Blueprint of a gear train.

 Robert J. Yarbrough
Patent Attorney

 Patents - Inventions - Trademarks 

Supreme Court Decisions on Patentable Subject Matter

By
Robert J. Yarbrough
2009, updated 2011

A. INTRODUCTION

An issued patent provides a monopoly to the inventor to make, use and sell the invention in the U.S. for a defined period of time.  Under the law, even if an invention is novel, un-obvious, has utility, and meets all of the technical requirements for a patent, a patent cannot issue unless the invention addresses patentable subject matter. This memorandum surveys Supreme Court cases on what can or cannot be the proper subject matter for a patent. 

II. DEFINITIONS FROM THE STATUTE

What can be patented is defined by statute at 35 U.S.C. 101 (1952):

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.

The term “process” is defined by 35 U.S.C. 100(b) as follows:

The term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.

III. THE CASES

A.  Neilson v Harford, 151 Eng. Rep. 1266, 8 M&W 806, Web. Pat. Cas. 273 (1844)

This English case was cited by O’Reilly v Morse, infra, and Parker v Flook, infra. Nielsen, whose portrait appears below discovered that a blast furnace worked much better if the air blown through the molten iron was preheated. He developed a furnace with a preheating chamber through which the air passed. portrait of Beumont Neilson

The court concluded that the principle of preheating air could not be patented; however, a furnace implementing the principle by including a preheating chamber was a proper subject for a patent. The court made the following statement:

The case must be considered as if, the principle being well known, the plaintiff had first invented a mode of applying it by a mechanical apparatus.

As applied in subsequent cases, the statement means that the natural phenomenon that has been discovered must be considered as prior art and the question of patentability turns on whether the implementation of the natural phenomenon is novel. If the implementation is conventional (as in Flook) or is trivial (as in Funk Brothers Seed Co. v Kalo Inoculant Co., infra.) then the subject matter cannot be patented.

B.  O’Reilly v Morse, 56 U.S. (15 How.) 62 (1853)

O’Reilly v Morse is the telegraph case and was an infringement action brought by Morse. The specific invention in question was the use of repeaters to allow a Diagram of Samuel Morse's telegraph repeater.telegraph signal to be transmitted over long distances. The telegraph key closed the circuit of an electromagnet at a remote location. The electromagnet acted as a second key and closed a second circuit to an even more remote location.

Claim 8 of the Morse patent reads as follows:

Eighth. I do not propose to limit myself to the specific machinery or parts of machinery described in the foregoing specification and claims; the essence of my invention being the use of the motive power of the electric or galvanic current, which I call electro-magnetism, however developed for marking or printing intelligible characters, signs, or letters, at any distances, being a new application of that power of which I claim to be the first inventor or discoverer.

The Supreme Court noted that Morse had not provided enablement for the breadth of the claim and taught only electromagnetic repeaters. The Court also adopted the reasoning of the Neilson case to conclude that claim 8 addresses all possible applications of a physical principle, not a specific implementation of the principle. Claim 8 therefore was not patentable.

C. Cochrane v Deener, 94 U.S. 780 (1876)

Diagram of the Cochrane separating apparatus.Cochrane was an infringement case. The invention was a process for milling flour using air to carry off fine impurities from the ‘middlings.’ The ‘middlings’ were then ground and added back to the superfine flour. Use of air in milling was old, but not for this purpose. Cochrane taught the use of a perforated inclined sheet through which air passed, carrying off the impurities from the middlings.

The Court took as a given that processes are patentable and concluded that the patented process is not limited to the specific machine disclosed in the specification. The Court concluded that a patent to a process is to the process as a whole and defined ‘process’ as follows:

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.

The definition of ‘process’ provided by Cochrane v Deener worked very well in the mechanical age.

D.  Tilghman v Proctor, 102 U.S. 707 (1880)

Tilghman was an infringement case. The patent claimed a process for manufacturing fatty acids and glycerin using water at high temperature and pressure.Apparatus for separating fatty acids and glycerine from Tilghman v Proctor

The Court considered whether O’Reilly v Morse held that processes are not patentable. The Court clarified that a patent for a process is different from a patent for a scientific principle. Morse claim 8 failed because it was not a claim to a particular machine, or a claim to a process for utilizing a principle. Instead it was a claim to the principle itself, which was not patentable.

The defendant was William Proctor, a partner in a venture called Proctor & Gamble.

E.  Mackay Radio & Telegraph v RCA., 306 U.S. 86 (1939)

Mackay was an infringement action relating to radio antenna design. The patent used a previously known mathematical expression to derive the proper angle of Diagram of an antennaa radio antenna when the wire making up the antenna was a multiple of half-wavelengths. The invention was to combine two wires separated by an angle double that calculated by the formula. To avoid prior art, the application was limited to antenna configurations calculated using the formula.

The Court accepted as established law that purely mathematical expressions are not patentable but “a novel and useful structure created with the aid of knowledge of scientific truth may be.” Mackay appears to be a situation where the principle in question really was part of the prior art.

The Court concluded that the accused devices did not infringe because they were not designed in accordance with the mathematical formula relied upon by the applicant.

F.  Funk Bros. Seed v Kalo Inoculant, 333 U.S. 127 (1948)

Funk Bros. was an infringement case. Legumes require bacteria to fix nitrogen,Photo of a plant from Funk Bros. with different species of bacteria used for different plants. Farmers could not mix the different species of bacteria, because they had mutually inhibitory effects. The inventor discovered that certain strains of the different species of bacteria did not have these inhibitory effects and could be mixed. A farmer could use a single mixed product to inoculate all of his or her crops.

The patent claim in question was the following:

An inoculant for leguminous plants comprising a plurality of selected mutually non-inhibitive strains of different species of bacteria of the genus Rhizobium, said strains being unaffected by each other in respect to their ability to fix nitrogen in the leguminous plant for which they are specific.

The Supreme Court concluded that this claim did not address patentable subject matter. The inventor did not create the strains of bacteria and the strains therefore were ‘phenomena of nature’ and unpatentable. While the aggregation of different strains into one product was an application of the natural phenomena, the invention amounted to no more than an alternate way to package the product. Because the packaging improvement over the unpatentable prior art was trivial, the invention was not patentable subject matter.

The Court in Funk Bros. appears to introduce obviousness into the question of what is patentable subject matter. The Court appeared to confound what can be patented with what should be patented.

G. Gottshalk v Benson, 409 U.S. 63 (1972)

Gottshalkhalk was an appeal from a denial of a patent by the PTO.
The process at issue was a method for converting ‘binary coded decimal’ numerals to pure binary numerals on a general purpose computer. The Court noted that the claimed process could occur on any computer or entirely in a person’s head. The patent claims would prohibit use of the algorithm by any person for any use on any machine and in any field. The Court found that the claim was directed to the algorithm and the algorithm was unpatentable.

Of interest, the PTO in its brief argued that no process should be patented unless it transformed substances or was implemented with a new machine. The Court reviewed its prior decisions relating to process patents and noted that all either transformed an article or utilized a particular machine. The Court noted with approval that the process inventions in the prior cases transformed a raw material, which provided definite bounds for the scope of the claims. Discussing Cochrane v Deener and Tilghman v Proctor, the Court said:

Transformation 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.

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…
(Emphasis supplied).

From the foregoing, the Court was not willing to prohibit all software patents and was not willing to require that all patents for processes either ‘transform’ an object or be tied to a particular machine.

We can infer that the Court found that transformation and tying a process to a particular machine are factors in determining whether the process is patentable, but that other factors may exist that were not before the Court. The Court did not need to reach those other factors because the claims in question were to a general principle, like Morse; namely, a mathematical algorithm.

The Federal Circuit in Bilski and the PTO in its Bilski appeals brief take a different read. The highlighted “the clue” phrase above is the basis of the Federal Circuit’s Bilski decision and the heart of the PTO’s argument to the Supreme Court to affirm Bilski. The argument goes that since the Supreme Court said ‘the’ clue rather than ‘a’ clue, then the Supreme Court intended the ‘machine or transformation’ test to be exclusive.

H.  Parker v Flook, 437 U.S. 584 (1978)

Parker v Flook was an appeal from a denial of a patent by the patent examiner.
The claims at issue in Parker v. Flook were directed to a method for monitoring the operation of a catalytic converter for hydrocarbon production by collecting data and applying an algorithm to the data to update an alarm value. The alarm value was a number, indicating whether the catalytic conversion process was within operational limits. The method was old, other than application of the algorithm. Parker v Flook is one step past Gottshalk v Benson. In Gottshalk, there were no limits on the algorithm at all. In Parker v Flook, the algorithm was limited to one field of activity.

Parker v Flook is a six to three decision. The majority concluded that the algorithm coupled with insignificant ‘post solution activity’ was not patentable subject matter.

The Court adopted the reasoning of the O’Reilly v Morse and Neilson v Harford cases, assuming that the physical principle was part of the prior art and looking for patentability separate and apart from the physical principle.
This approach has been compared to the ‘analytic dissection’ approach to computer program copyright infringement analysis. In this approach, two computer programs are compared to determine whether the works are ‘substantially similar’ for copyright infringement purposes. The first step is to remove all unprotectable elements from the copyrighted work, such as information in the public domain, unprotectable ideas, conventional elements, and functional aspects. What remains is compared to the accused infringing work.

Although not mentioned by the Court, the ‘transformation’ involved in Flook was of one number into another number. Query whether the invention would have been patentable if the draftsman had attached specific consequences to those numbers; for example, if the draftsman had included the step of adjusting the flow of feedstock into a reactor vessel when an adjusted alarm limit was exceeded. Here the transformation would have been from one hydrocarbon into another hydrocarbon.

I.  Diamond v Chakrabarty, 447 U.S. 303 (1980)Diagram from the Chakrabarty patent.

Chakrabarty developed a bacterium that ate crude oil. His patent application for the organism itself was denied by the PTO based on the argument that living organisms are not patentable. The examiner allowed claims directed to a method for producing the genetically-engineered bacterium and to a combination of the bacterium and other materials, such as straw, that could inoculate spilled oil with the bacterium.

In a five to four decision, the Supreme Court concluded that the bacterium was a ‘manufacture’ or ‘composition of matter’ under 35 U.S.C. 101 and hence patentable. Diamond v Chakrabarty, quoting the committee reports for the 1952 patent act, is the source of the quote that 101 is intended to “include anything under the sun that is made by man.” Since Chakrabarty’s bacterium was made by man, it was patentable.

The Court distinguished the mixture of naturally-occurring bacteria that was held unpatentable in Funk Bros. to the engineered bacterium of Chakabarty:

His claim is… to a nonnaturally occurring manufacture or composition of matter – a product of human ingenuity.”

The dissent argues legislative intent – the legislature did not intend for 101 to cover plants due to subsequent enactments that specifically addressed plant patents.

J.  Diamond v Diehr, 450 U.S. 175 (1981)

Diamond v Diehr is an appeal from a patent claim rejection.Flow chart from the rubber-curing patent in Diamond v Diehr.

The invention in question related to a process for making products from cured rubber. The curing time depends on a variety of parameters, including temperature. Prior to the invention, the only way to determine that temperature was to open the mold. The invention included thermocouples installed in the mold to measure the temperature without opening the mold. The invention also included a computer-implemented system to monitor the necessary parameters and perform the calculations to determine when the mold should be opened.

The examiner rejected the claims because once the unpatentable algorithm was removed from the claims (as in Parker v Flook), the remaining steps were old.

In a five to four decision, the Court concluded that while an algorithm alone is not patentable, if it is incorporated into a machine that “transforms an article to a different state or thing” then it is patentable subject matter.

The Court rejected the analysis used by the examiner and argued by the PTO that Flook required an unpatentable algorithm in the claims to be ignored and patentability determined based on the remainder of the claim:

…To accept the analysis proffered by the petitioner would, if carried to its extreme, make all inventions unpatentable, because all inventions can be reduced to underlying principles of nature which, once known, make their implementation obvious.

The Court did not overrule Flook; however, the Court stated that the invention must be considered “as a whole,” which contradicts the approach that Flook borrowed from Nielsen v Harford of treating physical principles or algorithms as part of the prior art and not to be considered when determining patentability.

K.  JEM AG Supply v Pioneer, 534 U.S. 124 (2001)

The issue was whether 101 addressed plants or whether protection of plants was limited by the Plant Patent Act and the Plant Variety Protection Act. The Court concluded that plants are a proper subject of utility patent protection.

L.  Laboratory Corp. of America v Metabolite Laboratories, 548 U.S. 124 (2006)

Lower courts found a patented process valid and infringed. The Supreme Court granted certiorari and subsequently revoked certiorari as improvidently granted because the appellant had not presented the 101 issues to the Federal Circuit. Justices Breyer, Stevens and Souter issued a dissent from the revocation of certiorari.

The invention was that homocysteine, an amino acid, in the body correlated to a deficiency of the vitamins folate (folic acid) and coalamin (B12). The claimed process involved measuring homocysteine by any means and if the level of was elevated, concluding that a vitamin deficiency was likely.

The issue on appeal, and the issue addressed by the dissent, was whether the claimed process addressed an unpatentable scientific principle.

The dissent pointed out that the inventors admitted that the correlation step occurred in the mind of the physician reviewing test results. Since the physician could not be divorced from his or her training, the claim would be infringed every time a physician reviewed homocysteine test results, whether or not the test was conducted for the purposes of determining a vitamin deficiency. (Homocysteine testing had been identified as a possible predictor of heart disease).

The dissent criticizes State Street Bank:

That case does say that a process is patentable if it produces a ‘useful, concrete, and tangible result.’ 149 F. 3d, at 1373. But this Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary. The Court, for example, has invalidated a claim to the use of electromagnetic current for transmitting messages over long distances even though it produces a result that seems ‘useful, concrete, and tangible.’ Morse, supra, at 16. Similarly the Court has invalidated a patent setting forth a system for triggering alarm limits in connection with catalytic conversion despite a similar utility, concreteness, and tangibility. Flook, supra. And the Court has invalidated a patent setting forth a process that transforms, for computer-programming purposes, decimal figures into binary figures, even though the result would seem useful, concrete, and at least arguably (within the computer’s wiring system) tangible. Gottschalk, supra.

Justice Souter has since retired, but Justices Breyer and Stevens still are on the Court.

M.  eBay v MercExchange, 547 US 388 (2006)

Although not a patentability case, the underlying patent in the eBay case was characterized by the majority opinion as “a business method patent.” The patent addresses the ‘buy it now’ function implemented by eBay. Diagram from eBay v MercExhange patent.

The patent was determined to be valid and infringed by the District Court and the validity of the patent was not at issue before the Supreme Court. The issue before the Court was whether injunctions should issue as a matter of course in the case of patent infringement. The unanimous Court determined that an injunction will not issue unless the successful patent plaintiff meets the four factors for injunctive relieve, just like every other litigant. The four factors are irreparable injury, no adequate remedy at law, balance of hardships favors plaintiff, and the public interest favors an injunction.

Of most interest is the concurring opinion by Justices Kennedy, Breyer, Souter and Stevens. The concurring opinion discussed the long-established practice of awarding injunctive relief in patent matters and distinguished the patent climate of earlier times to the present.

An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. …For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. … When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

From this dissent, at least three sitting justices are hostile to the direction that the patent field has taken and are eager to limit the scope of patent protection and of patents.

N. Bilski v Kappos, 561 US __ (2010)

The Bilski case involved whether a business method was the proper subject for patent protection. The inventors claimed a method of hedging risk in commodities trading.  In the Bilski method, a middle man buys coal, or options for coal, at a price that insulates coal producers from sharp drops in price.  The middle man sells the coal, or options for the coal, to consumers for a price that insulates the consumers from price spikes.  There were no hardware elements to the claims, for example, computers programmed to implement the trading steps.

The Federal Circuit Court of Appeals  held that the Bilski method was not patentable subject matter since it was not tied to any particular machine and did not transform an article into another state or thing. The Federal Circuit further had held that this "machine or transformation" test was the exclusive test to determine whether a method can be patentable subject matter. 

The Supreme Court affirmed the Federal Circuit's determination that the Bilski hedging method is unpatentable, but rejected the reasons given by the Federal Circuit. The Supreme Court expressly held that the "machine or transformation" test is not the only way to determine that a method is patentable subject matter and is instead only 'the clue' to be considered. The Court did not flesh out what other 'clues' might point to whether a method addresses patentable subject matter.

The Supreme Court also held that business methods are not categorically excluded from patent protection, declining to read non-existent limitations into the patent statute. The Court noted the uncertainty as to how the term 'business method' is defined and the unintended consequences that such a categorical exclusion likely would have.

The Court concluded that the Bilski invention was not patentable since it attempted to patent a prohibited abstract idea. The decision creates substantial uncertainty for inventors of business methods because it is unclear whether any particular business method invention will amount to an unpatentable 'abstract idea.'