Bilski (part 2) - Machine or transformation test is an important and useful clue

Yesterday, the Supreme Court issued its long-awaited decision in Bilski v. Kappos. I briefly posted on this yesterday here. The Court rejected the Federal Circuit's Machine or Transformation test as the sole mechanism for determining whether a process is patent-eligible:

This Court’s precedents establish that the machine-or-transformation test is a useful and important clue, aninvestigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for decidingwhether an invention is a patent-eligible “process.”

So what does that mean, and how did we get here? Keep reading.

Bilski's invention

Bernard Bilski and Rand Warsaw invented an "Energy Risk Management Method." This was a method to hedge against the risk of price changes in buying and selling commodities in the energy market. Claim 1 included the following steps:

(a) initiating a series of transactions between said commodity provider and consumers of said commoditywherein said consumers purchase said commodity at afixed rate based upon historical averages, said fixedrate corresponding to a risk position of said consumers;

(b) identifying market participants for said com-modity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market par-ticipant transactions balances the risk position of said series of consumer transactions.

This patent application sought to protect a method of doing business. The Patent Office rejected it, saying it was not a patent-eligible invention.

Patent-eligibility vs. Patentability

There are 2 main questions to ask when considering a patent on an invention: (1) is the type of invention eligible for patent protection; and (2) is the invention an invention at all? This second part, whether or not the invention is an invention at all, addresses whether the invention is new, useful and non-obvious. If someone else invented what you've claimed to invent, well then you haven't invented something that's new, useful or nonobvious. But before you get to that question, we must address the first consideration -- is the invention the type of thing that deserves patent protection.

Patent-eligiblity -What is patentable subject matter?

The U.S. statute that defines patent-eligible subject matter states:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition ofmatter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Thus, there are 4 patent-eligible inventions: processes, machines, manufacturers, and compositions of matter.

Over the years, the Supreme Court has carved out three specific exceptions to this patent-eligibility requirement. Laws of nature, abstract ideas, and physical phenomenon are not eligible for patent protection. Galileo could not patent gravity. Pythagoras could not patent his theoreom. Nobody gets to own the Northern Lights. But everything else under the sun made by man? Well, that's a different beast.

Machine or Transformation Test

The Federal Circuit had used a test for deciding whether or not a particular process was patent-eligibilty. The test analyzed whether the claimed process (1) was tied to a particular machine or apparatus, or (2) transformed a particular article into a different state or thing. This so-called machine-or-transformation test was the basis for rejecting Bilski's claimed invention, and was considered the "sole test" for determining patent-eligibilty for a process.

As you can see above, the Supreme Court rejected this approach, holding that the machine-or-transformation test is a useful tool for considering patent-eligibity, but it is not the sole test. This was a statutory construction case. The patent laws say they protect processes, and they even define what a process is. Congress did not put the machine-or-transformation test into the statute, and so that test can not be the only test for determining patent-eligibility.

Software inventions, business methods, diagnostic medicine techniques, ...

This case drew attention from innovators on all sides of the spectrum. Many argued that all business method patents are bad and we shouldn't have any of them. Others argued that software patents are also bad because they're simply business method patents and we shouldn't have them. The medical diagnostic community was also concerned as their methods of diagnosing could also fall into a business method analysis resulting in a loss of patent rights.

The Supreme Court addressed these concerns essentially head on, and explained that it wasn't drawing any bright-rules excluding anything from patent protection that Congress didn't put into the patent laws. The Court explained that the machine-or-transformation test was probably excellent for the Industrial Age, but the Information Age presents new types of inventions worthy of our patent laws:

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those inthe Industrial Age—for example, inventions grounded in aphysical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age.

But we should not forget what Thomas Jefferson felt at the beginning -- "ingenuity should receive a liberal encouragement." New technologies call for new tests. The Court did not hold that any of the above technologies are or are not patent-eligible. Of course, that's too broad a statement or question. The Court left that issue to another day:

This Age puts the possibility of innovation in the hands of more people and raisesnew difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections fortheir inventions, the patent law faces a great challenge instriking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of generalprinciples. Nothing in this opinion should be read to takea position on where that balance ought to be struck.

Bilski still loses

After explaining that machine-or-transformation is not the only test, the Court affirmed the rejections of Bilski's patent application because it was an attempt to claim an abstract idea. As discussed above, abstract ideas are not patent eligible, and thus no patent for Bilski.

The Concurring Opinions

Each Justice agreed with the result of the decision -- Bilski was not entitled to a patent on his method of hedging risk. Justice Scalia did not join with the Court's discussion of software and diagnostic patent-eligibility or the discussion relating to the Industrial Age vs. Information Age. Two other Justices authored opinions concurring in the result.

Justice Stevens, joined by Justices Ginsburg, Breyer and Sotomayor

This opinion advocates restoring patent law to its historical and constitutional moorings and excluding business methods from patent protection. Justice Stevens attacks the Court's opinion ("The opinion is less than pellucid in more than one respect, and, if misunderstood, could result in confusion or upset settled areas of the law."), and at times calls it absurd.

Under the Court's view, processes (like any other invention) must satisfy the two questions I discuss above: (1) is the process eligible for patent protection; and (2) is the process an invention (i.e. is it new, useful and nonobvious). Justice Stevens believes this approach renders the patent-eligibility question "comical."

A process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds—all would be patent-eligible. I am confident that the term “process” in §101 isnot nearly so capacious.

Justice Stevens does go on to note (in a footnote) that the patentability questions (is the method of walking a dog new, useful, and nonobvious) would still preclude these "comical" ideas from patent protection. He does not explain, however, why letting the patentability question protect against these "absurd" inventions is not sufficient.

Justice Stevens then traces our patent laws back to the English patent practice prior to our nation's founding. He tries to explain that business methods were never part of the picture, even though he does identify at least one "business method" patent issued in 1778 on a "Plan for assurances on lives of persons from 10 to 80 years of Age." Justice Stevens writes this off as little more than the whim or error of a single patent clerk.

So, we were one vote away from adding business methods as a fourth judicial exception to patent-eligibility.

Justice Breyer, joined by Justice Scalia

"I agree with Justice Stevens that a 'general method of engaging in business transactions' is not a patentable 'process' within the meaning of 35 U.S.C. §101." By joining this opinion, has Justice Scalia cast the 5th vote and excepted business methods from patent protection? I don't know the answer to that, and I trust we'll see plenty of litigation directed to that point.

Justice Breyer's opinion is that the Court has not changed anything, and the machine-or-transformation test was never the "sole" test used.

In sum, it is my view that, in reemphasizing that the“machine-or-transformation” test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.

Bilski v. Kappos, No. 08-964 (June 28, 2010)

"interactive channels" is patent eligible

David Schrader invented a method for getting advertising feedback on "interactive channels." He described interactive channels in the context of "...the Internet and World Wide Web, Interactive Television, and self service devices, such as Information Kiosks and Automated Teller Machines (ATMs)."

He claimed:

A method for obtaining feedback from consumers receiving an advertisement from an ad provided by an ad provider through an interactive channel, the method comprising the steps of:

creating a feedback panel including at least one feedback response concerning said advertisement; and

providing said feedback panel to said consumers, said feedback panel being activated by a consumer to provide said feedback response concerning said advertisement to said ad provider through said interactive channel.

The Examiner rejected the claims as failing to claim patent-eligible subject matter under 35 U.S.C. § 101. (The Examiner also rejected the claims for obviousness, but that analysis is not discussed in this post.) The applicant appealed these rejections to the Board of Patent Appeals and Interferences, which addressed the § 101 issue briefly.

After explaining that the test for determining patentable subject matter for a process is Bilski's machine or transformation test (i.e. whether the claimed process is (1) tied to a particular machine or apparatus; or (2) transforms a particular article into a different state or thing), the Board found:

We will not sustain the rejection of claims 1-12 under 35 U.S.C. § 1because one of ordinary skill in the art would understand that the claimed “interactive channels” constitutes patent eligible subject matter under § 101 because the Specification unequivocally describes interactive channels as part of an overall patent eligible system of apparatuses which include "...the Internet and World Wide Web, Interactive Television, and self service devices, such as Information Kiosks and Automated Teller Machines (ATMs)."

§ 101 rejection reversed (although obviousness rejections were sustained).

Documents

• U.S. Patent Publication 2004/0059625

Ex parte Schrader, Appeal 2009-009098 (BPAI Aug. 31, 2009)

A "classifier" is a particular machine, and thus patent eligible

George Forman (no, not that George Foreman) invented a method for selecting a predetermined number of features for a set of binary partitions over a set of categories given a dataset of feature vectors associated with the categories. Read the application here. Claim 1 and 4:

1. A computer-implemented feature selection method for selecting a predetermined number of features for a set of binary partitions over a set of categories given a dataset of feature vectors associated with the categories, the method comprising:

for each binary partition under consideration, ranking features using two-category feature ranking; and

while the predetermined number of features has not yet been selected:

picking a binary partition p;

selecting a feature based on the ranking for binary partition p; and

adding the selected feature to an output list if not already present in the output list and removing the selected feature from further consideration for the binary partition p.

4. A method in accordance with claim 1 and further comprising using the selected features in training a classifier for classifying data into categories.

The Examiner rejected claims 1-35 as nonstatutory subject under 35 U.S.C. § 101. (There were also obviousness rejections, which are not discussed in this posting). The Board of Patent Appeals and Interferences explained the law:

As the U.S. Supreme Court has noted, “‘[a]n idea of itself is not patentable[]’….‘A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.’” [Diamond v. Diehr, 450 U.S. 175, 185 (1981)] (citations omitted).

In determining whether a claim as a whole is directed to an abstract idea, a key distinction has been drawn between (1) claims that seek to wholly pre-empt the use of a fundamental principle, and (2) claims that are merely limited to foreclosing others from using a particular application of that fundamental principle. See In re Bilski, 545 F.3d 943, 957 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964).

Based on U.S. Supreme Court precedents, Bilski restated the U.S. Supreme Court’s “definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself.” Bilski, 545 F.3d at 954. This restatement, embodied as the “machine-or-transformation test,” requires that a claimed process either (1) be tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing. Id. This test ensures that the claimed process does not pre-empt uses of the principle that do not use the specified machine or apparatus. The test further precludes a claimed process from pre-empting “the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.” Id.

Claim 1 -- not patent eligible

Addressing claim 1, the Board found the recited steps were not tied to a particular machine or apparatus, nor did they transform a particular article into a different state or thing. As such, the claim failed Bilski, as was not patent eligible. The Board found the preamble's requirement that the method be "computer-implemented" was merely "a nominal structural recitation [which] would be a tantamount to a general purpose computer and would therefore not tie the process to a particular machine or apparatus." (citing Gottschalk v. Benson, 409 U.S. 63 (1972)). The Board also found no transformation in claim 1, and upheld the finding of rejection under § 101.

Claim 4 -- The Classifier is a particular machine & thus patent eligible

Turning to claim 4, the Board found that the "classifier" is a particular machine because of the following definition from the specification:

A classifier is typically constructed using an inducer. An inducer is an algorithm that builds the classifier using a training set comprising records with labels. After the classifier is built, it can be used to classify unlabeled records.” Spec. ¶ 0005.

Per the Board:

A “classifier” is therefore a particular machine in that it performs a particular data classification function that is beyond mere general purpose computing. Since the claim recites using the selected features in training this classifier, the claim is therefore tied to a particular machine, namely the classifier. Claim 4 also transforms a particular article into a different state or thing, namely by transforming an untrained classifier into a trained classifier.

Claim 15 -- A machine or article of manufacture, but still not patent eligible

First, the law:

If a claimed machine (or article of manufacture) involves a mathematical algorithm, then we must determine whether the scope of the claimed invention encompasses one of the judicially-created exceptions. This determination of claim scope requires that we make two inquiries:

(1) Is the claim limited to a tangible practical application, in which the mathematical algorithm is applied, that results in a real-world use (e.g., “not a mere field-of-use label having no significance”)?

(2) Is the claim limited so as to not encompass substantially all practical applications of the mathematical algorithm either “in all fields” of use of the algorithm or even in “only one field?”

If the machine (or article of manufacture) claim involves a mathematical algorithm and fails either prong of this two-part inquiry, then the claim is not directed to patent-eligible subject matter under § 101.

Claim 15 begins "A memory embodying computer program code for feature selection..." A memory is a machine or an article of manufacture, so it satisfies at least one category of § 101. But where the claimed machine involves a mathematical algorithm, the patent-eligibility analysis must go further. The Board's analysis:

Here, claim 15 is not limited to a tangible practical application in which the algorithm is applied that results in a real-world use. Although the preamble recites that the program code is “for feature selection for a plurality of categories,” this nominal intended use recitation falls well short of reciting a tangible practical application that results in a real-world use. Moreover, the remainder of the claim merely recites data manipulation steps that are performed by the processor upon execution of the program code. These limitations, likewise, fail to recite a tangible practical application that results in a real-world use. Furthermore, the sheer breadth of claim 15 encompasses substantially all practical applications of the algorithm. In essence, claim 15 merely recites a general purpose computing device intended to facilitate the future execution of the recited data manipulation functions—manipulations similar to those in claim 1 that we found to be unpatentable under § 101.

Reversed in part, affirmed in part.

Ex parte Forman, Appeal 2008-005348 (BPAI Aug. 17, 2009)

Computer programs are functional, and are patent eligible when recorded on computer-readable medium.

William Bodin and Derral Thorson invented a virtual camera and method for editing and browsing images for virtual cameras. Claims 17-24 were rejected under 35 U.S.C. § 101 as being directed to non-statutory subject matter. For example, claim 17 claimed:

A computer program product for digital imaging, the computer program product comprising: a recording medium; means, recorded on the recording medium, for creating, in the virtual camera, an unedited image request for an unedited digital image; ...

The Examiner found these claims non-statutory because the claims were directed to the computer program product itself, which is not embodied on a computer readable medium. The Board of Patent Appeals and Interferences disagreed. First, the law:

Under § 101, there are four categories of subject matter that are eligible for patent protection: (1) processes; (2) machines; (3) manufactures; and (4) compositions of matter. 35 U.S.C. § 101. But even if a claim fits within one or more of the statutory categories, it may not be patent eligible. In re Ferguson, 558 F.3d 1359, 1363 (Fed. Cir. 2009).

“[A]n applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article” into a different state or thing. In re Bilski, 545 F.3d 943, 961 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964); see also Gottschalk v. Benson, 409 U.S. 63, 70 (1972).

“[A] machine is a concrete thing, consisting of parts, or of certain devices and combination of devices. This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” Ferguson, 558 F.3d at 1364 (quoting In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007), reh’g denied en banc, 515 F.3d 1361 (Fed. Cir. 2008), and cert. denied, 129 S. Ct. 70 (2008)).

IBM, who owns the patent application, argued that the claims expressly include "a recording medium" and the means-plus-function clauses "record on the recording medium for digital imaging." The Board then explained:

Computer programs and data structures are deemed “functional descriptive material,” which impart functionality when employed as a computer component. When functional descriptive material is recorded on some computer-readable medium, it becomes structurally and functionally interrelated to the medium and will be statutory in most cases since use of technology permits the function of the descriptive material to be realized. Compare In re Lowry, 32 F.3d 1579, 1583-84 (Fed. Cir. 1994) (claim to data structure stored on a computer readable medium that increases computer efficiency held statutory) with In re Warmerdam, 33 F.3d 1354, 1361-62 (Fed. Cir. 1994) (claim to computer having a specific data structure stored in memory held statutory product-by-process claim but claim to a data structure that referred to ideas reflected in nonstatutory process rather than referring to a physical arrangement of the contents of a memory held nonstatutory).

Finally, the Board found that the "recording medium" disclosed in the Specification was equivalent to a computer-readable medium, and thus the Examiner's rejection was reversed.

Ex parte Bodin, 2009-002,913 (BPAI Aug. 5, 2009)

University of South Florida's amicus brief in Bilski

USF has filed an amicus brief in Bilski (which you can find on patently-o here).

USF argues that Bilski's impact on medical innovations is particularly troublesome. USF starts its discussion with the Constitution, and argues that medicine had been known for thousands of years as one of the "useful Arts." From Hippocrates (whose oath refers to medicine as "the art") to the first edition of the Encyclopædia Britannica (which defined medicine as "The art of preserving health...") to Thomas Jefferson (whose letters showed that he considered medicine one of the "useful Arts"), medicine was and is a "useful art." When Article I, Section 8 of the Constitution was drafted, the framers intended to include medicine as one of the "useful arts" to be protected.

USF next moves to Congress, and argues that when it enacted the first Patent Act, and ever since, it has consistently intended to include protecting medical innovations with patents. USF concludes:

The Federal Circuit’s “machine-or-transformation” test as set forth in In re Bilski is more restrictive than required by this Court’s precedent and finds no support in any legislation. In practice, it has already been applied to strike down patents directed to methods of immunizing patients with improved efficacy and safety thereby casting a cloud on the validity of a great many process patents in the medical and biotechnological fields.

The “machine-or-transformation” test is a useful starting point for analysis of patent eligibility of process claims. However, if a process claim is not tied to a particular machine or does not recite transformation of an article into a different state or thing, the inquiry should not stop there, as the process may still be patent eligible as long as it does not attempt to claim “laws of nature, natural phenomena, [or] abstract ideas.” Diamond v. Diehr, 450 U.S. 175, 185 (1981).

It's no Goud (sorry -- weak pun)

Goud and Zimmer invented a system abstraction layer for a basic input/output system (BIOS) program which enables selection from among at least 2 different processor abstraction layer (PAL) components.

Claims 1 is illustrative:

1. A method comprising:

providing at least two selectable processor abstraction layer B components within one basic input/output system program

The Examiner rejected this claim as being directed to non-statutory subject matter. The Board explained the basics:

Under § 101, there are four categories of subject matter that are eligible for patent protection: (1) processes; (2) machines; (3) manufactures; and (4) compositions of matter. 35 U.S.C. § 101. While the scope of patentable subject matter encompassed by § 101 is “extremely broad” and intended to “‘include anything under the sun that is made by man,’” it is by no means unlimited. In re Comiskey, 554 F.3d 967, 977 (Fed. Cir. 2009) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980)). For example, laws of nature, abstract ideas, and natural phenomena are excluded from

patent protection. Diamond v. Diehr, 450 U.S. 175, 185 (1981).

It is the second exclusion noted above—abstract ideas—that is relevant to the appeal before us. Thus, even if the claimed invention nominally recites subject matter that falls within the enumerated categories under § 101, the claimed invention would still not recite patentable subject matter if the claim as a whole is nonetheless directed to an abstract idea. As the U.S. Supreme Court has noted, “‘[a]n idea of itself is not patentable[]’….‘A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.’” Id. at 185 (citations omitted).

In determining whether a claim as a whole is directed to an abstract idea, the Court has drawn a key distinction between (1) claims that seek to wholly pre-empt the use of a fundamental principle, and (2) claims that are merely limited to foreclosing others from using a particular application of that fundamental principle. See In re Bilski, 545 F.3d 943, 957 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964).

Machine or Transformation? -- It's "rife with physical materials"

Applicants argued that claim 1 is "rife with physical materials" because it calls for processor abstraction layer B components and a BIOS program. Thus, according to Applicants, "the claim is statutory because it recites at (1) program, and (2) a concrete and tangible result, namely a BIOS program 'with certain characteristics never before seen in the prior art.'" The Board did not agree.

Claim 1 is not tied to a particular machine

[E]ven assuming, without deciding, that a machine were required to implement the recited method, such a machine would not be a particular machine as Bilski requires. See Bilski, 545 F.3d at 961-62. At best, such a nominal structural recitation would be a tantamount to a general purpose computer and would not tie the process to a particular machine or apparatus.⁵ Indeed, such a nominal recitation of physical structure tantamount to a general purpose computer is analogous to the recitation of storing binary coded decimal signals in a shift register that the U.S. Supreme Court found to be unpatentable in Benson. See Benson, 409 U.S. at 73 (listing claim 8 which calls for, in pertinent part, “storing the binary coded decimal signals in a reentrant shift register”) (emphasis added). In any event, “[n]ominal recitations of structure in an otherwise ineligible method fail to make the method a statutory process.” Ex parte Langemyr, App. No. 2008-1495, slip op., at 20 (BPAI May 28, 2008) (Informative) (citing Benson, 409 U.S. at 71-72), available at http://www.uspto.gov/web/offices/dcom/bpai/informative_opinions.html (last visited Mar. 15, 2009).

Claim 1 also does not transform a particular article into a different state or thing

We also find that claim 1 does not transform a particular article into a different state or thing. Merely providing selectable components within a program, in effect, provides a particular program with those components. Merely providing a program with particular components, however, falls well short of transforming a particular article into a different state or thing as Bilski requires.

^5. In Gottschalk v. Benson, 409 U.S. 63 (1972), the Court held that claims directed to a method for converting binary-coded-decimal (BCD) numerals into pure binary numerals for use with a general-purpose digital computer were nonstatutory under § 101.

Rejections affirmed.

Ex parte Goud, No. 2008-003121 (July 20, 2009)