On June 28, 2010, in a split decision, the Supreme Court finally decided the long-awaited case of Bilski v. Kappos, 561 U.S. ___, 70 U.S.L.W. 4802, 2010 U.S. LEXIS 5521 (U.S. June 28, 2010) (“Bilski III”). In the majority opinion, penned by Justice Kennedy (no fan of business method patents), the Court rejected the notion that the “machine-or-transformation” test is the sole test for determining whether a process claim is patent-eligible subject matter, as well as the notion that “methods of doing business” were categorically excluded from being patent-eligible subject matter. In reaching the decision, the Court reaffirmed its prior trilogy of Flook-Benson-Diehr and offered little guidance beyond the broad principles stated in those cases for determining whether a particular claimed process was merely directed to an abstract idea (not patent-eligible) or claimed a practical application of an abstract idea (patent-eligible). Justice Kennedy confirmed that the Court did not endorse the “useful, concrete and tangible result” standard set forth in State Street, AT&T, and the earlier Alappat decisions of the Federal Circuit, but left it to the Federal Circuit to carve out new boundaries for patent-eligible subject matter. For a detailed discussion of Bilski III, see The Nuts And Bolts Of The Bilski Decision.
So now that we know that the Federal Circuit adopted too narrow a view of patent-eligible processes and adopted an inappropriate bright-line test, the next question is how the Federal Circuit will carve out new boundaries. We have identified at least nine opportunities for the Federal Circuit to provide further guidance on those boundaries based on cases that are already on the court’s docket.
The first two opportunities are “GVRs” that the Supreme Court issued the day after Bilski III. In particular, the Court granted certiorari, vacated the Federal Circuit’s decision, and remanded, in light of Bilski III, two decisions involving methods of diagnosing a disease. In Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 581 F.3d 1336 (Fed. Cir. 2009), cert. granted, judgment vacated, and remanded, 78 U.S.L.W. 3254 (U.S. June 29, 2010), the Federal Circuit determined that the claimed method of diagnosing a disease was patent-eligible under the “transformation” prong of the “machine-or-transformation” test. See U.S. Supreme Court Affirms Bilski, But Sets the Course Clear for Business Method Patents.
On the other hand, in Classen Immunotherapies, Inc. v. Biogen IDEC, 304 Fed. Appx. 866 (Fed. Cir. 2008), cert. granted, judgment vacated, and remanded, 78 U.S.L.W. 3680 (U.S. June 29, 2010), the Federal Circuit found that the claimed method of selecting vaccine regimens by comparing the two regimens and selecting the regimen less likely to cause the relevant disorder was not patent-eligible because it failed to meet the “machine-or-transformation” test. With this pair of cases on remand, the Federal Circuit will be faced with, among other issues, whether the “machine-or-transformation” test is a safe harbor, since it has already determined that the claim in Prometheus met that standard. Likewise, the Federal Circuit will be faced with addressing whether the claim in Classen, which did not meet the “machine-or-transformation” test, is nonetheless patent-eligible as a practical application of an abstract principle or merely is an effort to claim an abstract principle.
Another case currently pending before the Federal Circuit has drawn a lot of attention from the public and the bar. In Association for Molecular Pathology v. U.S. Patent and Trademark Office, No. 09-cv-4515, slip op. (S.D.N.Y. Mar. 29, 2010, amended Apr. 5, 2010) (Sweet, J.), appeal docketed, No. 2010-1406 (Fed. Cir. June 22, 2010), the district court found a claim directed to isolating DNA for a particular gene sequence and methods for “comparing” or “analyzing” gene sequences for diagnosing breast cancer not to be patent-eligible.
In Fort Properties, Inc. v. American Master Lease, LLC, 609 F. Supp. 2d 1052 (C.D. Cal. 2009), appeal stayed, No. 2009-1242 (Fed. Cir. June 11, 2009), the PTO explicitly found during prosecution that a claim met the “useful, concrete and tangible result” test. Nonetheless, the district court held that the claim was not patent-eligible subject matter under the “machine-or-transformation” test. In Fort, the claimed process was not tied to a machine per se, but instead was made tangible as a result of various contractual obligations that were formed. While the Federal Circuit has already rejected the proposition that transformations of legal obligations by themselves are a sufficient type of transformation to make a process claim patent-eligible, In re Bilski, 545 F.3d 943, 963 (Fed. Cir. 2008). Fort provides the Federal Circuit the opportunity to reconsider that holding in view of the Supreme Court’s guidance in Bilski III.
In a series of district court decisions† the district courts rejected certain computer-implemented claims related to financial transactions and 3-D graphics (FuzzySharp) under various theories that narrowly view patent eligibility. These cases present the Federal Circuit with the opportunity to address the “general purpose” versus “specific purpose” distinction that has been bantered about by the Board of Patent Appeals and Interferences in various post-Bilski decisions. See, e.g., Ex Parte Myr, Appeal No. 2009-5949, 2009 WL 3006497, at * 8-9 (B.P.A.I. Sept. 18, 2009); Ex Parte Mitchell, Appeal No. 2008-2012, 2009 WL 460662, at *6 (B.P.A.I. Feb. 23, 2009); Ex Parte Nawathe, Appeal No. 2007-3360, 2009 WL 327520, at *4 (B.P.A.I. Feb. 9, 2009).
†FuzzySharp Technologies. Inc. v. 3D Labs Inc., Ltd., No. C-07-5948, 2009 U.S. Dist. LEXIS 115493 (N.D. Cal. Dec. 11, 2009), appeal stayed, No. 2010-1160 (Fed. Cir. Mar. 25, 2010), Research Corporation Technologies, Inc. v. Microsoft Corp., No. 01-cv-658, slip op. (D. Ariz. July 28, 2009), appeal docketed, No. 2010-1037 (Fed. Cir. Oct. 22, 2009), DealerTrack, Inc. v. Huber, 657 F. Supp. 2d 1152 (C.D. Cal. 2009), appeals stayed, No. 2009-1566 and No. 2009-1588 (Fed. Cir. Oct. 27, 2009), Every Penny Counts, Inc., v. Bank of America Corp., No. 2:07-cv-042, 2009 U.S. Dist. LEXIS 53626 (M.D. Fla. May 27, 2009), appeal stayed, No. 2009-1442 (Fed. Cir. Aug. 31, 2009), and CyberSource Corp. v. Retail Decisions, Inc., 620 F. Supp. 2d 1068 (N.D. Cal. 2009), appeal stayed, No. 2009-1358 (Fed. Cir. July 30, 2009).
*Charles R. Macedo is a partner at Amster, Rothstein & Ebenstein LLP and is the author of The Corporate Insider’s Guide to U.S. Patent Practice, published by Oxford University Press in 2009. His practice specializes in intellectual property issues including litigating patent, trademark and other intellectual property disputes, prosecuting patents before the U.S. Patent and Trademark Office and other patent offices throughout the world, registering trademarks and service marks with the U.S. Patent and Trademark Office and other trademark offices throughout the world, and drafting and negotiating intellectual property agreements. Mr. Macedo was principal attorney on amicus briefs submitted to the U.S. Supreme Court in Bilski III and to the Federal Circuit in Bilski II on behalf of certain clients. The majority opinion in Bilski III adopted positions advocated by these submissions. Copies of these amicus briefs and other writings on Bilski II and Bilski III are available at www.arelaw.com.