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Bilski: What It Means, Part 2 -- Listening to the Dissenting Opinions - Updated
Wednesday, November 05 2008 @ 03:10 PM EST

Let's start here, the official bios of the justices that serve on the U.S. Court of Appeals for the Federal Circuit, the court that just rendered the ruling in In Re Bilski [PDF]. It will help us to understand their point of view, and that will make us more effective in responding. You'll have to make an effort to look at things from a different angle, since most of us feel so strongly that software patents are a curse on development and innovation. But it's worth it to try, if only so as to formulate arguments that can be effective in trying to help them, and those who think as they do, to realize that there is something new in the patent world, a development model that depends not on closing others out but on collaboration and shared science.

The first thing you probably noticed in the ruling was that not all the judges thought identically. Two justices strongly dissented, two answered their points in a concurring decision, and one felt that the court didn't go far enough and should have just decided that business methods could never be patented.

Look on the bios, though, at the backgrounds of these judges. These are not Generation Y-ers. Here's when each was appointed and by which president:

  • PAUL R. MICHEL was appointed as a Circuit Judge to the United States Court of Appeals for the Federal Circuit by President Ronald Reagan in 1988.
  • DANIEL M. FRIEDMAN was nominated by President Jimmy Carter as Chief Judge of the United States Court of Claims on March 22, 1978, was confirmed by the Senate on May 17, 1978, and assumed duties on May 24, 1978.
  • PAULINE NEWMAN was appointed by President Ronald Reagan in 1984.
  • GLENN L. ARCHER, JR. was nominated by President Ronald Reagan and assumed duties as Circuit Judge on December 23, 1985.
  • HALDANE ROBERT MAYER was appointed by President Ronald Reagan in 1987, and served as Chief Judge from 1997 to 2004.
  • S. JAY PLAGER was appointed Circuit Judge by President George H. W. Bush in 1989, and assumed the status of Senior Circuit Judge in 2000.
  • ALAN D. LOURIE was appointed by President George H. W. Bush in 1990.
  • RAYMOND C. CLEVENGER, III was appointed by President George H. W. Bush in 1990.
  • RANDALL R. RADER was appointed to the United States Claims Court by President George H. W. Bush in 1989 and served on that court until his appointment to the Federal Circuit in 1990.
  • ALVIN A. SCHALL was appointed by President George H. W. Bush in 1992.
  • WILLIAM C. BRYSON was appointed by President William J. Clinton in 1994.
  • ARTHUR J. GAJARSA was appointed by President William J. Clinton in 1997.
  • RICHARD LINN was appointed by President William J. Clinton in 1999.
  • TIMOTHY B. DYK was appointed by President William J. Clinton in 2000.
  • SHARON PROST was appointed by President George W. Bush in 2001.
  • KIMBERLY A. MOORE was appointed by President George W. Bush in 2006.

See? Catching my drift? As you know, in the US, federal judges are appointed by the president in office at the time, and they are appointed for life, as long as they don't commit treason, etc. This was a deliberate choice back in the early days, when the Constitution was being written, to create an independent federal judiciary. By making the judges immune from the voting/political process (except for the obvious in the appointment process), the hope was that the judiciary would balance out the other two branches and protect the Constitution from any legislative or executive mistakes or overreaching.

So that's why you see the court here made up of folks old enough, probably, in some cases to be your grandfather or at least your father. That doesn't mean they are out of it or unable to think. Just as you would show respect to your father or grandfather, knowing they have more life experience than you do, it's perfectly appropriate to show respect to those in the judiciary. But does your grandfather understand computers? Your parents? Did you have to show them how to do email? I'm guessing yes. I know I did.

There probably isn't a single judge on this court who grew up with computers in his or her life. But look at their backgrounds a little more carefully, and you'll see that while they may not know what you know about tech, they are certainly highly educated and highly accomplished individuals in their area of expertise, namely patent law. Let's focus on those who wrote opinions, now. The entire court was involved in the decision, but only six wrote opinions.

The Chief Judge, who wrote the decision:

PAUL R. MICHEL was appointed as a Circuit Judge to the United States Court of Appeals for the Federal Circuit by President Ronald Reagan in 1988. On December 25, 2004, after 16 years on the court, he assumed the duties of Chief Judge. Chief Judge Michel has written over 300 opinions in patent, trademark, takings, contract, tax, veterans' rights, international trade and government personnel cases. He is the recipient of the Eli Whitney Prize, the Katz-Kiley Prize, and the Jefferson Medal for "outstanding contribution … to the progress of science and useful arts." In 2003, he was named by Managing Intellectual Property magazine as one of the 50 most influential people in the world in intellectual property. Prior to his appointment to the court, Chief Judge Michel served in the executive and legislative branches of government for 22 years. Following graduation from Williams College in 1963 and the University of Virginia Law School in 1966, he served as Assistant District Attorney and Deputy District Attorney for Investigations in Philadelphia under Arlen Specter; as Assistant Special Watergate Prosecutor under Leon Jaworski responsible for the Howard Hughes-Bebe Rebozo investigation; and under Dick Thornburgh as Deputy Chief of the Justice Department's Public Integrity Section directing the "Koreagate" investigation. In 1978 he was appointed by Benjamin Civiletti as Associate Deputy Attorney General, helping to supervise United States Attorneys, the FBI, and the Marshals Service. From April 1981 until his appointment to the court in March of 1988, he served on Senator Arlen Specter's staff, including as Chief of Staff. Since October 2005, he has been a member of the Executive Committee of the Judicial Conference of the United States, the governing body of the Judicial Branch. He has taught at George Washington and other law schools, made many presentations to various city, state, national and international bar associations and participated in the training of judges of other nations. With two co-authors, he helped produce a casebook for law students, entitled, Modern Patent Litigation and Strategy. He has published many articles on appellate advocacy.
The judges who wrote the two dissents:
PAULINE NEWMAN was appointed by President Ronald Reagan in 1984. From 1982 to 1984, Judge Newman was Special Adviser to the United States Delegation to the Diplomatic Conference on the Revision of the Paris Convention for the Protection of Industrial Property. She served on the advisory committee to the Domestic Policy Review of Industrial Innovation from 1978 to 1979 and on the State Department Advisory Committee on International Intellectual Property from 1974 to 1984. From 1969 to 1984, Judge Newman served as director, Patent, Trademark and Licensing Department, FMC Corp. From 1961 to 1962 she worked for the United Nations Educational, Scientific and Cultural Organization as a science policy specialist in the Department of Natural Resources. She served as patent attorney and house counsel of FMC Corp. from 1954 to 1969 and as research scientist, American Cyanamid Co. from 1951 to 1954. Judge Newman received a B.A. from Vassar College in 1947, an M.A. from Columbia University in 1948, a Ph.D. from Yale University in 1952 and an LL.B. from New York University School of Law in 1958.

RANDALL R. RADER was appointed to the United States Claims Court by President George H. W. Bush in 1989 and served on that court until his appointment to the Federal Circuit in 1990. Prior to his appointment, Judge Rader served as Minority Chief Counsel, Staff Director, Senate Committee on the Judiciary, Subcommittee on Patents, Trademarks, and Copyrights from 1987 to 1988. He also served as General Counsel and Chief of the Senate Committee on the Judiciary's Subcommittee on the Constitution from 1981 to 1986, and as Counsel in the House of Representatives from 1975 to 1980. Judge Rader taught Patent Law at the University of Virginia School of Law and at the George Washington University National Law Center, and Comparative Patent Law at Georgetown University Law Center. Judge Rader is the author of a casebook entitled Patent Law, published by West Publishing in 1998.

The concurring opinions:
RICHARD LINN was appointed by President William J. Clinton in 1999. Prior to his appointment, Judge Linn was a Partner and Practice Group Leader at the Washington, DC law firm of Foley and Lardner from 1997 to 1999. He was a Partner and head of the intellectual property department at Marks and Murase, L.L.P. from 1977 to 1997. Judge Linn served as Patent Advisor, United States Naval Air Systems Command from 1971 to 1972, was a Patent Agent at the United States Naval Research Laboratory from 1968 to 1969, and served as a Patent Examiner at the United States Patent Office from 1965 to 1968. He was a member of the founding Board of Governors of the Virginia Bar Section on Patent, Trademark, and Copyright Law and served as Chairman in 1975. Judge Linn was a recipient in 2000 of the Rensselaer Alumni Association Fellows Award. He served as an Adjunct Professor and Professional Lecturer in Law at George Washington University Law School from 2001 to 2004. Judge Linn is a past president of the Giles Sutherland Rich Inn of Court and an honorary member of the Richard Linn American Inn of Court. He received a B.E.E. from Rensselaer Polytechnic Institute in 1965, and a J.D. from Georgetown University Law Center in 1969.

TIMOTHY B. DYK was appointed by President William J. Clinton in 2000. Prior to his appointment, Judge Dyk was Partner and Chair, Issues and Appeals Practice Area, at Jones, Day, Reavis and Pogue from 1990 to 2000. He was Adjunct Professor at Yale Law School from 1986 to 1987 and 1989, at the University of Virginia Law School in 1984 and 1985, and from 1987 to 1988, and at the Georgetown University Law Center in 1983, 1986, 1989 and 1991. Judge Dyk was Associate and Partner, Wilmer Cutler and Pickering from 1964 to 1990. From 1963 to 1964, Judge Dyk served as Special Assistant to Assistant Attorney General Louis F. Oberdorfer. He also served as Law Clerk to Chief Justice Warren from 1962 to 1963, and to Justices Reed and Burton (retired) from 1961 to 1962. Judge Dyk received an A.B. from Harvard College in 1958 and an LL.B. from Harvard Law School in 1961. He was First President of the Edward Coke Appellate Inn of Court from 2000 to 2002 and President of the Giles Sutherland Rich Inn of Court from 2006 to 2007.

The judge who thought the court didn't go far enough:
HALDANE ROBERT MAYER was appointed by President Ronald Reagan in 1987, and served as Chief Judge from 1997 to 2004. Judge Mayer served on the United States Claims Court from 1982 until his appointment to the Federal Circuit. He was an adjunct professor at George Washington University National Law Center and the University of Virginia School of Law. He served as Deputy and Acting Special Counsel, and was in private practice in Charlottesville, Virginia, in the 1970s, and in Washington, DC, in the early 1980s. Judge Mayer served as Special Assistant to the Chief Justice of the United States, Warren E. Burger, for three years, and as Law Clerk to the Honorable John D. Butzner, Jr., United States Court of Appeals for the Fourth Circuit. Judge Mayer served in the Army from 1963 to 1975, in the Infantry and the Judge Advocate General's Corps. He was awarded the Bronze Star, Meritorious Service, and Army Commendation Medals, the Combat Infantryman Badge, Parachutist Badge, Ranger Tab, and Ranger Combat Badge. He retired as Lieutenant Colonel. Judge Mayer received a B.S. from the United States Military Academy, and a J.D. from The College of William and Mary, where he was editor-in-chief of the William and Mary Law Review.
As you can see, there is no one in this picture who doesn't deserve our respect for their accomplishments. But they're not the MTV generation. Do any of them have a Facebook page? Use Debian, or even know what it is? Just saying.

What they know better than you and I do is patent law. They know it through and through, and you and I, most of us, do not. Their accomplishment in the law doesn't mean they understand much about your area of expertise, the Free and Open Source Software development model or about programming, period. If anything, their backgrounds will make it very hard for them to understand that FOSS development conflicts by its very nature with patents. Their brains are wired for patents as being a good thing. It's what they do, what they've done all their lives.

What is so incredible and, frankly, surprising to me, is that they went as far as they did. Do you find it easy to tell your friends, family or boss that you were wrong about something? With specifics? How would you feel about doing so in public, knowing that it would result not only in headlines but in extensive analysis and opinions being expressed about you?

This is the same court that originally thought that business methods patents were a great idea. It was only after they decided State Street and saw how it played out in real life, the incredible upsurge in stupid patents, that they realized that something was amiss. And the Supreme Court gave this court a strong shove in a new direction with a couple of recent patent decisions. So they looked again. And to their credit, they did say they were wrong in that decision. There are, of course, the same level of footnotes and face-saving that you might employ in your mea culpas. That explains the somewhat Kafkaesque wording, I believe, claiming not to overturn State Street while gutting it so thoroughly one has to wonder how they define "overturn". Did the court draw the line in the perfect spot? I don't think so. Justice Mayer doesn't think so. You probably don't either. But there is another side to listen to and consider.

The patent bar, as I showed you earlier, is very disturbed by this decision. So are two of the circuit court judges that were involved in this case. Incidentally, not all lawyers were unhappy. Tax lawyers were thrilled by this decision, and from what I've seen only wish it had gone further. I'll show you that in a later article. But the important point to remember is this: none of these judges has any financial interest in patent law being extended to business methods patents or software. That's why I explained all that to you, so you'll understand that we're looking at sincerely held positions, not anything underhanded or financially based. These judges have jobs for life, and no one can remove them from the bench except for gross misconduct. Their only motivation, then, is to express themselves according to what they believe to be the law. That doesn't make them right, but it means they are worth reading and considering, if only to know how to respond.

So let's look now at the dissenting opinions, as text, so you can give consideration to the point of view of those who sincerely believe that patents should cover more than they now can. You'll note that the State Street decision was in 1998. Some of these justices were sitting on the court at that time. The decision in State Street was decided by three judges, Giles Sutherland Rich, who passed away in 1999, and justices Plager and Bryson, still serving. Judge Rich wrote the decision in State Street, when he was 94 years old. Most of the 16 judges that decided Bilski were serving in 1998, only four of them having been appointed later than that. You'll see Justice Newman referenced in one of the footnotes of that State Street decision, footnote 10. So she is no newbie to patent law. I don't agree with her, and most of you don't either, but leave that aside for the moment and listen to what they have to say, with the level of respect that you'd show your technically limited parents or grandparents, and ask yourself, how would I speak to them to help them understand what FOSS is all about and what the development model needs to encourage innovation.

I know. My mother includes in every conversation about the Internet that it's ruining the world. But although I'm clear that she is wrong about that, I never call her a moron. So please keep your comments respectful, just in case we have visitors who are curious about what the tech community has in mind. But other than that, feel free to comment on what the two dissenting justices had to say.

[Update: To provide you with insight into some of their personalities and gifts, and senses of humor, you might like to read a transcript of the keynote speech [PDF] by Judge Plager, given at the University of North Carolina just before the decision on Bilski was published. He talks briefly about State Street and its impact and mentions AT&T, which he decided. I think you will enjoy his sense of humor. ("When I was a young member of the Illinois law faculty, back in the days when the earth was boiling and the dinosaurs were roaming...") And here's a speech [PDF] by Judge Linn, given at the AIPLA annual meeting on the same date, October 24. He discusses the recent shift by the Supreme Court on patents and what it means for those seeking patents now, as well as some questions he has on how to interpret what they wrote in decisions like KSR. ("The net result of all of these decisions is that patentees are likely to have to confront more obviousness challenges, patentees are less likely to obtain enhanced damage awards based on willfulness, and patentees will be more challenged to obtain injunctive relief than just a few years ago.") End update.]

You'll find the concurring opinion, basically answering the dissents, on page 37 of the PDF. Justice Newman's dissenting opinion begins on page 57 and ends on page 97, and the one by Justice Rader begins on page 123. Here they are as text, first the Newman dissent, then Rader's, and then the concurring opinion by Justices Linn and Dyk:

*****************************

United States Court of Appeals for the Federal Circuit

2007-1130
(Serial No. 08/883,892)

IN RE BERNARD L. BILSKI
and RAND A. WARSAW

Appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences.

NEWMAN, Circuit Judge, dissenting.

The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the patent system. The court achieves this result by redefining the word "process" in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today's electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today's Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.

This exclusion is imposed at the threshold, before it is determined whether the excluded process is new, non-obvious, enabled, described, particularly claimed, etc.; that is, before the new process is examined for patentability. For example, we do not

(1)

know whether the Bilski process would be found patentable under the statutory criteria, for they were never applied.

The innovations of the "knowledge economy" — of "digital prosperity" — have been dominant contributors to today's economic growth and societal change. Revision of the commercial structure affecting major aspects of today's industry should be approached with care, for there has been significant reliance on the law as it has existed, as many amici curiae pointed out. Indeed, the full reach of today's change of law is not clear, and the majority opinion states that many existing situations may require reassessment under the new criteria.

Uncertainty is the enemy of innovation. These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed. I respectfully dissent.

DISCUSSION

The court's exclusion of specified process inventions from access to the patent system is achieved by redefining the word "process" in the patent statute. However, the court's redefinition is contrary to statute and to explicit rulings of the Supreme Court and this court. I start with the statute:

Section 101 is the statement of statutory eligibility

From the first United States patent act in 1790, the subject matter of the "useful arts" has been stated broadly, lest advance restraints inhibit the unknown future.

The nature of patent-eligible subject matter has received judicial attention over the years, as new issues arose with advances in science and technology. The Supreme Court has consistently confirmed the constitutional and legislative purpose of providing

2

a broadly applicable incentive to commerce and creativity, through this system of limited exclusivity. Concurrently, the Court early explained the limits of patentable subject matter, in that "fundamental truths" were not intended to be included in a system of exclusive rights, for they are the general foundations of knowledge. Thus laws of nature, natural phenomena, and abstract ideas are not subject to patenting. Several rulings of the Court have reviewed patent eligibility in light of these fundamentals. However, the Court explicitly negated today's restrictions. My colleagues in the majority are mistaken in finding that decisions of the Court require the per se limits to patent eligibility that the Federal Circuit today imposes. The patent statute and the Court's decisions neither establish nor support the exclusionary criteria now adopted.

The court today holds that any process that does not transform physical matter or require performance by machine is not within the definition of "process" in any of the patent statutes since 1790. All of the statutes contained a broad definition of patent-eligible subject matter, like that in the current Patent Act of 1952:

35 U.S.C §101 Whoever 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.
In Diamond v. Diehr, 450 U.S. 175 (1981) the Court explained that Section 101 is not an independent condition of patentability, but a general statement of subject matter eligibility. The Court stated:
Section 101, however, is a general statement of the type of subject matter that is eligible for patent protection "subject to the conditions and requirements of this title." Specific conditions for patentability follow and §102 covers in detail the conditions relating to novelty. The question therefore of whether a particular invention is novel is "wholly apart from whether the invention falls in a category of statutory subject matter."

3

Id. at 189-90 (footnote omitted) (quoting In re Bergy, 596 F.2d 952, 961 (C.C.P.A. 1979)).

"Process" is defined in the 1952 statute as follows:

35 U.S.C. §100(b) The term "process" means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.
The 1952 Patent Act replaced the word "art" in prior statutes with the word "process," while the rest of Section 101 was unchanged from earlier statutes. The legislative history for the 1952 Act explained that "art" had been "interpreted by courts to be practically synonymous with process or method." S. Rep. No. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2398, 2409-10. In Diehr the Court explained that a process "has historically enjoyed patent protection because it was considered a form of 'art' as that term was used in the 1793 Act." 450 U.S. at 182.

The definition of "process" provided at 35 U.S.C. §100(b) is not "unhelpful," as this court now states, maj. op. at 6 n.3, but rather points up the errors in the court's new statutory interpretation. Section 100(b) incorporates the prior usage "art" and the term "method," and places no restriction on the definition. This court's redefinition of "process" as limiting access to the patent system to those processes that use specific machinery or that transform matter, is contrary to two centuries of statutory definition.

The breadth of Section 101 and its predecessor provisions reflects the legislative intention to accommodate not only known fields of creativity, but also the unknown future. The Court has consistently refrained from imposing unwarranted restrictions on statutory eligibility, and for computer-implemented processes the Court has explicitly

4

rejected the direction now taken. Nonetheless, this court now adopts a redefinition of "process" in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities, stating that this result is required by the Court's computer-related cases, starting with Gottschalk v. Benson, 409 U.S. 63 (1972). However, the Court in Benson rejected the restriction that is imposed today:

This court's new definition of "process" was rejected in Gottschalk v. Benson

In Benson the claimed invention was a mathematical process for converting binary-coded decimal numerals into pure binary numbers. The Court explained that a mathematical formula unlimited to a specific use was simply an abstract idea of the nature of "fundamental truths," "phenomena of nature," and "abstract intellectual concepts," as have traditionally been outside of patent systems. 409 U.S. at 67. However, the Court explicitly declined to limit patent-eligible processes in the manner now adopted by this court, stating:

It is argued that a process patent must either be tied to a particular machine or apparatus or must operate to change articles or materials to a "different state or thing." We do not hold that no process patent could ever qualify if it did not meet the requirements of our prior precedents. It is said that the decision precludes a patent for any program servicing a computer. We do not so hold.
Id. at 71. The Court explained that "the requirements of our prior precedents" did not preclude patents on computer programs, despite the statement drawn from Cochrane v. Deener, 94 U.S. 780, 787-88 (1876), that "[t]ransformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines." Benson, 409 U.S. at 70. Although this same statement is now relied upon by this court as requiring its present ruling, maj. op at 13 & n.11, the

5

Court in Benson was explicit that: "We do not hold that no process patent could ever qualify if it did not meet [the Court's] prior precedents." The Court recognized that Cochrane's statement was made in the context of a mechanical process and a past era, and protested:

It is said we freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology. Such is not our purpose.
Benson, 409 U.S. at 71. Instead, the Court made clear that it was not barring patents on computer programs, and rejected the "argu[ment] that a process patent must either be tied to a particular machine or apparatus or must operate to change articles or materials to a 'different state or thing'" in order to satisfy Section 101. Id. Although my colleagues now describe these statements as "equivocal," maj. op. at 14, there is nothing equivocal about "We do not so hold." Benson, 409 U.S. at 71. Nonetheless, this court now so holds.

In Parker v. Flook the Court again rejected today's restrictions

The eligibility of mathematical processes next reached the Court in Parker v. Flook, 437 U.S. 584 (1978), where the Court held that the "process" category of Section 101 was not met by a claim to a mathematical formula for calculation of alarm limits for use in connection with catalytic conversion of hydrocarbons and, as in Benson, the claim was essentially for the mathematical formula. The Court later summarized its Flook holding, stating in Diamond v.Diehr that:

The [Flook] application, however, did not purport to explain how these other variables were to be determined, nor did it purport "to contain any disclosure relating to the chemical processes at work, the monitoring of the process variables, nor the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit."

6

Diehr, 450 U.S. at 186-87 (quoting Flook, 437 U.S. at 586).

The Court explained in Flook that a field-of-use restriction to catalytic conversion did not distinguish Flook's mathematical process from that in Benson. However, the Court reiterated that patent eligibility of computer-directed processes is not controlled by the "qualifications of our earlier precedents," again negating any limiting effect of the usages of the past, on which this court now places heavy reliance. The Court stated:

The statutory definition of "process" is broad. An argument can be made, however, that this Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a "different state or thing." As in Benson, we assume that a valid process patent may issue even if it does not meet one of these qualifications of our earlier precedents.[1]
Flook, 437 U.S. at 589 n.9 (quoting Cochrane, 94 U.S. at 787). This statement directly contravenes this court's new requirement that all processes must meet the court's "machine-or-transformation test" or be barred from access to the patent system.

The Court in Flook discussed that abstractions and fundamental principles have never been subject to patenting, but recognized the "unclear line" between an abstract principle and the application of such principle:

The line between a patentable "process" and an unpatentable "principle" is not always clear. Both are "conception[s] of the mind, seen only by [their] effects when being executed or performed."
Flook, 437 U.S. at 589 (alterations in original) (quoting Tilghman v. Proctor, 102 U.S. 707, 728 (1880)).

7

The decision in Flook has been recognized as a step in the evolution of the Court's thinking about computers. See Arrhythmia Res. Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1057 n.4 (Fed. Cir. 1992) ("it appears to be generally agreed that these decisions represent evolving views of the Court") (citing R.L. Gable & J.B. Leaheey, The Strength of Patent Protection for Computer Products, 17 Rutgers Computer & Tech. L.J. 87 (1991); D. Chisum, The Patentability of Algorithms, 47 U. Pitt. L. Rev. 959 (1986)). That Flook does not support today's per se exclusion of forms of process inventions from access to the patent system is reinforced in the next Section 101 case decided by the Court:

In Diamond v. Chakrabarty the Court again rejected per se exclusions of subject matter from Section 101

In Diamond v. Chakrabarty, 447 U.S. 303 (1980), the scope of Section 101 was challenged as applied to the new fields of biotechnology and genetic engineering, with respect to the patent eligibility of a new bacterial "life form." The Court explained the reason for the broad terms of Section 101:

The subject-matter provisions of the patent law have been cast in broad terms to fulfill the constitutional and statutory goal of promoting "the Progress of Science and the useful Arts" with all that means for the social and economic benefits envisioned by Jefferson. Broad general language is not necessarily ambiguous when congressional objectives require broad terms.
Id. at 315 (quoting U.S. Const., art. I, §8). The Court referred to the use of "any" in Section 101 ("Whoever invents or discovers any new and useful process . . . or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title"), and reiterated that the statutory language shows that Congress "plainly contemplated that the patent laws would be given wide scope." Id. at

8

308. The Court referred to the legislative intent to include within the scope of Section 101 "anything under the sun that is made by man," id. at 309 (citing S. Rep. 82-1979, at 5; H.R. Rep. 82-1923, at 6 (1952)), and stated that the unforeseeable future should not be inhibited by judicial restriction of the "broad general language" of Section 101:

A rule that unanticipated inventions are without protection would conflict with the core concept of the patent law that anticipation undermines patentability. Mr. Justice Douglas reminded that the inventions most benefiting mankind are those that push back the frontiers of chemistry, physics, and the like. Congress employed broad general language in drafting §101 precisely because such inventions are often unforeseeable.
Id. at 315-16 (citations and internal quotation marks omitted). The Court emphasized that its precedents did not alter this understanding of Section 101's breadth, stating that "Flook did not announce a new principle that inventions in areas not contemplated by Congress when the patent laws were enacted are unpatentable per se." Id. at 315.

Whether the applications of physics and chemistry that are manifested in advances in computer hardware and software were more or less foreseeable than the advances in biology and biotechnology is debatable, but it is not debatable that these fields of endeavor have become primary contributors to today's economy and culture, as well as offering an untold potential for future advances. My colleagues offer no reason now to adopt a policy of exclusion of the unknown future from the subject matter now embraced in Section 101.

Soon after Chakrabarty was decided, the Court returned to patentability issues arising from computer capabilities:

In Diamond v. Diehr the Court directly held that computer-implemented processes are included in Section 101

9

The invention presented to the Court in Diehr was a "physical and chemical process for molding precision synthetic rubber products" where the process steps included using a mathematical formula. The Court held that the invention fit the "process" category of Section 101 although mathematical calculations were involved, and repeated its observation in Chakrabarty that "courts should not read into the patent laws limitations and conditions which the legislature has not expressed." Diehr, 450 U.S. at 182 (internal quotation marks omitted) (citing Chakrabarty, 447 U.S. at 308).

The Court distinguished a claim that would cover all uses of a mathematical formula and thus is an abstract construct, as in Benson, from a claim that applies a mathematical calculation for a specified purpose, as in Diehr. The Court stated that "a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer," id. at 187, and explained that the line between statutory and nonstatutory processes depends on whether the process is directed to a specific purpose, see id. ("It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." (emphasis in original)). The Court clarified that Flook did not hold that claims may be dissected into old and new parts to assess their patent eligibility. Id. at 189 n.12.

However, the Court did not propose the "machine-or-transformation" test that this court now insists was "enunciated" in Diehr as a specific limit to Section 101. Maj. op. at 10. In Diehr there was no issue of machine or transformation, for the Diehr process both employed a machine and produced a chemical transformation: the process was conducted in "an openable rubber molding press," and it cured the rubber. In

10

discussing the known mathematical formula used by Diehr to calculate the relation between temperature and the rate of a chemical reaction, the Court recited the traditional exceptions of "laws of nature, natural phenomena, and abstract ideas," 450 U.S. at 185, and explained that the entirety of the process must be considered, not an individual mathematical step.

The Court characterized the holdings in Benson and Flook as standing for no more than the continued relevance of these "long-established" judicial exclusions, id., and repeated that a practical application of pure science or mathematics may be patentable, citing Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94 (1939) ("While a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge and scientific truth may be."). The Court explained that the presence of a mathematical formula does not preclude patentability when the structure or process is performing a function within the scope of the patent system, stating:

[W]hen a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of §101.
450 U.S. at 192. This statement's parenthetical "e.g." is relied on by the majority for its statement that Diehr requires today's "machine-or-transformation" test. However, this "e.g." does not purport to state the only "function which the patent laws were designed to protect." Id. This "e.g." indeed describes the process in Diehr, but it does not exclude all other processes from access to patenting.

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It cannot be inferred that the Court intended, by this "e.g." parenthetical, to require the far-reaching exclusions now attributed to it. To the contrary, the Court in Diehr was explicit that "an application of a law of nature or mathematical formula" may merit patent protection, 450 U.S. at 187 (emphasis in original), and that the claimed process must be considered as a whole, id. at 188. The Court recognized that a process claim may combine steps that were separately known, and that abstract ideas such as mathematical formulae may be combined with other steps to produce a patentable process. Id. at 187. The steps are not to be "dissect[ed]" into new and old steps; it is the entire process that frames the Section 101 inquiry. Id. at 188.

The Diehr Court did not hold, as the majority opinion states, that transformation of physical state is a requirement of eligibility set by Section 101 unless the process is performed by a machine. It cannot be inferred that the Court silently imposed such a rule. See maj. op. at 14 (relying on lack of repetition in Diehr of the Benson and Flook disclaimers of requiring machine or transformation, as an implicit rejection of these disclaimers and tacit adoption of the requirement). There was no issue in Diehr of the need for either machine or transformation, for both were undisputedly present in the process of curing rubber. It cannot be said that the Court "enunciated" today's "definitive test" in Diehr.2

Subsequent Supreme Court authority reinforced the breadth of Section 101

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In J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001), the Court described Section 101 as a "dynamic provision designed to encompass new and unforeseen inventions," id. at 135, that case arising in the context of eligibility of newly developed plant varieties for patenting. The Court stated: "As in Chakrabarty, we decline to narrow the reach of §101 where Congress has given us no indication that it intends this result." Id. at 145-46. The Court reiterated that "Congress plainly contemplated that the patent laws would be given wide scope," id. at 130 (quoting Chakrabarty, 447 U.S. at 308), and that the language of Section 101 is "extremely broad," id. This is not language of restriction, and it reflects the statutory policy and purpose of inclusion, not exclusion, in Section 101.

The Court's decisions of an earlier age do not support this court's restrictions of Section 101

My colleagues also find support for their restrictions on patent-eligible "process" inventions in the pre-Section 101 decisions O'Reilly v. Morse, 56 U.S. (15 How.) 62 (1853), Cochrane v. Deener, 94 U.S. 780 (1876), and Tilghman v. Proctor, 102 U.S. 707 (1880). Although the Court in Benson and in Flook took care to state that these early decisions do not require the restrictions that the Court was rejecting, this court now places heavy reliance on these early decisions, which this court describes as "consistent with the machine-or-transformation test later articulated in Benson and reaffirmed in Diehr." Maj. op. at 12. As I have discussed, no such test was "articulated in Benson" and "reaffirmed in Diehr."

However, these early cases do show, contrary to the majority opinion, that a "process" has always been a distinct category of patentable invention, and not tied to either apparatus or transformation, as this court now holds. For example, in Tilghman v.

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Proctor the Court considered a patent on a process for separating fats and oils, and held that the process was not restricted to any particular apparatus. The Court held that a process is an independent category of invention, and stated:

That a patent can be granted for a process, there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture.
102 U.S. at 722; see also Corning v. Burden, 56 U.S. (15 How.) 252, 268 (1853) ("It is for the discovery or invention of some practical method or means of producing a beneficial result or effect, that a patent is granted, and not for the result or effect itself.") The difference between a process and the other categories of patent-eligible subject matter does not deprive process inventions of the independent status accorded by statute, by precedent, and by logic, all of which negate the court's new rule that a process must be tied to a particular machine or must transform physical matter.

The majority also relies on O'Reilly v. Morse, citing the Court's rejection of Morse's Claim 8 for "the use of the motive power of the electro or galvanic current, which I call electromagnetism, however developed, for making or printing intelligible characters, signs or letters at any distances . . . ." The Court explained:

In fine he claims an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent. The Court is of the opinion that the claim is too broad, and not warranted by law.
56 U.S. (15 How.) at 113. However, the claims that were directed to the communication system that was described by Morse were held patentable, although no machine, transformation, or manufacture was required. See Morse's Claim 5 ("The system of signs, consisting of dots and spaces, and horizontal lines, for numerals, letters, words, or sentences, substantially as herein set forth and illustrated, for telegraphic

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purposes."). I cannot discern how the Court's rejection of Morse's Claim 8 on what would now be Section 112 grounds, or the allowance of his other claims, supports this court's ruling today. Indeed, Morse's claim 5, to a system of signs, is no more "tangible" than the systems held patentable in Alappat and State Street Bank, discussed post and now cast into doubt, or the Bilski system here held ineligible for access to patenting.

The majority opinion also relies on Cochrane v. Deener, particularly on certain words quoted in subsequent opinions of the Court. In Cochrane the invention was a method for bolting flour, described as a series of mechanical steps in the processing of flour meal. The question before the Court was whether the patented process would be infringed if the same steps were performed using different machinery. The answer was "that a process may be patentable, irrespective of the particular form of the instrumentalities used." 94 U.S. at 788. The Court stressed the independence of a process from the tools that perform it:

A process is a mode of treatment of certain materials to produce a given result. It is an act, or series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. If new and useful, it is just as patentable as is a piece of machinery. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.
94 U.S. at 788. The Court did not restrict the kinds of patentable processes; the issue in Cochrane was whether the process must be tied to the machinery that the patentee used to perform it.

This court now cites Cochrane's description of a process as "acts performed upon subject-matter to be transformed and reduced to a different state or thing," id., this

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court stating that unless there is transformation there is no patentable process. That is not what this passage means. In earlier opinions this court and its predecessor court stated the correct view of this passage, as has the Supreme Court. The Court of Customs and Patent Appeals observed:

[This Cochrane passage] has sometimes been misconstrued as a 'rule' or 'definition' requiring that all processes, to be patentable, must operate physically on substances. Such a result misapprehends the nature of the passage quoted as dictum, in its context, and the question being discussed by the author of the opinion. To deduce such a rule from the statement would be contrary to its intendment which was not to limit process patentability but to point out that a process is not limited to the means used in performing it.
In re Prater, 415 F.2d 1393, 1403 (C.C.P.A. 1969). Again in In re Schrader, 22 F.3d 290, 295 n.12 (Fed. Cir. 1994) this court noted that Cochrane did not limit patent eligible subject matter to physical transformation, and that transformation of "intangibles" could qualify for patenting. In AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358 (Fed. Cir. 1999), this court described physical transformation as "merely one example of how a mathematical algorithm may bring about a useful application."

The Court saw the Cochrane decision in its proper perspective. Both Flook and Benson rejected the idea that Cochrane imposed the requirement of either specific machinery or the transformation of matter, as discussed ante. See Flook, 437 U.S. at 588 n.9; Benson, 409 U.S. at 71. Non-transformative processes were not at issue in either Cochrane or Diehr, and there is no endorsement in Diehr of a "machine-or-transformation" requirement for patentable processes.

These early cases cannot be held now to require exclusion, from the Section 101 definition of "process," of all processes that deal with data and information, whose only

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machinery is electrons, photons, or waves, or whose product is not a transformed physical substance.

The English Statute of Monopolies and English common law do not limit "process" in Section 101

I comment on this aspect in view of the proposal in the concurring opinion that this court's new two-prong test for Section 101 process inventions was implicit in United States law starting with the Act of 1790, because of Congress's knowledge of and importation of English common law and the English Statute of Monopolies of 1623. The full history of patent law in England is too ambitious to be achieved within the confines of Bilski's appeal,3 and the concurring opinion's selective treatment of this history may propagate misunderstanding.

The concurrence places primary reliance on the Statute of Monopolies, which was enacted in response to the monarchy's grant of monopolies "to court favorites in goods or businesses which had long before been enjoyed by the public." Graham v. John Deere Co., 383 U.S. 1, 5 (1966) (citing Peter Meinhardt, Inventions, Patents and

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Monopoly 30-35 (1946)). The Statute of Monopolies outlawed these "odious monopolies" or favors of the Crown, but, contrary to the concurring opinion, the Statute had nothing whatever to do with narrowing or eliminating categories of inventive subject matter eligible for a British patent. See Prager, Historical Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 313 ("The statute [of Monopolies] said nothing about meritorious functions of patents, nothing about patent disclosures, and nothing about patent procedures; it was only directed against patent abuses.").

Patents for inventions had been granted by the Crown long before 1623. See Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. at 143 (the first patent grant to the "introducer of a newly-invented process" was in 1440); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 626-27 (discussing first patents for "invention" in England in the fifteenth century). That practice was unaffected by the terms of the Statute of Monopolies, which rendered "utterly void" all "Monopolies and all Commissions, Grants, Licenses, Charters and Letters Patent" that were directed to "the sole Buying, Selling, Making, Working or Using any Thing within this Realm," 21 Jac. 1, c.3, §I (Eng.), but which specifically excepted Letters Patent for inventions from that exclusion, id. §VI. The only new limitation on patents for invention was a fourteen-year limit on the term of exclusivity. See Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 649.

The usage "Letters Patent" described one of the forms of document whereby the Crown granted various rights, whether the grant was for an odious monopoly that the Statute of Monopolies eliminated, or for rights to an invention new to England. That usage was not changed by the Statute of Monopolies. Nor were other aspects of the

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British practice which differed from that enacted in the United States, particularly the aspect whereby a British patent could be granted to a person who imported something that was new to England, whether or not the import was previously known or the importer was the inventor thereof. In England, "[t]he rights of the inventor are derived from those of the importer, and not vice versa as is commonly supposed." Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q.R. at 152; see also MacLeod, Inventing the Industrial Revolution 13 ("The rights of the first inventor were understood to derive from those of the first importer of the invention.").

In contrast, in the United States the patent right has never been predicated upon importation, and has never been limited to "manufactures." See, e.g., Walterscheid, To Promote the Progress of Useful Arts 93, 137-38, 224; see also Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 309 ("The American Revolution destroyed many of the ancient customs; it brought a sweeping reorientation of patent law, with new forms, new rules, new concepts, and new ideals."). The differences between the American and English patent law at this nation's founding were marked, and English judicial decisions interpreting the English statute are of limited use in interpreting the United States statute. In all events, no English decision supports this court's new restrictive definition of "process."

The concurrence proposes that the Statute of Monopolies provides a binding definition of the terms "manufacture," "machine," "composition of matter," and "process" in Section 101 of the U.S. Patent Act. See concurring op. at 5-8. The only one of these terms that appears in the Statute of Monopolies is "manufacture", a broad term that reflects the usage of the period. Even at the time of this country's founding, the usage

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was broad, as set forth in Samuel Johnson's Dictionary of the English Language (3d. ed. 1768), which defines "manufacture" as "any thing made by art," and defines "art" as "the power of doing something not taught by nature and instinct"; "a science"; "a trade"; "artfulness"; "skill"; "dexterity." Historians explain that England's primary motive for patenting was to promote "[a]cquisition of superior Continental technology" at a time when England lagged behind, see MacLeod, Inventing the Industrial Revolution 11; this cannot be interpreted to mean that England and perforce the United States intended to eliminate "processes" from this incentive system. It is inconceivable that on this background the Framers, and again the enactors of the first United States patent statutes in 1790 and 1793, intended sub silentio to impose the limitations on "process" now created by this court.

Congress' earliest known draft patent bill included the terms "art, manufacture, engine, machine, invention or device, or any improvement upon the same." Walterscheid, To Promote the Progress of Useful Arts 92. The 1793 Act explicitly stated "any new and useful art," §1, 1 Stat. 318 (1793), a usage that was carried forward until "art" was replaced with "process" in 35 U.S.C. §101 and defined in §100(b). Historians discuss that Congress' inclusion of any "art" or "process" in the patent system was a deliberate clarification of the English practice. See Walterscheid, To Promote the Progress of Useful Arts 93 ("[The first patent bill] appears to be an obvious attempt to deal legislatively with issues that were beginning to be addressed by the English courts. . . . [I]t states unequivocally that improvement inventions are patentable and expands the definition of invention or discovery beyond simply 'manufacture.'"); Karl B. Lutz, Patents and Science: A Clarification of the Patent Clause of the U.S. Constitution,

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32 J.P.O.S. 83, 86 (1950) ("By the year 1787 it was being recognized even in Great Britain that the phrase 'new manufactures' was an unduly limited object for a patent system, since it seems to exclude new processes. . . . [This question was] resolved in the United States Constitution by broadening the field from 'new manufactures' to 'useful arts' . . . .").

In interpreting a statute, it is the language selected by Congress that occupies center stage: "[O]ur obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose." Chakrabarty, 447 U.S. at 315. The Court has "perceive[d] no ambiguity" in Section 101, leaving no need for foreign assistance. Id. The legislative choice to afford the patent system "wide scope," id. at 308, including "process" inventions, evolved in the United States independent of later developments of the common law in England.

The concurrence concludes that the Statute of Monopolies foreclosed the future patenting of anything that the concurrence calls a "business method" — the term is not defined — whether or not the method is new, inventive, and useful. But the Statute of Monopolies only foreclosed "odious" monopolies, illustrated by historical reports that Queen Elizabeth had granted monopolies on salt, ale, saltpeter, white soap, dredging machines, playing cards, and rape seed oil, and on processes and services such as Spanish leather-making, mining of various metals and ores, dying and dressing cloth, and iron tempering. See Walterscheid, Early Evolution (Part 2), 76 J.P.T.O.S. at 854 n.14; Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 634-35. These and other grants, many of which were implemented by Letters Patent, were the "odious monopolies" that were rendered illegal. They included several classes of known

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activity, product and process, and had nothing to do with new "inventions." The Statute of Monopolies cannot be held to have restricted the kinds of new processes that can today be eligible for patenting in the United States, merely because it outlawed patents on non-novel businesses in England. The presence or absence of "organizing human activity," a vague term created by the concurrence, has no connection or relevance to Parliament's elimination of monopoly patronage grants for old, established arts. The Statute of Monopolies neither excluded nor included inventions that involve human activity, although the words "the sole working or making in any manner of new manufactures" presuppose human activity. 21 Jac. 1, c.3, §VI (emphases added). We are directed to no authority for the proposition that a new and inventive process involving "human activity" has historically been treated differently from other processes; indeed, most inventions involve human activity.

The concurrence has provided hints of the complexity of the evolution of patent law in England, as in the United States, as the Industrial Revolution took hold. Historians have recognized these complexities. See, e.g., Walterscheid, To Promote the Progress of Useful Arts 5 ("[T]he American patent law almost from its inception departed from its common law counterpart in the interpretation that would be given to the definition of novelty . . . ."); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 638 (noting that in Elizabethan times, novelty only required a showing that "the industry had not been carried on within the realm within a reasonable period of time, while today "the proof of a single public sale of an article" or a "printed publication" can negate patentability).

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I caution against over-simplification, particularly in view of the uncertainties in English common law at the time of this country's founding. See Boulton v. Bull, 2 H. Bl. 463, 491 (C.P. 1795) (Eyre, C.J.) ("Patent rights are no where that I can find accurately discussed in our books."); MacLeod, Inventing the Industrial Revolution 61 ("It was only from the time when the Privy Council relinquished jurisdiction that a case law on patents began to develop. . . . But it was a slow process and even the spate of hard-fought patent cases at the end of the eighteenth century did little to establish a solid core of judicial wisdom."). The English judicial opinions of the eighteenth century were not as limiting on the United States as my colleagues suggest. See Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 355 (2002) ("In the eighteenth century, patentees and those who gave advice concerning patents were certainly of the view that the Statute did not preclude the patenting of general principles of operation."); see also MacLeod, Inventing the Industrial Revolution 63-64.

It is reported that in the century and a half following enactment of the Statute of Monopolies, the English patent registers were replete with inventions claimed as "processes." See Walterscheid, Early Evolution (Part 3), 77 J.P.T.O.S. at 856 ("As one of the earliest texts on the patent law stated in 1806: 'most of the patents now taken out, are by name, for the method of doing particular things . . . ."). The concurrence agrees; but it is also reported that because patents were not litigated in the common law courts until the Privy Council authorized such suits in 1752, judicial interpretation of various aspects of patent law were essentially absent until about the time this country achieved independence, leading to the variety of views expressed in Boulton v. Bull. The legislators in the new United States cannot now be assigned the straightjacket of law

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not yet developed in England. Indeed, the first patent granted by President Washington, upon examination by Secretary of State Jefferson, was for a method of "making Pot-ash and Pearl-ash," a process patent granted during the period that the concurrence states was fraught with English uncertainty about process patents. See The First United States Patent, 36 J.P.O.S. 615, 616-17 (1954).

The concurrence lists some English process patents predating the United States' 1793 Patent Act, and argues that processes not sufficiently "like" these archaic inventions should not now be eligible for patenting. I refer simply to Flook, 437 U.S. at 588 n.9, where the Court stated: "As in Benson, we assume that a valid process patent may issue even if it does not meet one of the qualifications of our earlier precedents." Similarly, the Chakrabarty Court stated: "[A] statute is not to be confined to the particular applications . . . contemplated by the legislators. This is especially true in the field of patent law." Chakrabarty, 447 U.S. at 315-16 (citing Barr v. United States, 324 U.S. 83, 90 (1945); Browder v. United States, 312 U.S. 335, 339 (1941); Puerto Rico v. Shell Co., 302 U.S. 253, 257 (1937)). The meaning of the statutory term "process" is not limited by particular examples from more than two hundred years ago.

However, I cannot resist pointing to the "business method" patents on Woodcroft's list. See concurring op. at 15 (citing No. 1197 to John Knox (July 21, 1778) ("Plan for assurances on lives of persons from 10 to 80 years of age.")). Several other process patents on Woodcroft's list appear to involve financial subject matter, and to require primarily human activity. See, e.g., No. 1170 to John Molesworth (Sept. 29, 1777) ("Securing to the purchasers of shares and chances of state-lottery tickets any prize drawn in their favor."); No. 1159 to William Nicholson (July 14, 1777) ("Securing

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the property of persons purchasing shares of State-lottery tickets."), cited in Bennet Woodcroft, Alphabetical Index of Patentees of Inventions 383, 410 (U.S. ed. 1969). Other English process patents from the several decades following 1793 can aptly be described as "business methods," although not performed with the aid of computers. E.g., No. 10,367 to George Robert D'Harcourt (Oct. 29, 1844) ("Ascertaining and checking the number of checks or tickets which have been used and marked, applicable for railway officers.").

While most patents of an earlier era reflect the dominant mechanical and chemical technologies of that era, modern processes reflect the dramatic advances in telecommunications and computing that have occurred since the time of George III. See USPTO White Paper, Automated Financial or Management Data Processing Methods (Business Methods) 4 (2000), available at http://www.uspto.gov/web/menu/busmethp/whitepaper.pdf (hereinafter USPTO White Paper) ("The full arrival of electricity as a component in business data processing system[s] was a watershed event."). It is apparent that economic, or "business method," or "human activity" patents were neither explicitly nor implicitly foreclosed from access to the English patent system.

Evolution of process patents in the United States

The United States' history of patenting establishes the same point. The PTO has located various patents predating modern computer usages that can be described as financial or business methods. The USPTO White Paper at 3-4 and appendix A describes the history of financial apparatus and method patents dating back to 1799, including patents on bank notes, bills of credit, bills of exchange, check blanks,

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detecting and preventing counterfeiting, coin counting, interest calculation tables, and lotteries, all within the first fifty years of the United States patent system. It is a distortion of these patents to describe the processes as "tied to" another statutory category — that is, paper and pencil. Concurring op. at 16-17 & n.18. Replacement of paper with a computer screen, and pencil with electrons, does not "untie" the process. Fairly considered, the many older financial and business-oriented patents that the PTO and many of the amici have identified are of the same type as the Bilski claims; they were surely not rendered patent-eligible solely because they used "paper" to instantiate the financial strategies and transactions that comprised their contribution.

I do not disagree with the general suggestion that statutes intended to codify the existing common law are to be interpreted in light of then-contemporary practice, including, if relevant, the English cases. See concurring op. at 12-13. However, the court must be scrupulous in assessing the relevance of decisions that were formulated on particularized facts involving the technology of the period. The United States Supreme Court has never held that "process" inventions suffered a second-class status under our statutes, achieving patent eligibility only derivatively through an explicit "tie" to another statutory category. The Court has repeatedly disparaged efforts to read in restrictions not based on statutory language. See Diehr, 450 U.S. at 182; Chakrabarty, 447 U.S. at 308. Yet second-class status is today engrafted on "process" inventions. There is plainly no basis for such restriction, which is a direct path to the "gloomy thought" that concerned Senator O.H. Platt in his Remarks in Congress at the Centennial Proceedings of the United States Patent System:

For one, I cannot entertain the gloomy thought that we have come to that century in the world's life in which new and grander achievements are

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impossible. . . . Invention is a prolific mother; every inventive triumph stimulates new effort. Man never is and never will be content with success, and the great secrets of nature are as yet largely undiscovered.
Invention and Advancement (1891), reprinted in United States Bicentennial Commemorative Edition of Proceedings and Addresses: Celebration of the Beginning of the Second Century of the American Patent System 75-76 (1990).

In sum, history does not support the retrogression sponsored by the concurrence.

This court now rejects its own CCPA and Federal Circuit precedent

The majority opinion holds that there is a Supreme Court restriction on process patents, "enunciated" in Benson, Flook, and Diehr; and that this restriction was improperly ignored by the Federal Circuit and the Court of Customs and Patent Appeals, leading us into error which we must now correct. Thus this court announces that our prior decisions may no longer be relied upon. Maj. op. at 19-20 & nn.17, 19. The effect on the patents and businesses that did rely on them is not considered.

The Court's decisions in Benson, Flook, and Diehr all reached the Supreme Court by way of the CCPA, and the CCPA successively implemented the Court's guidance in establishing the Freeman/Walter/Abele test for eligibility under Section 101. The Federal Circuit continued to consider computer-facilitated processes, as in Arrhythmia Research Technology, 958 F.2d at 1059-60, where patent-eligibility was confirmed for a computer-assisted mathematical analysis of electrocardiograph signals that determined the likelihood of recurrence of heart attack. This court now rules that this precedent "should no longer be relied on." Maj. op. at 19 n.17.

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In In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994) (en banc) the question was the eligibility for patent of a rasterizer that mathematically transforms data to eliminate aliasing in a digital oscilloscope. The court held that a computer-implemented system that produces a "useful, concrete, and tangible result" is Section 101 subject matter. Id. at 1544. This court now rules that "a 'useful, concrete and tangible result' analysis should no longer be relied on." Maj. op. at 20 n.19.

The Alappat court stressed the intent, embodied in the language of the statute, that the patent system be broadly available to new and useful inventions:

The use of the expansive term "any" in §101 represents Congress's intent not to place any restrictions on the subject matter for which a patent may be obtained beyond those specifically recited in §101 and other parts of Title 35.
33 F.3d at 1542. This court looked to the Supreme Court's guidance in its Section 101 decisions, and explained:
A close analysis of Diehr, Flook, and Benson reveals that the Supreme Court never intended to create an overly broad, fourth category of [mathematical] subject matter excluded from §101. Rather, at the core of the Court's analysis in each of these cases lies an attempt by the Court to explain a rather straightforward concept, namely, that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, and thus that subject matter is not, in and of itself, entitled to patent protection.
Id. at 1543 (emphasis in original). The court cited the Supreme Court's distinction between abstract ideas and their practical application, and stated of the claimed rasterizer: "This is not a disembodied mathematical concept which may be characterized as an 'abstract idea,' but rather a specific machine to produce a useful, concrete, and tangible result." Id. at 1544.

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This principle was applied to a computer-implemented data processing system for managing pooled mutual fund assets in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and to a method for recording and processing telephone data in AT&T v. Excel. The court explained that processes that include mathematical calculations in a practical application can produce a useful, concrete, and tangible result, which in State Street Bank was "expressed in numbers, such as price, profit, percentage, cost, or loss." 149 F.3d at 1375. In AT&T v. Excel the court applied State Street Bank and Diehr, and stated that "physical transformation . . . is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application" and thus achieve a useful, concrete, and tangible result. 172 F.3d at 1358. This analysis, too, can no longer be relied on. Maj. op. at 20 n.19.

The now-discarded criterion of a "useful, concrete, and tangible result" has proved to be of ready and comprehensible applicability in a large variety of processes of the information and digital ages. The court in State Street Bank reinforced the thesis that there is no reason, in statute or policy, to exclude computer-implemented and information-based inventions from access to patentability. The holdings and reasoning of Alappat and State Street Bank guided the inventions of the electronic age into the patent system, while remaining faithful to the Diehr distinction between abstract ideas such as mathematical formulae and their application in a particular process for a specified purpose. And patentability has always required compliance with all of the requirements of the statute, including novelty, non-obviousness, utility, and the provisions of Section 112.

29

The public has relied on the rulings of this court and of the Supreme Court

The decisions in Alappat and State Street Bank confirmed the patent eligibility of many evolving areas of commerce, as inventors and investors explored new technological capabilities. The public and the economy have experienced extraordinary advances in information-based and computer-managed processes, supported by an enlarging patent base. The PTO reports that in Class 705, the examination classification associated with "business methods" and most likely to receive inventions that may not use machinery or transform physical matter, there were almost 10,000 patent applications filed in FY 2006 alone, and over 40,000 applications filed since FY 98 when State Street Bank was decided. See Wynn W. Coggins, USPTO, Update on Business Methods for the Business Methods Partnership Meeting 6 (2007) (hereinafter "PTO Report"), available at http://www.uspto.gov/web/menu/pbmethod/partnership.pps. An amicus in the present case reports that over 15,000 patents classified in Class 705 have issued. See Br. of Amicus Curiae Accenture, at 22 n.20.4 The industries identified with information-based and data-handling processes, as several amici curiae explain and illustrate, include fields as diverse as banking and finance, insurance, data processing, industrial engineering, and medicine.

Stable law, on which industry can rely, is a foundation of commercial advance into new products and processes. Inventiveness in the computer and information services fields has placed the United States in a position of technological and commercial preeminence. The information technology industry is reported to be "the

30

key factor responsible for reversing the 20-year productivity slow-down from the mid-1970s to the mid-1990s and in driving today's robust productivity growth." R.D. Atkinson & A.S. McKay, Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution 10 (Info. Tech. & Innovation Found. 2007), available at http://www.itif.org/files/digital_prosperity.pdf. By revenue estimates, in 2005 the software and information sectors constituted the fourth largest industry in the United States, with significantly faster growth than the overall U.S. economy. Software & Info. Indus. Ass'n, Software and Information: Driving the Knowledge Economy 7-8 (2008), http://www.siia.net/estore/globecon-08.pdf. A Congressional Report in 2006 stated:

As recently as 1978, intangible assets, such as intellectual property, accounted for 20 percent of corporate assets with the vast majority of value (80 percent) attributed to tangible assets such as facilities and equipment. By 1997, the trend reversed; 73 percent of corporate assets were intangible and only 27 percent were tangible.
H.R. Rep. No. 109-673 (accompanying a bill concerning judicial resources).

This powerful economic move toward "intangibles" is a challenge to the backward-looking change of this court's ruling today. Until the shift represented by today's decision, statute and precedent have provided stability in the rapidly moving and commercially vibrant fields of the Information Age. Despite the economic importance of these interests, the consequences of our decision have not been considered. I don't know how much human creativity and commercial activity will be devalued by today's change in law; but neither do my colleagues.

The Section 101 interpretation that is now uprooted has the authority of years of reliance, and ought not be disturbed absent the most compelling reasons. "Considerations of stare decisis have special force in the area of statutory interpretation,

31

for here, unlike in the context of constitutional interpretation, the legislative power is implicated, and Congress remains free to alter what [the courts] have done." Shepard v. United States, 544 U.S. 13, 23 (2005) (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 172-73 (1989)); see also Hilton v. S.C. Pub. Res. Comm'n, 502 U.S. 197, 205 (1991) (in cases of statutory interpretation the importance of adhering to prior rulings is "most compelling"). Where, as here, Congress has not acted to modify the statute in the many years since Diehr and the decisions of this court, the force of stare decisis is even stronger. See Shepard, 544 U.S. at 23.

Adherence to settled law, resulting in settled expectations, is of particular importance "in cases involving property and contract rights, where reliance interests are involved." Payne v. Tennessee, 501 U.S. 808, 828 (1991); see also United States v. Title Ins. & Trust Co., 265 U.S. 472, 486 (1924) (declining to overrule precedent where prior ruling "has become a rule of property, and to disturb it now would be fraught with many injurious results"). This rationale is given no weight by my colleagues, as this court gratuitously disrupts decades of law underlying our own rulings. The only announced support for today's change appears to be the strained new reading of Supreme Court quotations. But this court has previously read these decades-old opinions differently, without objection by either Congress or the Court. My colleagues do not state a reason for their change of heart. See Benjamin N. Cardozo, The Nature of the Judicial Process 149 (1921) ("[T]he labor of judges would be increased almost to the breaking point if every past decision could be reopened in every case, and one could not lay one's own course of bricks on the secure foundation of the courses laid by others who had gone before him.").

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It is the legislature's role to change the law if the public interest so requires. In Chakrabarty the Court stated: "The choice we are urged to make is a matter of high policy for resolution within the legislative process after the kind of investigation, examination, and study that legislative bodies can provide and courts cannot." 447 U.S. at 317; see also Flook, 437 U.S. 595 ("Difficult questions of policy concerning the kinds of programs that may be appropriate for patent protection and the form and duration of such protection can be answered by Congress on the basis of current empirical data not equally available to this tribunal.").

It is, however, the judicial obligation to assure a correct, just, and reliable judicial process, and particularly to respect the principles of stare decisis in an area in which prior and repeated statutory interpretations have been relied upon by others. See, e.g., Shepard, 544 U.S. at 23 ("[T]he claim to adhere to case law is generally powerful once a decision has settled statutory meaning."); Hilton, 502 U.S. at 202 ("Adherence to precedent promotes stability, predictability, and respect for judicial authority."); Payne, 501 U.S. at 827 ("Stare decisis is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process."). These considerations appear to be abandoned.

Uncertain guidance for the future

Not only past expectations, but future hopes, are disrupted by uncertainty as to application of the new restrictions on patent eligibility. For example, the court states that even if a process is "tied to" a machine or transforms matter, the machine or transformation must impose "meaningful limits" and cannot constitute "insignificant

33

extra-solution activity". Maj. op. at 24. We are advised that transformation must be "central to the purpose of the claimed process," id., although we are not told what kinds of transformations may qualify, id. at 25-26. These concepts raise new conflicts with precedent.

This court and the Supreme Court have stated that "there is no legally recognizable or protected 'essential' element, 'gist' or 'heart' of the invention in a combination patent." Allen Eng'g Corp. v. Bartell Industries, Inc., 299 F.3d 1336, 1345 (Fed. Cir. 2002) (quoting Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 345 (1961)). This rule applies with equal force to process patents, see W.L. Gore & Associates, Inc. v. Garlock, Inc., 721 F.2d 1540, 1548 (Fed. Cir. 1983) (there is no gist of the invention rule for process patents), and is in accord with the rule that the invention must be considered as a whole, rather than "dissected," in assessing its patent eligibility under Section 101, see Diehr, 450 U.S. at 188. It is difficult to predict an adjudicator's view of the "invention as a whole," now that patent examiners and judges are instructed to weigh the different process components for their "centrality" and the "significance" of their "extra-solution activity" in a Section 101 inquiry.

As for whether machine implementation will impose "meaningful limits in a particular case," the "meaningfulness" of computer usage in the great variety of technical and informational subject matter that is computer-facilitated is apparently now a flexible parameter of Section 101. Each patent examination center, each trial court, each panel of this court, will have a blank slate on which to uphold or invalidate claims based on whether there are sufficient "meaningful limits", or whether a transformation is adequately "central," or the "significance" of process steps. These qualifiers, appended

34

to a novel test which itself is neither suggested nor supported by statutory text, legislative history, or judicial precedent, raise more questions than they answer. These new standards add delay, uncertainty, and cost, but do not add confidence in reliable standards for Section 101.

Other aspects of the changes of law also contribute uncertainty. We aren't told when, or if, software instructions implemented on a general purpose computer are deemed "tied" to a "particular machine," for if Alappat's guidance that software converts a general purpose computer into a special purpose machine remains applicable, there is no need for the present ruling. For the thousands of inventors who obtained patents under the court's now-discarded criteria, their property rights are now vulnerable.

The court also avoids saying whether the State Street Bank and AT&T v. Excel inventions would pass the new test. The drafting of claims in machine or process form was not determinative in those cases, for "we consider the scope of §101 to be the same regardless of the form — machine or process — in which a particular claim is drafted." AT&T v. Excel, 172 F.3d at 1357. From either the machine or the transformation viewpoint, the processing of data representing "price, profit, percentage, cost, or loss" in State Street Bank is not materially different from the processing of the Bilski data representing commodity purchase and sale prices, market transactions, and risk positions; yet Bilski is held to fail our new test, while State Street is left hanging. The uncertainty is illustrated in the contemporaneous decision of In re Comiskey, 499 F.3d 1365, 1378-79 (Fed. Cir. 2007), where the court held that "systems that depend for their operation on human intelligence alone" to solve practical problems are not within the scope of Section 101; and In re Nuijten, 500 F.3d 1346, 1353-54 (Fed. Cir. 2007),

35

where the court held that claims to a signal with an embedded digital watermark encoded according to a given encoding process were not directed to statutory subject matter under Section 101, although the claims included "physical but transitory forms of signal transmission such as radio broadcasts, electrical signals through a wire, and light pluses through a fiber-optic cable."

Although this uncertainty may invite some to try their luck in court, the wider effect will be a disincentive to innovation-based commerce. For inventors, investors, competitors, and the public, the most grievous consequence is the effect on inventions not made or not developed because of uncertainty as to patent protection. Only the successes need the patent right.

The Bilski invention has not been examined for patentability

To be patentable, Bilski's invention must be novel and non-obvious, and the specification and claims must meet the requirements of enablement, description, specificity, best mode, etc. See 35 U.S.C. §101 ("Whoever invents or discovers a new and useful process . . . may obtain a patent therefor, subject to the conditions and requirements of this title."); Diehr, 490 U.S. at 190 (the question of whether an invention is novel is distinct from whether the subject matter is statutory); State Street Bank, 149 F.3d at 1377 ("Whether the patent's claims are too broad to be patentable is not to be judged under §101, but rather under §§102, 103, and 112."). I don't know whether Bilski can meet these requirements — but neither does this court, for the claims have not been examined for patentability, and no rejections apart from Section 101 are included in this appeal.

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Instead, the court states the "true issue before us" is "whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or mental process," maj. op. at 7, and answers "yes." With respect, that is the wrong question, and the wrong answer. Bilski's patent application describes his process of analyzing the effects of supply and demand on commodity prices and the use of a coupled transaction strategy to hedge against these risks; this is not a fundamental principle or an abstract idea; it is not a mental process or a law of nature. It is a "process," set out in successive steps, for obtaining and analyzing information and carrying out a series of commercial transactions for the purpose of "managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price." Claim 1, preamble.

Because the process Bilski describes employs complex mathematical calculations to assess various elements of risk, any practicable embodiment would be conducted with the aid of a machine — a programmed computer — but the court holds that since computer-implementation is not recited in claim 1, for that reason alone the process fails the "machine" part of the court's machine-or-transformation test. Maj. op. at 24. And the court holds that since Bilski's process involves the processing of data concerning commodity prices and supply and demand and other risk factors, the process fails the "transformation" test because no "physical objects or substances" are transformed. Maj. op. at 28-29. The court then concludes that because Bilski's Claim 1 fails the machine-or-transformation test it ipso facto preempts a "fundamental principle" and is thereby barred from the patent system under Section 101: an illogical leap that displays the flaws in the court's analysis.

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If a claim is unduly broad, or if it fails to include sufficient specificity, the appropriate ground of rejection is Section 112, for claims must "particularly point out and distinctly claim[]" the invention. See In re Vaeck, 947 F.2d 488, 495-96 (Fed. Cir. 1991) (affirming rejection under Section 112 where "[t]here is no reasonable correlation between the narrow disclosure in applicant's specification and the broad scope of protection sought in the claims"); In re Foster, 438 F.2d 1011, 1016 (C.C.P.A. 1971) (claims "not commensurate with appellants' own definition of what they are seeking to cover" are rejected under Section 112, rather than Section 101); In re Prater, 415 F.2d at 1403-04 (applying Section 112 to claims that included mental steps). The filing of a broader claim than is supported in the specification does not convert the invention into an abstraction and evict the application from eligibility for examination. A broad first claim in a patent application is routine; it is not the crisis event postulated in the court's opinion.

The role of examination is to determine the scope of the claims to which the applicant is entitled. See 37 C.F.R. §1.104(a). The PTO's regulations provide:

On taking up an application for examination or a patent in a reexamination proceeding, the examiner shall make a thorough study thereof and shall make a thorough investigation of the available prior art relating to the subject matter of the claimed invention. The examination shall be complete with respect to both compliance of the application or patent under reexamination with the applicable statutes and rules and to the patentability of the invention as claimed, as well as with respect to matters of form, unless otherwise indicated.
Id. §1.104(a)(1). The Manual of Patent Examining Procedure (MPEP) similarly instructs the examiners to conduct a "thorough search of the prior art" before evaluating the invention under Section 101. MPEP §2106(III) (8th ed., rev. 7, July. 2008) ("Prior to evaluating the claimed invention under 35 U.S.C. §101, USPTO personnel are expected

38

to conduct a thorough search of the prior art."). The MPEP also requires examiners to identify all grounds of rejection in the first official PTO action to avoid unnecessary delays in examination. Id. §2106(II) ("Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to some statutory requirement."). I note that this requirement does not appear to have been here met.

Several amici curiae referred to the difficulties that the PTO has reported in examining patents in areas where the practice has been to preserve secrecy, for published prior art is sparse. The Federal Trade Commission recognized that the problem of "questionable" patents stems mostly from "the difficulty patent examiners can have in considering all the relevant prior art in the field and staying informed about the rapid advance of computer science." FTC, To Promote Innovation: The Proper Balance of Competition & Patent Law and Policy at ch. 3, pp. 44 (Oct. 2003), available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf. However, this problem seems to be remedied, for the PTO reported in 2007 that for Class 705, "[t]he cases the examiners are now working on have noticeably narrower claims" than the cases filed in or before FY 2000. PTO Report at 9. The PTO reports that its search fields have been enlarged, staff added, and supervision augmented. FTC Report at ch. 1, p. 30. ("Since the PTO introduced [these changes] the allowance rate for business method patents has decreased, and the PTO believes that this decreased allowance rate indicates improved PTO searches for prior art."). If this court's purpose now is to improve the quality of

39

issued patents by eliminating access to patenting for large classes of past, present, and future inventions, the remedy would appear to be excessive.

A straightforward, efficient, and ultimately fair approach to the evaluation of "new and useful" processes — quoting Section 101 — is to recognize that a process invention that is not clearly a "fundamental truth, law of nature, or abstract idea" is eligible for examination for patentability. I do not suggest that basic scientific discoveries are a proper subject matter of patents (the Court in Chakrabarty mentioned E=mc2 and the law of gravity), and I do not attempt an all-purpose definition of the boundary between scientific theory and technological application. But it is rare indeed that a question arises at the boundary of basic science; more usual is the situation illustrated by Samuel Morse's telegraph, in which the Court simply held that Morse's general claim was "too broad," exceeding the scope of his practical application.

Bilski's process for determining risk in commodity transactions does not become an abstraction because it is broadly claimed in his first claim. It may be claimed so broadly that it reads on the prior art, but it is neither a fundamental truth nor an abstraction. Bilski's ten other claims contain further details and limitations, removing them farther from abstraction. Although claim 1 may have been deemed "representative" with respect to Section 101, the differences among the claims may be significant with respect to Sections 102, 103, and 112. Bilski's application, now pending for eleven years, has yet to be examined for patentability.

CONCLUSION

In sum, the text of Section 101, its statutory history, its interpretation by the Supreme Court, and its application by the courts, contravene this court's redefinition of

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the statutory term "process." The court's decision affects present and future rights and incentives, and usurps the legislative role. The judicial role is to support stability and predictability in the law, with fidelity to statue and precedent, and respect for the principles of stare decisis.

Patents provide an incentive to invest in and work in new directions. In United States v. Line Materials Co., 333 U.S. 287, 332 (1948), Justice Burton, joined by Chief Justice Vinson and Justice Frankfurter, remarked that "the frontiers of science have expanded until civilization now depends largely upon discoveries on those frontiers to meet the infinite needs of the future. The United States, thus far, has taken a leading part in making those discoveries and in putting them to use." This remains true today. It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future.

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1 My colleagues cite only part of this quotation as the Court's holding in Flook, maj. op. at 13, ignoring the qualifying words "[a]n argument can be made" as well as the next sentence clarifying that this argument was rejected by the Court in Benson and is now again rejected in Flook.
2 Many amici curiae pointed out that the Supreme Court did not adopt the test that this court now attributes to it. See, e.g., Br. of Amicus Curiae Am. Intellectual Property Law Ass'n at 18 & n.16; Br. of Amicus Curiae Biotechnology Industry Org. at 17-21; Br. of Amicus Curiae Boston Patent Law Ass'n at 6-8; Br. of Amicus Curiae Business Software Alliance at 13; Br. of Amicus Curiae Federal Circuit Bar Ass'n at 21; Br. of Amicus Curiae Regulatory Datacorp, Inc. at 12-13; Br. of Amicus Curiae Accenture at 16-17; Br. of Amicus Curiae Washington State Patent Law Ass'n at 10-11.
3 Scholarly histories include M. Frumkin, The Origin of Patents, 27 J.P.O.S. 143 (1945); E. Wyndham Hulme, Privy Council Law and Practice of Letters Patent for Invention from the Restoration to 1794, 33 L.Q. Rev. 63 (Part I), 180 (Part II) (1917); Hulme, On the History of Patent Law in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280 (1902); Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. 141 (1896); Ramon A. Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S 615 (1959); Christine MacLeod, Inventing the Industrial Revolution: The English Patent System 1660-1800 (1988); Frank D. Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. 309 (1961); Brad Sherman & Lionel Bently, The Making of Modern Intellectual Property Law: The British Experience , 1760-1911 (1999); Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents, printed serially at J. Pat. & Trademark Off. Soc'y ("J.P.T.O.S.") 76:697 (1994) (Part 1); 76:849 (1994) (Part 2); 77:771, 847 (1995) (Part 3); 78:77 (1996) (Part 4); 78:615 (1996) (Part 5, part I); and 78:665 (1996) (Part 5, part II) (hereinafter "Early Evolution"); and Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law and Administration, 1798-1836 (1998).
4 The PTO recognizes that patents on "business methods" have been eligible subject matter for two centuries. See USPTO White Paper 2 ("Financial patents in the paper-based technologies have been granted continuously for over two hundred years.").

*********************************

United States Court of Appeals for the Federal Circuit

2007-1130
(Serial No. 08/883,892)

IN RE BERNARD L. BILSKI
and RAND A. WARSAW

Appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences.

RADER, Circuit Judge, dissenting.

This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single sentence: "Because Bilski claims merely an abstract idea, this court affirms the Board's rejection." If the only problem of this vast judicial tome were its circuitous path, I would not dissent, but this venture also disrupts settled and wise principles of law.

Much of the court's difficulty lies in its reliance on dicta taken out of context from numerous Supreme Court opinions dealing with the technology of the past. In other words, as innovators seek the path to the next techno-revolution, this court ties our patent system to dicta from an industrial age decades removed from the bleeding edge. A direct reading of the Supreme Court's principles and cases on patent eligibility would yield the one-sentence resolution suggested above. Because this court, however, links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes, I must respectfully dissent.

(1)

I

The Patent Law of the United States has always embodied the philosophy that "ingenuity should receive a liberal encouragement." Writings of Thomas Jefferson 75-76 (Washington ed. 1871); see also Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980). True to this principle, the original Act made "any new and useful art, machine, manufacture or composition of matter" patent eligible. Act of Feb. 21, 1793, ch. 11, § 1, 1 Stat. 318 (emphasis supplied). Even as the laws have evolved, that bedrock principle remains at their foundation. Thus, the Patent Act from its inception focused patentability on the specific characteristics of the claimed invention — its novelty and utility — not on its particular subject matter category.

The modern incarnation of section 101 holds fast to that principle, setting forth the broad categories of patent eligible subject matter, and conditioning patentability on the characteristics, not the category, of the claimed invention:

Whoever 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 (2006) (emphases supplied). As I have suggested, the Supreme Court requires this court to rely on the "ordinary, contemporary, common meaning" of these words. Diamond v. Diehr, 450 U.S. 175, 182 (1981). If this court would follow that Supreme Court rule, it would afford broad patent protection to new and useful inventions that fall within the enumerated categories and satisfy the other conditions of patentability. That is, after all, precisely what the statute says.

In Diehr, the Supreme Court adopted a very useful algorithm for determining patentable subject matter, namely, follow the Patent Act itself. After setting forth the

2

procedural history of that case, the Supreme Court stated: "In cases of statutory construction, we begin with the language of the statute." Diehr, 450 U.S. at 182. With an eye to the Benson language (so central to this court's reasoning) that "[t]ransformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines," Gottschalk v. Benson, 409 U.S. 63, 72 (1972), the Court then noted:

[I]n dealing with the patent laws, we have more than once cautioned that "courts 'should not read into the patent laws limitations and conditions which the legislature has not expressed.'"
Diehr, 450 U.S. at 182 (citations omitted). Indeed section 101's term "process" contains no hint of an exclusion for certain types of methods. This court today nonetheless holds that a process is eligible only if it falls within certain subsets of "process." Ironically the Patent Act itself specifically defines "process" without any of these judicial innovations. 35 U.S.C. § 100(b). Therefore, as Diehr commands, this court should refrain from creating new circuitous judge-made tests.

Read in context, section 101 gives further reasons for interpretation without innovation. Specifically, section 101 itself distinguishes patent eligibility from the conditions of patentability — providing generously for patent eligibility, but noting that patentability requires substantially more. The language sweeps in "any new and useful process . . . [and] any improvement." 35 U.S.C. § 101 (emphasis supplied). As an expansive modifier, "any" embraces the broad and ordinary meanings of the term "process," for instance. The language of section 101 conveys no implication that the Act extends patent protection to some subcategories of processes but not others. It does not mean "some" or even "most," but all.

3

Unlike the laws of other nations that include broad exclusions to eligible subject matter, such as European restrictions on software and other method patents, see European Patent Convention of 1973, Art. 52(2)(c) and (3), and prohibitions against patents deemed contrary to the public morality, see id. at Art. 53(a), U.S. law and policy have embraced advances without regard to their subject matter. That promise of protection, in turn, fuels the research that, at least for now, makes this nation the world's innovation leader.

II

With all of its legal sophistry, the court's new test for eligibility today does not answer the most fundamental question of all: why would the expansive language of section 101 preclude protection of innovation simply because it is not transformational or properly linked to a machine (whatever that means)? Stated even more simply, why should some categories of invention deserve no protection?

This court, which reads the fine print of Supreme Court decisions from the Industrial Age with admirable precision, misses the real import of those decisions. The Supreme Court has answered the fundamental question above many times. The Supreme Court has counseled that the only limits on eligibility are inventions that embrace natural laws, natural phenomena, and abstract ideas. See, e.g., Diehr, 450 U.S. at 185 ("This Court has undoubtedly recognized limits to § 101 and every discovery is not embraced within the statutory terms. Excluded from such patent protection are laws of nature, natural phenomena, and abstract ideas."). In Diehr, the Supreme Court's last pronouncement on eligibility for "processes," the Court said directly that its only exclusions from the statutory language are these three common law exclusions:

4

"Our recent holdings . . . stand for no more than these long-established principles." Id. at 185.

This point deserves repetition. The Supreme Court stated that all of the transformation and machine linkage explanations simply restated the abstractness rule. In reading Diehr to suggest a non-statutory transformation or preemption test, this court ignores the Court's admonition that all of its recent holdings do no more than restate the natural laws and abstractness exclusions. Id.; see also Chakrabarty, 447 U.S. at 310 ("Here, by contrast, the patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature's handiwork, but his own; accordingly it is patentable subject matter under § 101."); Parker v. Flook, 437 U.S. 584, 591-594 (1978) ("Even though a phenomenon of nature or mathematical formula may be well known, an inve ntive application of the principle may be patented. Conversely, the discovery of such a phenomenon cannot support a patent unless there is some other inventive concept in its application."); In re Taner, 681 F.2d 787, 791 (C.C.P.A 1982) ("In Diehr, the Supreme Court made clear that Benson stands for no more than the long-established principle that laws of nature, natural phenomena, and abstract ideas are excluded from patent protection.").

The abstractness and natural law preclusions not only make sense, they explain the purpose of the expansive language of section 101. Natural laws and phenomena can never qualify for patent protection because they cannot be invented at all. After all, God or Allah or Jahveh or Vishnu or the Great Spirit provided these laws and phenomena as humanity's common heritage. Furthermore, abstract ideas can never

5

qualify for patent protection because the Act intends, as section 101 explains, to provide "useful" technology. An abstract idea must be applied to (transformed into) a practical use before it qualifies for protection. The fine print of Supreme Court opinions conveys nothing more than these basic principles. Yet this court expands (transforms?) some Supreme Court language into rules that defy the Supreme Court's own rule.

When considering the eligibility of "processes," this court should focus on the potential for an abstract claim. Such an abstract claim would appear in a form that is not even susceptible to examination against prior art under the traditional tests for patentability. Thus this court would wish to ensure that the claim supplied some concrete, tangible technology for examination. Indeed the hedging claim at stake in this appeal is a classic example of abstractness. Bilski's method for hedging risk in commodities trading is either a vague economic concept or obvious on its face. Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class. In any event, this facially abstract claim does not warrant the creation of new eligibility exclusions.

III

This court's willingness to venture away from the statute follows on the heels of an oft-discussed dissent from the Supreme Court's dismissal of its grant of certiorari in Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 548 U.S. 124 (2006). That dissent is premised on a fundamental misapprehension of the distinction between a natural phenomenon and a patentable process.

The distinction between "phenomena of nature," "mental processes," and "abstract intellectual concepts" is not difficult to draw. The fundamental error in that Lab

6

Corp. dissent is its failure to recognize the difference between a patent ineligible relationship — i.e., that between high homocysteine levels and folate and cobalamin deficiencies — and a patent eligible process for applying that relationship to achieve a useful, tangible, and concrete result — i.e., diagnosis of potentially fatal conditions in patients. Nothing abstract here. Moreover, testing blood for a dangerous condition is not a natural phenomenon, but a human invention.

The distinction is simple but critical: A patient may suffer from the unpatentable phenomenon of nature, namely high homocysteine levels and low folate. But the invention does not attempt to claim that natural phenomenon. Instead the patent claims a process for assaying a patient's blood and then analyzing the results with a new process that detects the life-threatening condition. Moreover, the sick patient does not practice the patented invention. Instead the patent covers a process for testing blood that produces a useful, concrete, and tangible result: incontrovertible diagnostic evidence to save lives. The patent does not claim the patent ineligible relationship between folate and homocysteine, nor does it foreclose future inventors from using that relationship to devise better or different processes. Contrary to the language of the dissent, it is the sick patient who "embod[ies] only the correlation between homocysteine and vitamin deficiency," Lab. Corp., 548 U.S. at 137, not the claimed process.

From the standpoint of policy, the Lab Corp. dissent avoids the same fundamental question that the Federal Circuit does not ask or answer today: Is this entire field of subject matter undeserving of incentives for invention? If so, why? In the context of Lab. Corp. that question is very telling: the natural condition diagnosed by

7

the invention is debilitating and even deadly. See U.S. Patent No. 4,940,658, col. 1, ll. 32-40 ("Accurate and early diagnosis of cobalamin and folate deficiencies . . . is important because these deficiencies can lead to life-threatening hematologic abnormalities . . . . Accurate and early diagnosis of cobalamin deficiency is especially important because it can also lead to incapacitating and life-threatening neuropsychiatric abnormalities."). Before the invention featured in Lab Corp., medical science lacked an affordable, reliable, and fast means to detect this debilitating condition. Denial of patent protection for this innovation — precisely because of its elegance and simplicity (the chief aims of all good science) — would undermine and discourage future research for diagnostic tools. Put another way, does not Patent Law wish to encourage researchers to find simple blood tests or urine tests that predict and diagnose breast cancers or immunodeficiency diseases? In that context, this court might profitably ask whether its decisions incentivize research for cures and other important technical advances. Without such attention, this court inadvertently advises investors that they should divert their unprotectable investments away from discovery of "scientific relationships" within the body that diagnose breast cancer or Lou Gehrig's disease or Parkinson's or whatever.

IV

In sum, this court today invents several circuitous and unnecessary tests. It should have merely noted that Bilski attempts to patent an abstract idea. Nothing more was needed. Instead this opinion propagates unanswerable questions: What form or amount of "transformation" suffices? When is a "representative" of a physical object sufficiently linked to that object to satisfy the transformation test? (e.g., Does only vital

8

sign data taken directly from a patient qualify, or can population data derived in part from statistics and extrapolation be used?) What link to a machine is sufficient to invoke the "or machine" prong? Are the "specific" machines of Benson required, or can a general purpose computer qualify? What constitutes "extra-solution activity?" If a process may meet eligibility muster as a "machine," why does the Act "require" a machine link for a "process" to show eligibility? Does the rule against redundancy itself suggest an inadequacy in this complex spider web of tests supposedly "required" by the language of section 101?

One final point, reading section 101 as it is written will not permit a flurry of frivolous and useless inventions. Even beyond the exclusion for abstractness, the final clause of section 101 — "subject to the conditions and requirements of this title" — ensures that a claimed invention must still satisfy the "conditions and requirements" set forth in the remainder title 35. Id. These statutory conditions and requirements better serve the function of screening out unpatentable inventions than some vague "transformation" or "proper machine link" test.

In simple terms, the statute does not mention "transformations" or any of the other Industrial Age descriptions of subject matter categories that this court endows with inordinate importance today. The Act has not empowered the courts to impose limitations on patent eligible subject matter beyond the broad and ordinary meaning of the terms process, machine, manufacture, and composition of matter. It has instead preserved the promise of patent protection for still unknown fields of invention.

Innovation has moved beyond the brick and mortar world. Even this court's test, with its caveats and winding explanations seems to recognize this. Today's software

9

transforms our lives without physical anchors. This court's test not only risks hobbling these advances, but precluding patent protection for tomorrow's technologies. "We still do not know one thousandth of one percent of what nature has revealed to us." Attributed to Albert Einstein. If this court has its way, the Patent Act may not incentivize, but complicate, our search for the vast secrets of nature. When all else fails, consult the statute.

10

****************************

United States Court of Appeals for the Federal Circuit

2007-1130
(Serial No. 08/833,892)


IN RE BERNARD L. BILSKI
and RAND A. WARSAW

Appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences.

DYK, Circuit Judge, with whom LINN, Circuit Judge, joins, concurring.

While I fully join the majority opinion, I write separately to respond to the claim in the two dissents that the majority's opinion is not grounded in the statute, but rather "usurps the legislative role."1 In fact, the unpatentability of processes not involving manufactures, machines, or compositions of matter has been firmly embedded in the statute since the time of the Patent Act of 1793, ch. 11, 1 Stat. 318 (1793). It is our dissenting colleagues who would legislate by expanding patentable subject matter far beyond what is allowed by the statute.

I

Section 101 now provides:

Whoever 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.

1

35 U.S.C. § 101 (emphases added).

The current version of § 101 can be traced back to the Patent Act of 1793. In relevant part, the 1793 Act stated that a patent may be granted to any person or persons who:

shall allege that he or they have invented any new and useful art, machine, manufacture or composition of matter, or any new and useful improvement on any art, machine, manufacture or composition of matter . . . .
1 Stat. 318, 319 § 1 (1793) (emphases added). The criteria for patentability established by the 1793 Act remained essentially unchanged until 1952, when Congress amended § 101 by replacing the word "art" with "process" and providing in § 100(b) a definition of the term "process". The Supreme Court has made clear that this change did not alter the substantive understanding of the statute; it did not broaden the scope of patentable subject matter.2 Thus, our interpretation of § 101 must begin with a consideration of what the drafters of the early patent statutes understood the patentability standard to require in 1793. See Diehr, 450 U.S. at 182-83 (looking to the 1793 Act).

A

The patentability criteria of the 1793 Act were to a significant extent the same in the 1790 Act.3 The 1790 "statute was largely based on and incorporated" features of

2

the English system and reveals a sophisticated knowledge of the English patent law and practice.4 This is reflected in Senate committee report5 for the bill that became the 1790 Act, which expressly noted the drafters. reliance on the English practice:

The Bill depending before the House of Representatives for the Promotion of useful Arts is framed according to the Course of Practice in the English Patent Office except in two Instances.
22 J. Pat. Off. Soc'y at 363 (emphasis added).6 Likewise, the legislative history of the 1793 Patent Act reflects the same keen understanding of English patent practice. During a debate in the House over the creation of a Patent Office, for example, the

3

Representative who introduced the bill noted that its principles were "an imitation of the Patent System of Great Britain." 3 Annals of Congress 855 (1793).7

Later, Justice Story, writing for the Supreme Court, recognized the profound influence of the English practice on these early patent laws, which in many respects codified the common law:

It is obvious to the careful inquirer, that many of the provisions of our patent act are derived from the principles and practice which have prevailed in the construction of that of England. . . . The language of [the patent clause of the Statute of Monopolies] is not, as we shall presently see, identical with ours; but the construction of it adopted by the English courts, and the principles and practice which have long regulated the grants of their patents, as they must have been known and are tacitly referred to in some of the provisions of our own statute, afford materials to illustrate it.
Pennock v. Dialogue, 27 U.S. 1, 18 (1829) (emphases added); see also Graham v. John Deere Co., 383 U.S. 1, 5 (1966) (noting that first patent statute was written against the "backdrop" of English monopoly practices); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 n.6 (1964) ("Much American patent law derives from English patent law.").

While Congress departed from the English practice in certain limited respects, in many respects Congress simply adopted the English practice without change. Both the 1790 and the 1793 Acts, for example, adopted the same 14-year patent term as in

4

England. Both also required inventors to file a written specification — a requirement recognized by the English common law courts in the mid-eighteenth century.8 In addition, as discussed below, the categories of patentable subject matter closely tracked the English approach, and in certain respects reflected a deliberate choice between competing views prevalent in England at the time.

B

The English practice in 1793, imported into the American statutes, explicitly recognized a limit on patentable subject matter. As the Supreme Court recounted in Graham v. John Deere, the English concern about limiting the allowable scope of patents arose from an aversion to the odious Crown practice of granting patents on particular types of businesses to court favorites. 383 U.S. 1, 5 (1966); see also MacLeod, supra n.8 at 15 ("But most offensive of all was the granting of monopoly powers in established industries, as a form of patronage, to courtiers whom the crown could not otherwise afford to reward."). Parliament responded to the Crown.s abuses in 1623 by passing the Statute of Monopolies, prohibiting the Crown from granting these despised industry-type monopolies. Not all monopolies were prohibited, however: the Statute expressly exempted invention-type patent monopolies. Section 6 of the Statute exempted from its prohibitions "letters patent and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures . . . ." 21 Jac. 1. c.3, s.6 (emphases added).

5

Each of the five categories of patentable subject matter recognized by the 1793 Patent Act — (1) "manufacture," (2) "machine," (3) "composition of matter," (4) "any new and useful improvement," and (5) "art" — was drawn either from the Statute of Monopolies and the common law refinement of its interpretation or resolved competing views being debated in England at the time. See To Promote the Progress, supra n.4 at 239.

"Manufacture." At the most basic level, the 1793 Act, like the Statute of Monopolies, expressly provided for the patentability of "manufactures." This language was not accidental, but rather reflected a conscious adoption of that term as it was used in the English practice. Id. ("It is clear that the Congress sought to incorporate into the U.S. statutory scheme in 1793 at least as much of the common law interpretation of 'new manufactures' as was understood at the time.").

"Machine." Likewise, the category of "machines" in the 1793 Act had long been understood to be within the term "manufactures" as used in the English statute. See id.; see, e.g., Morris v. Bramson, 1 Carp. P.C. 30, 31 (K.B. 1776) (sustaining a patent "for an engine or machine on which is fixed a set of working needles. . . for the making of eyelet-holes") (emphasis added); MacLeod, supra n.8 at 101 (noting, among numerous other early machine patents, seven patents on "machinery to raise coal and ores" before 1750).

"Composition of Matter." Although the 1790 statute did not explicitly include "compositions of matter," this was remedied in the 1793 statute. At the time, "compositions of matter" were already understood to be a type of manufacture patentable under the English statute. See To Promote the Progress, supra n.4, at

6

224 n.4. One example is found in Liardet v. Johnson, 1 Carp. P.C. 35 (K.B. 1778), a case involving a patent on a "composition" of stucco (a composition of matter). Lord Mansfield's jury instructions noted that by the time of that trial he had decided "several cases" involving compositions: "But if . . . the specification of the composition gives no proportions, there is an end of his patent. . . . I have determined, [in] several cases here, the specification must state, where there is a composition, the proportions . . . ."9

"Any new and useful improvement." The reference to "any new and useful improvement" in the 1793 Act also adopted a consensus recently reached by the English courts. The common law courts had first ruled in Bircot's Case in the early seventeenth century that an improvement to an existing machine could not be the proper subject of a patent under the Statute of Monopolies. See Boulton v. Bull, 2 H. Bl. 463, 488 (C.P. 1795). In 1776 that line of cases was overruled in Morris v. Bramson, because such a reading of the statute "would go to repeal almost every patent that was ever granted."10

"Art." As the Supreme Court has recognized, a process "was considered a form of 'art' as that term was used in the 1793 Act." Diehr, 450 U.S. at 182 (citing Corning v. Burden, 56 U.S. at 267-268). The language of the Statute of Monopolies permitted patents on that which could be characterized as the "working or making of any manner of new manufactures within this realm." 21 Jac. 1. c.3, s.6. While this language plainly

7

applied to tangible "new manufactures" (such as machines or compositions of matter), it also appeared to allow patenting of manufacturing processes as the "working or making of any manner of new manufactures." Thus, under the Statute of Monopolies patents could be had on the "working or making of any manner of new manufactures." Numerous method patents had issued by 1793, including James Watt's famous 1769 patent on a "[m]ethod of diminishing the consumption of fuel in [steam]-engines."11 However, the English courts in the mid-eighteenth century had not yet resolved whether processes for manufacturing were themselves patentable under the statute, and as discussed below, the issue was being actively litigated in the English courts. In the 1793 Act Congress resolved this question by including the term "art" in the statute, adopting the practice of the English law officers and the views of those in England who favored process patents.

II

The question remains as to what processes were considered to be patentable in England at the time of the 1793 Act. Examination of the relevant sources leads to the conclusion that the method Bilski seeks to claim would not have been considered patentable subject matter as a process under the English statute.

A

First, the language of the Statute of Monopolies — "working or making of any manner of new manufactures" — suggests that only processes that related to "manufactures" (including machines or compositions of matter) could be patented.

8

Second, the English patent practice before and contemporaneous with the 1793 Act confirms the notion that patentable subject matter was limited by the term "manufacture" in the Statute of Monopolies and required a relation to the other categories of patentable subject matter. The organization of human activity was not within its bounds. Rather, the patents registered in England under the Statute of Monopolies before 1793 were limited to articles of manufacture, machines for manufacturing, compositions of matter, and related processes. A complete list of such patents (with a few missing patents from the 17th century) was published in the mid- 1800s by Bennet Woodcroft, the first head of the English Patent Office.12 Representative examples of patented processes at the time include: "Method of making a more easy and perfect division in stocking frame-work manufactures," No. 1417 to John Webb (1784); "Making and preparing potashes and pearl-ashes of materials not before used for the purpose," No. 1223 to Richard Shannon (1779); "Making salt from sea-water or brine, by steam," No. 1006 to Daniel Scott (1772); "Milling raw hides and skins so as to be equally good for leather as if tanned," No. 893 to George Merchant (1768); "Making salt, and removing the corrosive nature of the same, by a separate preparation of the brine," No. 416 to George Campbell (1717); and "Making good and merchantable tough iron . . . with one-fifth of the expense of charcoal as now used," No. 113 to Sir Phillibert Vernatt (1637).

Nothing in Woodcroft's list suggests that any of these hundreds of patents was on a method for organizing human activity, save for one aberrational patent discussed

9

below. Rather, the established practice reflects the understanding that only processes related to manufacturing or "manufactures" were within the statute. The English cases before 1793 recognized that the practice followed in issuing patents was directly relevant to the construction of the statute. See, e.g., Morris, 1 Carp. P.C. at 34 (declining to read the statute in such a way that "would go to repeal almost every patent that was ever granted").

Third, nearly contemporaneous English cases following shortly after the 1793 Act lend further insight into what processes were thought to be patentable under the English practice at the time the statute was enacted. Although the issue of the validity of process patents had not conclusively been settled in the English common law before 1793, the question was brought before the courts in the landmark case of Boulton v. Bull, 2 H. Bl. 463, 465 (C.P. 1795), which involved James Watt's patent for a "method of lessening the consumption of steam, and consequently fuel in [steam] engines."13 In 1795, the court rendered a split decision, with two judges on each side. Boulton, 2 H. Bl. at 463 (1795). Those who viewed process patents as invalid, as did Justice Buller, urged that a method was merely an unpatentable principle: "A patent must be for some new production from [elements of nature], and not for the elements themselves." Id. at 485. He thought "it impossible to support a patent for a method only, without having carried it into effect and produced some new substance." Id. at 486. Justice Health similarly found that the "new invented method for lessening the consumption of steam

10

and fuel in [steam] engines" (i.e., the Watt patent), being neither "machinery" nor a "substance[] (such as medicine[]) formed by chemical and other processes," was not within the Statute of Monopolies. Id. at 481-82. In contrast, Lord Chief Justice Eyres, who believed processes had long been a valid subject of patents, urged that "two-thirds, I believe I might say three-fourths, of all patents granted since the statute [of Monopolies] passed, are for methods of operating and of manufacturing . . . ." Id. at 494-95 (emphasis added). He agreed that "[u]ndoubtedly there can be no patent for a mere principle; but for a principle so far embodied and connected with corporeal substances . . . I think there may be a patent." Id. at 495 (emphasis added). Justice Rooke also noted that Watt's method was within the statute because it was connected with machinery: "What method can there be of saving steam or fuel in engines, but by some variation in the construction of them?" Id. at 478. The Justices who believed process patents were valid spoke in terms of manufacturing, machines, and compositions of matter, because the processes they believed fell within the statute were processes that "embodied and connected with corporeal substances." Id. at 495.

In 1799, on appeal from another case involving the same Watt patent, the validity of such process patents were upheld. Hornblower v. Boulton (K.B. 1799), 8 T.R. 95. There, Chief Justice Lord Kenyon stated that "it evidently appears that the patentee claims a monopoly for an engine or machine, composed of material parts, which are to produce the effect described; and that the mode of producing this is so described, as to enable mechanics to produce it. . . . I have no doubt in saying, that this is a patent for a manufacture, which I understand to be something made by the hands of man." Id. at 99. Justice Grose agreed, finding that "Mr. Watt had invented a method of lessening

11

the consumption of steam and fuel in [steam] engines", and this was "not a patent for a mere principle, but for the working and making of a new manufacture within the words and meaning of the statute." Id. at 101-02. He further noted, however, that "This method . . . if not effected or accompanied by a manufacture, I should hardly consider as within the [statute]." Id. at 102-03 (emphasis added). Justice Lawrence similarly found such process patents to be permissible: "Engine and method mean the same thing, and may be the subject of a patent. 'Method,' properly speaking, is only placing several things and performing several operations in the most convenient order . . . ." Id. at 106.

There is no suggestion in any of this early consideration of process patents that processes for organizing human activity were or ever had been patentable. Rather, the uniform assumption was that the only processes that were patentable were processes for using or creating manufactures, machines, and compositions of matter.

B

The dissenters here, by implication at least, appear to assume that this consistent English practice should somehow be ignored in interpreting the current statute because of technological change.14 There are several responses to this.

The first of these is that the Supreme Court has made clear that when Congress intends to codify existing law, as was the case with the 1793 statute, the law must be interpreted in light of the practice at the time of codification. In Schmuck v. United

12

States, 489 U.S. 705, 718-19 (1989), for example, the Court considered the proper interpretation of Rule 31(c) of the Federal Rules of Criminal Procedure. The rule, "which ha[d] not been amended since its adoption in 1944," was a restatement of an 1872 Act "codif[ying] the common law for federal criminal trials." Because of this fact, the Court found that the "prevailing practice at the time of the Rule's promulgation informs our understanding of its terms." Id.; see also, e.g., Eldred v. Ashcroft, 537 U.S. 186, 200 n.5 (2003) (considering the English practice at the time of the enactment of the 1790 copyright act); Tome v. United States, 513 U.S. 150, 159-60, 166 (1995) (looking to practice and noting that "a majority of common-law courts were performing [a task required by the common law] for well over a century" in interpreting a Federal Rule of Evidence that "was intended to carry over the common-law"); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549-554 (1985) (relying on the history and practice of copyright fair-use when statutory provision reflected the "intent of Congress to codify the common-law doctrine"); Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 164-65 (1939) (considering the English practice "which theretofore had been evolved in the English Court of Chancery" at the time of the 1789 Judiciary Act in determining availability of costs under equity jurisdiction).

13

Second, the Supreme Court language upon which the dissents rely15 offers no warrant for rewriting the 1793 Act. To be sure, Congress intended the courts to have some latitude in interpreting § 101 to cover emerging technologies, Chakrabarty, 447 U.S. at 316, and the categorical terms chosen are sufficiently broad to encompass a wide range of new technologies. But there is no evidence that Congress intended to confer upon the courts latitude to extend the categories of patentable subject matter in a significant way. To the contrary, the Supreme Court made clear that "Congress has performed its constitutional role in defining patentable subject matter in § 101; we perform ours in construing the language Congress has employed. In so doing, our obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose." Id. at 315. In Benson, the Court rejected the argument that its decision would "freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology." Gottschalk v. Benson, 409 U.S. 63, 71 (1972). Instead, the Court explained that it "may be that the patent laws should be extended to cover [such onrushing technology], a policy matter to which we are not competent to speak" but that "considered action by the Congress is needed." Id. at 72-73.

Third, we are not dealing here with a type of subject matter unknown in 1793. One commentator has noted:

14

The absence of business method patents cannot be explained by an absence of entrepreneurial creativity in Great Britain during the century before the American Revolution. On the contrary, 1720 is widely hailed as the beginning of a new era in English public finance and the beginning of major innovations in business organization.
Malla Pollack, The Multiple Unconstitutionality of Business Method Patents, 28 Rutgers Computer & Tech. L.J. 61, 96 (2002) (footnotes omitted).16 In the hundreds of patents in Woodcroft's exhaustive list of English patents granted from 1612 to 1793, there appears to be only a single patent akin to the type of method Bilski seeks to claim. That sole exception was a patent granted to John Knox in 1778 on a "Plan for assurances on lives of persons from 10 to 80 years of age."17 Later commentators have viewed this single patent as clearly contrary to the Statute of Monopolies:
Such protection of an idea should be impossible . . . . It is difficult to understand how Knox's plan for insuring lives could be regarded as 'a new manner of manufacture'; perhaps the Law Officer was in a very good humour that day, or perhaps he had forgotten the wording of the statute; most likely he was concerned only with the promised "very considerable Consumption of [Revenue] Stamps" which, Knox declared, would 'contribute to the increase of the Public Revenues.'
Renn, supra n.16 at 285. There is no indication that Knox's patent was ever enforced or its validity tested, or that this example led to other patents or efforts to patent similar activities. But the existence of the Knox patent suggests that as of 1793 the potential advantage of patenting such activities was well-understood.

In short, the need to accommodate technological change in no way suggests that

15

the judiciary is charged with rewriting the statute to include methods for organizing human activity that do not involve manufactures, machines, or compositions of matter.

C

Since the 1793 statute was reenacted in 1952, it is finally important also to inquire whether between 1793 and 1952 the U.S. Patent Office and the courts in this country had departed from the English practice and allowed patents such as those sought by Bilski. In fact, the U.S. Patent Office operating under the 1793 Act hewed closely to the original understanding of the statute. As in the English practice of the time, there is no evidence that patents were granted under the 1793 Act on methods of organizing human activity not involving manufactures, machines or the creation of compositions of matter. The amicus briefs have addressed the early American practice, and some of them claim that human activity patents were allowed in the early period. To the contrary, the patents cited in the briefs are plainly distinguishable.

The earliest claimed human activity patent cited in the briefs issued in 1840, entitled "Improvement in the Mathematical Operation of Drawing Lottery-Schemes." Br. of Amicus Curiae Regulatory Datacorp 23 n.54. But that patent is fundamentally unlike the Bilski claim, since it does not claim a method of organizing human activity not involving manufactures, machines or the creation of compositions of matter. See U.S. Patent No. 1700 (issued July 18, 1840). Rather, it is directed to a scheme of combining different combinations of numbers onto a large number of physical lottery tickets (i.e., a

16

method for manufacturing lottery tickets). Id. col.1. The other early-issued patents cited in the amicus briefs are similarly distinguishable.18

Likewise, Supreme Court decisions before the 1952 Patent Act assumed that the only processes that were patentable were those involving other types of patentable subject matter. In later cases the Supreme Court has recognized that these cases set forth the standard for process patents in the pre-1952 period. Diehr, 450 U.S. at 182-84; Gottschalk, 409 U.S. at 69-70. The leading case is Corning v. Burden, 56 U.S. 252 (1853). There, the Supreme Court discussed the patentability of processes:

A process, eo nomine, is not made the subject of a patent in our act of Congress. It is included under the general term 'useful art.' An art may require one or more processes or machines in order to produce a certain result or manufacture. The term machine includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. But where the result or effect is produced by chemical action, by the operation or application of some element or power of nature, or of one substance to another, such modes, methods, or operations, are called 'processes.' A new process is usually the result of discovery; a machine, of invention. The arts of tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores, and numerous others are usually carried on by processes, as distinguished from machines. . . . It is for the discovery or invention of

17

some practicable method or means of producing a beneficial result or effect that a patent is granted, and not for the result or effect itself. It is when the term process is used to represent the means or method of producing a result that it is patentable, and it will include all methods or means which are not effected by mechanism or mechanical combinations.
Id. at 267-68 (emphases added). In Cochrane v. Deener, the Court clarified its understanding of a patentable "process":
That a process may be patentable, irrespective of the particular form of the instrumentalities used, cannot be disputed. . . . A process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. If new and useful, it is just as patentable as is a piece of machinery. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.
94 U.S. 780, 787-88 (1876) (emphases added). Finally, in Tilghman v. Proctor, 102 U.S. 707, 722 (1880), the Court noted:
That a patent can be granted for a process there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture. A manufacturing process is clearly an art, within the meaning of the law.
(Emphasis added). The Court's definition of a patentable process was well-accepted and consistently applied by the courts of appeals. See, e.g., P.E. Sharpless Co. v. Crawford Farms, 287 F. 655, 658-59 (2nd Cir. 1923); Chicago Sugar-Refining Co. v. Charles Pope Glucose Co., 84 F. 977, 982 (7th Cir. 1898).

Finally, nothing in the legislative history of the 1952 Act suggests that Congress intended to enlarge the category of patentable subject matter to include patents such as the method Bilski attempts to claim. As discussed above, the only change made by the

18

1952 Act was in replacing the word "art" with the word "process". The Supreme Court has already concluded that this change did not alter the substantive understanding of the statute. See Diehr, 450 U.S. at 182 ("[A] process has historically enjoyed patent protection because it was considered a form of 'art' as that term was used in the 1793 Act.").

The House Report accompanying the 1952 bill includes the now-famous reference to "anything under the sun made by man":

A person may have "invented" a machine or a manufacture, which may include anything under the sun made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.
H.R. 1923 at 7. Although this passage has been used by our court in past cases to justify a broad interpretation of patentable subject matter, I agree with Judge Mayer that, when read in context, the statement undercuts the notion that Congress intended to expand the scope of § 101. See Mayer, J., dissenting op. at 5-6. It refers to things .made by man,. not to methods of organizing human activity. In this respect, the language is reminiscent of the 1799 use of the phrase "something made by the hands of man" by Chief Justice Lord Kenyon as a limitation on patentable subject matter under the Statute of Monopolies. The idea that an invention must be "made by man" was used to distinguish "a philosophical principle only, neither organized or capable of being organized" from a patentable manufacture. Hornblower, 8 T.R. at 98. Lord Kenyon held that the patent before him was not based on a mere principle, but was rather "a patent for a manufacture, which I understand to be something made by the hands of man." Id. at 98 (emphases added); accord American Fruit Growers v. Brogdex Co., 283

19

U.S. 1, 11 (1931) (giving "anything made for use from raw or prepared materials" as one definition of "manufacture").

In short, the history of § 101 fully supports the majority's holding that Bilski's claim does not recite patentable subject matter. Our decision does not reflect "legislative" work, but rather careful and respectful adherence to the Congressional purpose.

20

1 The dissents fault the majority for "ventur[ing] away from the statute," Rader, J., dissenting op. at 6, and "usurp[ing] the legislative role," Newman, J., dissenting op. at 41.
2 See Diamond v. Diehr, 450 U.S. 175, 182 (1981) ("[A] process has historically enjoyed patent protection because it was considered a form of 'art' as that term was used in the 1793 Act."); Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). Rather, the 1952 Act simply affirmed the prior judicial understanding, as set forth in Corning v. Burden, 56 U.S. (15 How.) 252 (1853), that Congress in 1793 had provided for the patentability of a "process" under the term "art". Diehr, 450 U.S. at 182.
3 In relevant part, the 1790 Act permitted patents upon "any useful art, manufacture, engine, machine, or device, or any improvement therein not before known or used." Ch. 11, § 1, 1 Stat. 109, 110 (1790).
4 Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law & Administration, 1798-1836 109 (1998) (hereinafter To Promote the Progress); see also Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents (Part 1), 76 J. Pat. & Trademark Off. Soc'y 697, 698 (1994) ("[T]he English common law relating to patents was what was best known in the infant United States.").
5 Senate Committee Report Accompanying Proposed Amendments to H.R. 41, reprinted in Proceedings in Congress During the Years 1789 & 1790 Relating to the First Patent & Copyright Laws, 22 J. Pat. Off. Soc'y 352, 363 (1940).
6 Neither of those two instances related to patentable subject matter or was adopted in the enacted statute. The first proposed departure from the English practice was a novelty provision protecting the inventor against those who derived their knowledge of the invention from the true inventor; the second was in a requirement that patentees make a "Public Advertisement" of their invention. Such a requirement was thought necessary "in so extensive a Country as the United States." Senate Report, reprinted in 22 J. Pat. Off. Soc'y at 363-64.

The American statute ultimately differed in some other respects. For example, Congress rejected the English rule that the invention need only be novel in England. The American statute required novelty against the whole world and did not permit "patents of importation." See To Promote the Progress, supra n.4 at 95-97, 137-38.
7 Even the opposing view — urging departure from the English practice in particular respects — recognized that the English practice provided considerable guidance. See 3 Annals of Congress at 855-56 ("[Great Britain] had afforded, it was true, much experience on the subject; but regulations adopted there would not exactly comport in all respects either with the situation of this country, or with the rights of the citizen here. The minds of some members had taken a wrong direction, he conceived, from the view in which they had taken up the subject under its analogy with the doctrine of patents in England."); see also To Promote the Progress, supra n.4 at 216-17.
8 See Christine MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660-1800 48-49 (2002); To Promote the Progress, supra n.4 at 400, 404.
9 Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 55 (2002) (quoting E. Wyndham Hulme, On the History of the Patent Laws in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280, 285 (1902)).
10 Morris, 1 Carp. P.C. at 34; see also Boulton, 2 H.Bl. at 489 ("Since [Morris v. Bramson], it has been the generally received opinion in Westminster Hall, that a patent for an addition is good.").
11 Walterscheid, supra n.9 at 355-56 (emphasis added); see also Boulton, 2 H. Bl. at 494-95 (1795) (noting that many method patents had issued).
12 Bennet Woodcroft, Alphabetical Index of Patentees of Inventions, from March 2, 1617 (14 James I) to October 1, 1852 (16 Victoriae) (2d ed. 1857)).
13 The Supreme Court has in several opinions noted Boulton v. Bull in connection with its consideration of English patent practice. See, e.g., Markman v. Westview Instruments, Inc., 517 U.S. 370 , 381 n.6 (1996); Evans v. Eaton, 20 U.S. (7 Wheat.) 356, 388 n.2-3 (1822).
14 See, e.g., Rader, J., dissenting op. at 1 ("[T]his court ties our patent system to dicta from an industrial age decades removed from the bleeding edge."); id. ("[T]his court . . . links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes . . . ."); Newman, J., dissenting op. at 5 ("[T]his court now adopts a redefinition of "process" in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities . . . .").
15 See, e.g., Newman, J., dissenting op. at 10 ("'[C]ourts should not read into the patent laws limitations and conditions which the legislature has not expressed.'" (quoting Diehr, 450 U.S. at 182)); Rader, J., dissenting op. at 3 (same).
16 Similarly, another commentator states: "it might be wondered why none of the many ingenious schemes of insurance has ever been protected by patenting it." D.F. Renn, John Knox's Plan for Insuring Lives: A Patent of Invention in 1778, 101 J. Inst. Actuaries 285 (1974), available at http://www.actuaries.org.uk/__data/assets/ pdf_file/0006/25278/0285-0289.pdf (last visited Oct. 3, 2008).
17 Woodcroft, supra n.12 at 324.
18 See, e.g., Complemental Accident Insurance Policy, U.S. Patent No. 389,818 (issued Sept. 18, 1888) (claiming a "complemental insurance policy" as an apparatus consisting of two separate cards secured together); Insurance System, U.S. Patent No. 853,852 (issued May 14, 1907) (claiming a "two-part insurance policy" as "an article of manufacture").

A number of the amici also refer to the discussion and the patents cited in "A USPTO White Paper" (the "White Paper") to establish the historical foundation of business method patents. See, e.g., Br. of Amicus Curiae Accenture 14-15 n. 11. As Judge Mayer notes, dissenting op. at 7 n.4, the White Paper does not show this proposition. As the White Paper itself recognizes, the early financial patents it discusses were largely mechanical products and methods related to financial paper, not methods for organizing human activity. White Paper at 2. Thus, while the White Paper shows that inventions in the business realm of finance and management historically enjoyed patent protection, it does little to establish that business methods directed to the organization of human activity not involving manufactures, machines or the creation of compositions of matter were similarly patentable.

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