Bilski: Discerning Between Abstract Ideas and Patent-Eligible Claims

By: Jared T. Olson

Bilski Overview

On June 28, 2010, the U.S. Supreme Court issued its highly anticipated opinion in Bilski v. Kappos. In the opinion, the Court confirmed that:

(1) Only laws of nature, physical phenomena, and abstract ideas have been explicitly recognized as being outside the broad scope of 35 U.S.C. §101;

(2) The so-called machine-or-transformation test is not the sole test for deciding whether a claim recites a patent-eligible process; and

(3) At least some business methods are likely patentable.

(See Slip Op. at 5-7 and 10-11). After clarifying these issues, the Court held that Bilski’s claims were abstract ideas and, therefore, not patent-eligible subject matter (see Id. at 13). Essentially, the Court’s opinion restored the legal landscape to what it was before the CAFC’s opinion on Bilski, probably with the exclusion of CAFC cases like State Street since the "useful, concrete and tangible result" test was both overruled by the CAFC and never adopted by the Supreme Court.

A Case-Based Analysis

In arriving at the determination that Bilski’s claims were abstract ideas, the Court did not apply any specific tests or establish any bright-line rules. Notably, the Court did not even apply the machine-or-transformation test. Instead, the Court began by analyzing Bilski’s claims and then comparing them to the claims in three previous Supreme Court cases: Gottschalk v. Benson, 409 U.S. 63 (1972); Parker v. Flook, 437 U.S. 584 (1978); and Diamond v. Diehr, 450 U.S. 175 (1981) (see Slip Op. at 13-15). The Court then concluded that Bilski’s claims were excluded from the scope of 35 U.S.C. § 101 because they were “just like the algorithms at issue in Benson and Flook” (see Id. at 15). In light of the Court’s case-based analysis, Examiners and patent practitioners would do well to not only become familiar with the reasoning in Bilski, but also the reasoning in Benson, Flook, and Diehr. After all, with respect to the Bilski cases, Justice Kennedy instructed that "[s]tudents of patent law would be well advised to study these scholarly opinions" (Id. at 3).

Gottschalk v. Benson

In Benson, the Court considered claims that were directed to an algorithm that converted binary-coded decimal (BCD) numerals into pure binary code (see Slip Op.. at 13). In determining whether the claims constituted an abstract idea, the Court essentially considered the breadth of the claims in terms of potential embodiments or applications (see Benson, 409 U.S. at 68). The Court stated:

Here the ‘process’ claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion. The end use may (1) vary from the operation of a train to verification of drivers; licenses to researching the law books for precedents and (2) be performed through any existing machinery or future-devised machinery or without any apparatus.

(Id., emphasis added).

Elaborating on the importance of breadth in determining whether a claim is an abstract idea, the Court discussed O’Reilly v. Morse, 56 U.S. 15 (1853) and Corning v. Burden, 56 U.S. 252 (1853) (see Benson, 409 U.S. at 68-70). In Morse, the Court rejected a claim that recited the use of “electromagnetism, however developed for marking or printing intelligible characters, signs, or letters, at any distance,” since the claim was so broad as to preempt subsequent, superior inventions (see Benson, 409 U.S. at 68). In Corning, the Court considered the patent-eligible status of new and useful improvements in tanning and dying (see Id. at 69). In Corning, the Court held that the claimed process was patent-eligible, irrespective of any particular machinery, because the chemical process or physical acts involved would be sufficiently definite to confine the patent within rather definite bounds (see Id.).

Returning to the process claimed in Benson, the Court reasoned that:

The mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that if the judgment below is affirmed, the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.

(Id., emphasis added). Accordingly, the Court appears to place significant emphasis on a claim’s breadth in terms of practical applications when determining whether the claim is directed to an abstract idea. Notably, not only does the Court seem to consider the claim’s breadth in terms of present-day applications, but also potential applications and preemption issues. Said another way, Benson illustrates that the likelihood of a claim being considered an abstract idea increases as the claim’s level of abstraction gives rise to more and more highly distinct embodiments and/or applicable environments. Thus, increased breadth seems to be directly corrolated with an increase in the level of abstraction.

Parker v. Flook

In Flook, the Court considered claims that were directed to a procedure that used a mathematical algorithm to monitor conditions during a catalytic conversion process (see Slip Op. at 14). The petitioner apparently attempted to distinguish the claims at issue from those of Benson by limiting the application thereof to petrochemical or oil-refining environments (see Id. at 14). The Court acknowledged that the line between a patentable process and an unpatentable principle is not always clear since both are conceptions of the mind, seen only by their effects when being executed or performed (see Flook, 437 U.S. at 589). The Court also acknowledged that while a mathematical algorithm alone is not patentable, a process or structure that uses or executes the mathematical algorithm may be (Flook, 437 U.S. at 591). Nevertheless, the Court held that limiting a mathematical formula to a particular environment or adding insignificant, post-solution activities is not enough to convert a mathematical algorithm into a patentable process under 35 U.S.C. § 101 (Flook, 437 U.S. at 590). Accordingly, limiting an algorithm to a technical environment alone may not be enough to satisfy the requirements of 35 U.S.C. § 101, especially when the algorithm is readily applicable to many other environments.

Diamond v. Diehr

In Diehr, the Court considered a process directed to molding raw, uncured synthetic rubber into a cured precision product (see Slip Op. at 14). Similar to the claims in Benson and Flook, the claims in Diehr relied upon a mathematical formula to complete some, but not all, of the claimed operations (see Id.). In the Diehr opinion, the Court stated that when determining whether a claim is a process within the scope of 35 U.S.C. § 101, the claim must be considered as a whole and that the recitation of a mathematical algorithm does not necessarily render the claim unpatentable (see Diehr, 450 U.S. at 187). The Court even went so far as to state that it is common that the application of a mathematical formula to a known process may well be deserving of a patent (see Id.). Having laid out these positions, the Court held that the claims in Diehr were patent-eligible since the claims were not merely an attempt to patent a mathematical formula, but rather an actual process for molding rubber products (see Slip Op. at 15). Accordingly, in determining whether a claim is an abstract idea, the Court appears to give significant weight to the overall thrust of a claim and its potential applications.

Bilski v. Kappos

In light of these cases, it is clear why the Court held that Bilski’s claims are outside of the scope of 35 U.S.C. § 101. As noted by the Court, the petitioners were essentially seeking to patent the concept of hedging risk in energy markets (see Slip Op. at 13). Also, the practice of hedging has been prevalent for some time and is frequently taught in introductory finance classes across the country (see Slip Op. at 15). As such, Bilski’s claims had a considerable range of potential applications, like the algorithm claimed in Benson. Further, Bilski’s restriction of this fundamental concept to energy markets, equations, or computerized processes was similar to Flook, which restricted a mathematical algorithm to petrochemical or oil-refining environments (see Slip Op. at 15-16). It is of no surprise, therefore, that the Court held Bilski’s claims attempted to patent an abstract idea (Id).

Conclusion

The Court in Bilski largely restored the legal landscape to what it was before the CAFC’s opinion. It did not provide a specific test or bright-line rule for determining whether a claim is an abstract idea and did not apply the machine-or-transformation test to Bilski’s claims. After all, “‘[i]n choosing such expansive terms [for 35 U.S.C. § 101], ... modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope,’ Diamond v. Chakrabarty, 447 U. S. 303, 308 (1980). Congress took this permissive approach to patent eligibility to en-sure that “‘ingenuity should receive a liberal encouragement.’” Id., at 308–309 (quoting 5 Writings of Thomas Jefferson 75–76 (H. Washington ed. 1871))" (Slip Op. at 4 and 5). Rather, the Court applied a case-based analysis that primarily focused on the overall thrust, breadth, and widespread applicability of Bilski’s claims. Thus, as claims become broader, while there is no bright-line rule, it seems that the risk of the claims potentially being rejected as abstract ideas also increases.