CAFC Releases a Big "Two-Fer" On Patentable Subject Matter

Will all the fuss over 35 U.S.C. 101 and the USPTO's McGruff-like approach to "taking a bite out of patentable subject matter," one would expect that any forthcoming decisions from the CAFC on section 101 would firmly address the boundaries of of patentable subject matter. Last week, the CAFC provided two ("two, TWO!") decisions for the price of one on section 101:

In re Comiskey (2006-1286) September 20, 2007 (link)

Comiskey’s patent application claims a method and system for mandatory arbitration involving legal documents, such as wills or contracts. The claims in question did not reference, and do not require, the use of a device such as a computer. Considered a "mental process," the CAFC found the claims were not intended to be covered by the patent statute:

It is thus clear that the present statute does not allow patents to be issued on particular business systems—such as a particular type of arbitration—that depend entirely on the use of mental processes. In other words, the patent statute does not allow patents on particular systems that depend for their operation on human intelligence alone, a field of endeavor that both the framers and Congress intended to be beyond the reach of patentable subject matter. Thus, it is established that the application of human intelligence to the solution of practical problems is not in and of itself patentable.

The rub here was that two of the independent claims recited software "modules" that performed specific tasks related to the arbitration. Some of the dependent claims specifically recited structures embodying hardware as well (WWW, electronic communication, etc.). Giving a tacit nod to In re Schraeder and Warmerdam, the CAFC ruled that reciting limitations relating to hardware (or other "tangible" mediums) could bring otherwise unpatentable mental processes into the realm of patentable subject matter:

When an unpatentable mental process is combined with a machine, the combination may produce patentable subject matter, as the Supreme Court’s decision in Diehr and our own decisions in State Street Bank and AT&T have confirmed . . . While the mere use of the machine to collect data necessary for application of the mental process may not make the claim patentable subject matter . . . these claims in combining the use of machines with a mental process, claim patentable subject matter.

However, while the 101 barrier may be satisfied in this context, the obviousness hurdle becomes more of a factor:

The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness. Moreover, there is no pertinent evidence of secondary considerations because the only evidence offered is of long-felt need for the unpatentable mental process itself, not long-felt need for the combination of the mental process and a modern communication device or computer.

In re Nuijten (2006-1371 ), September 20, 2007 (link)

The sole issue in this case was whether or not a signal is patentable subject matter. Nuijten’s patent application discloses a technique for reducing distortion induced by the introduction of "watermarks" into signals. Nuijten recited claims directed to "[a] method of embedding supplemental data in a signal" and "[a]n arrangement for embedding supplemental data in a signal", which were found to be patentable by the PTO.

The no-no came when Nuijten claimed "[a] signal with embedded supplemental data." Because of the transitory nature of signals, the CAFC (in a 2-1 decision) found that claiming a signal itself could not fall under any of the statutory categories of 35 U.S.C. 101:

The claims on appeal cover transitory electrical and electromagnetic signals propagating through some medium, such as wires, air, or a vacuum. Those types of signals are not encompassed by any of the four enumerated statutory categories: "process, machine, manufacture, or composition of matter."

The Nuijten court also clarified State Street which stated that "[t]he question of whether a claim encompasses statutory subject matter should not focus on which of the four categories of subject matter a claim is directed to—process, machine, manufacture, or composition of matter—but rather on the essential characteristics of the subject matter, in particular, its practical utility." While patentees have previously argued that utility was the main focus, the CAFC stated that this approach was not entirely correct:

In telling courts where they "should not focus" their analysis, State Street was advising not to be concerned about debates over "which of the four categories" . . . subject matter falls into—that is, not to be overly concerned with pigeonholing subject matter once the court assures itself that some category has been satisfied. If, for instance, a court determines that a claim encompasses either a process or machine but is unsure which category is appropriate, it need not resolve the ambiguity. The claim must be within at least one category, so the court can proceed to other aspects of the § 101 analysis.

Linn, dissenting-in-part:

I agree with the majority that the subject of Nuijten’s signal claims is not a "machine," "process," or "composition of matter" as used in 35 U.S.C. § 101. As the majority recognizes, however, "[t]he question of whether the claimed signals are ‘manufactures’ is more difficult." . . . As mentioned, the Supreme Court quoted in American Fruit the following definition of "manufacture," upon which the majority relies today: "the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by hand-labor or by machinery." . . . Based on this definition and the associated definition of "article," the majority concludes that manufactures must be "tangible," a definition that excludes "[a] transient electric or electromagnetic transmission." . . . With all due respect, I believe that these conclusions are erroneous.

* * *

The PTO’s position makes little sense. As a doctrinal matter, the PTO should not look to § 101 sometimes and § 103 at other times to accomplish essentially the same end. As a matter of principle, there is little reason to allow patent claims to otherwise unpatentable, deemed abstractions just because those deemed abstractions are stored in a tangible medium, while rejecting the same inventions standing alone. Nuijten’s signal involves the same degree and type of human ingenuity whether or not it happens to be encoded in the magnetic fields of a hard disk drive, the optical pits of a compact disc, a stream of photons propagating across a vacuum, or any other specific form that technology might put it in. The signal is either a "new and useful" manufacture or it is not. To allow a patent on a storage medium containing the signal but to deny one to the real underlying invention "make[s] the determination of patentable subject matter depend simply on the draftman’s art" in the sense criticized by the Supreme Court in Flook. 437 U.S. at 593.

So what has changed? Not too much. Unfortunately, the CAFC has not provided any significant guidance on the application of 35 U.S.C. § 101, other than clarifying that (1) some nexus to a tangible medium is required, and (2) signals, per se, are not patentable. Of course, judge Linn's dissent is correct: applicants seeking to overcome the strictures of 35 U.S.C. § 101 need only tie in some "processor" (or similar) limitations to have their claims recognized by the PTO. Form over substance? You bet.

NOTE: In re Bilski, which rounds out the CAFC's "holy trinity" of patentable subject matter cases for the year, is scheduled for oral argument on October 1. Stay tuned.