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Bilski meets State Street Bank

Recently, I encountered an Office action in which the examiner stated that the claims are patent eligible under § 101 because they pass the machine-or-transformation test but do not recite statutory subject matter under § 101 because they are not directed to a practical application of a judicial exception. The examiner argued that the claims are not directed to a practical application of a judicial exception because the claimed invention does not produce a result. Based on this line of reasoning, the examiner concluded that the claims are not patent eligible under § 101.

Examiners have been trained to look for evidence of producing a result in a claim in the form of storing or outputting the result on some medium. Such limitation – which the Board of Patent Appeals and Interferences (BPAI) has now properly classified as an insignificant post-solution activity (see Ex Parte Gutta, Appeal 2008-3000, January 15, 2009) – was required to be in the claim to show that the claimed invention produced a “useful, concrete, and tangible result” and therefore was directed to a practical application of a judicial exception. In the past, I’ve expressed dismay about this requirement on the basis that a result is no less a result because it is not used tangibly in a claim.

But the examiner’s line of reasoning presents a dilemma. How could a claim be patent eligible under § 101 and not be statutory under § 101 since the meaning of patent eligibility and statutory subject matter under § 101 are the same? As is evident from the Office action, the dilemma arose because the examiner had combined an old test for determining patent eligibility under § 101 with a new test for determining patent eligibility as if the new test wasn’t sufficient to determine patent eligibility on its own, the new test being the machine-or-transformation test. Determining whether a claimed invention is directed to a practical application of a judicial exception or not is an incarnation of the old test.

I disagreed with the examiner that any test other than the machine-or-transformation test was needed to determine patent eligibility for any type of claim under § 101. The problem then was to rebut the examiner’s statement of rejection.

I started by learning about what guidelines had been given to the examiners for determining patent eligibility in view of In re Bilski, Fed. Cir., No. 2007-1130, October 30, 2008, which produced the machine-or-transformation test.

I found a memo dated January 7, 2009, from Mr. John J. Love, the Deputy Commissioner for Patent Examination Policy. The memo acknowledged the Bilski decision and the machine-or-transformation test that ensued from it. The memo recommended that examiners should continue to follow the guidelines appearing in MPEP 2106, with the modification that the method claim must meet the machine-or-transformation test. Mr. Love explained that the machine-or-transformation test is slightly different from the previous two-step test for determining patent eligibility, as outlined in his Love memo of May 15, 2008. The two-step test included asking the practical application of a judicial exception question. In the memo of January 7, 2009, Mr. Love did not explain to the examiners that the two-step test is a flawed test for determining patent eligibility of a method claim under § 101, which may have led to the examiners assuming that the machine-or-transformation test is just another tool for rejecting claims under 101.

From Bilski, it is clear that the two-step test in Mr. Love’s memo of May 15, 2008, is a flawed test. The next thing I did was to find out what the BPAI was saying about “result” and the patent eligibility question, and I was fortunate to find a case that echoed my position on the sufficiency of the machine-or-transformation test to unambiguously determine patent eligibility of a claim.

In Ex parte Howard Borenstein et al., March 30, 2009, the BPAI had the following to say about statutory subject matter:

“The test to determine whether a claimed process recites patentable subject matter under § 101 is whether: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In re Bilski, 545 F.3d 943, 961-62 (Fed. Cir. 2008) (en banc).

In Bilski, the Federal Circuit considered whether the “test” for compliance with § 101 is whether the invention is valid and useful, and concluded that this is not the correct test. Specifically, the Court rejected the viability of the “useful, concrete, and tangible result” language of State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1373 (1998), as a test, because while such an inquiry “may in many instances provide useful indications of whether a claim is drawn to a fundamental principle or a practical application of such a principle,” it inappropriately focuses on the result of the claimed invention rather than the invention itself. In re Lewis Ferguson, _____ F.3d _____, _____, 2009 WL 565074*4 (Fed. Cir. 2009).”

From the excerpt above, it is abundantly clear that focusing on the result of the claimed invention can result in an incorrect determination of whether a claim is directed to statutory subject matter or not. From the above, not only is the machine-or-transformation test the definitive test for determining whether a claimed process recites patentable subject matter under § 101, it is also inappropriate to use tests that focus on the result of the claimed invention rather than the invention itself to determine patent eligibility under § 101.

I shared my findings with the examiner, who listened graciously, agreed that I had a point, and promised to discuss the matter with his supervisor.