• Federal Circuit Announces Patent Eligibility Test Affecting "Business Method" Inventions
  • December 18, 2008 | Authors: Minh-Quan K. Pham; Charles R. Wolfe; H. Keeto Sabharwal
  • Law Firm: Blank Rome LLP - Washington Office
  • The Federal Circuit recently handed down the long-awaited In re Bilski opinion, which has broad implication on the patentability of “business method” inventions. The Federal Circuit, sitting en banc, affirmed the Board of Patent Appeals and Interferences’ (BPAI) rejection of Bilski’s invention relating to a method for managing risk in commodity trading. In doing so, the Court announced a two-prong “machine or transformation” test to determine whether a method claim is eligible for patent protection under 35 U.S.C. § 101. According to the test, a claimed process is patentable under § 101 if: (1) it is tied to a particular machine or apparatus; or (2) it transforms a particular article into a different state or thing. The court emphasized that this is the sole test to determine patentability under § 101 and deemed other tests invalid. Most notably, the Federal Circuit overruled the “useful, concrete and tangible result” test that was followed in the State Street Bank decision. 

    The Court did not specifically elaborate on the first prong of the test, because Bilski had conceded that the claims were not tied to a machine. An interesting question which appears to remain is whether a claim is patentable where it claims a process that is tied to a general purpose computer. The BPAI, in Ex parte Langemyr (May 28, 2008), has repudiated this approach by ruling that “a general purpose computer is not a particular machine.” Thus, according to the BPAI, linking an innovative process with a general purpose computer does not confer patentability under § 101 to the otherwise unpatentable process.

    With regard to the second prong, the Court clarified that the transformation implicated “must be central to the purpose of the claimed process,” i.e., it must also “impose meaningful limits on the claim’s scope,” and not “be insignificant extra-solution activity.” The Court cited data gathering as an example of “insignificant extra-solution activity.”

    Moreover, the type of “article” being transformed is also important in the transformation analysis. According to the Court, transformation of physical objects or substances, or representations of physical objects or substances, are patentable under § 101. An example of transformation of physical objects or substances is a chemical or physical transformation.

    As for the transformation of representations of physical objects or substances, the Court turned to its earlier decision in Abele to explain that displaying of data variances from average values was not patentable because it did not specify the type or nature of the data, or did not specify how or where the data is obtained. In another words, this data could be anything and did not “impose meaningful limits on the claim’s scope.” However, displaying “X-ray attenuation data produced in a two dimensional field by a computed tomography scanner” was patentable because the data represented physical and tangible objects (bones, organs, and other body tissues). Thus, transformation of a specific type of data is patentable, while transformation of general data is not. When claiming transformation of data, it is important to “specify the type or nature of the data” or “specify how or where the data is obtained.”

    Overall the ruling in In re Bilski is most significant in the business method patent arena. Clearly, those claims should be drafted so that they: (1) are tied to a machine or apparatus; or (2) transform a particular article into a different state or thing. Because the Court has not elaborated on the machine prong of the test, it is probably more reliable to draft the claims according to the transformation test. Additionally, claims drawn to an apparatus should also be drafted when possible.

    In re Bilski also has significant impact in biotechnology, especially in medical diagnostic claims, such as those at issue in LabCorp v. Metabolite Laboratories. In LabCorp, at issue is whether a step of “correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate” was patentable under § 101 (the Supreme granted certiorari in this case, but later dismissed it). In applying the machine prong of the “machine or transformation” test, it is clear that such a “correlating” step is not tied to a machine or apparatus. Thus, the patent eligibility decision turns on whether the “correlating” step “transforms a particular article into a different state or thing.” It could be argued that this “correlating” step transforms elevated homocysteine levels (data representing the amount of homocysteine in the body fluid) to diagnosis of cobalamin or folate deficiency. Thus, in medical diagnostic claims, where claims tying the method to a machine or apparatus are impractical (as doing so would eliminate diagnosis by, e.g., a physician), the claims should be especially drafted to satisfy the “transformation” prong of the “machine or transformation” test.

    Overall, patents with business method or medical diagnosis claims should be reviewed to determine their compliance with In re Bilski. If possible, reissue applications should be considered as a method for curing any potential defects.