By Jad A. Mills and Christopher E. Everett, Foley & Lardner LLP
This article is part of our Summer 2009 edition of Legal News: China Quarterly Newsletter, Eye on China.
While it was already becoming increasingly difficult to obtain prompt U.S. patent protection, the Court of Appeals for the Federal Circuit (Federal Circuit) imposed tough new patentability standards on method claims in its October 2008 In re Bilski decision. (In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008) (Bilski). This decision is expected by many to mark the end of business method patents. However, Bilski not only affects business method patents, but also has important implications for at least the software and life science fields. This issue has become so important that the U.S. Supreme Court agreed in June 2009 to review the Federal Circuit decision. Although the Supreme Court’s response to Bilski is awaited with great expectation, prudent patent applicants need to understand the Federal Circuit’s Bilski decision now to best protect their business interests — regardless of how the Supreme Court rules.
U.S. law limits patentable subject matter to new and useful processes, machines, manufactures, and compositions of matter. Method claims fall under the “process” type of patentable subject matter. However, patentable subject matter also is limited to things created by mankind. Abstract concepts, phenomena of nature, and mental processes accomplished solely within one’s mind are not eligible for patent protection, but are the “basic tools” of scientific work. (In re Bilski, 545 F.3d at 952). The Bilski decision addressed whether a business method for hedging risk in the field of commodities trading was a patentable innovation.
The patent examiner rejected the Bilski claims because “‘the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application.’” (In re Bilski, 545 F.3d at 950 (quoting Ex parte Bilski No. 2002-2257, 2006 WL 5738364 1, 3 (B.P.A.I. Sept. 26, 2006))). The Board of Patent Appeals and Interferences upheld the rejection but noted that process claims that do not recite a specific apparatus can still be patentable “‘if there is a transformation of physical subject matter from one state to another.’” Id., 2006 WL 5738364 at 42)). The Federal Circuit combined these analyses in what is now known as the machine or transformation test, which states that method claims must either be tied to a particular apparatus or must transform a particular article into a different state or thing to be patent-eligible. The Federal Circuit further explained that merely including a physical step, providing a tangible result, or including an extraneous machine or transformation was not sufficient. Although the Bilski decision does not categorically exclude all business methods from patent protection, by requiring the claims to be tied to a specific machine or to transforming a specific article, any patentable business method will necessarily be narrowly drawn to that machine or article, making it easy for imitators to design around. In addition to its implications for business methods, Bilski also has important implications for other fields of technology.
After Bilski, software is still patentable to the extent that it is tied to a specific machine or to the transformation of a specific article. The Federal Circuit has previously held that some signal and data transformations are patent-eligible. For instance, transforming X-ray attenuation into an image of body organs was held patentable in the Abele case because the data was transformed into a particular image representing a tangible physical object: the body organs. (In re Bilski, 545 F.3d at 962-963 (citing In re Abele, 684 F.2d 902, 908-09 (C.C.P.A. 1982))). Bilski’s method, however, transformed data that represented non-tangibles, legal obligations, and business risks. Many software applications may transform data that do not represent a tangible object. In such cases it becomes increasingly important to tie the software claim to a specific machine without unnecessarily limiting the scope of the claim.
Bilski also affects method claims in the life sciences industry. In Immunotherapies v. Biogen, the Federal Circuit affirmed the invalidation of claims for a method for evaluating vaccine immunization schedules because it failed to tie the method either to a particular machine or to the transformation of a particular article into a different state or being. (Classen Immunotherapies, Inc. v. Biogen Idec, No. 2006-1634 (Fed. Cir. 2008)).
In view of the Bilski decision’s effect on method patents from a variety of technology fields, companies should reevaluate the status of their intellectual property. Pending method applications close to being examined should be evaluated to find support for limiting the claims to a specific apparatus or article transformation. Some pending method applications may need to be abandoned, but valuable patent protection can be preserved in some cases by addressing the machine or transformation test as early in the prosecution process as possible.
New method applications should limit claims to specific machines or to the transformation of particular articles while preserving as much of the breadth of the claim as possible. This should be done with care and may be accomplished by drafting claims of varying scopes to maximize the application’s potential breadth. Although failing to tie the process to a particular machine or to the transformation of a particular article is fatal, tying the process to the wrong machine or article can dramatically weaken one’s patent protection. Specifications should be drafted in such a way that they give broad support for further claim limitations that may be needed during the prosecution. This process will be more successful if innovator companies have identified the machines to be used or articles to be transformed that are most essential to the invention and valuable to the inventor.
Previous method patents may not meet Bilski’s machine or transformation test. Owners, licensees, and potential practitioners of existing method patents should engage patent counsel to review these patents or licensing relationships involving such patents. By better understanding Bilski’s machine or transformation test and engaging experienced patent counsel, companies can maximize their IP protection potential while creating an efficient IP enforcement, procurement, and defense strategy. As Chinese companies continue to engage in U.S. markets, proper method-claim strategies will become more important than ever.