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Mind Over Matter - by Michael Shimokaji


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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 for more information.

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Mind Over Matter - by Michael Shimokaji

  1. 1. by Michael A. Shimokaji and Philip L. GahaganMINDOVERMATTERThe Bilski decision, like others before it, reveals how courtshave frequently kept patent law lagging behind technologyF 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 casesanswer was no. More recently, the answer has order for a process to be patentable, it must that led to the transformation test arebeen maybe. With In re Bilski, the U.S. Court undergo a physical transformation during Gottschalk v. Benson5 and Parker v. Flook.6of 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 arecently 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 forcerns 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 KANEKOSection 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 Centerpositions 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
  2. 2. ically stated that “transformation and reduc- expansive principles formulated with com- audio or video format, did not fall into anytion of an article ‘to a different state or thing’ puter technology in mind.”16 The Federal category of Section 101 and therefore was notis the clue to the patentability of a process Circuit, mindful that it could not overrule the patentable subject matter since it was neitherclaim 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.25Flook, 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, asas one component” but because there is a lack formation test “is not an invariable require- well as whether mental steps processes areof “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 bancapplication involved a mathematical formula useful application.”17 In this manner, the hearing and collecting some 100 plus amicithat doomed it (as in Benson) but the lack of Federal Circuit has effectively displaced the curiae briefs, the Federal Circuit Court ofapplication 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 inline 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 thatcreating the transformation doctrine in which a “useful, concrete, and tangible result.”18 The “while looking for a ‘useful, concrete, andthe Court held that “transformation and Federal Circuit in AT&T reinforced the trend tangible result’ may in many instances [bereduction 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 underprocess 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 transformationwhether a physical transformation occurs its operation does not produce a ‘useful, con- test, stating that in order to denoteduring 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 transformdecision, the Federal Circuit has expanded more outdated legal methodologies is also an article “to a different state or thing.”27upon 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 processheld 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 courtthe subject matter for which a patent may be there are conflicting decisions in the case law, held that “the proper inquiry under Sectionobtained 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 claimto carve out an exception for the transfor- subject matter under Section 101. meets the machine-or-transformation test.…Amation of data and began to outline the for- The twin cases of In re Comiskey21 and In claim that purportedly lacks any ‘physicalmation of a “utility-based” test for patentabil- re Nuijten,22 decided in late 2007, epitomize steps’ but is still tied to a machine or achievesity of subject matter under Section 101. The the struggle over whether the physical-trans- an eligible transformation passes mustercourt held that the transformation of data was formation test retains any applicability. under §101.”28 As to what constitutes anvalid subject matter since it transformed and Although the decisions were published on “eligible transformation,” the court was aproduced a “useful, concrete, and tangible the same day, they came to different conclu- little unclear. The court did hold that theresult.”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 thatformation 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 thea “physical transformation” test and move line of cases that had ultimately held that purported transformation could take placecloser and closer to the adopting of a utility mental steps processes must be tied to another entirely in the ether of computer circuitry istest 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 previousby 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-claimedtions, 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 anyrejecting the notion that computer programs mental steps processes by holding that the transformation of the underlying physicalwere patentable. As technology progressed, proposed invention, a method for embed- object that the data represented.”31 The courtthe courts disagreed…and announced more ding a “watermark-type” signal within an continued on—perhaps leaving the door of38 Los Angeles Lawyer April 2009
  3. 3. mental steps patentability there existed a “strong pas-open—by stating: “[S]o long sion in this Court for strikingas the claimed process is lim- [patents] down, so that theited to a practical application only patent that is valid isof a fundamental principle to one which this Court has nottransform specific data, and been able to get its handsthe claim is limited to a visual on.”41 Thus, when Congressdepiction that represents spe- changed the patent laws incific physical-objects or sub- 1952, the change was meantstances,” the claim would not to create a broader and morebe preemptive and would be patent-friendly system. As thepatentable under Section 101. legislative history illustrates, “anything under the sun thatMental Steps after Bilski is made by man” and fulfillsTo understand why mental the conditions of the title issteps should be patentable, a worthy of patent protec-review of first principles is in tion.42 The wide berth givenorder. The patent system is to the subject-matter stan-mandated by the U.S. Con- dard derives from thesestitution 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 anachieve this goal, the patent invention in similar terms ofsystem stimulates “the cre- benefits to society. Courtsative activity of authors and have used language such asinventors by the provision of “capacity to perform func-a special reward [a limited tion,” practicability, andmonopoly], and [allowing] accomplishment of a “pur-the public access to the prod- pose practically when applieducts 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 ofallowing a creator to establish the process and not from thea 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 tomonopoly. 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 matterproductive efforts that, in turn, will have a term “process” in its own definition is prob- (e.g., abstract concepts) denote patentablepositive effect on society.34 This is the con- lematic, this usage indicates that the process subject matter. This formulation is also institutional 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 stepsprocesses 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 andwas essentially a nineteenth century version ter, or material). The legislative history sup- social usefulness standard from whichof 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 forterm “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 and100 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 benefitnation of the intent of Congress when it these two categories exist—one patentable conferred upon inventor and society. Thechanged “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 theorder to clarify that Congress intended “art” Since enactment of Title 35, courts have invention.44in 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, itas “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 usingmake 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
  4. 4. 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 (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). ( 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). 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 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 layer42 Los Angeles Lawyer April 2009