For many years, patent law has struggled with the question of whether a series of thoughts can be patented. Under the mental steps doctrine, the answer was no. More recently, the answer has been maybe, it depends. The United States Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over all patent appeals, recently revisited the issue in the newly minted case of In re Bilski. Generally, the mental steps doctrine states that an invention is not entitled to patent protection if it involves only mental steps. The mental steps doctrine addresses the threshold question concerning whether the invention constitutes patentable subject matter under 35 U.S.C. §101 (i.e., whether the invention falls within the types of thing that can be patented). Contact info@shimokaji.com for more information.

1. by Michael A. Shimokaji and Philip L. Gahagan
MIND
OVER
MATTER
The Bilski decision, like others before it, reveals how courts
have frequently kept patent law lagging behind technology
F
or many years, patent law has strug- several differing and changing tests, from a through the 1980s, a series of three cases
gled with the question of whether a strict no-mental-steps rule to the more recent laid the groundwork for what became the
series of thoughts can be patented. physical-transformation rule. The physical- transformation test for patentability of sub-
Under the mental steps doctrine, the transformation rule essentially states that in ject matter for processes. The first two cases
answer was no. More recently, the answer has order for a process to be patentable, it must that led to the transformation test are
been maybe. With In re Bilski, the U.S. Court undergo a physical transformation during Gottschalk v. Benson5 and Parker v. Flook.6
of Appeals for the Federal Circuit, which has the process.2 Recently, a second proposed In Benson, the court held that computer soft-
exclusive jurisdiction over patent appeals, test—utility—surfaced. ware was not patentable subject matter as a
recently revisited the issue. The mental steps A string of recent cases stemming from the process since the algorithm that it encom-
doctrine holds that an invention is not enti- U.S. Supreme Court’s Diamond v. Diehr3 passed was a mathematical formula and,
tled to patent protection if it involves only decision and continuing through the recent In therefore, a law of nature.7 The court specif-
mental steps. The threshold question con- re Bilski has outlined a utility-based test for
cerns whether an invention constitutes patentable subject matter as it pertains to Michael A. Shimokaji is a partner of Shimokaji &
patentable subject matter under 35 USC mental steps. Under the utility test, an inven- Associates, P.C., in Irvine, California, where his
AMANE KANEKO
Section 101, which outlines four categories: tion is patentable subject matter under Section practice includes patent litigation. Philip L.
machines, processes, manufactures, and com- 101 if it produces a useful, concrete, and Gahagan is a second-year law student and Center
positions of matter.1 tangible result.4 for International and Comparative Law Fellow at
Over the years, the courts have applied Beginning in the 1970s and continuing Whittier Law School in Costa Mesa.
36 Los Angeles Lawyer April 2009

3. ically stated that “transformation and reduc- expansive principles formulated with com- audio or video format, did not fall into any
tion of an article ‘to a different state or thing’ puter technology in mind.”16 The Federal category of Section 101 and therefore was not
is the clue to the patentability of a process Circuit, mindful that it could not overrule the patentable subject matter since it was neither
claim that does not include particular Supreme Court’s physical-transformation test a process (as the court defined it), method,
machines.”8 This sentiment was continued in handed down in Diehr, telegraphed its intent composition of matter, nor a machine.25
Flook, in which the court held that the patent to limit the impact of the rule when it stated Comiskey and Nuijten illustrate the contin-
being applied for was not patentable “not that “the notion of physical transformation uing struggle of courts to apply the physical-
because it contains a mathematical algorithm can be misunderstood.” The physical-trans- transformation test and the utility test, as
as one component” but because there is a lack formation test “is not an invariable require- well as whether mental steps processes are
of “inventive application of the principle.”9 ment, but merely one example of how a patentable.
In other words, it was not the fact that the mathematical algorithm may bring about a For example, after granting an en banc
application involved a mathematical formula useful application.”17 In this manner, the hearing and collecting some 100 plus amici
that doomed it (as in Benson) but the lack of Federal Circuit has effectively displaced the curiae briefs, the Federal Circuit Court of
application to an “invention.”10 Supreme Court’s physical-transformation test Appeals decided in Bilski that the utility
In 1981, the courts continued down this and supplanted it with a utility test as the stan- test was not the test that should be used in
line of reasoning in the case of Diamond v. dard for patentability of subject matter under order to ascertain whether a process appli-
Diehr, in which the U.S. Supreme Court reit- Section 101. The utility test asserts that a cation indicates Section 101 patentable sub-
erated the reasoning from Benson and Flook, process is patentable if the process produces ject matter. In Bilski, the court held that
creating the transformation doctrine in which a “useful, concrete, and tangible result.”18 The “while looking for a ‘useful, concrete, and
the Court held that “transformation and Federal Circuit in AT&T reinforced the trend tangible result’ may in many instances [be
reduction of an article to a different state or away from requiring a physical transforma- useful]…that inquiry is insufficient to deter-
thing is the clue to the patentability of a tion when it explained that an invention that mine whether a claim is patent-eligible under
process claim” not involving machines.11 dealt solely in numbers did not “render it §101.”26 The court then proceeded to reaf-
This “transformation” test focused solely on non-statutory subject matter, unless, of course, firm the preeminence of the transformation
whether a physical transformation occurs its operation does not produce a ‘useful, con- test, stating that in order to denote
during the process and on little else. crete, and tangible result.’”19 patentable subject matter, the process must
However, in the 27 years since the Diehr The court’s shift to the utility test from be tied to a particular machine, or transform
decision, the Federal Circuit has expanded more outdated legal methodologies is also an article “to a different state or thing.”27
upon the physical-transformation rule handed evidenced by the Federal Circuit’s most recent However, while the court completely dis-
down in Diehr. In the 1998 decision of State reinterpretation of the mathematical algo- missed the utility test, it left open the pos-
Street Bank and Trust Company v. Signature rithm exception established in State Street. sibility—discussed in the appellant’s sup-
Financial Group, Inc., the Federal Circuit The court explained that if a process uses a plemental brief—that a patentable process
held that the repetitive use of the term “any” mathematical algorithm to achieve a “new could involve, if not be based completely on,
within 35 USC Section 101 shows congres- and useful end, it ‘at the very least is not several mental steps.
sional “intent not to place any restrictions on barred at the threshold by §101.”20 While In explaining this new reasoning, the court
the subject matter for which a patent may be there are conflicting decisions in the case law, held that “the proper inquiry under Section
obtained beyond those specifically recited in the utility test appears to have taken root as 101 is not whether the process claim recites
§ 101.”12 The court in State Street continued the new standard for determining patentable sufficient ‘physical steps,’ but rather the claim
to carve out an exception for the transfor- subject matter under Section 101. meets the machine-or-transformation test.…A
mation of data and began to outline the for- The twin cases of In re Comiskey21 and In claim that purportedly lacks any ‘physical
mation of a “utility-based” test for patentabil- re Nuijten,22 decided in late 2007, epitomize steps’ but is still tied to a machine or achieves
ity of subject matter under Section 101. The the struggle over whether the physical-trans- an eligible transformation passes muster
court held that the transformation of data was formation test retains any applicability. under §101.”28 As to what constitutes an
valid subject matter since it transformed and Although the decisions were published on “eligible transformation,” the court was a
produced a “useful, concrete, and tangible the same day, they came to different conclu- little unclear. The court did hold that the
result.”13 The court focused on whether the sions concerning the patentability of mental “transformation” must be one that “is cen-
transformation of the data involved was “use- steps processes. The court in Comiskey effec- tral to the purpose of the claimed process”
ful” and not whether a strict physical trans- tively held that an invention must include a and that the patentability of a process that
formation occurred.14 physical transformation in order for it to be involves a “chemical or physical transfor-
Over the next 10 years, the Federal Circuit the type of thing for which a patent is granted. mation of physical objects or substances”
would continue to move further away from This conclusion was reached by following a was “virtually self-evident.”29 Whether the
a “physical transformation” test and move line of cases that had ultimately held that purported transformation could take place
closer and closer to the adopting of a utility mental steps processes must be tied to another entirely in the ether of computer circuitry is
test in tune with the congressional desire to category of subject matter in order to be less certain.
allow “anything under the sun that is made patentable.23 The court in Comiskey breathed The court, however, reaffirmed a previous
by man” to obtain a patent.15 renewed life into the mental steps doctrine by ruling in which it held that the transforma-
once again concluding that mental steps were tion of raw data into a particular visual depic-
The Utility-Based Test not patentable subject matter and likened tion of a physical object on a display “was suf-
In AT&T Corporation v. Excel Communica- them to abstract concepts.24 ficient to render that more narrowly-claimed
tions, Inc., the court noted that at one point, However, the Nuijten court ultimately process patent-eligible.”30 As the court stated:
the “PTO published guidelines essentially avoided the question of the patentability of “[T]he claim was not required to involve any
rejecting the notion that computer programs mental steps processes by holding that the transformation of the underlying physical
were patentable. As technology progressed, proposed invention, a method for embed- object that the data represented.”31 The court
the courts disagreed…and announced more ding a “watermark-type” signal within an continued on—perhaps leaving the door of
38 Los Angeles Lawyer April 2009

4. mental steps patentability there existed a “strong pas-
open—by stating: “[S]o long sion in this Court for striking
as the claimed process is lim- [patents] down, so that the
ited to a practical application only patent that is valid is
of a fundamental principle to one which this Court has not
transform specific data, and been able to get its hands
the claim is limited to a visual on.”41 Thus, when Congress
depiction that represents spe- changed the patent laws in
cific physical-objects or sub- 1952, the change was meant
stances,” the claim would not to create a broader and more
be preemptive and would be patent-friendly system. As the
patentable under Section 101. legislative history illustrates,
“anything under the sun that
Mental Steps after Bilski is made by man” and fulfills
To understand why mental the conditions of the title is
steps should be patentable, a worthy of patent protec-
review of first principles is in tion.42 The wide berth given
order. The patent system is to the subject-matter stan-
mandated by the U.S. Con- dard derives from these
stitution in order to “pro- patent-friendly policies.
mote the Progress of Science The courts have inter-
and the useful Arts.”32 To preted the usefulness of an
achieve this goal, the patent invention in similar terms of
system stimulates “the cre- benefits to society. Courts
ative activity of authors and have used language such as
inventors by the provision of “capacity to perform func-
a special reward [a limited tion,” practicability, and
monopoly], and [allowing] accomplishment of a “pur-
the public access to the prod- pose practically when applied
ucts of the genius after the in industry.” 43 Therefore,
limited period of exclusive utility is found in the practi-
control has expired.”33 By cability and application of
allowing a creator to establish the process and not from the
a limited monopoly over the process itself or an intra-
invention, the sciences and useful arts are definition of the term “process” in the statute. process transformation. Under this rubric,
promoted. Society reaps the benefits of the Congress defined it to be “a process, art or mental steps processes that are practicable,
invention during and after the grant of method, and includes a new use of a known accomplish a purpose, and are applicable to
monopoly. The Supreme Court has stated process, machine, manufacture, composition industry and do not fall into the judicially cre-
that the patent system was created to foster of matter, or material.”37 While usage of the ated pitfalls of unpatentable subject matter
productive efforts that, in turn, will have a term “process” in its own definition is prob- (e.g., abstract concepts) denote patentable
positive effect on society.34 This is the con- lematic, this usage indicates that the process subject matter. This formulation is also in
stitutional and public policy backdrop against category is a separate category of patentable line with congressional intent to create a sys-
which the debate about patenting of mental subject matter independent of any of the tem that would benefit society. A mental steps
processes is conducted. other physical categories of subject matter process that conforms to these practical
In 1952, the 82nd Congress rewrote what (machine, manufacture, composition of mat- requirements is within the applicability and
was essentially a nineteenth century version ter, or material). The legislative history sup- social usefulness standard from which
of the patent laws by creating what became ports this interpretation.38 patentability derives.
Title 35 of the U.S. Code.35 Two important Congress placed no further limitation or Alternatively, if the physical-transforma-
changes were that Congress eliminated the restriction on the categorical definition. It is tion test were to be held as the standard for
term “art” from the categories of patentable a judicially created truism that the courts patentability of a process, the utility and use-
subject matter, replacing it with the term “should not read into federal patent laws fulness of the process is taken out of the
“process,” and added a definition of the term limitations and conditions which [the] legis- equation. This would, in turn, defeat the pur-
“process” in what would become Sections lature has not expressed.”39 Since Congress pose of granting a patent. Precedents and
100 and 101. did not divide processes into “mental” and legislative history illustrate that the genius of
The legislative history contains an expla- “physical,” the suggestion that somehow the patent system rests in the dual benefit
nation of the intent of Congress when it these two categories exist—one patentable conferred upon inventor and society. The
changed “art” to “process.” Congress and the other not—runs contrary to con- inventor benefits monetarily from the lim-
explained that the change was necessary in gressional intent. ited monopoly, and society benefits from the
order to clarify that Congress intended “art” Since enactment of Title 35, courts have invention.44
in this instance to be synonymous with interpreted it as an effort to “to change the While Bilski disavowed the utility test as
“process or method” and not to be the same slow but steady drift of judicial decision[s] the test for patentability of subject matter, it
as “useful art” or the way the term is used in that had been hostile to patents.”40 This sen- did recognize that the standard could be ben-
“other places in the statute.”36 In order to timent was echoed by Supreme Court Justice eficial and did not bar the courts from using
make its intent clear, Congress included a Robert Jackson, who wrote in 1949 that the standard entirely. Therefore, it could be
Los Angeles Lawyer April 2009 39

7. argued that it would be prudent for a court of judicial scrutiny must be applied in order
to employ the utility standard in a case in to ascertain whether or not the process is
which additional factors were needed in order patentable. In the end, the courts must finally
to ascertain patentability. While the Bilski recognize that mental steps processes are
court merely mandated that the courts employ essential to the evolution of both technol-
the machine or transformation standard first, ogy and society and deserve protection. ■
it did not state that the standard should never
be employed. 1 35 U.S.C. §101 (2000).
2 Gottschalk v. Benson, 409 U.S. 63 (1972).
Additionally, cases that potentially prevent
3 Diamond v. Diehr, 450 U.S. 175 (1981).
the patentability of mental steps processes 4 State Street v. Signature Fin. Group, Inc., 149 F. 3d
run contrary to congressional intent of fos-
1368, 1374 (Fed. Cir. 1998).
tering invention and rewarding risk. 5 Gottschalk, 409 U.S. 63.
Technology has evolved to the point where 6 Parker v. Flook, 437 U.S. 584 (1978).
7 An algorithm is “a mathematical or logical process
many processes do not have physical repre-
sentations. The final product of these consisting of a series of steps, designed to solve a spe-
cific type of problem.” BLACK’S LAW DICTIONARY (8th
processes may be useful, but they would fail
ed. 2004).
a physical-transformation test for subject 8 Gottschalk, 409 U.S. at 70.
matter, since no corresponding physical mate- 9 Parker, 437 U.S. at 594.
EXPERT WITNESS rial is produced or changed. Advances in 10 Id.
11 Diamond v. Diehr, 450 U.S. 175, 184 (1981).
computer science and related industries are
12 State Street v. Signature Fin. Group, Inc., 149 F. 3d
INDUSTRIAL/COMMERCIAL illustrative and have made it routine that
1368, 1373 (Fed. Cir. 1998).
REAL ESTATE nothing physical is involved in processes that 13 Id. at 1373.
Care, Duty & Broker Responsibility have a useful result.45 Software patents typ- 14 Id. at 1374.
Lease & Purchase Contracts ically recite how the physical components of 15 Id. at 1373 n.3.
16 AT&T Corp. v. Excel Commc’ns, Inc., 172 F. 3d
Condition of Premises the computer act as a result of the software’s
instructions. Essentially, the mental step 1352, 1356 (Fed. Cir. 1999).
44 Years of Experience 17 Id. at 1359.
processes in the software are being patented. 18 See State Street, 149 F. 3d at 1374.
Freeing software patents from physical com- 19 AT&T Corp., 172 F. 3d at 1359.
JACK KARP puter components would be a major improve- 20 Id. at 1357.
21 In re Comiskey, 499 F. 3d 1365 (Fed. Cir. 2007).
(310) 377-6349 FAX: (310) 868-2880 ment in patent law.
22 In re Nuijten, 500 F. 3d 1346 (Fed. Cir. 2007).
Furthermore, the court’s assertion that a
23 In re Comiskey, 499 F. 3d 1365, 1377 (Fed. Cir.
process claim must be tied to another category
2007).
of subject matter in order to be patentable (in 24 Id. at 1377-78.
this instance, the category of machines) erodes 25 Nuijten, 500 F. 3d 1346.
the process category as a separate category of 26 In re Bilski, 545 F. 3d 943, 88 U.S.P.Q. 2d 1385 (Fed.
The Los Angeles patentable subject matter. If a process were Cir. 2008)(en banc), available at http://www.cafc
.uscourts.gov/opinions/07-1130.pdf (visited Oct. 30
County Bar Association tied to another category of subject matter, then
2008).
it would cease to truly be a process. Instead, 27 Id. at 956.
has moved it would simply be a new and useful way to 28 Id. at 961.
use a machine, or manufacture, or composi- 29 Id. at 962.
30 Id. at 963.
tion of matter, which would effectively elim-
31 Id.
LACBA is pleased to announce inate the process category as a separate cat- 32 U.S. CONST. art. I, §8.
the relocation of its offices to: egory of patentable subject matter. This would 33 Sony Corp. of Am. v. Universal City Studios, Inc.,
be a way to make a process invention truly 464 U.S. 417, 429 (1984).
1055 West 7th Street, Suite 2700
patentable, not because it is a process under 34 Kewanee v. Bicron, 416 U.S. 470, 480 (1974).
Los Angeles, CA 90017 35 ROBERT PATRICK MERGES & JOHN FITZGERALD DUFFY,
Sections 100(b) and 101 but rather because
it would fall within one of the other categories PATENT LAW AND POLICY: Cases and Materials 10
Our telephone numbers, e-mail (Lexis 2007).
of subject matter. Thus, once this position is 36 1952 U.S.C.C.A.N. (66 Stat.) 2398.
addresses and website address broken down, it becomes apparent that this 37 35 U.S.C. §100(b).
(www.lacba.org) will not change. first prong of the court’s machine-or-trans- 38 1952 U.S.C.C.A.N. (66 Stat.) 2410.
39 Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980).
formation test is essentially a pure transfor-
40 Reiner v. I. Leon Co., 285 F. 2d 501, 503 (2d Cir.
For more information about the move, mation test, only by another name.
1960).
including move-related news and The physical-transformation test was 41 Jungerson v. Otsby & Barton Co., 335 U.S. 560, 572
announcements, please visit workable in a world where most inventions (1949).
www.lacba.org/themove. were physical things. But it is arguably an out- 42 1952 U.S.C.C.A.N. (66 Stat.) 2399.
dated test of patentability in the twenty-first 43 See Curtis-Wright Corp. v. Link Aviation, Inc., 182
century. The Bilski court’s reemphasis on the F. Supp. 106 (N.D. N.Y. 1959); Isenstead v. Watson,
157 F. Supp. 7 (D.C. D.C., 1957); General Steel Prods.
machine-or-transformation test, however,
Questions may be directed to LACBA Co. v. Lorenz, 337 F. 2d 726 (5th Cir. 1964).
indicates the court’s unwillingness to move 44 See Sony Corp. of Am. v. Universal City Studios, Inc.,
Member Services by calling (213) forward and evolve the patent law system. 464 U.S. 417, 429 (1984).
896-6560 or by sending an e-mail to Nevertheless, even under the recently affirmed 45 In In re Bilski, the process for which a patent was
msd@lacba.org. machine-or-transformation test, mental steps sought has no physical substance but is useful in that
processes, in their current forms, are not it helps shield users from risks due to fluctuations in the
markets due to demand.
unpatentable per se. Instead, an added layer
42 Los Angeles Lawyer April 2009