Patent Owners, Patent Litigants, and Those Seeking Patent Protection Are Advised to Re-evaluate Method Claims of Patents and Applications in Light of the New Standard.
On October 30, the United States Court of Appeals for the Federal Circuit, in its highly anticipated In re Bilski decision regarding so-called "business method" patents, clarified the test for determining whether a claimed method recites patent-eligible subject matter. The clarified test will also determine the validity of issued patents, including those in litigation. The court, in refusing to extend patent protection to a method of hedging risk in the field of commodities trading, made clear that the only proper test for determining whether a patent method claim recites patent-eligible subject matter is the Supreme Court's "machine-or-transformation test." The "machine-or-transformation" test requires that, in order to be patent-eligible (or valid for an issued patent), a method claim must either:
- be "tied" to a particular machine or
- transform an article into a different state or thing.
The court explicitly rejected other, previous tests, including the "useful, concrete and tangible result" formulated by the Federal Circuit in its 1998 State Street Bank decision, which opened the door to patent protection for business methods.
The Method Claim Must Be Tied to a Specific Machine or Transformation in a Way That Imparts Meaningful Limits on Claim Scope
Under the newly announced test, tying a claim to a specific machine or transformation must impart meaningful limits on the claim's scope and must not be merely insignificant "extra-solution" activity. The court did not elaborate on the definition of "insignificant extra-solution activity," but stated that the following examples were insufficient to impart patent-eligibility:
- merely adding a pre-solution step of gathering data
- inserting a simple recordation step in the middle of a process; or
- adding a final step simply applying the process to a pre-existing scientific technique.
In the case before the court, Bilski admitted that the hedging process at issue was not linked to a specific machine or apparatus. Therefore, the Federal Circuit did not further explore the first, or "machine implementation," part of the test.
The Federal Circuit Provided Examples of Transformative Processes
Addressing the "transformation" part of the test, the court stated that a claimed method transforms an article when, as above, there are meaningful limits on the claim's scope and the claimed transformation is not merely insignificant extra-solution activity. The court itself admitted that this determination is "hardly straightforward," but provided a number of examples of processes that satisfied the test:
- a computer-operated process to transform raw, uncured rubber into molded, cured rubber products
- using high temperature and pressure to transform fats into constituent compounds; and
- transforming grain meal into purified flour.
Because the claim in Bilski claimed only a "purported transformation[s] or manipulation[s] simply of public or private legal obligations or relationships, business risks, or other such abstractions," the Court found the claims of the Bilski patent not patent-eligible.
The Machine-or-Transformation Test May Be Altered Further in the Future
The Court acknowledged that its "machine-or-transformation test" may need to be altered in the future to adapt to emerging new technological and scientific development, stating "we recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the test or how it is applied."
Certain Method Claims, Such as "Business Method Patents," Are Now More Vulnerable to Challenge
Despite those comments, one thing is certain after the Federal Circuit's decision: method claims that are not tied to a particular machine and that do not transform an article into a different state or thing are now more vulnerable to challenge. In particular, "business method" patents, because of their focus on intangible rights and obligations, may be particularly vulnerable to challenge. For this reason, those currently litigating method claims may want to reevaluate or revisit whether the method claims are sufficiently tied to a particular machine or transformation, and adjust or revisit their litigation options and strategies accordingly.
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