Federal Circuit Upholds Method Claims Outside the “Machine-or-Transformation” Test After Bilski

Research Corp v. Microsoft (decided 12/8/10)

By: Steven J. Henry

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What This Means To You

  • Don’t be afraid to file patent applications for methods that have an abstract feel so long as they have some practical application.
  • Give extra attention to beefing up disclosures in patent applications for process inventions, to establish the concrete ways the process/method is used. Showing commercial or practical application is key. 

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Overview

In its first significant case involving a challenge to the patent-eligibility of computer-implemented subject matter since the Supreme Court’s 2010 Bilski decision, the Federal Circuit has, in a decision handed down December 8, 2010, looked beyond the “machine or transformation” (MOT) test and ruled that “inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.”

Broadly speaking, inventions, including specifically methods, that have commercial application are open to patent protection without need to conduct a MOT analysis.

Case Background

In Research Corp. Techs. v. Microsoft Corp., RCT had sued Microsoft for infringement of six patents relating to improvements in “digital image halftoning” processes used in displaying images on screens and in printing – essentially, mathematical processes for manipulating image information. Microsoft challenged certain claims of two of the patents as not meeting the criteria required for patent-eligibility. The district court invalidated those claims prior to the June 2010 Supreme Court decision in Bilski v. Kappos, holding them ineligible for a patent. RCT appealed.

Decision Analysis

In reversing the district court, the Federal Circuit was called upon to consider how to apply the Supreme Court’s Bilski ruling (discussed in our IP Alert available here.) Briefly, the Supreme Court indicated that the so-called MOT test, while frequently useful, was not the only way to determine when a method is patent-eligible, with the ultimate requirement being that the invention was not merely abstract. No guidance, however, was given as to how to decide when a method is directed to a mere abstraction, so that it falls outside the patent system.

The Federal Circuit began by noting that the claim literally specifies a process, raising the question of whether any of the three judicially created exceptions (laws of nature, physical phenomena and abstract ideas) applied. After agreeing with the parties that the invention did not constitute a natural law or physical phenomena, the court turned to abstractness.

Although the court declined to tackle the ultimate definition of abstractness, it did give us useful guidance, setting a very high bar. In effect, the court is telling us that Section 101’s eligibility requirements provide a low threshold only and the “primary” basis for evaluation of a patent claim should be novelty, unobviousness, definiteness, enablement, etc.

Lest anyone think the court was merely deciding on the facts of this specific case, and the next set of facts might lead to a different conclusion, the opinion explicitly noted that “inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.”

One might be safe to conclude that—at least in the eyes of this panel—a claim to an invention with practical utility will never fall on the wrong side of the line between the ineligible abstract idea and the eligible non-abstract subject matter.

The court did emphasize, however, that it was re-focusing on “primary” patentability issues, specifically, the sufficiency of the disclosure. In doing so, it warned that an invention “which is not so manifestly abstract as to override the statutory language of section 101” could nevertheless lack sufficient disclosure to support a patent.

We can, therefore, paraphrase the decision as stating that any method with a commercial market is going to be patent-eligible subject matter, but it had better not be claimed more broadly than what has been disclosed and it must have been properly recognized and set forth as an invention in the patent application. If this decision is followed by other panels, as should be the case but is not guaranteed, we should rapidly see a sharp drop in PTO rejections and litigation disputes over subject matter eligibility. These effects could be offset, however, by increased attention to the requirements of Section 112 (indefiniteness, lack of enablement, lack of written description, etc.)

Takeaways

While the fight over the limits to patent-eligible subject matter is never over, this decision, following on the heels of Bilski, indicates that battles over eligibility are being relegated to rare situations. If you have a commercial invention with practical application, then its method (processes) can be patented if they meet the usual criteria of novelty and unobviousness, and the claims are supported by a proper specification.

However, one should give extra attention to beefing up disclosures in patent applications for process inventions, to establish the concrete ways the process/method is used. The court is likely to give greater scrutiny to whether the claims might be too broad in light of the inventors’ actual contributions.

Good claim strategy can help one fight off a subject matter attack. Having dependent claims that introduce hardware elements and additional context for embodiments will allow one to point to those claims as evidence of statutory subject matter in the independent claims, taking a hint from Judge Rader. In other words, do not simply claim the high-level process idea; it could be important to also claim some embodiment implementations.

The Patent and Trademark Office may take some time to adapt to this ruling. It basically renders obsolete the Office’s current Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos, 75 Federal Register 43922 (July 27, 2010), which instructs examiners to apply the machine or transformation test to all method claims and put the onus on the applicant to explain why failure to satisfy that test is not fatal. Until the Office’s education of and instructions to its Examining Corps catches up to RCT, one has to assume individual patent examiners will need to be educated about the proper state of the law. This decision represents a major development and we have not yet seen a formal reaction from the PTO.