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Thursday at the Federal Circuit: In re Bilski oral arguments on scope of patentable subject matter

May 06, 2008
Post by Blog Staff

This Thursday, the Federal Circuit will hear oral arguments en banc in In re Bilski (No. 2007-1130), a case that will help define the scope of patentable subject matter. Numerous amicus briefs have been filed in the case, and perhaps most interestingly, two of the amici, Bank of America and Regulatory DataCorp, have been granted permission to participate in the oral arguments.

More information about the case and its possible implications after the jump.

The broadest independent claim at issue in the case is claim 1, reproduced below:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

The examiner rejected the claims under § 101 because "the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts," as well as asserting that the claims were directed to an "abstract idea," and thus were not patentable.

The Board of Patent Appeals and Interferences (BPAI) affirmed, but also took the opportunity in an informative opinion to discuss the appropriate test to apply when assessing whether a claim is directed to statutory subject matter. The BPAI held that State Street did not apply here, because that case was limited to the situation of transformation of data by a machine, a situation not presented here. The BPAI essentially sought the Federal Circuit's guidance, observing that the Federal Circuit cannot address rejections it does not see, and inviting clarity on a number of different § 101 issues. While the case is arguably a close one, it was clear that the BPAI was going to affirm the rejection in the hopes that the applicants would appeal to the Federal Circuit, which would then provide a test for determining whether claims are drawn to statutory subject matter.

The applicants did appeal, and the Federal Circuit obliged the BPAI, agreeing sua sponte to hear the case en banc. The Federal Circuit requested briefing on five questions:

  1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?
  2. What standard should govern in determining whether a process is patent-eligible subject matter under § 101?
  3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
  4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under § 101?
  5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

The invited participation from amici, and the patent community responded in force. Below is a list of the amici who have filed briefs (Patently-O has many of the briefs available online):

Organizations

  • Accenture
  • American Civil Liberties Union
  • American Express Company
  • American Institute of Certified Public Accountants
  • American Intellectual Property Law Association
  • Association of American Medical Colleges
  • Bank of America Corporation
  • Biotechnology Industry Organization
  • Boston Patent Law Association
  • Business Software Alliance
  • Center for Advanced Study & Research on Intellectual Property
  • CFPH, L.L.C.
  • Computer & Communications Industry Association
  • Consumers Union
  • Dell, Inc.
  • Electronic Frontier Foundation
  • Eli Lilly & Company
  • End Software Patents
  • Federal Circuit Bar Association
  • Federation Internationale Des Conseils en Propriete Industrielle
  • Hartford Financial Services Group, Inc.
  • Houston Intellectual Property Law Association
  • Intellectual Property Owners Association
  • International Business Machines Corporation
  • John Hancock Life Insurance Company (U.S.A.)
  • Koninklijke Philips Electronics N.V.
  • Lehman Brothers Inc.
  • MetLife, Inc.
  • Microsoft Corporation
  • Morgan Stanley
  • PCT Capital LLC
  • Pacific Life Insurance Company
  • Public Knowledge
  • Rearden Capital Corp.
  • Red Hat Inc.
  • Regulatory DataCorp, Inc.
  • Reserve Management Corporation
  • SAP America, Inc.
  • Sales Optimization Group
  • Software & Information Industry Association
  • Symantec Corporation
  • The Clearing House Association L.L.C.
  • The Financial Services Roundtable
  • Wachovia Corporation
  • Washington State Patent Law Association
  • William Mitchell College of Law Intellectual Property Inst.
  • Yahoo! Inc.

Individuals

  • Aharonian, Gregory
  • Allison, John R.
  • Burk, Dan L.
  • Cahoy, Daniel R,
  • Chin, Andrew
  • Clifford, Ralph D.
  • Collins, Kevin Emerson
  • Cotropia, Christopher A.
  • Crouch, Dennis D.
  • Dogan, Stacey L.
  • Epstein, Richard
  • Farley, Christine Haight
  • Flynn, Sean Fiil
  • Ghosh, Shubha
  • Holbrook, Tim
  • Hollaar, Lee A.
  • Hrick, David C.
  • Issacs, Davida H.
  • Jaszi, Peter A.
  • Kesan, Jay I.
  • Kieff, Scott
  • Lefstin, Jeffrey A.
  • Lemley, Mark A.
  • Lipton, Jacqueline D.
  • Mayer, Charles B.
  • McJohn, Stephen
  • Merges, Robert P.
  • Morgan, Jason V.
  • Morris, Roberta J.
  • Mtima, Lateef
  • Nimmer, Raymond
  • Osenga, Kristen
  • Petherbridge, Lee
  • Pollack, Malla
  • Rai, Arti K.
  • Risch, Michael
  • Sarnoff, Joshua D.
  • Wagner, R. Polk

In addition to the applicants and USPTO, two amici will also be participating in oral argument. The two selected by the Federal Circuit are Bank of America and Regulatory DataCorp. Bank of America, like many in the financial industry, is seeking a narrowing of statutory subject matter, while Regulatory DataCorp argues that the scope of statutory subject matter is properly broad. Interestingly, Professor John Duffy, one of Regulatory DataCorp's listed counsel, is the author of an article regarding the constitutionality (or lack thereof) of BPAI administrative law judges appointed after March 29, 2000 (46 of the 74 currently serving)


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