New Directions in Patenting Process Inventions

35 U.S.C. '101 defines processes, machines, manufactures, and compositions of matter as the categories of inventions that can be the subject matter of a patent. 35 U.S.C. '100(b) defines the term 'process' to mean 'process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.' Section 101 also requires that the subject matter sought to be patented be 'useful.'

'[P]rocesses represent an especially troublesome type of invention ' because almost anything can be claimed as a series of steps that technically can be considered a process, but the term process is so broad that it can be used to claim inventions that cover nothing more than human conduct or thought processes that are totally unrelated to any science or technology.' Ex Parte Lundgren, Appeal no. 2003-2088 (U.S. Patent and Trademark Office ('PTO') Board of Patent Appeals and Interferences ('BPAI'), 2005), at p. 10.

Courts excepted from the above statutory categories of patentable subject matter 'a patent on the [idea, law of nature or natural phenomena] itself.' Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972). Nonetheless, methods and products employing abstract ideas, natural phenomena, and laws of nature to perform a real-world function may be patentable. See PTO Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility ('Guidelines'), Official Gazette Notices, Nov. 22, 2005. Recently, the PTO and federal courts have refined the contours of patentable subject matter for process inventions through case law and the Guidelines.

Tests for Statutory Process Inventions

The Court of Customs and Patent Appeals ('CCPA') and the Federal Circuit have settled many difficult patentability issues involving computers and mathematical algorithms. In In re Musgrave, for example, the CCPA in 1970 observed that '[a]ll that is necessary ' to make a sequence of operational steps a statutory 'process' within ' '101 is that it be in the technological arts so as to be in consonance with the Constitutional purpose to promote the progress of 'useful arts.' Const. Art. 1, sec. 8.' Musgrave, 431 F.2d 893.

In State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), the Federal Circuit narrowed the prohibition on patenting mathematical algorithms. The court declared patentable a 'Hub and Spoke' software-based method and system for managing mutual funds, based on the useful result of momentarily fixing the share price of a 'spoke fund' for reporting purposes. To be patentable under State Street, an invention involving a mathematical algorithm would need to claim a practical application of that algorithm or use of the algorithm to effect a transformation of data. The court's analysis did not appear to require that business methods be tied to an 'implementation' in a computer or other system to be patentable. It thus apparently became possible to patent 'pure' methods of doing business, at least to the extent such methods are claimed in a way that produces a 'useful, concrete and tangible result.' Id. at 1373.

Ex Parte Lundren

This case, decided in the BPAI in September 2005, dealt a deathblow to the technological arts test and endorsed the useful, concrete, and tangible result test. One claim at issue recited a method of compensating a manager for, among other things, the purpose of reducing incentives for industry collusion. The method of this claim includes eight steps that apparently can be implemented without use of a computer or calculating machine. The Examiner initially issued claim rejections under '101 based on failure to produce a 'useful, concrete and tangible result.' The Examiner subsequently withdrew that rejection, and rejected claims based on the technological arts test. The issue on the second appeal was whether 'the invention and [its] practical application ' [are] outside the technological arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of computer, automated means, [or] apparatus of any kind ' ' Lundgren at 4.

An expanded panel of the BPAI in a 3-2 decision reversed the rejection. The court concluded that the Examiner had found a useful, concrete, and tangible result based on the Examiner's withdrawal of the previous rejection based on this test. The court also concluded that the technological arts test was not appropriate, as the BPAI did not view Musgrave to have created a separate 'technological arts' test for statutory subject matter. The BPAI in formulating this conclusion referred to In re Toma, 575 F.2d 872, 877 (CCPA 1978). The Toma court stated that cases such as Musgrave involved what was called at that time a 'mental steps' rejection, and observed, '[t]he language which the examiner has quoted was written in answer to 'mental steps' rejections and was not intended to create a generalized definition of statutory subject matter.' Id. at 878.

In a probing and scholarly concurrence-dissent, Judge Lee Barrett agreed that there is no separate and distinct technological arts test, since such a requirement is implicit in the classes of '101. Judge Barrett defined three possible tests for statutory subject matter of non-machine-implemented process claims. The first turned on whether there was a transformation of physical subject matter to a different state or thing. The second involved exceptions for laws of nature, physical phenomena, and abstract ideas. The third test looked to whether there was a useful, concrete, and tangible result for machine or machine-implemented processes, a la State Street. Id. at 77.

Judge Jerry Smith dissented, claiming that the Examiner's issue was new, since no existing decision unequivocally held that the claimed invention should be granted or denied a patent. Id. at 9. Judge Smith further commented that an invention must be tied to a recognized science or technology to meet the Constitutional mandate of promoting progress of the useful arts. Otherwise, a 'process' can claim inventions that cover nothing more than human conduct or thought processes totally unrelated to any science or technology. Judge Smith asserted that the technological arts standard rejected by the majority represents a more modern term for 'useful arts' in the Constitution. Id. He opined that 'The majority's position ' opens the floodgate for patents on essentially any activity which can be pursued by human beings without regard to whether those activities have anything to do with the traditional sciences or whether they enhance the technological arts in any manner.' Id. at 12. Judge Smith concluded that the appropriate forum for resolution is the federal judiciary. Id. As discussed below, it appears that the U.S. Supreme Court is poised to provide such resolution in deciding LabCorp v. Metabolite, which is pending at press time.

PTO Interim Guidelines

The Guidelines appear to document the State Street and Lundgren (majority) opinions. 'The principal objective ' is to assist examiners in determining ' whether a claimed invention ' is a practical application of a judicial exception to statutory subject matter ' [which] is claimed if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.' Guidelines at 1. The Guidelines confirm that 'United States patent law does not support ' a 'technical aspect' or 'technological arts' requirement.' Guidelines at Annex III. The period for public commentary on the Guidelines ran until June 30, 2006.

Labcorp. v. Metabolite

The patent at issue, U.S. 4,940,658 (the '658 Patent) claims a method for diagnosing low levels of two vitamins found in the blood of warm-blooded animals. Brief for Respondents at 1-2, 6. The method calls for the steps of 1) determining the composition of an amino acid, and 2) correlating the amino acid level with the levels of the vitamins. Id. at 5. The Supreme Court granted certiorari Oct. 31, 2005, limited to the question: 'Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to 'correlat[e]' test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.' Brief for Petitioner at (i).

Petitioner Laboratory Corporation of America Holdings ('LabCorp') asserts that the claimed invention is too insignificant for patentability and that allowing the patent will weaken the prohibition on patenting scientific principles by allowing aspiring patentees to embed the principle within a synthetic process. Brief for Petitioner at 25.

Metabolite emphasizes the pa-tentability of applications of laws of nature, mathematical formulas, and scientific principles. Brief for Respondents at 27. Metabolite argues that the '658 Patent involves such an application and that the subject matter of the '658 Patent produces a useful, concrete, and tangible result, thus satisfying the State Street test. Id. at 38.

If the Court agrees that patent claims should be construed broadly as to assert property rights over scientific principles or laws of nature, the floodgates could further open to admit other similarly broad claims. Inventors who patent basic principles of new and innovative fields of research could then exert significant control within those fields. Brief of Amicus Curiae of the American Heart Association Supporting Petitioner at 13.

On June 22, 2006, as this article was going to press, the Supreme Court dismissed the writ of certiorari as improvidently granted. Justice Stephen Breyer, along with Justices John Paul Stevens and David Souter dissented from the decision. The dissent engaged in a discussion of why the issue presented should be considered and then stated that they believed the claim at issue to be invalid but that even if they were wrong, the broader issue requires consideration to 'help diminish legal uncertainty.'

David Varn is a freelance patent agent and holds a J.D. and M.S.E.E.. He has worked for Fenwick & West LLP and Pennie & Edmonds LLP. Varn has also held management positions in engineering, marketing, and intellectual property in a number of high-technology companies. He can be reached at 408-243-9326 and at [email protected].

35 U.S.C. '101 defines processes, machines, manufactures, and compositions of matter as the categories of inventions that can be the subject matter of a patent. 35 U.S.C. '100(b) defines the term 'process' to mean 'process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.' Section 101 also requires that the subject matter sought to be patented be 'useful.'

'[P]rocesses represent an especially troublesome type of invention ' because almost anything can be claimed as a series of steps that technically can be considered a process, but the term process is so broad that it can be used to claim inventions that cover nothing more than human conduct or thought processes that are totally unrelated to any science or technology.' Ex Parte Lundgren, Appeal no. 2003-2088 (U.S. Patent and Trademark Office ('PTO') Board of Patent Appeals and Interferences ('BPAI'), 2005), at p. 10.

Courts excepted from the above statutory categories of patentable subject matter 'a patent on the [idea, law of nature or natural phenomena] itself.' Gottschalk v. Benson , 409 U.S. 63, 71-72 (1972). Nonetheless, methods and products employing abstract ideas, natural phenomena, and laws of nature to perform a real-world function may be patentable. See PTO Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility ('Guidelines'), Official Gazette Notices, Nov. 22, 2005. Recently, the PTO and federal courts have refined the contours of patentable subject matter for process inventions through case law and the Guidelines.

Tests for Statutory Process Inventions

The Court of Customs and Patent Appeals ('CCPA') and the Federal Circuit have settled many difficult patentability issues involving computers and mathematical algorithms. In In re Musgrave, for example, the CCPA in 1970 observed that '[a]ll that is necessary ' to make a sequence of operational steps a statutory 'process' within ' '101 is that it be in the technological arts so as to be in consonance with the Constitutional purpose to promote the progress of 'useful arts.' Const. Art. 1, sec. 8.' Musgrave, 431 F.2d 893.

In State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), the Federal Circuit narrowed the prohibition on patenting mathematical algorithms. The court declared patentable a 'Hub and Spoke' software-based method and system for managing mutual funds, based on the useful result of momentarily fixing the share price of a 'spoke fund' for reporting purposes. To be patentable under State Street, an invention involving a mathematical algorithm would need to claim a practical application of that algorithm or use of the algorithm to effect a transformation of data. The court's analysis did not appear to require that business methods be tied to an 'implementation' in a computer or other system to be patentable. It thus apparently became possible to patent 'pure' methods of doing business, at least to the extent such methods are claimed in a way that produces a 'useful, concrete and tangible result.' Id. at 1373.

Ex Parte Lundren

This case, decided in the BPAI in September 2005, dealt a deathblow to the technological arts test and endorsed the useful, concrete, and tangible result test. One claim at issue recited a method of compensating a manager for, among other things, the purpose of reducing incentives for industry collusion. The method of this claim includes eight steps that apparently can be implemented without use of a computer or calculating machine. The Examiner initially issued claim rejections under '101 based on failure to produce a 'useful, concrete and tangible result.' The Examiner subsequently withdrew that rejection, and rejected claims based on the technological arts test. The issue on the second appeal was whether 'the invention and [its] practical application ' [are] outside the technological arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of computer, automated means, [or] apparatus of any kind ' ' Lundgren at 4.

An expanded panel of the BPAI in a 3-2 decision reversed the rejection. The court concluded that the Examiner had found a useful, concrete, and tangible result based on the Examiner's withdrawal of the previous rejection based on this test. The court also concluded that the technological arts test was not appropriate, as the BPAI did not view Musgrave to have created a separate 'technological arts' test for statutory subject matter. The BPAI in formulating this conclusion referred to In re Toma, 575 F.2d 872, 877 (CCPA 1978). The Toma court stated that cases such as Musgrave involved what was called at that time a 'mental steps' rejection, and observed, '[t]he language which the examiner has quoted was written in answer to 'mental steps' rejections and was not intended to create a generalized definition of statutory subject matter.' Id. at 878.

In a probing and scholarly concurrence-dissent, Judge Lee Barrett agreed that there is no separate and distinct technological arts test, since such a requirement is implicit in the classes of '101. Judge Barrett defined three possible tests for statutory subject matter of non-machine-implemented process claims. The first turned on whether there was a transformation of physical subject matter to a different state or thing. The second involved exceptions for laws of nature, physical phenomena, and abstract ideas. The third test looked to whether there was a useful, concrete, and tangible result for machine or machine-implemented processes, a la State Street. Id. at 77.

Judge Jerry Smith dissented, claiming that the Examiner's issue was new, since no existing decision unequivocally held that the claimed invention should be granted or denied a patent. Id. at 9. Judge Smith further commented that an invention must be tied to a recognized science or technology to meet the Constitutional mandate of promoting progress of the useful arts. Otherwise, a 'process' can claim inventions that cover nothing more than human conduct or thought processes totally unrelated to any science or technology. Judge Smith asserted that the technological arts standard rejected by the majority represents a more modern term for 'useful arts' in the Constitution. Id. He opined that 'The majority's position ' opens the floodgate for patents on essentially any activity which can be pursued by human beings without regard to whether those activities have anything to do with the traditional sciences or whether they enhance the technological arts in any manner.' Id. at 12. Judge Smith concluded that the appropriate forum for resolution is the federal judiciary. Id. As discussed below, it appears that the U.S. Supreme Court is poised to provide such resolution in deciding LabCorp v. Metabolite, which is pending at press time.

PTO Interim Guidelines

The Guidelines appear to document the State Street and Lundgren (majority) opinions. 'The principal objective ' is to assist examiners in determining ' whether a claimed invention ' is a practical application of a judicial exception to statutory subject matter ' [which] is claimed if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.' Guidelines at 1. The Guidelines confirm that 'United States patent law does not support ' a 'technical aspect' or 'technological arts' requirement.' Guidelines at Annex III. The period for public commentary on the Guidelines ran until June 30, 2006.

Labcorp. v. Metabolite

The patent at issue, U.S. 4,940,658 (the '658 Patent) claims a method for diagnosing low levels of two vitamins found in the blood of warm-blooded animals. Brief for Respondents at 1-2, 6. The method calls for the steps of 1) determining the composition of an amino acid, and 2) correlating the amino acid level with the levels of the vitamins. Id. at 5. The Supreme Court granted certiorari Oct. 31, 2005, limited to the question: 'Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to 'correlat[e]' test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.' Brief for Petitioner at (i).

Petitioner Laboratory Corporation of America Holdings ('LabCorp') asserts that the claimed invention is too insignificant for patentability and that allowing the patent will weaken the prohibition on patenting scientific principles by allowing aspiring patentees to embed the principle within a synthetic process. Brief for Petitioner at 25.

Metabolite emphasizes the pa-tentability of applications of laws of nature, mathematical formulas, and scientific principles. Brief for Respondents at 27. Metabolite argues that the '658 Patent involves such an application and that the subject matter of the '658 Patent produces a useful, concrete, and tangible result, thus satisfying the State Street test. Id. at 38.

If the Court agrees that patent claims should be construed broadly as to assert property rights over scientific principles or laws of nature, the floodgates could further open to admit other similarly broad claims. Inventors who patent basic principles of new and innovative fields of research could then exert significant control within those fields. Brief of Amicus Curiae of the American Heart Association Supporting Petitioner at 13.

On June 22, 2006, as this article was going to press, the Supreme Court dismissed the writ of certiorari as improvidently granted. Justice Stephen Breyer, along with Justices John Paul Stevens and David Souter dissented from the decision. The dissent engaged in a discussion of why the issue presented should be considered and then stated that they believed the claim at issue to be invalid but that even if they were wrong, the broader issue requires consideration to 'help diminish legal uncertainty.'

David Varn is a freelance patent agent and holds a J.D. and M.S.E.E.. He has worked for Fenwick & West LLP and Pennie & Edmonds LLP. Varn has also held management positions in engineering, marketing, and intellectual property in a number of high-technology companies. He can be reached at 408-243-9326 and at [email protected].