No. 08-964
IN THE
Supreme Court of the United States
 
BERNARD L. BILSKI and RAND A. WARSAW,
Petitioners,
v.
JOHN DOLL, Acting Under Secretary of Commerce
for Intellectual Property and Acting Director,
Patent and Trademark Office, Respondent.
_______________________________
ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
BRIEF OF AMICUS CURIAE
THE HOUSTON INTELLECTUAL PROPERTY LAW
ASSOCIATION IN SUPPORT OF PETITIONERS
STEPHEN KOCH
President
HOWARD SPEIGHT*
HOUSTON INTELLECTUAL
PROPERTY LAW ASSOCIATION
9601 Katy Freeway
Suite 280
Houston, TX, 77024
* Counsel of Record
Counsel for Amicus Curiae
224409
A
(800) 274-3321 • (800) 359-6859

i
Cited Authorities
TABLE OF CONTENTS
Page
TABLE OF CITED AUTHORITIES  . . . . . . . . .
iii
INTERESTS OF THE AMICUS CURIAE  . . .
1
SUMMARY OF THE ARGUMENT  . . . . . . . . . .
3
ARGUMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
A. The Federal Circuit’s Adoption of the
“Machine–or–Transformation” Formula
as the “Only Applicable Test” to
Determine Patent Eligibility for a Process
Threatens to Stifle Innovation, a Key
Driver of the Nation’s Economy  . . . . . . . .
4
1.
The Patent System is a Key Driver
of the United States Economy and
Should Adapt to Changing Times  . .
4
2.
The “Machine–or–Transformation”
Formula Threatens the vitality of
many Software Patents  . . . . . . . . . . . .
7
a. The BPAI has applied the
Federal Circuit’s Bilski opinion
as a broad exclusion over
software  . . . . . . . . . . . . . . . . . . . . . .
9

ii
Cited Authorities
Contents
Page
b. The machine–or–transformation
test’s negative impact on
important  patents  . . . . . . . . . . . . .
14
i.   Dell Computer Corporation’s
“build–to–order”  patents  . . .
14
ii. AT&T’s linear programming
patent  . . . . . . . . . . . . . . . . . . . .
17
iii. Sperry Corporation’s LZW
compression patent  . . . . . . . .
20
3.
The proper standard that should
govern in determining whether a
process is patent–eligible subject
matter under section 101 is the test
for processes stated in Diehr  . . . . . .
23
B. The Federal Circuit’s Adoption of the
“Machine–or–Transformation” Formula
as the “Only Applicable Test” to
Determine Patent Eligibility for a Process
Contradicts the Clear Congressional
Intent that Patents Protect “method[s] of
doing or conducting business.  . . . . . . . . . .
26

iii
T
Cited Authorities
ABLE OF CITED AUTHORITIES
Page
Cases
Cochrane v. Deener,
94 U.S. 780 (1877)  . . . . . . . . . . . . . . . . . . . . . . . . 13, 24
Diamond v. Diehr,
450 U.S. 175 (1972)  . . . . . . . . . . . . . . . . . . . . . passim
Ex Parte Altman,
2009 WL 1709111 (BPAI May 29, 2009)  . . . . .
12
Ex Parte Avinash,
2009 WL 1714570 (BPAI June 2, 2009)  . . . . . 10, 11
Ex Parte Barnes,
2009 WL 164074 (BPAI January 22, 2009)  . . .
10
Ex Parte Busche,
2009 WL 1707168 (BPAI May 28, 2009)  . . . . .
11
Ex Parte Caputo,
2009 WL 1747508 (BPAI June 18, 2009)  . . . . .
11
Ex Parte Cornea–Hasegan,
2009 WL 86725 (BPAI January 13, 2009)  . . . .
17
Ex Parte Dang,
2009 WL 1892586 (BPAI June 29, 2009)  . . . . .
12
Ex Parte Greene,
2009 WL 1134839 (BPAI April 24, 2009)  . . . . .
12

iv
Cited Authorities
Page
Ex Parte Hardwick,
2009 WL 1796055 (BPAI June 22, 2009)  . . . . .
10
Ex Parte Mau,
2009 WL 1182161 (BPAI May 1, 2009)  . . . . . .
10
Ex Parte Nawathe,
2009 WL 327520 (BPAI February 9, 2009)  . . 19, 22
Ex Parte Petculescu,
2009 WL 1718896 (BPAI June 4, 2009)  . . . . . 10, 11
Ex Parte Verhaegh,
2009 WL 1719535 (BPAI June 11, 2009)  . . . . 11, 13
Festo Corp. v. Shoketsu Kinzoku
Kogyo Kabushiki Co.,
535 U.S. 722 (2002)  . . . . . . . . . . . . . . . . . . . . . . . 6, 25
Gottschalk v. Benson,
409 U.S. 63 (1972)  . . . . . . . . . . . . . . . . . . . . . . . . .
24
In re Bilski,
545 F.3d 943 (Fed. Cir. 2008), cert. granted
129 S. Ct. 2735 (U.S. 2009)  . . . . . . . . . . . . . . . passim
In re Nuijten,
500 F.3d 1346 (Fed. Cir. 2007)  . . . . . . . . . . . . . .
10

v
Cited Authorities
Page
KSR International v. Teleflex, Inc.,
550 U.S. 398 (2007)  . . . . . . . . . . . . . . . . . . . . . . .
25
Warner–Jenkinson Co.
v. Hilton Davis Chemical Co.,
520 U.S. 17 (1997)  . . . . . . . . . . . . . . . . . . . . . . . . .
25
Statutes
35 U.S.C. § 101  . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
35 U.S.C. § 102  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
35 U.S.C. § 103  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
35 U.S.C. § 112  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 20
35 U.S.C. § 273  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Other Authorities
Alan Cohen, The Squishy Patent, NAT’L L.J.,
Aug. 8, 2002  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 21
JAMES  BESSEN & MICHAEL  MEURER, PATENT
FAILURE, HOW  JUDGES, BUREAUCRATS,  AND
LAWYERS  PUT  INNOVATORS  AT  RISK, 202
(Princeton Univ. Press 2008)  . . . . . . . . . . . . . . .
18

vi
Cited Authorities
Page
KEVIN G. RIVETTE & DAVID KLINE, REMBRANDTS
IN  THE  ATTIC 15 (Harvard Bus. Sch. Press
2000)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 14, 15
MARSHALL PHELPS & DAVID KLINE, BURNING THE
SHIPS, INTELLECTUAL  PROPERTY  AND  THE
TRANSFORMATION  OF  MICROSOFT, 161 (John
Wiley & Sons 2009)  . . . . . . . . . . . . . . . . . . . . . . 5, 6, 7
Peter Zura, Bilski at the BPAI–What a Mess
(Part 1), The 271 Patent Blog, http://
271patent.blogspot.com/2009/06/bilski-at-
bpai-what-mess-part-1.html (last visited July
8, 2009)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Ronald A. Katz, Secrets of the Trade: An
Inventor Shares His Licensing Know–How,
in MAKING INNOVATION PAY: PEOPLE WHO TURN
IP INTO  SHAREHOLDER  VALUE 177 (Bruce
Berman, ed. 2006)  . . . . . . . . . . . . . . . . . . . . . . . .
5

1
INTERESTS OF THE AMICUS CURIAE
The Houston Intellectual Property Law Association
(HIPLA) is an association of over 400 lawyers and other
professionals who work in the Houston, Texas area.1
Founded in 1961, HIPLA is one of the largest
associations of intellectual property practitioners in the
country. No HIPLA member has served as record
counsel to any party in the subject of this appeal.
The practice of most of the HIPLA membership
relates in substantial part to the field of intellectual
property law, and HIPLA members are often called upon
to advise their clients in matters involving the statute
at issue in this case, 35 U.S.C. § 101. Members of HIPLA
advise clients from all over the United States and the
world, most of whom routinely file patent applications
in the United States. Each of those patent applications
is subjected to scrutiny by the United States Patent and
Trademark Office under the statute. Once their patents
are allowed, HIPLA members’ clients rely on the validity
of those patents, which is subject to review under the
statute. As such, section 101 is a statutory provision of
great consequence to many clients of HIPLA members.
1. No counsel for a party authored this brief in whole or in
part, and no such counsel or party made a monetary contribution
intended to fund the preparation or submission of this brief.
No person other than the amicus curiae, or its members or
counsel made a monetary contribution to its preparation or
submission. The parties have consented to the filing of this brief.

2
Many HIPLA members’ clients file patent
applications directed to software and business methods.
Even companies that appear to be traditional brick–
and–mortar enterprises, such as the energy companies,
have developed large portfolios of software and business
methods patents and patent applications. Software and
business methods patents and patent applications are
among the patent properties adversely affected by the
decision under appeal here.
Because the Federal Circuit has improperly narrowed
the scope of the statute as it applies to processes from
that established by this Court in Diamond v. Diehr, this
Amicus respectfully requests this Court to reverse such
holding. Diamond v. Diehr, 450 U.S. 175 (1972). Because
the Federal Circuit has improperly established the
“machine–or–transformation” test for patent eligibility,
this Amicus respectfully requests this Court to reverse
such holding.The United States Patent and Trademark
Office (hereinafter the “USPTO”) rejected the claims of
the instant patent application under 35 U.S.C. § 101. The
Court of Appeals for the Federal Circuit (hereinafter the
“Federal Circuit”) affirmed the rejection. In re Bilski, 545
F.3d 943 (Fed. Cir. 2008), cert. granted 129 S. Ct. 2735 (U.S.
2009) . In its decision, the Federal Circuit adopted the
machine–or–transformation test as the sole test governing
section 101 analysis for process patents.

3
SUMMARY OF THE ARGUMENT
The Patent System is very important to the economy
of the United States. It provides the context for much
of the wealth owned by companies and for employment
in the United States and around the world. Further,
owners use their intellectual property not merely to
protect the benefits of their substantial research and
development investments from exploitation by both
domestic and foreign enterprises, but also to generate
licensing revenue and as leverage in collaborative
agreements. All of those uses rely on a stable Patent
System.
The Federal Circuit’s Bilski opinion disrupts that
stability. One example of that disruption is that the
Board of Patent Appeals and Interferences now
generally applies the Bilski opinion in such a way that
claims to software, standing alone, and transformation
of data, standing alone, are not patentable subject
matter. A second example is that applying the Federal
Circuit’s machine–or–transformation test to important
patents which have issued in recent years might have
invalidated those patents, which would have been
detrimental to the United States economy. Others will
argue that the Federal Circuit’s Bilski opinion is
inconsistent with this Court’s precedent. We will focus
on the disruptions to the stability of the Patent System
caused by those inconsistencies.
This Court should reject the machine–or–
transformation test.

4
ARGUMENT
A. The Federal Circuit’s Adoption of the “Machine–
or–Transformation” Formula as the “Only
Applicable Test” to Determine Patent Eligibility
for a Process Threatens to Stifle Innovation, a
Key Driver of the Nation’s Economy
1. The Patent System is a Key Driver of the
United States Economy and Should Adapt to
Changing Times
The United States economy has undergone an
enormous change in the last few decades. We have moved
from a brick–and–mortar economy to one that relies on
such technologies as the Internet, e–commerce, and
cellular telephones. Technological revolutions are not
uncommon in United States history and often induce
discussions about patent quality:
[W]henever the United States has undergone
a major industrial renaissance – such as
occurred during the nineteenth century when
first steam and then later the telegraph,
telephone, and electric power industries
emerged2 – the number of new patents [has]
skyrocketed, as have concerns about a
resulting decline in patent quality and an
increase in patent litigation. So in 1836, and
2. See also KEVIN G. RIVETTE & DAVID KLINE, REMBRANDTS
IN  THE  ATTIC 15 (Harvard Bus. Sch. Press 2000). Figure 1–2
shows several other industrial evolutions, including Auto and
Air in the early 20th century, Synthetics and Aerospace in the
1960s and 1970s and the current High Tech revolution.

5
again in 1870, Congress reformed the patent
system to better enable it to meet the
demands of new technologies and new
industries. MARSHALL PHELPS & DAVID KLINE,
BURNING  THE  SHIPS, INTELLECTUAL  PROPERTY
AND  THE  TRANSFORMATION  OF  MICROSOFT, 161
(John Wiley & Sons 2009).
Indeed, the Congress is considering, as it did in its last
session, sweeping revisions to the Patent Statute.
35 U.S.C. § 101, et seq.
Such changes are to be expected and are healthy.
Patent law, as an enabler of innovation, must keep up
with the times and changes to technology. Changes to
patent law should be made carefully, though, and should
be made in the context of the long history of the Patent
Statute and be sensitive to the fact that current owners
of patent properties, such as patents, patent
applications, and licenses to patents or patent
applications, have relied on the current state of the law
in acquiring and applying such assets.
For example, patent holders have gone beyond
using patent properties in the traditional negative
sense, i.e., preventing others from making, using, selling,
offering to sell, or importing the patented invention.
Patents are also used to generate licensing revenue for
their owners in return for the right to practice the
patented invention. See Ronald A. Katz, Secrets of the
Trade: An Inventor Shares His Licensing Know–How,
in MAKING INNOVATION PAY: PEOPLE WHO TURN IP INTO
SHAREHOLDER VALUE 177, 182 (Bruce Berman, ed. 2006)
(describing a “business model” for licensing patents).

6
Further, some patent property holders have realized
that “IP’s greatest value [lies] not so much in being a
weapon against competitors, but rather in serving as a
bridge to collaboration with other firms that would
enable companies to acquire technologies and
competencies they needed to compete successfully.”
PHELPS & KLINE, supra, at 5 (emphasis in original). For
Microsoft Corporation, one of the America’s leading
technology companies, “these IP–enabled collaborations
have led to greater success . . . in the marketplace,
materially enhanced the company’s bottom line, and
advanced the interests of [its] shareholders.” Id. at 142.
These strategies rely on a stable Patent System and
anything other than carefully measured changes could
disrupt the entire structure. See Festo Corp. v. Shoketsu
Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 739 (2002)
(“courts must be cautious before adopting changes that
disrupt the settled expectations of the inventing
community”). It is difficult, for example, to seek
enforcement of one’s patent rights, attempt to license a
patent, or work out a collaborative agreement when the
patent property bases of such efforts suddenly become
invalid. But that is exactly the cloud that the Federal
Circuit‘s decision has caste. The next section of this brief
provides some examples, illustrative of the decision’s
broad negative impact on the patent system.
This is not an abstract problem without economic
implications. According to one commentator:
intellectual property has now become the chief
source of wealth of the modern corporation.
IP and other intangible assets today account

7
for upwards of 80 percent of the market
capitalization of all public companies in the
world—with brands, copyrights, patents and
technological know–how now comprising the
lion’s share of these intangibles. PHELPS  &
KLINE, supra, at 137.
One important set of intellectual property rights that is
directly threatened by the Federal Circuit’s Bilski
decision is software. “Intellectual property rights in
software are now essential to the jobs and living
standards of tens of millions of people the world over.
Of the 1.2 trillion dollars spent worldwide on information
technology this year, 21 percent of that will go towards
software. Yet that 21 percent produces more than half
of the 35 million jobs worldwide in the information
technology sector.” PHELPS & KLINE, supra, at 163.
The Federal Circuit’s decision to adopt the machine–
or–transformation test as the only test for patentable
subject matter is a drastic, unjustified, and improvident
change of direction for patent law. It should be rejected.
2. The “Machine–or–Transformation” Formula
Threatens the vitality of many Software
Patents
In the decision under appeal, the Federal Circuit
observed that “a claim is not a patent–eligible ‘process’
if it claims ‘laws of nature, natural phenomena, [or]
abstract ideas.’” In re Bilski, 545 F.3d at 952, quoting
Diamond v. Diehr, 450 U.S. 175, 185 (1972)). The Federal
Circuit further observed this Court’s distinction
“between those claims that ‘seek to pre–empt the use

8
of ’ a fundamental principle, on the one hand, and claims
that seek only to foreclose others from using a particular
application’ of that fundamental principle, on the other.”
Id. at 953, (quoting Diehr, 450 U.S. at 187). The Federal
Circuit then adopted the “machine–or–transformation”
formulation as the governing test for determining if a
claimed process is “tailored narrowly enough to
encompass only a particular application of a
fundamental principle rather than to pre–empt the
principle itself,” i.e., whether a process is patent–eligible
under 35 U.S.C. § 101. Id. at 954, 956. The Federal
Circuit’s formulation of that test is: “A claimed process
is surely patent–eligible under § 101 if: (1) it is tied to a
particular machine or apparatus, or (2) it transforms a
particular article into a different state or thing.”
Id. at 954. The Federal Circuit determined that the
“machine–or–transformation” is to be the “sole test
governing § 101 analysis.” Id. at 955–956.
Thus, rather than adopting the test annunciated
under  Diehr that a process is patent–eligible if it is
tailored narrowly enough to encompass a particular
application of a fundamental principle, rather than the
principle itself, and rather than adopting the machine–
or–transformation test as one test for patent eligibility,
the Federal Circuit adopted its new machine–or–
transformation test as the only test.
One quasi–judicial body charged with applying the
Federal Circuit’s machine–or–transformation test is the
Board of Patent Appeals and Interferences (hereinafter
“BPAI”) within the United States Patent and
Trademark Office (hereinafter “USPTO”). The BPAI’s
implementation of the machine–or–transformation test

9
since the Federal Circuit’s Bilski decision has been, in
the words of one commentator, a “mess.” See Peter Zura,
Bilski at the BPAI–What a Mess (Part 1), The 271 Patent
Blog, http://271patent.blogspot.com/2009/06/bilski-at-
bpai-what-mess-part-1.html (last visited July 8, 2009).
As of June 16, 2009, “section 101 rejections [had] a 92%
rate of being at least partly affirmed at the BPAI in
2009.”  Id. All “of the BPAI’s cases in 2009 dealt with
business methods and algorithmic processes. The 92%
rate is remarkable, given the fact that, as recently as
2005, the BPAI did not uphold a single rejection based
on patentable subject matter.” Id. (emphasis in original).
Thus, the Federal Circuit’s decision in this case has
fundamentally changed section 101 law, at least as it
respects business methods and algorithmic processes.
a. The BPAI has applied the Federal
Circuit’s  Bilski opinion as a broad
exclusion over software.
The BPAI analysis of patentability of a process
under the Federal Circuit’s Bilski decision is an exercise
in formalistic reasoning. The BPAI typically does not
deal with the questions of whether or not the claim
covers a law of nature or natural phenomenon and
whether or not the claimed subject matter sets out “’[a]
procedure . . . [a] series of actions, motions, or operations
definitely conducing to an end, whether voluntary or
involuntary.’” In re Bilski, 535 F.3d at 952 (definition of
“process”). Those questions are most likely answerable
upon a quick inspection of the claim. Instead, the BPAI
moves directly to the question of whether the claimed
subject matter is unpatentably abstract. In some cases,
the BPAI considers the abstraction question as one of

10
whether or not the claim pre–empts the use of a
fundamental principle. See, e.g., Ex Parte Barnes, 2009
WL 164074 at *6 (BPAI January 22, 2009)(“A claim that
is drawn only to the analyzing of data . . . is a claim that
seeks to pre–empt the use of a fundamental principle”).
In other cases, the BPAI decides the abstraction issue
using the machine–or–transformation test. See, e.g.,
Ex Parte Hardwick, 2009 WL 1796055 at *4–5 (BPAI
June 22, 2009)(invention “not tied to a particular
machine” and does not transform an article).
The BPAI appears to have arrived at some general
rules:
1. It has been found that software, such as a data
processing program, standing alone, does not satisfy the
machine element of the machine–or–transformation test.
See, e.g.Ex Parte Petculescu, 2009 WL 1718896 at * 8
(BPAI June 4, 2009) (“Software in itself, with no
structural tie to an article of manufacture, machine,
process or composition of matter, is not patentable
subject matter” (citing In re Nuijten, 500 F.3d 1346,
1357 (Fed. Cir. 2007)); Ex Parte Mau, 2009 WL 1182161
at *11 (BPAI May 1, 2009) (“[c]omputer programs and
data structures are not physical machines”).
2. It has been found that a claim that recites an
otherwise unpatentable method does not become patent
eligible simply because the claim recites the method
being run on a general purpose computer. See, e.g.,
Ex Parte Avinash, 2009 WL 1714570 at *9, *11 (BPAI
June 2, 2009) (“Even assuming that the claimed temporal
processing unit introduces structure into claim 1, we
still find that the claim recites no more than a general–

11
purpose controller or computer (FF 14) that preempts
substantially all practical applications;” “a general
purpose computing system does not tie claim 10 to a
special purpose or particular machine” (emphasis in
original)).
3. It has been found that transforming data does
not satisfy the transformation test, See e.g., Ex Parte
Verhaegh, 2009 WL 1719535 at * 14 (BPAI June 11, 2009)
(“The steps of process claims 1–5 also failed the second
prong of the machine–or–transformation test because
the data process in the claims do not represent physical
and tangible objects”); Ex Parte Patculescusupra, at
*7 (the “purported transformation of data without a
machine, is insufficient to establish patent–eligibility
under § 101” (citing In re Bilski, 545 F.3d at 961));
Ex Parte Busche, 2009 WL 1707168 at *10 (BPAI May
28, 2009) (“the data represents information about a
generic training and testing data set, which are
intangible data;” the data is not transformed), unless
the (a) data clearly representing physical and tangible
objects, such as bones, organs, and other body tissue;
and (b) the transformation of raw data into a particular
visual depiction of a physical object on a display
(i.e., the Adele exception). See, e.g.Ex Parte Avinash,
supra at *12; Ex Parte Caputo, 2009 WL 1747508 at *3
(BPAI June 18, 2009)(“‘So long as the claimed process
is limited to a practical application of a fundamental
principle to transform specific data, and the claim is
limited to a visual depiction that represents physical
objects or substances, there is no danger that the scope
of the claim would wholly pre–empt all uses of the
principle’” (quoting In re Bilski, 545 F.3d at 962).

12
4. It has been found that reciting a computer in the
preamble of a claim is usually found to be merely an
exercise in claim drafting, see, e.g., Ex Parte Greene,
2009 WL 1134839 at *7 (BPAI April 24, 2009) (“merely
adding a nominal recitation of conventional computer
hardware in a claim otherwise directed to a pure
mathematical algorithm is merely an exercise in claim
drafting that cannot, by itself, render the claim
statutory”), or merely a field of use recitation and
insufficient to transform an otherwise unpatentable
method claim into patentable subject matter. See, e.g.,
Ex Parte Dang, 2009 WL 1892586 at *4 (BPAI June 29,
2009) (“although the claim preamble recites the method
as being computer implemented, we consider it to be
merely a field of use recitation . . . [s]ince the reference
to a computer is not again mentioned in the claim, we
find that claim 1 fails to be tied to a particular machine
or apparatus” and thus non–patent eligible subject
matter).
5. On the other hand, it has been found that the
recitation of a computer in the preamble and later in
the body of the claim does recite patentable subject
matter. See, e.g.Ex Parte Altman, 2009 WL 1709111 at
*6 (BPAI May 29, 2009) (preamble recites host
multiprocessor system’s operating system and claim
body recites “a local lookaside table that receives  a
target virtual memory address and outputs a host
memory address and page access rights” indicating that
“execution by a machine is required” and the claim
recites patentable subject matter (emphasis in original)).
6. Finally, it has been found that recitation of
elements in the means–plus–function format satisfies

13
the machine prong of the machine–or–transformation
test. See, e.g.Ex Parte Verhaeghsupra, at *7 (elements
in means plus function format are presumed to require
construction under 35 U.S.C. § 112 implying that the
claim is directed to a machine).
These examples, taken either individually or as a
whole, provide clear evidence of the problems with the
rigid  Bilski machine–or–transformation test. The
machine prong of that test is implicitly at odds with
language this Court quoted in Diehr, i.e., that “the tools
to be used . . . . may be of secondary consequence.”
Diehr, 450 U.S. at 183-84 (quoting Cochrane v. Deener,
94 U.S. 780, 787–788 (1877)). The Bilski test on the
contrary raises the “tool” to having primary significance.
The transformation component of that test is equally
at odds with this Court’s precedent. Although this court
has frequently used the phrase “transformation and
reduction of an article” in its opinions, the focus has
always been on the fact that “[t]he process requires that
certain things should be done with certain substances,
and in a certain order; but the tools to be used in doing
this may be of secondary consequence.” Id.  at 183
(quoting  Cochrane, 94 U.S. at 780, 787; and that
“Transformation and reduction of an article ‘to a
different state or thing’ is the clue to the patentability
of a process claim that does not include particular
machines,  Id.  The Bilski focus on the article changes
the focus from the nature of the process – to do
something in a certain order – to a focus on the object
of the process. That is a more limiting standard than
either the Patent Statute or this Court’s precedent
requires and should be overruled.

14
As the above BPAI examples indicate, the Federal
Circuit’s Bilski decision has resulted in a significantly
different outcome for recently filed patent applications
than would have been expected heretofore. As the
examples below further indicate, the decision also raises
questions regarding the state of long issued patents on
which a significant portion of the economy relies.
b. The machine–or–transformation test’s
negative impact on important patents.
As discussed above, intellectual property rights are
vitally importantly throughout the world and
particularly in the United States. The change to the law
brought about by the Federal Circuit’s Bilski opinion
might be argued to be a vehicle to invalidate some of
those important patents. Several examples follow.
i. Dell Computer Corporation’s “build–
to–order” patents.
In the late 1990’s Dell Computer Corporation soared
to the top of the personal computer business. RIVETTE
& KLINE, supra n.2, at 34. The key to Dell’s success was:
a unique ‘build–to–order’ direct sales model
that enables buyers to order a custom–
configured PC via the Internet or an 800
number. These orders are then processed
through continuous–flow manufacturing,
configuration, and customer service operation
for delivery to home or office within 72 hours.
Id. at 34–35.

15
Dell patented some of those processes. A Westlaw
search of issued patents with Dell as the assignee and
“build–to–order” as a search term results in
approximately 160 hits. Dell did not just sit on its
patents. Instead:
[i]n the spring of 1999, the company cross–
licensed its patents to IBM in a $16 billion deal
that enabled each to plug key holes in their
respective businesses. Dell gained access to
IBM’s patented PC components, and IBM
obtained access to Dell’s patented systems for
running a successful build–to–order direct
sales effort. Id. at 36.
This is an example of the collaborative use of a patent
portfolio that was discussed above. Arguably, the
agreement would not have been possible without Dell’s
patenting of its build–to–order manufacturing system.
One patent that may have been included in Dell’s
cross–license with IBM was U.S. Patent No. 5,963,743,
entitled Database for Facilitating Software Installation
and Testing for a Build–to–Order Computer System,
which issued on October 5, 1999. U.S. Patent No.
5,963,743 (issued Oct. 5, 1999) (“‘743 Patent”). The ‘743
Patent is directed to “an improved method for installing
software and testing computer systems before they are
shipped to customers.” ‘743 Patent at column 2, lines
30–32.

16
Claim 1 of the ‘743 Patent is repeated below:
1. A database for use by a system database in
the manufacturing of a build–to–order
computer system comprising: a step table
containing a set of software installation and
testing steps shared among different
components of substantially all computer
systems being manufactured, wherein a
prescribed software installation or testing step
is executed by the system database during the
manufacturing of the build–to–order computer
system to facilitate a corresponding software
installation or testing for the build–to–order
computer system, the step table including an
aftercode attribute identifying whether a halt
or reboot is required after a corresponding step
is executed; and a component table coupled to
the step table, the component table containing
a set of substantially all possible components
that are included within the computer systems
being manufactured, wherein the prescribed
software installation or testing step executed
by the system database is determined in
accordance with a corresponding component
included in the build–to–order computer system.
Claim 1 recites a step table and a component table.
The step table contains the software installation and
testing steps necessary to manufacture a build–to–order
computer. The component table contains a set of all of
the possible components that might be used in the
manufacture of the build–to–order computer. The claim
does not describe any particular machine and the

17
databases it recites appear to be intended to reside on
a general purpose computer. It could be argued that
claim 1 does not describe any action whatsoever and, in
particular, does not describe a “transformation.”
Therefore, if faced with determining whether claim
1 of the ‘743 Patent recites patentable subject matter,
the BPAI might today determine that it does not. The
BPAI might reason that the claim is to a “general
purpose computer that has been programmed in an
unspecified manner to implement the functional steps
recited” in the claim, Ex Parte Cornea–Hasegan, 2009
WL 86725 at *4 (BPAI January 13, 2009), and thus that
it does not satisfy the “machine” prong of the machine–
or–transformation test. Similarly, the BPAI might today
find that claim 1 does not satisfy the transformation
prong because the claim describes no action at all.
Thus, had the Federal Circuit’s Bilski decision been
in place when Dell was prosecuting the ‘743 Patent in
the USPTO, the ‘743 Patent might not have issued, or
at least not in its current form. Dell might have been
deprived of a major component of its deal with IBM,
the deal might not have happened, and both Dell and
IBM would have been the poorer for it.
ii. AT&T’s linear programming patent.
U.S. Patent No. 4,744,028, entitled Methods and
Apparatus for Efficient Resource Allocation, U.S. Patent
No. 4,744,028 (issued May 10, 1988) (“‘028 Patent”), is
sometimes cited, by even those that are hostile to
software patents, “as an example of what a software
patent should be: a highly specific, nontrivial

18
contribution to practical knowledge.” JAMES BESSEN &
MICHAEL  MEURER, PATENT  FAILURE, HOW  JUDGES,
BUREAUCRATS,  AND  LAWYERS  PUT  INNOVATORS  AT  RISK,
202 (Princeton Univ. Press 2008). It is directed to
optimizing resource allocations, particularly among
telecommunications transmission facilities.
AT&T obtained a patent on the algorithm in 1988
and “developed a product (KORBX), bundling the
software with a high–performance computer. Although
AT&T did make a small number of sales and also
apparently licensed the patent, this effort was not a
significant commercial success.” Id.
Claim 1 of the ‘028 Patent is repeated below:
1. A method for allocating the available
telecommunication transmission facilities
among the subscribers demanding service at
a particular time so as to reduce the total cost
of operating said transmission facilities,
where the available transmission facilities, the
subscribers, and the total cost are related in
a linear manner, said method comprising the
steps of:
tentatively and iteratively reassigning said
available telecommunications transmis-
sion facilities to said subscribers so as
to reduce said total costs at each said
reassignment,

19
each said reassignment being determined by
normalizing the previous assignment
with respect to constraints on said
allocations,
terminating said iterative reassigning
steps when said costs are below a
preselected threshold, and
allocating said transmission facilities in
accordance with the reduced cost
assignment.
If asked to review this claim in light of the Federal
Circuit’s Bilski decision, the BPAI might today find that
it does not recite patentable subject matter. The BPAI
might find that, although the claim mentions
“telecommunications transmission facilities” in the body
of the claim, the subject matter of the claim is not tied
to those facilities. Instead, the claim describes a series
of steps to be performed by a general purpose computer.
Consequently, the BPAI might decide that the claim
merely recites software and does not satisfy the
“machine” prong of the machine–or–transformation test.
Further, the BPAI might today decide that, while
transmission facilities are allocated in the last step of
the claim, that allocation is represented by mere data
in the computer and the transmission facilities are not
transformed by the claimed process. See  Ex Parte
Nawathe, 2009 WL 327520 at *4 (BPAI February 9, 2009)
(transforming input XML documents into represented
data is not a transformation because “documents are
not an article . . . [r]ather, they are mere data that

20
represent such entities”). Accordingly, the BPAI might
find that the claim does not satisfy the transformation
prong of the machine–or–transformation test and that,
as a result, the claim does not qualify as patentable
subject matter. As a result, an exemplary software
patent may not have issued.
One commentary criticizes the ‘028 Patent saying
that “serious questions exist as to the boundaries of even
this patent, questions as to whether its claims are truly
novel, and whether Karmaker [the inventor] actually
‘possessed’ all the technologies claimed.” BESSEN  &
MEURER,  supra, at 202. These questions illustrate a
better approach to questioning the validity of this
patent. The threshold for patentable subject matter
should be low, and should not exclude software, and the
other tests for patentability, i.e., novelty under 35 U.S.C.
§ 102, obviousness under 35 U.S.C. § 103, and the
various requirements of 35 U.S.C. § 112, should be
applied as more appropriate gate–keepers.
iii. Sperry Corporation’s LZW compres-
sion patent.
Law.com describes U.S. Patent No. 4,558,302,
entitled High Speed Data Compression and
Decompression Apparatus and Method, U.S. Patent No.
4,558,302 (issued Dec. 10, 1985) (“‘302 Patent”), as “the
patent that spurred the growth of the Web from little
known medium used by techies for sending files to a
worldwide phenomena.” Alan Cohen, The Squishy
Patent, NAT’L L.J., Aug. 8, 2002, http://www.law.com/jsp/
article.jsp?id=1028321281489 (last visited July 9, 2009).
“The LZW algorithm provides a fast, elegant way to

21
compress and decompress data. It is the trick that allows
Web users to view photos and animations without
waiting hours for them to download. Every time you call
up CNN.com, Yahoo or just about any other Web site,
you’re looking at LZW compression in action.” Id.
Claim 107 of the ‘302 Patent is repeated below:
107. In a data compression and data
decompression method, a compression method
for compressing a stream of data character
signals into a compressed stream of code
signals, said compression method comprising
the steps of
storing, in the locations of a memory, strings
of data character signals encountered
in said stream of data character signals,
respectively, said stored strings having
code signals associated therewith,
respectively, said locations of said
memory being accessable by a plurality
of address signals, respectively, each
said string of data character signals
comprising a prefix string of data
character signals and an extension
character signal, said prefix string
corresponding to a string stored in said
memory,
searching said stream of data character
signals by comparaing said stream to
said stored strings to determine the
longest match therewith,

22
inserting into said memory, for storage
therein, an extended string comprising
said longest match with said stream of
data character signals extended by the
next data character signal following said
longest match,
assigning a code signal corresponding to said
stored extended string, and
providing the code signal associated with said
longest match so as to provide said
compressed stream of code signals.
If asked to review this claim in light of the Federal
Circuit’s  Bilski decision, the BPAI might find that it
does not recite patentable subject matter. The various
steps set out in the claim all appear to be intended to be
performed in software and there is no reference in the
claim to a particular machine. Therefore, the BPAI
might find that the claim does not satisfy the “machine”
prong of the machine–or–transformation test.
Further, the BPAI might today find that the only
thing that is transformed in the claim is data, that
transforming data is not sufficient to satisfy the
“transformation” prong of the machine–or–
transformation test, see Ex Parte Nawathe,  supra, at
*4 (transforming data is does not satisfy the
“transformation” prong of the test), and therefore that
claim 107 of the ‘302 Patent does not claim patentable
subject matter.

23
3. The proper standard that should govern in
determining whether a process is patent–
eligible subject matter under section 101 is
the test for processes stated in Diehr
This Amicus believes, for the reasons set out above,
that the Federal Circuit erred in adopting the machine–
or–transformation test as the sole test for determining
whether a process is patent eligible subject matter. The
Federal Circuit seemed reluctant to come to that
conclusion, apparently driven by its interpretation of
this Court’s precedent. See In re Bilski, 545 F.3d at 956
(“we agree that future developments in technology and
the sciences may present difficult challenges to the
machine–or–transformation test, just as the widespread
use of computers and the advent of the Internet has
begun to challenge it in the past decade”). The Federal
Circuit appeared to invite this Court to speak to the
standard, writing that “we recognize that the Supreme
Court may ultimately decide to alter or perhaps even
set aside [the machine–or–transformation test] to
accommodate emerging technologies.” Id.
This Court, however, has already given guidance as
to the proper standard in Diamond v. Diehr. This
Amicus urges this Court to reject the machine–or–
transformation test and return the “[t]ransformation
and reduction of an article ‘to a different state or thing’”
analysis stated in its precedent. Determining whether
a process is patent–eligible subject matter under section
101 should be a two–step process: (a) determine whether
the process falls under one of the exclusions from patent
coverage (laws of nature, natural phenomena, and
abstract ideas), and, if not, (b) apply the general rule

24
for process claims set out by the Court in Diehr : “[t]he
process requires that certain things should be done with
certain substances, and in a certain order; but the tools
to be used in doing this may be of secondary
consequence,” Id., at 184 (quoting Cochrane, 94 U.S. at
780, 787–88); and that “‘[t]ransformation and reduction
of an article “to a different state or thing” is the clue to
the patentability of a process claim that does not include
particular machines.’” Diehr, 450 U.S. at 184 (quoting
Gottschalk v. Benson, 409 U.S. 63, 70 (1972)).
To determine if a process falls under the “abstract
ideas” exclusion, the test should be whether the claim
seeks to pre–empt the use of a fundamental principle
as opposed to seeking to foreclose others from using a
particular “application” of that fundamental principle,
as set out in Diehr.
The long period of time and the tremendous
technological advances that have occurred since the
Cochrane opinion issued in 1877 justify updating the
portion of the formulation concerning “certain
substances” to include intangible articles, such as
commodity consumption risk and ownership interests,
as in this case, and this Amicus urges this Court to make
that clarification.
Further, this case gives this Court an opportunity
to sweep away other formalisms that have crept into
section 101 law. The Court’s existing precedent in this
area has proven to be all too easily manipulated into
frustrating the intent of Congress that statutory subject
matter should “‘include anything under the sun that is
made by man.’” Diehr, 450 U.S. at 182 (discussing the

25
legislative history of the 1952 Patent Act). Is there any
argument that computer software and data are not
“made by man”? And yet, the Federal Circuit, and the
BPAI observing the Federal Circuit’s mandates, has
followed this Court’s precedent to decide that they are
not patentable subject matter. This Amicus urges the
Court to indicate that merely because a claim must be
implemented in software or that it involves solely the
manipulation of data, that claim does not necessarily
pre–empt the use of a fundamental principle.
In summary, this Court has rejected the Federal
Circuit’s attempts to formularize abstract patent law
concepts. See KSR International v. Teleflex, Inc., 550
U.S. 398, 415 (2007) (rejecting the Federal Circuit’s
“rigid approach” to obviousness analysis); Festo Corp.
535 at 738 (rejecting the Federal Circuit’s rigid approach
to prosecution history estoppels); Warner–Jenkinson
Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 39–40
(1997) (refusing to participate in a debate regarding the
“particular linguistic framework” used to analyze the
doctrine of equivalents). The Court should do the same
in this case and reject the machine–or–transformation
test as the sole test for determining whether process
claims recite patentable subject matter.

26
B. The Federal Circuit’s Adoption of the “Machine–
or–Transformation” Formula as the “Only
Applicable Test” to Determine Patent Eligibility
for a Process Contradicts the Clear Congressional
Intent that Patents Protect “method[s] of doing
or conducting business.
This Amicus urges this Court to reject the machine–
or–transformation test for patent claims to methods of
doing or conducting business for the reasons described
above. Such claims should be considered patentable
subject matter if they satisfy the Diehr test described
above.
Respectfully submitted,
STEPHEN KOCH
President
HOWARD SPEIGHT*
HOUSTON INTELLECTUAL
PROPERTY LAW ASSOCIATION
9601 Katy Freeway
Suite 280
Houston, TX, 77024
Counsel for Amicus Curiae
* Counsel of Record