The Federal Circuit Clarifies Test for Patent Eligible Subject Matter of Method Claims

Choate Alert

 | November 17, 2008

 | Intellectual Property Litigation

On October 30, the United States Court of Appeals for the Federal Circuit, in a highly anticipated en banc decision, In re Bilski, clarified the test for determining whether a claimed method recites patent-eligible subject matter.  The court, in refusing to extend patent protection to a method of hedging risk in the field of commodities trading, made clear that the only proper test for determining whether a patent method claim recites patent-eligible subject matter is the Federal Circuit's “machine-or-transformation test.”

The “machine-or-transformation” test requires that, in order to be patent-eligible, a method claim
must either:

  • be “tied” to a particular machine, or
  • transform an article into a different state or thing.

The court explicitly rejected other, previous tests, including the “useful, concrete and tangible result” formulated by the Federal Circuit in its 1998 State Street Bank decision, which opened the door to patent protection for business methods.  Even though previous cases have used a now rejected test, the Bilski court stated that the results of these cases are consistent with the new “machine-or-transformation” test.

Insignificant Extra-Solution Activity Not Sufficient

Under the newly announced test, tying a claim to a specific machine or transformation must impart meaningful limits on the claim's scope and must not be merely “insignificant extra-solution” activity. The court did not elaborate on the definition of “insignificant extra-solution activity,” but stated that the following examples were insufficient to impart patent-eligibility:

  • merely adding a pre-solution step of gathering data
  • inserting a simple recordation step in the middle of a process
  • adding a final step simply applying the process to a pre-existing scientific technique.

In the case before the court, Bilski admitted that the hedging process at issue was not linked to a specific machine or apparatus. Therefore, the Federal Circuit did not further explore the first, or “machine implementation,” part of the test.

Transformation Must be Central to the Claimed Process

Addressing the “transformation” part of the test, the court stated that a claimed method
transforms an article when, as above, there are meaningful limits on the claim's scope and
the claimed transformation is not merely insignificant extra-solution activity. The transformation must be central to the purposes of the claimed process.

The court itself admitted that this determination is “hardly straightforward,” but provided a number of examples of processes that satisfied the test:

  • a computer-operated process to transform raw, uncured rubber into molded, cured rubber products
  • using high temperature and pressure to transform fats into constituent compounds
  • transforming grain meal into purified flour.

Because the claim in Bilski claimed only a “purported transformation[s] or manipulation[s] simply of public or private legal obligations or relationships, business risks, or other such abstractions,” the Court found the claims of the Bilski patent not patent-eligible.

Business Method and Software Related Inventions Affirmed Patentable

The Bilski decision comes in the wake of much sentiment about the effectiveness of the US patent system and in particular, whether or not business methods and software should be patent-eligible.  In light of Bilski, one undoubtedly will hear further sentiment on these categories of patents.  Responsive to several amicus briefs on the matter, the Court specifically declined to adopt any broad exclusion of software or business method claims from patentability.  The Court makes clear that business method and software inventions are still as patentable as any other category, subject, of course, to the “machine-or-transformation” test. 

Also The Test for Biotechnology and Life Sciences Method Claims

Although public commentary on Bilski has focused on the decision’s effects on business methods and software patentability, the Federal Circuit's “machine-or-transformation” test is the sole patent-eligibility test for all categories of method claims.  Therefore, method claims in the biotechnology and life sciences will also fall under this test.  As the “machine-or-transformation” test is used to determine when a claimed process preempts the use of fundamental principles, the extent this test is applicable to those life sciences method claims which are not tied to a particular machine is uncertain.  In Bilski, the Court specifically points to chemical reactions as the sort of physical transformation that will render a process patentable.  But the question remains: will preemption occur even in the face of physical transformation if the underlying chemical reaction covers a fundamental principle?


Method Claim and Patent Drafting Strategy

The Court acknowledged that its “machine-or-transformation test” may need be altered in the future to adapt to emerging new technological and scientific development, stating “we recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the test or how it is applied.”

Patent owners and patent filers should take the opportunity to review their method claim and patent drafting strategies with an eye for possible future test alterations.

Choate’s IP team takes a strategy-first approach to patent protection. We have extensive experience providing strategic patent counseling to a wide range of high tech and life sciences clients from startups to emerging companies to global public companies.  Choate’s high tech patent protection group has reviewed its pre-Bilski best practices and strategies of protecting business method and software related inventions.  We believe that these best practices will successfully withstand the Supreme Court’s test.

 

 

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