Vviewpoints
DOI: 10.1145/1364782.1364790
Legally Speaking
Revisiting Patentable
Subject Matter
Is everything under the sun made by humans
patentable subject matter?
ARE BUSINESS METHODS and
software algorithms patentable? Many of us think
they shouldn’t be. However, under a 1998 U.S.
Federal Circuit Court of Appeals
decision in State Street Bank Bank
v. Signature Financial Group, they
seem to be. That case opined that business methods could be patented and
regarded any process conforming to a
dictionary definition as patentable subject matter, as long as it produces a “
useful, concrete, and tangible result.” This
would include program algorithms.
Because of State Street Bank’s very
broad interpretation of patentable
subject matter, the U.S. Patent and
Trademark Office (PTO) has been
flooded with applications for patents
on methods of all kinds, including
business methods, methods of meditation, dating methods, sports moves,
tax strategies, and even plots for novels. This capacious view of patentable
subject matter may, however, be about
to change.
This past February, the Federal Circuit decided to hear en banc (with the
full court, not just the usual panel of
three judges) an appeal by Bernard
Bilski of a decision by the PTO
Board of Patent Appeals and Interferences (BPAI) denying Bilski’s application for a patent on a method
for managing energy consumption risks owing to vagaries of the
weather for failure to claim patentable
subject matter.
The order announcing the en banc
review invited interested parties to
file amicus curiae (friend of the court)
briefs to address not only whether
Bilski’s patent application should be
granted, but also what test or standard should be used for judging what
processes are eligible for patent protection. The order even asks whether
the State Street Bank decision should
be overturned.
Bilski’s claim
Claim 1 of Bilski’s application sets
forth three steps of his method for
energy risk management: initiating
a series of transactions between a commodity provider and consumers of the
commodity whereby consumers would
purchase the commodity at a fixed rate
based on historical averages (setting
the risk position of the consumers);
identifying market participants for
the commodity who have a counter-risk position to that of consumers; and
initiating a series of transactions
between the commodity provider and
market participants having a counter-risk position at a second fixed rate
such that transactions of the market
participants balance out the risks
to consumers.
Bilski relies upon the State Street
Bank decision in support of his claim.
He asserts his claim recites a process
and this method produces a useful,
concrete, and tangible result. To understand why BPAI rejected Bilski’s claim,
a brief historical review is in order.
the Supreme court
on Process Patents
The Supreme Court first considered
whether computer program processes
could be patented in its unanimous
1972 decision in Gottschalk v. Benson.
Benson had applied for a patent on
a method for transforming binary
coded decimals to pure binary form.
One claim called for implementing
this algorithm in a programmed computer; a second was for the algorithm
as such.
Section 101 of U.S. patent law states
that “[w]hoever 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
therefore.” Benson’s algorithm was a
process in the dictionary sense of the
word, but that didn’t necessarily mean
it was a process within the meaning of
section 101.
Under the Court’s past decisions,
patentable processes had been those
that transformed matter from one
physical state to another. Benson’s
process didn’t do this. Past decisions
had also excluded laws of nature,
mathematical and scientific principles, mental processes, and abstract
ideas from patent protection. Because
Benson’s method could be carried out
in a person’s head or with aid of paper
and pencil, it seemed like a mental
process or abstract idea, and perhaps
a mathematical principle. The Court
was also disturbed that Benson’s