MVS Filewrapper® Blog: USPTO Issues New Examination Guidelines for Patent Subject Matter Eligibility

The basic requirements for filing a U.S. utility patent are rather straightforward. Patents are granted for new, useful and non-obvious processes, products or compositions of matter. Similarly, any new, useful and non-obvious improvement to these categories of inventions may be granted a patent. Although seemingly straightforward, the three basic requirements for patentability are impacted by an evolving legal landscape which is largely dictated by court-created case law. 

 

For much of the last thirty years, the case law addressing patent eligibility has had some consistency.  However, a series of court decisions in recent years has changed the understanding of what is considered patent-eligible.  As a result, the USPTO released guidelines last month providing an analytical framework to evaluate whether a patent claim meets these patent subject matter eligibility requirements (as set forth in 35 USC § 101). These guidelines titled "Guidance for Determining Subject Matter Eligibility of Claims Reciting or Involving Laws of Nature, Natural Phenomena, & Natural Products" are particularly relevant for those dealing with patent applications (and portfolios) in the fields of biotechnology, chemistry and/or life sciences. Although subject matter eligibility is applicable for all fields of patenting, the guidelines were provided to patent examiners to specifically address examination of claims “reciting or involving laws of nature/natural principles, natural phenomena, and/or natural products” (i.e. applying the legal principles set forth in the Myriad and Prometheus decisions, see earlier FileWrapper postings for further detail).

 

A few key points to consider in light of the USPTO guidelines (available at http://www.uspto.gov/patents/law/exam/myriad-mayo_guidance.pdf) include the following:

 

1.      The guidelines apply to all claims (excluding "abstract ideas")

Any claims that “recite or involve laws of nature/natural principles, natural phenomena, and/or natural products” are to be examined using the new guidelines. The only exclusion is a claim which is alleged to recite an “abstract idea,” which will not be examined using the new guidelines.

 

2.      Natural products are very broadly defined

The guidelines define natural products broadly, including “substances found in or derived from nature.” The take-home for patent Examiners is that claimed subject matter for a product must be non-naturally occurring to be subject matter eligible. In addition, to meet requirements of non-obviousness, the non-naturally occurring product must be “markedly different in structure from naturally occurring products.”

 

3.      There is a 3-part eligibility test to be applied by Examiners

The guidelines provide Examiners with a decision tree for determining patent subject matter eligibility (reproduced at the beginning of this post).  The first question asked by an examiner when evaluating a patent claim will be whether the claimed invention is directed to a statutory patent-eligible subject matter category (process, machine, manufacture, or composition of matter).

If the first threshold is met, the examiner will next question whether the claim recites or involves a judicial exception, which therefore precludes patentability. Examples of these exceptions include abstract ideas, laws of nature (i.e. natural principles), natural phenomena, and natural products.

Finally, the third question to be assessed by an examiner under the guidelines is whether the claim as a whole recites something "significantly different" than the mentioned judicial exception. The guidelines provide more extensive analysis of what constitutes a "significant" difference. Generally, there must be a showing that the product claimed has a marked difference from what exists in nature, or also recites a meaningful limitation to add something of significance to the patent claim.



We note that the guidelines were created by the USPTO for the USPTO examiners. Therefore, they are an interpretation of case law relating to subject matter eligibility. They are not binding law, and they are subject to change and/or judicial challenge. However, they can be helpful in navigating the area between patentable and unpatentable subject matter. 

 

MVS Filewrapper® Blog: Bring on the New Year—What is in Store for IP in 2014?

Happy New Year to all of our FilewrapperÒ followers! We hope 2013 was a productive year and wish you the best in 2014. As the New Year quickly approaches we would like to share with you a few predictions for 2014 for you to look forward to and for which to prepare!

·         Increased opportunities for quasi-litigation under AIA.  Various new mechanisms are available to challenge patents under the America Inventors Act (also referred to as “AIA” or “Patent Reform”) many provisions of which took effect in 2013. New strategies are available to challenge patents at the USPTO instead of challenging in court, providing distinct advantages—and some disadvantages.  Inter Partes Review, Post-Grant Review and transitional programs specific for business method patents are quasi-litigation proceedings which are heard by a panel of USTPO administrative law judges.  Ex Parte Reexamination—which has been available since 1981—also remains to allow a patent challenge to be heard by a patent examiner, requiring little from the challenger other than filing required papers with some evidence of patent invalidity.  The cost for ex-parte reexamination has significantly increased, although it remains a far less expensive option than litigation with the courts.

·         (Finally) an international design patent application is available!  Design patents protect a product’s new, original and ornamental design.  Design patents present a smart option for investment in protecting a product, since they cost significantly less than utility patents and are generally granted at a much faster rate.  In addition to these benefits of filing design patents, changes in international design registration under the Hague Agreement may facilitate more effective international protection for your design inventions.  Effective December 18, 2013 a single international application designating a variety of countries for protection can be filed through the International Bureau of WIPO.  This is beneficially a single international application to be filed at one location, which will ultimately be examined by many different Offices thereafter to provide more prompt and cost effective options for design protection.  Over 60 countries and territories—including the European Union—are members of the Hague Agreement.  However, there are various countries that are excluded from this treaty (e.g. Australia, Canada, China, Mexico, Japan, India, and Brazil), which would require a separate application as has been done in the past for foreign design patents.  Nonetheless, the Hague Agreement provides significant improvements for international design protection.

·         (Some USPTO) Fees Decrease January 1, 2014.  In addition to the new classification of “micro-entity” status for Applicants to receive 75% reduction of some USPTO fees that took effect in 2013, the New Year also brings certain fee reductions.  Notably, Issue Fee payments for granted patents are substantially reduced (from $1,780 to $960 for large entity), along with the removal of publication fees and assignment recordation fees.  Reissue patent, design patent and plant patent issue fees are also decreasing.  In addition, in 2014 certain PCT fees will be eligible for payment under small and micro entity status.

·         The search continues for a test to determine patentable subject matter under §101.  The Supreme Court will hear CLS Bank v. Alice in 2014 after the Federal Circuit’s en banc decision in 2013 found many software patents to be ineligible.  The Supreme Court will again try to define an abstract idea in considering whether claims to a computerized method (using a computer-readable medium and a computer to implement instructions) is patentable subject matter.  Both the Federal Circuit and patentees are still searching for a test under §101 that is “consistent, cohesive, and accessible [to provide] guidance and predictability for patent applicants and examiners, litigants, and the courts.”

·         We may receive further guidance on Claim Indefiniteness.  The Supreme Court is expected to grant certiorari on Nautilus v. Biosig Instruments involving indefiniteness under §112, second paragraph to determine whether claims having multiple reasonable interpretations are too ambiguous and would render a patent unenforceable for lack of written description.

·         Protecting American from “Patent Trolls.”  As previously reported on FilewrapperÒ, there is legislative movement in the House and Senate to limit lawsuits which can be filed by non-practicing entities (NPEs or Patent Trolls).  There seems to be great energy around limiting “frivolous” lawsuits in our court system.  In early 2014, the Senate will consider a companion bill to Senate 1720 ("Patent Transparency and Improvements Act of 2013"), which is said to already have support from the White House.  If legislation passes the Senate, then the House and Senate bills will need to be reconciled before being sent to the President.

·         New Patent Director.  Stay tuned for further administrative changes at the USPTO as the new Director, Michelle Lee, takes office January 13, 2014. The former Google executive has been made deputy director of the USPTO, and in that capacity will take on the duties of acting director.  Lee has issued statements planning to “attack” the backlog of unexamined patents (remains at more than 500,000) and improve patent quality with improved inter partes review.

MVS Filewrapper® Blog: New and Useful - July 8, 2013

·         The Federal Circuit in Ultramercial, Inc. v. Hulu, LLC held that the district court erred in holding that the subject matter of U.S. Patent No. 7,346,545 ('545) is not a "process" within the language and meaning of 35 U.S.C. § 101.  The Federal Circuit reversed and remanded this case stating the claims were not abstract and were patent eligible.

The '545 patent claims a method for distribution of copyrighted products over the Internet where the consumer receive the product for free in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content.  In other words, it is a method for monetizing and distributing copyrighted products over the Internet.

Ultramercial originally sued Hulu, LLC ("Hulu"), YouTube, LLC ("YouTube"), and WildTangent, Inc. ("WildTangent"), alleging infringement of the '545 patent.  Hulu and YouTube were later dismissed from the case.  WildTangent then moved to dismiss for failure to state a claim under Rule 12(b)(6).  The United States District Court for the Central District of California granted the dismissal holding that patent '545 did not claim patent-eligible subject matter.  The Federal Circuit had previously reversed the district court's holding and remanded the case, but that earlier decision was vacated by the United States Supreme Court. 

The district court’s grant of the motion to dismiss was based on its conclusion that there was no reasonable construction that would render the subject matter patent-eligible.  The Federal Circuit took issue with this approach, and explained that inquiries into patent-eligibility under § 101 would often involve factual questions, and that claim construction would often be necessary.   In this case, the Federal Circuit determined that the factual determinations were key to deciding eligibility, and that a construction most favorable to the patentee should be applied. 

In its analysis, the Federal Circuit reiterated that under the “abstract ideas” limitation to patent-eligibility of 35 U.S.C. § 101, a claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead to the abstract idea itself.  A claim may be premised on an abstract idea and, indeed, the abstract idea may be of central importance to the invention—the question for patent eligibility is whether the claim contains limitations that meaningfully tie that abstract idea to an actual application of that idea through meaningful limitations.  In determining if the claim is abstract or not, the court must look at the claim as a whole and "cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims."

The Federal Circuit looked to the Supreme Court for guidance on discerning whether or not a claim is an abstraction.  First, the Supreme court in Prometheus stated that a claim is not meaningfully limited if it merely describes an abstract idea or in essence simply adds the words "apply it."  Second, a claim is invalid if the subject matter preempts all practical uses of an abstract idea.  In other words, a claim is invalid if it covers every practical application of that abstract idea.  Finally, the Supreme Court in Prometheus stated "that a claim is not meaningfully limited if its purported limitations provided no real direction, cover all possible ways to achieve the provided result, or are overly-generalized."

With this guidance in mind, the Federal Court held that the claims of '545 were patent eligible and not invalid under § 101.  The court noted that by its terms, patent '545 invokes computers and applications of computer technology.  Even without claim construction, several of the steps require that the method be performed though computers, on the internet, and in a cyber-market environment.  Further, if the products are offered for sale on the internet, they must be restricted by complex computer programming as well.  Viewing the subject matter as a whole, the invention recites a process, it does not pre-empt all use of the abstract idea, the recited steps are not all pre- or post-solution steps, and the claim is not overly generalized.  The claims also do not involve a mathematical algorithm, a series of purely mental steps, or any similarly abstract idea.  Thus the claims of patent '545 were found to be patent-eligible.  

  

·         In Authors Guild v. Google Inc., the Second Circuit vacated a class certification by the United States District Court for the Southern District of New York, and remanded the case back for further consideration, without prejudice to any renewal of the motion for class certification.

The suit commenced in 2005 when The Authors Guild, an association of authors, and several individual authors sued Google alleging copyright infringement by Google Books.  Google Books would scan and index books and make short snippets of the books available for public viewing without payment to the authors.

Following a course of discovery and settlement agreements, both parties moved for an approval of an amended proposed class settlement agreement.  After the court refused the motion, the plaintiff moved to certify a proposed class of "[a]ll persons residing in the United States who hold a United States copyright interest in one or more books reproduced by Google."  The district court allowed the certification.  Google opposed the motion for class certification and appealed the District Court's grant of class certification to the Second Circuit.  In its appeal, Google stated they intended to raise a "fair use" defense, which might moot the litigation.  Google also raised the defense that the class representatives do not adequately protect the interests of the class as a whole.

The appellate court set aside Google's second defense and chose to just focus on the fair use argument, stating "the resolution of Google's fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues."  The court believed that Google's fair use defense should be fully resolved before questions regarding class certification are decided on.  The court vacated the District Court's decision to allow certification of the proposed class and remanded the case back for consideration of the fair use issues, without prejudice to any renewal of the motion for class certification.

·         In Fresenius USA v. Baxter Inter'l, the Federal Circuit decided whether the cancellation of the asserted claims by the United States Patent and Trademark Office ("PTO"), pursuant to the agency's statutory reexamination authority, must be given effect in pending infringement litigation.  The Federal Circuit held that it did, and dismissed the district court's decision and remanded with instructions to dismiss.

The case commenced when Fresenius USA and Fresenius Medical Care Holdings (collectively, "Fresenius") brought a declaratory judgment action against Baxter International and Baxter Healthcare Corporation (collectively "Baxter") alleging that claims of U.S. Patent No. 5, 247, 434 ('434) were invalid and not infringed.  Baxter counterclaimed for infringement.  The district court found in favor of Baxter that Fresenius infringed the claims and that the claims were not invalid.  The Federal Circuit affirmed the district court's ruling, but remanded to reconsider its injunction and post-verdict damages.

While the litigation was pending on remand to the District Court, the PTO completed a reexamination of the patent and determined that all asserted claims were invalid.  After the PTO made its determination, the district court entered judgment against Fresenius in the pending infringement proceeding.  On appeal, Fresenius argued that Baxter no longer had a cause of action because the PTO gave its ruling before the district court gave theirs.

The reexamination statute of 1928 authorized the PTO to reconsider patents of "doubtful" validity, and to cancel "defectively examined and therefore erroneously granted patents."  Looking at the language and legislative history, the court noted that reexamination is supposed to occur concurrently with litigation, and that cancellation of claims during reexamination would be binding on concurrent infringement litigation.  After looking at all applicable precedent, the court concluded that if the PTO confirms the original claim in identical form, a suit based on that claim may continue, but if the original claim is cancelled or amended to cure invalidity, the patentee's cause of action is extinguished and the suit would fail.

Baxter contends that this rule does not apply to the present case because their case was conclusively decided before PTO gave their decision.  The Federal Circuit disagreed. The court stated that their original decision was not sufficiently final as to immunize it from the PTO's decision.  The court's original decision left open many aspects that still needed to be decided upon by the lower court.  The court explained "it is well-established that where the scope of relief remains to be determined, there is no final judgment binding the parties or the court."  For the PTO's decision to have no effect, a final decree must have been given, leaving nothing further to be done except the execution of it.  Since the PTO invalidated the claims before the lower court decided the injunction and post-verdict damages issues, Baxter no longer had a cause of action and the suit would fail.

MVS Filewrapper® Blog: Supreme Court Addresses Product of Nature Doctrine Relating to Gene Patents

The Supreme Court today handed down its decision in Association for Molecular Pathology v. Myriad Genetics, Inc.  The Court held that isolated DNA is a product of nature and not patent eligible merely because it has been isolated, but that complementary DNA (cDNA) is patent eligible because it is not naturally occurring. 

The Court limited its holding to the patentability of isolated genes and cDNA, concluding that DNA sequences that do not exist in nature (i.e. cDNA) are patent eligible under § 101, but that merely isolating a naturally occurring gene from the surrounding genetic material in not sufficient to render the gene patent-eligible.  The Court also took care not to further limit patent-eligibility for innovative methods for manipulating genes, uses of newly discovered genes, or DNA molecules with altered sequences. 

            Myriad discovered the location and sequence of two genes—BRCA1 and 2.  Mutations in these genes are linked to increased risk of developing breast and ovarian cancer.  Myriad obtained several patents, which include numerous composition claims that cover the BRCA1 and BRCA2 genes, both as isolated DNA (i.e. the genetic sequence as it otherwise exists in the cell, but excised from the rest of the genome) and as cDNA (i.e. only the coding regions of the genomic DNA sequence; all non-coding regions have been removed).  After the patents were granted, Myriad filed suit against a number entities that performed BRCA testing alleging infringement of the patents. 

The case was originally filed in the Southern District of New York by a group of researcher, physicians, advocacy groups, and patients seeking a declaratory judgment that the Myriad patents were invalid under 35 U.S.C. § 101 because the claimed subject matter was ineligible for patent protection.  The district court granted summary judgment to the declaratory judgment plaintiffs, holding the composition claims of the Myriad patents invalid because they covered products of nature.  Myriad appealed to the Federal Circuit, which reversed the district court.  The Supreme Court granted certiorari, but vacated the Federal Circuit decision and remanded the case to the Federal Circuit–without opinion–in light of the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories.  On remand, the Federal Circuit held that Myriad’s claims to both isolated DNA and cDNA were patent-eligible, and the Supreme Court again granted certiorari. 

In its decision, the Supreme Court affirmed in part and reversed in part the Federal Circuit. The Court separately addressed the patentability of isolated, naturally occurring DNA molecules and synthetically created cDNA.  The Court framed its decision in terms of the “important implicit exception[s]” to patentability under § 101—laws of nature, natural phenomena, and abstract ideas.  With respect to the claimed isolated DNA molecules, the Court concluded that Myriad did not create anything, but rather merely separated an important and useful gene from its surrounding genetic material, which did not constitute an act of invention.  Because the location and order of the nucleotides existed in nature before Myriad found and separated them, and Myriad had not created or altered the genetic structure of the DNA, the claims to the compositions did not meet the requirements for patent-eligibility under § 101. 

With respect to cDNA, the Court concluded that it did not present the same obstacles patentability as naturally occurring, isolated DNA.  Because cDNA molecules do not exist in nature—due to the absence of non-coding intron regions, compared to the genetic DNA sequence—they are not products of nature, and constitute patent-eligible subject matter under § 101. 

Ultimately, the Court concluded that Myriad is entitled to the exclusive right to synthetically create BRCA cDNA, but not the exclusive right to isolate an individual’s BRCA genes.  However, the Court took special care to point out the limits of its decision.  First, the Court emphasized that its decision did not reach any method claims, since those were not before the Court on appeal, but stated that the processes used by Myriad to isolate and generate the claimed DNA were well understood by geneticists at the time.  Presumably, this would run afoul of the Court’s holding in Mayo Collaborative Services v. Prometheus Laboratories.  However, the Court did note that Myriad “could possibly have sought a method patent” for some innovative method of manipulating genes, had it created any. 

The Court also called attention to the fact that its decision in this case did not involve the patent-eligibility of new applications of genes, leaving open the possibility of protection for various uses of newly discovered genes or other DNA sequences, such as those claimed in the unchallenged claims of Myriad’s patents.  These claims include kits for detecting mutations, methods for screening, and nucleic acid probes specifically hybridizable to mutated BRCA.  Finally, the Court stated that its opinion did not address “DNA in which the order of the naturally occurring nucleotides has been altered,” concluding that this type of alteration constitutes a different inquiry. 

The Court held “that genes and the information they encode are not patent eligible under §101 simply because they have been isolated from the surrounding genetic material,” but that DNA sequences that do not exist in nature (i.e. cDNA) are patent eligible under § 101, and left open the possibility of patent-eligibility for innovative methods for manipulating genes, uses of newly discovered genes, and DNA molecules with altered sequences.  This case helps to define the boundaries of the Product of Nature doctrine after Mayo Collaborative Services v. Prometheus Laboratories, and in particular with respect to gene patents, but leaves many issues regarding the scope of the Product of Nature doctrine unresolved. 

MVS Filewrapper® Blog: Federal Circuit Deems Software Patent Ineligible, Provides Little Certainty

In its recent en banc decision in CLS Bank v. Alice Corp, the Federal Circuit has affirmed the finding of subject matter ineligibility of Alice Corp's method and software for management of risk in financial transactions through use of a third party intermediary.  The ten-member panel produced seven different decisions, but did not produce any majority opinion.  However, seven judges agreed that the method and computer-readable medium claims were patent ineligible.  Additionally, eight of the ten determined that the claims should rise or fall under § 101 regardless of claim type.

In the plurality opinion written by Judge Lourie, the court examined Supreme Court precedent on the issue of patent eligible subject matter.  Utilizing these precedents, the Federal Circuit proposed an "integrated approach" to § 101 problems—patents should not be allowed to preempt the fundamental tools of discovery; courts should avoid overly formalistic approaches to subject-matter eligibility that invites manipulation by patent applicants; courts should use a flexible, claim-by-claim approach that avoids rigid line-drawing.  The analysis asks the following questions:

-          Does the claimed invention fall into one of the four statutory classes (process, machine, manufacture, composition of matter)?

-          Does the claimed invention meet a judicial exception to patent eligibility (law of nature, natural phenomena, abstract idea)?

-          What is the fundamental concept at issue in the claim?

-          Will the patenting of the idea preempt the whole idea or does the claim provide enough limitations to limit the scope of the patent grant?

-          Is the human contribution more than a trivial addition or tangential, routine, well-understood, conventional limitation?

Under this analysis, the plurality determined that the abstract idea claimed in Alice Corp's patent was not rendered patent eligible because the added limitations were nothing more than "insignificant post-solution activity."  They refused to reward the clever use of extravagant language to make the claims sound more limited with terms like "shadow record."  Ultimately, the five judge plurality concluded that adding existing computer technology to an abstract idea does not render it patent eligible.

Judge Rader's opinion, concurring-in-part and dissenting-in-part, differed slightly in his proposed analysis for subject matter eligibility.  He focused on whether the limitations in the claim restrict the abstract idea to a concrete reality or actual application of the idea.  He noted that if the claim covers all practical applications of an abstract idea, it is not meaningfully limited.  In contrast to Judge Lourie's opinion, Judge Rader found that when a claim is limited by the requirement for a computer, that is an important indication of patent eligibility.  Ultimately, where the claim is tied to a computer in such a way that the computer plays a meaningful role in the performance of the claimed invention and the claim does not preempt virtually all uses of an underlying abstract idea, the claim is patent eligible.  For these reasons, Judge Rader deemed Alice Corp's system claims to be patent eligible.

Judge Newman filed an opinion concurring with the majority that the claims should rise or fall together, but dissenting in her opinion that all of the claims are patent eligible. She indicated her concern over the uncertainty surrounding subject matter eligibility, which she believed was not remedied by this en banc decision. She proposed that the court return to the time-tested principles of patent law and abandon its failed § 101 ventures into abstractions, preemption, and meaningfulness. In response to the concern of preemption of experimentation and innovation, Judge Newman stated that the court should reaffirm the long-standing rule that study and experimentation are not infringement.

There continues to be uncertainty regarding the patentability of various types of software inventions. The fragmented opinions of the en banc panel indicate that despite their desire for a clear, consistent approach to section 101 that provides certainty and guidance to applicants and examiners alike, the issue of software patent eligibility is far from resolved.

Ultramercial LLC v. Hulu LLC

The United States Court of Appeals for the Federal Circuit recently addressed the issue of whether a method of using advertising as a form of currency, to distribute copyrighted products over the internet, constituted patent-eligible subject matter.  The court reversed the district court’s dismissal for lack of subject matter eligibility and found the claimed invention fell within patent-eligible subject matter under 35 U.S.C. §101’s definition of a “process.”

Ultramercial, LLC and Ultramercial, Inc.’s (collectively, “Ultramercial”) filed suit against Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”), in the United States District Court for the Central District of California.  Ultramercial alleged infringement of its patent that claimed a method for distributing copyrighted products over the internet.  The method allowed a consumer to freely obtain copyrighted products, such as songs, movies, and books, over the internet in exchange for viewing an advertisement.  The copyrighted products were paid for by the advertiser.  Hulu and YouTube were dismissed from the case, and WildTangent filed a motion to dismiss for failure to state a claim with patent-eligible subject matter.  The district court dismissed Ultramercial’s patent infringement claims, finding that Ultramercial’s patent did not claim patent-eligible subject matter.  Ultramercial appealed to the United States Court of Appeals, Federal Circuit. 

The United States Court of Appeals, Federal Circuit, initially noted that the district court had dismissed Ultramercial’s claims for failure to claim patent-eligible subject matter without formally construing the claims.  The court recognized that it had “never set forth a bright line rule requiring district courts to construe claims before determining subject matter eligibility.”  Thus, the court held that claim construction may not always be necessary for 35 U.S.C. §101 analysis, and that this case did not require claim construction in light of the subject matter at issue.

The court then set forth the categories of subject matter eligible for patent protection under 35 U.S.C. §101:

[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. 

35 U.S.C. §101.  The court noted that the language of §101 clarifies that the categories of patent-eligible subject matter are no more than a “course eligibility filter” (quoting Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed.Cir. 2010)), and that subject matter eligibility is “merely a threshold check.”  The court pointed out that there are only three categories of subject matter outside the eligibility constraints of §101: laws of nature; physical phenomena; and abstract ideas.  The court further admitted that it, and the United States Supreme Court, have found it difficult to provide a precise definition for the patent-ineligible category of abstractness.  While abstract ideas are patent ineligible, on the other hand, an application of an abstract idea may well be protected.  Thus, the court gave “substantial weight to the statutory reluctance to list any new, non-obvious, and fully disclosed subject matter as beyond the reach of title 35.” 

Addressing Ultramercial’s patent, the court found that it constituted a method of monetizing and distributing copyrighted products over the internet.  Thus, as a method, Ultramercial’s claims satisfied §101’s definition of a “process” and fell within patent-eligible subject matter.  The court determined that Ultramercial’s patent did not simply claim an abstract idea, i.e. advertising can serve as currency, but actually disclosed a practical application for this concept.  The court also found several factors significant, for instance, the invention involved an extensive computer interface and solved problems with prior art banner advertising by requiring consumers to view advertisements before granting access to any copyrighted products.

The court ultimately held that “the ‘course eligibility filter’ of §101 should not be used to invalidate patents based on concerns about vagueness, indefinite disclosure, or lack of enablement, as these infirmities are expressly addressed by §112.”  (quoting Research Corp., 627 F.3d at. 869; citing 35 U.S.C. §112).  Thus, the court determined that Ultramercial’s claimed invention was not so “manifestly abstract as to override the statutory language of section 101,” because it was an improvement to prior art technology and a practical application of the general concept of utilizing advertising as currency.  (quoting Research Corp., 627 F.3d at. 869).  As a result, the court reversed the district court’s dismissal of Ultramercial’s patent claims for lack of subject matter eligibility and remanded for further proceedings.

Federal Circuit determines that method for optimizing dosing of medication is patent eligible

The Federal Circuit on Friday looked at the issue of what constitutes an attempt to patent a natural phenomenon.   In Prometheus Laboratories, Inc. v. Mayo Collaborative Services, the Federal Circuit determined that a method for optimizing the dosage of a medication was not directed to a natural phenomenon and therefore was patent-eligible subject matter within the meaning of § 101 of the Patent Act. This is the second case in as many weeks refining the analysis of patent-eligible subject matter in light of this summer's Supreme Court ruling in Bilski v. Kappos.

More details of Prometheus Labs., Inc. v. Mayo Collaborative Servs. after the jump.

USPTO publishes interim guidance for assessing patentable subject matter post-Bilski

In a Federal Register notice today, the USPTO has published interim guidance regarding how examiners are to assess whether an application's patent claims fall within the scope of patentable subject matter defined in § 101 in light of the Supreme Court's decision in Bilski.  Many patent attorneys were concerned when the initial memo to examiners was released, suggesting the machine-or-transformation test was a burden-shifting mechanism and leaving it to an applicant who did not meet the test to prove the claims fell within § 101.  The new guidance should allay these concerns somewhat, and comments are sought on both the guidelines and to provide examples of claims that are perceived to fall both within and without § 101.

The notice provides a background of the Bilski decision, particularly in the context of abstract ideas, given that was the basis for the Court finding Bilski's claims unpatentable.  It then provides details on how examiners are to evaluate claims for § 101 compliance and provides factors to be considered.  Of particular note is the following passage:

Section 101 is merely a coarse filter and thus a determination of eligibility under § 101 is only a threshold question for patentability.  Sections 102, 103, and 112 are typically the primary tools for evaluating patentability unless the claim is truly abstract . . . .

The guidelines also provide how the examiner can make a § 101 rejection such that it can be responded to: 

If a claim is rejected under § 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea. Specifically identifying the factors used in the analysis will allow the applicant to make specific arguments in response to the rejection if the applicant believes that the conclusion that the claim is directed to an abstract idea is in error.

The Notice lists various factors that an examiner can use to assist in the determination.  On the whole, this approach should assist both applicants and examiners in addressing § 101 issues in a productive manner, although there will in most cases be room for argument regarding the relative weighing of the factors.

Click below for a listing of the factors identified in the notice as relevant to the § 101 analysis.

[More]

Supreme Court: Business method patents survive, but barely; Bilski's claims unpatentable

Yesterday, the Supreme Court decided Bilski v. Kappos, the most recent case at the Court probing the boundaries of patentable subject matter under § 101.  Details of the underlying facts of the Bilski case may be found in our post on the Federal Circuit's en banc decision here.

All nine Justices agreed that Bilski's method claims were not patentable.  All nine Justices also agreed the "machine-or-transformation" test, held by the Federal Circuit to be the exclusive test for whether method claims are patentable subject matter, was a useful test, but not the exclusive test for such claims.  In this way, the outcome was similar to KSR.  There, the Federal Circuit had adopted an exclusive test for the question of obviousness.  The Supreme Court then held the test was useful, but not the exclusive test for obviousness.  In addition, all members of the Court at least expressed skepticism that the "useful, concrete, tangible result" test from State Street was a viable test, with the majority stating "nothing in today's opinion should be read as endorsing interpretations of § 101 that the Court of Appeals for the Federal Circuit has used in the past," citing State Street, and the Justice Stevens opinion concurring in the judgment stating it would be a "grave mistake" to assume that all claims meeting this test are patentable. 

The disagreement among the Justices came when considering the question of whether business methods as a more general category fall within the scope of patentable subject matter defined in § 101.  More detail of that disagreement after the jump.

Update: The Court, in its last orders of the Term, has issued a GVR in two § 101 cases, the Prometheus case, relating to methods for measuring the level of certain drug metabolites in the system for the purpose of adjusting the drug administration level, and the Classen case, a nonprecedential opinion relating to a method of selecting a vaccination schedule by comparing alternatives and selecting the alternative with the lower likelihood of autoimmune disorders.  The Federal Circuit will therefore have two opportunities to address § 101 in light of the Court's guidance sooner rather than later.

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Bilski decided

This morning, the Supreme Court handed down its opinion in Bilski v. Kappos.  The court affirmed the Federal Circuit's decision.

We'll have more detailed analysis soon.

To read the opinion, click here.

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