No. 08-964
================================================================
In The
Supreme Court of the United States
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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.
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On Writ Of Certiorari To The
United States Court Of Appeals
For The Federal Circuit
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BRIEF OF AMICUS CURIAE
RAYMOND C. MEIERS IN SUPPORT
OF NEITHER PARTY
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GREGG W. EMCH
Counsel of Record
MACMILLAN, SOBANSKI & TODD LLC
One Maritime Plaza, Fifth Floor
720 Water Street
Toledo, Ohio 43604
419-255-5900
Attorneys for Amicus Curiae
================================================================
COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2831
i
QUESTIONS PRESENTED
1. Whether the Federal Circuit erred by holding
that a “process” must be tied to a particular machine
or apparatus, or transform a particular article into a
different state or thing (“machine-or-transformation”
test), to be eligible for patenting under 35 U.S.C.
§ 101, despite this Court’s precedent declining to limit
the broad statutory grant of patent eligibility for
“any” new and useful process beyond excluding
patents for “laws of nature, physical phenomena, and
abstract ideas.”
2. Whether the Federal Circuit’s “machine-or-
transformation” test for patent eligibility, which
effectively forecloses meaningful patent protection to
many business methods, contradicts the clear
Congressional intent that patents protect “method[s]
of doing or conducting business.” 35 U.S.C. § 273.
ii
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ..................................
i
TABLE OF CONTENTS .........................................
ii
TABLE OF AUTHORITIES ...................................
v
STATEMENT OF INTEREST OF AMICUS CU-
RIAE ....................................................................
1
SUMMARY OF ARGUMENT ................................
1
ARGUMENT ...........................................................
3
1. THE FRAMEWORK FOR IDENTIFYING
PATENTABLE SUBJECT MATTER ..........
3
A. The Fundamentals: Manifestations of
Nature and Abstract Ideas are not
Patentable ..............................................
3
i. Manifestations of Nature .................
4
ii. Abstract Ideas ..................................
5
iii.
The cooperative relationship be-
tween Manifestations of Nature and
Abstract Ideas ..................................
7
B. The Model of Patentable Subject Mat-
ter Revealed by Precedent ....................
7
C.
The Implicit Application of the Tri-
partite System in Precedent .................
9
i. Useful results must be obtained ......
9
ii. Manifestations of Nature must be
applied .............................................. 11
iii
TABLE OF CONTENTS – Continued
Page
iii. A human-caused invention must be
defined between the manifestations
of nature that are applied and the
useful results that are achieved ...... 13
iv.
Confirming a distinction between
the manifestations of nature ap-
plied and human-caused structures
or steps .............................................. 17
v. Summary .......................................... 22
D. Benefits of the Tripartite System and
Perspective ............................................. 23
i. The model of patentable subject
matter as a tripartite system
divides the analysis into compo-
nents that are individually easier to
assess ................................................ 23
ii.
The model of patentable subject
matter as a tripartite system is
rigorous and flexible ......................... 25
iii. The model of patentable subject
matter as a tripartite system will
encourage focused claiming and
extensive disclosure, especially in
emerging fields ................................. 25
iv. Perspective ....................................... 26
2.
APPLICATION OF THE TRIPARTITE
MODEL OF PATENTABLE SUBJECT
MATTER TO THE PRESENT CLAIMS ..... 26
iv
TABLE OF CONTENTS – Continued
Page
A. The claimed subject matter achieves a
useful result that is objectively veri-
fiable ...................................................... 26
B. The useful result does not arise natu-
rally ........................................................ 29
C. The claim recites something human-
caused that links the manifestations of
nature applied and the useful result
achieved ................................................. 29
D. A human-controlled step recited in the
claimed subject matter is more than a
restatement of the useful result ........... 29
E.
The claimed subject matter is not
based on reliable manifestations of
nature ..................................................... 30
CONCLUSION ....................................................... 32
v
TABLE OF AUTHORITIES
Page
CASES
Brenner v. Manson, 383 U.S. 519 (1966) ........... passim
Diamond v. Chakrabarty, 447 U.S. 303
(1980) ..................................................... 19, 20, 22, 25
Diamond v. Diehr, 450 U.S. 175 (1981) ....................... 5
Funk Brothers Seed Co. v. Kalo Inoculant Co.,
333 U.S. 127 (1948) ......................................... passim
Gottschalk v. Benson, 409 U.S. 63 (1972) .......... passim
In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) ............. 5, 28
Laboratory Corp. of America Holdings v. Metabo-
lite Laboratories Inc., 548 U.S. 124 (2006) .............. 24
Le Roy v. Tatham, 55 U.S. 156 (1852) ...................... 4, 6
Mackay Radio & Telegraph Co. v. Radio Corp.
of America, 306 U.S. 86 (1939) ....................... passim
O’Reilly v. Morse, 56 U.S. 62 (1853) ................... passim
Parker v. Flook, 437 U.S. 584 (1978) ................. passim
Rubber-Tip Pencil Company v. Howard, 87 U.S.
498 (1874) .................................................................. 3
Smith v. Snow, 294 U.S. 1 (1935) .............................. 20
The Telephone Cases, 126 U.S. 1 (1888) .... 16, 17, 20, 22
Tilghman v. Proctor, 102 U.S. 707 (1880) ................ 3, 8
STATUTES
35 U.S.C. § 101 ................................................... passim
35 U.S.C. § 102 ..................................................... 10, 11
vi
TABLE OF AUTHORITIES – Continued
Page
35 U.S.C. § 103 ..................................................... 10, 11
35 U.S.C. § 112 ...................................................... 10, 11
OTHER AUTHORITIES
Random House Webster’s Unabridged Dictionary
(2d ed. 1997) .............................................................. 6
U.S. App. No. 08/833,892 .......................... 26, 27, 28, 30
U.S. Pat. No. 174,465 ........................................... 16, 17
U.S. Pat. No. 1,974,387 .............................................. 11
U.S. Pat. No. 2,908,693 .......................................... 9, 11
U.S. Pat. No. Re117 ............................ 14, 15, 16, 17, 19
1
STATEMENT OF INTEREST
OF AMICUS CURIAE1
Raymond C. Meiers is an attorney in private
practice who has been interested in the field of
patentable subject matter for over ten years. He has
not been paid for this brief. It represents his concern
for the advancement of patent law. He holds a
Bachelor of Science in Mechanical Engineering from
the University of Toledo and a Juris Doctor from
the University of Cincinnati. He has no business or
personal relationship with the Petitioners or the
Respondent and does respectfully submit this brief as
a true amicus curiae.
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SUMMARY OF ARGUMENT
Precedent provides a contemporary and robust
framework for distinguishing between patentable and
the unpatentable subject matter. It is not necessary
to turn to narrowly-focused and rigid tests like the
machine test or the transformation test. Similarly, it
is not necessary to turn to subjective standards like
“technology” or “mental processes.” Further, § 101
need not be viewed as some quaint but ineffectual
1 Under Supreme Court Rule 37.6, I state that no part of
this brief was authored by counsel for any party, and no person
or entity made a monetary contribution to the preparation or
submission of the brief. The brief is filed with the consent of the
parties, copies of the consent letters having been filed with the
Clerk.
2
provision of Title 35, such that the other provisions of
Title 35 are capable of filtering subject matter not
worthy of a patent.
The framework provided by precedent, when
fully appreciated and properly applied, will function
to isolate unpatentable subject matter in conformance
with legislative intent. As set forth in greater detail
below, precedent reveals that patentable subject
matter is defined by a tripartite system. The three
elements of the system are manifestations of nature,
invention, and useful result. The invention applies
manifestations of nature and achieves a useful result.
Each element must be present and distinct from the
other elements, but the three elements must have
a contextual relationship with one another. The
Court has provided guidance for assessing each
element individually and for verifying the necessary
relationship among the elements.
It is submitted that the application of the
tripartite system reveals that the claims at issue in
the present matter fail to define patentable subject
matter. Specifically, the claims are not based on
manifestations of nature, demonstrated by the fact
that the claims will not produce the only useful result
implied by the application. The claims purport to
provide a system by which a party practicing the
claims will achieve a profit from counterbalancing
two series of commercial transactions. Recognizing
that patent claims must achieve the useful result
that is alleged, the present claims implicitly assert
a foolproof method for making a profit in a risk
3
management market. No readily appreciated law of
economics indicates that such a method is possible
and no such law is set forth in the application.
Patents are not granted for claimed subject matter
that merely attempts to achieve a useful result.
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ARGUMENT
1. THE FRAMEWORK FOR IDENTIFYING
PATENTABLE SUBJECT MATTER
A. The Fundamentals: Manifestations of
Nature and Abstract Ideas are not
Patentable
It is beyond dispute that manifestations of
nature are not patentable. A claim to the exclusive
use of a power of nature itself on the ground that the
patentee was the first to discover that it could be
employed to a useful result cannot be sustained.
Tilghman v. Proctor, 102 U.S. 707, 726-7 (1880).
Similarly, abstract ideas are not patentable. An idea
may be a good one, but an idea is not patentable.
Rubber-Tip Pencil Company v. Howard, 87 U.S. 498,
507 (1874).
Building on these fundamentals, subsequent
decisions by the Court provide a robust framework for
the analysis of claimed subject matter under § 101.
The starting point for revealing this framework is to
focus on the fundamentals. Specifically, the defini-
tions of “manifestations of nature” and “abstract
ideas” must be examined. In addition, the basis for
their exclusion from patentable subject matter must
4
be appreciated. Understanding the meaning and
context of these terms under § 101 is critical and
should not be assumed. As stated by Justice Frank-
furter:
It only confuses the issue, however, to
introduce such terms as “the work of nature”
and the “laws of nature.” For these are vague
and malleable terms infected with too much
ambiguity and equivocation. Everything
that happens may be deemed “the work of
nature,” and any patentable composite
exemplifies in its properties “the laws of
nature.” Arguments drawn from such terms
for ascertaining patentability could fairly be
employed to challenge almost every patent.
Funk Brothers Seed Co. v. Kalo Inoculant
Co., 333 U.S. 127, 134-5 (1948) (Frankfurter,
F. concurring).
A similar concern was expressed in Le Roy v. Tatham,
55 U.S. 156 (1852). “The word principle is used by
elementary writers on patent subjects, and some-
times in adjudications of courts, with such a want of
precision in its application, as to mislead.” Id. at 174.
By reexamining these terms, first applied to claimed
subject matter over one hundred and fifty years ago,
the nature of patentable subject matter begins to
come into focus.
i.
Manifestations of Nature
Manifestations of nature are defined by several
different categories. A manifestation of nature is
found in phenomena of nature, such as the quality of
5
bacteria. Funk Bros., 333 U.S. at 130. Natural
phenomena may not be definable by equations or
objectively measurable, but can be observed by
humans. Manifestations of nature also include “laws”
of nature, wherein natural phenomena can be defined
by incontrovertible equations. The Arrhenius
equation is one example of a law of nature. Diamond
v. Diehr, 450 U.S. 175, 177 n.2 (1981). Phenomena
like the heat of the sun, electricity, and the qualities
of metals can also be defined by laws of nature. Funk
Bros., 333 U.S. at 130. An algorithm or mathematical
formula is like a law of nature. Parker v. Flook, 437
U.S. 584, 589 (1978).
Manifestations of nature possess two traits
relevant to patentable subject matter. First, they
arise without the assistance of humans. Thus, “they
cannot be invented at all.” In re Bilski, 545 F.3d 943,
1013 (Fed. Cir. 2008) (Rader, J., dissenting). They are
“free to all men and reserved exclusively to none” and
“part of the storehouse of men.” Funk Bros., 333 U.S.
at 281. For this reason, manifestations of nature
themselves cannot be patented. A second trait
common to manifestations of nature is that they are
dependable. They define reliable building blocks and
tools that can be applied in an invention to repeatedly
achieve a useful result.
ii. Abstract
Ideas
An “idea” is any conception existing in the mind
as a result of mental understanding, awareness, or
6
activity. Random House Webster’s Unabridged
Dictionary 949 (2d ed. 1997). An idea is a thought,
conception, notion, groundless supposition, or fantasy.
Id. The adjective “abstract” connotes thought apart
from concrete realities, specific objects, or actual
instances. Id. at 8. The term abstract also refers to
expressing a quality or characteristic apart from any
specific object or instance.
An “abstract idea” is theoretical, not applied or
practical. In terms of patentable subject matter, an
abstract idea is a hoped-for result. An abstract idea is
thus the antithesis of a useful result that is required
of patentable subject matter. “A principle in the
abstract is a fundamental truth or a motive and
cannot be patented.” Le Roy, 55 U.S. at 175 (emphasis
added). An invention2 converts a hoped-for result into
a useful result. Patents are not granted as “a reward
for the search, but compensation for its successful
conclusion.” Brenner v. Manson, 383 U.S. 519, 536
(1966). Thus, if the purported result of claimed
2 The term “invention” has a common meaning and a more
particular meaning in patent law. Subject matter may be
developed or envisioned that is viewed as useful and new. In
common usage, such subject matter is referred to as an
invention. However, the requirements set forth in Title 35 of the
United States Code determine whether such subject matter is
truly an invention. As used herein, “invention” strictly refers to
subject matter that conforms to §
101 and presumes
conformance with the other provisions of Title 35. Subject
matter that purports to be an invention but has not been
confirmed as thus is referred to as “claimed subject matter.”
7
subject matter is not in fact useful, the claimed
subject matter is directed to an abstract idea.
iii. The cooperative relationship be-
tween Manifestations of Nature and
Abstract Ideas
Like
manifestations
of
nature, abstract ideas are
relevant to patentable subject matter in more than
one way. In a negative sense, both manifestations of
nature and abstract ideas are categories excluded
from patentable subject matter. They thus define
boundaries around patentable subject matter. In a
positive sense, manifestations of nature and abstract
ideas place claimed subject matter in context and
confirm its status as an invention. It is this
interdependent relationship that is the basis of a
framework of analysis for claimed subject matter.
B. The Model of Patentable Subject Matter
Revealed by Precedent
Precedent can be harmonized on the principle
that patentable subject matter is defined by a
tripartite system in which manifestations of
nature are applied by human-created invention to
achieve a useful result:
“He who discovers a hitherto unknown
phenomenon of nature has no claim to a monopoly of
it which the law recognizes. If there is to be invention
from such a discovery, it must come from the
application of the law of nature to a new and useful
8
end.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972)
(quoting Funk Bros., 333 U.S. at 130).
“While a scientific truth, or the mathematical
expression of it, is not patentable invention, a novel
and useful structure created with the aid of
knowledge of scientific truth may be.” Mackay Radio
& Telegraph Co. v. Radio Corp. of America, 306 U.S.
86, 94 (1939).
“The chemical principle or scientific fact upon
which . . . [the invention] is founded is, that the
elements of neutral fat require to be severally united
with an atomic equivalent of water in order to
separate from each other and become free. This
chemical was not discovered by Tilghman. He only
claims to have invented a particular mode of bringing
about the desired chemical union between the fatty
elements and water.” Tilghman v. Proctor, 102 U.S. at
729.
“A patent will be good, though the subject of the
patent consists in the discovery of a great, general,
and most comprehensive principle in science or law of
nature, if that principle is by the specification applied
to any special purpose, so as thereby to effectuate a
practical result and benefit not previously attained.”
Le Roy, 55 U.S. at 175 (quoting Househill Company v.
Neilson, Webster’s Patent Cases, 683).
The quoted passages demonstrate that an
invention does not exist in a vacuum. Its presence is
confirmed only by reference to the manifestations of
nature that are applied and to the useful results that
9
are achieved. Confirming the existence of each of
these three elements and verifying a relationship
among them is the basis for a framework of § 101
analysis.
C. The Implicit Application of the Tri-
partite System in Precedent
i.
Useful results must be obtained
In
Brenner, the patent applicant pursued claims
to a process for making steroids. The process is
disclosed in U.S. Pat. No. 2,908,693, hereafter the
’693 patent.3 The applicant’s claims were found
unpatentable by the Court for failing to disclose any
utility for the compound produced by the process.
Brenner, 383 U.S. at 536. The process at issue
involved the application of manifestations of nature
(the materials that were subject to the process). The
claimed process successfully achieved a specific end (a
compound). However, the claimed subject matter was
not an invention because the specific end was not
useful.
Brenner does not stand for the position that an
invention achieves a result that is universally useful.
A patent on a vehicle brake system would likely not
be useful to a maker of packaging but would still be
3 The ’693 patent issued to Ringold and Rosenkranz.
Manson sought an interference with Ringold and Rosenkranz
and the claims considered by the Court were the interference
claims, identical to the claims in the ’693 patent.
10
valid. A patented drug is not effective for all patients.
However, the requirement of usefulness under § 101
applies to all inventions and, therefore, usefulness
must have some global definition across the fields of
inventive endeavor. In Brenner, the Court rejected
the proposition that usefulness under § 101 simply
requires that the claim subject not be harmful as
suggested by Justice Story. Brenner, 383 U.S. at 532-
3, n.20.
It is submitted that usefulness under §
101
requires objective verification. Claimed subject
matter should be rejected under § 101 for failing to
achieve a useful result that can be objectively
verified, rather than applying the cryptic label
“abstract idea.” For example, the practice of the
invention will save labor, effectuate more rapid oil-
spill control, reduce cost, increase production, reduce
the frequency of failure, increase wealth, improve
nutritional value, alleviate symptoms, or affect some
other measurable quality. The useful result must be
verifiable even to those who choose not to practice the
invention.
It is conceded that when claimed subject matter
appears vulnerable to invalidity under § 101 that the
claimed subject matter may also be vulnerable under
§ 102, § 103, and § 112 of Title 35. However, that is
not a legitimate basis for casting § 101 as a pseudo-
requirement of patentability. The result in Brenner
demonstrates that the other requirements of Title 35,
§ 102, § 103, and § 112, will not always filter
unpatentable subject matter. The claims at issue in
11
Brenner were identical to the claims of the ’693
patent. The issuance of the ’693 patent demonstrates
that the claims conformed to § 102, § 103, and § 112.
However, these same claims did not produce a useful
result for the patent applicant in Brenner. The
Brenner case does not make clear why the useful
result asserted by the applicants of the ’693 patent
were not also applicable to the claims at issue.
ii. Manifestations of Nature must be
applied
In
Mackay, the claimed subject matter was
directed to a structure for an antenna.4 A formula
recited in the claims at issue defined a mathematical
relationship between the angle of the wires of the
antenna, their length, and the length of wave
propagated. Mackay, 306 U.S. at 98. The useful result
achieved by the claimed subject matter was “the best
directional radio propagation by the V type antenna.”
Id. at 101. The Court found that the formula was
“applicable only to antenna wires which are multiples
of half wavelengths long.” Id. at 98.
In background, a prior patent had covered
antenna wires which were multiples of half wave-
lengths long, thus conforming to the formula. The
claims at issue in Mackay were added to an
application pending when the suit between the
4 Claims 15 and 16 of U.S. Pat. No. 1,974,387 were at issue.
12
parties began. Id. at 100. These claims were added to
that application in order to cover the competitor’s
products that did not infringe the prior patent. The
claims covered antenna wires that were intermediate
of multiples of half wavelengths. The formula upon
which the claims were based did not apply to these
wires. Id.
The Court found the claims invalid, stating the
claimed subject matter was based on “no scientific
law applicable to wire lengths which are inter-
mediate of multiples of half wave lengths.” Id. at 98
(emphasis added). The claims effectively cancelled
“from the application the statement of the scientific
law defining the invention.” Id. at 100 (emphasis
added). As a result, the “best directional radio
propagation” could not be derived from the claimed
subject matter. Id. at 101.
The result in Mackay demonstrates why an
invention must be based on manifestations of nature:
these building blocks, selected and applied by the
invention, will, in fact, produce the useful result that
is alleged. Patentable subject matter must “produce
precisely the [useful] result” alleged. O’Reilly v.
Morse, 56 U.S. 62, 119 (1853).
Some argue that claimed subject matter must be
directed to “technology.” It is submitted that a better
inquiry is whether the claim is predicated on
manifestations of nature. If the patentability of the
claim under § 101 is in question, an applicant can
objectively address the issue by verifying the
13
particular manifestations of nature that are applied
by the claimed subject matter. Proving whether or not
the claim is directed to “technology” is wholly
subjective. Also, the definition of “technology” is
backward-looking and may fail to encompass
emerging fields of inventive endeavor.
iii. A human-caused invention must be
defined between the manifestations
of nature that are applied and the
useful results that are achieved
The holding of Brenner supports the position that
patentable subject matter involves the achievement
of a useful result. If the claimed subject matter does
not achieve a useful result, it is directed to an
abstract idea. The holding of Mackay supports the
position that patentable subject matter also involves
the application of manifestations of nature. If the
claimed subject matter is not based on predictable
and reliable manifestations of nature, the result
produced by the claimed subject matter cannot be
predictably achieved and is therefore not useful.
Brenner and Mackay address opposite ends of the
tripartite system of patentable subject matter. The
invention element of the system lies between. The
invention element of the tripartite system can be
viewed metaphorically as a ladder. The foot of the
ladder rests on the foundation provided by the
current progress of science and the useful arts. The
ladder extends to what was previously only a
14
desirable outcome or abstract idea. The existence of
the ladder converts the abstract idea into a useful
result. The rungs of the ladder are applied man-
ifestations of nature. One or more humans establish
the rails of the ladder which harness and order the
manifestations of nature. Invention lies in the
selection of manifestations of nature to apply, as well
as the order and operating environment in which
those manifestations are applied.
The model of an invention as a ladder is
consistent with precedent and helpful. The ladder
model reflects the concern that an invention is
human-caused and not naturally occurring. The
ladder model also conveys that the useful result is not
readily achievable. Section 101 has been and must
continue to be interpreted to require that the ladder
to the useful result is more than just one rung.
The
O’Reilly case represents a relatively straight-
forward analysis. The eighth claim of Morse’s U.S.
Pat. No. Re117, hereafter the Re117 patent, read:
8. I do not propose to limit myself to the
specific machinery, or parts of machinery,
described in the foregoing specifications and
claims; the essence of my invention being the
use of the motive power of the electric or
galvanic current, which I call electro-
magnetism, however developed, for making
or printing intelligible characters, letters, or
signs, at any distances, being a new
15
application of that power, of which I claim to
be the first inventor or discovered.
The useful result of making or printing intelligible
characters, letters, or signs, at any distances was
achievable by applying the manifestation of nature of
electro-magnetism. Other manifestations of nature
were also applied; the specification of the Re117
patent describes human-caused steps and structures
required to achieve the printing of intelligible
characters at a distance. Claims 1-7 of the Re117
patent were focused on the embodiments set forth in
the specification and thereby defined an invention
between the manifestations of nature applied by
Morse and the useful result.5
Claim 8 expressly departed from any limitation
in the specification. In claim 8, Morse made no
pretense of establishing a human-caused invention
between the manifestation of nature and the useful
result. The claims were found invalid. The Court
noted that the written description of the Re117 patent
did not support claim 8. O’Reilly, 56 U.S. at 119-20.
However, the Court also supported the finding of
invalidity on the lack of usefulness. The Court stated
that “Morse has not discovered . . . that electric or
galvanic current will always print at a distance, no
5 Current standards for claim drafting and interpretation
are different than the standards applied to the Morse claims.
However, a cursory review of claims 1-7 of Re117 make it clear
that those claims were intended to include limitations set forth
in the specification.
16
matter what may be the form of the machinery or
mechanical contrivances through which it passes.”
O’Reilly, 56 U.S. at 117 (emphasis added).
In
The Telephone Cases, 126 U.S. 1 (1888), the
holding of O’Reilly was distinguished. Claim 5 of
Bell’s U.S. Pat. No. 174,465, hereafter the ‘465
patent, was at issue. The claim read:
5. The method of, and apparatus for, trans-
mitting vocal or other sounds telegraphically,
as herein described, by causing electrical
undulations, similar in form to the vibrations
of the air accompanying the said vocal or
other sound, substantially as set forth.
The useful result was transmitting vocal or other
sounds telegraphically. The manifestations of nature
applied included electrical undulations. The specific-
ation of the ‘465 patent describes human-caused steps
and structures required to transmit vocal or other
sounds telegraphically by applying electrical undula-
tions. ’465 patent passim. The difference between
Bell’s fifth claim and Morse’s eighth claim is that
Bell’s fifth claim expressly limits itself, twice, to the
description of the specification.
The results in O’Reilly and The Telephone Cases
are consistent with the tripartite system of pat-
entable subject matter. In O’Reilly, Morse sought to
characterize the mere association of a manifestation
of nature and an achievable useful result as an
invention. The printing of characters over a distance
could be achieved through, in part, electromagnetism,
as shown by claims 1-7 of the Re117 patent. However,
17
Morse’s eighth claim was not bound to any human-
caused steps or structures. The useful result of
printing characters over a distance could not be
produced by electromagnetism alone and no human-
caused structures or steps, no invention, filled the
void. That fact rendered the eighth claim an abstract
idea. In The Telephone Cases, Bell limited claim 5 by
the description of the ’465 patent’s specification,
which set forth human-caused structures and steps
that would, in fact, achieve the useful result.
The eighth claim of the Re117 patent appears to
be the last patent claim considered by the Court in
which a bare correlation between a manifestation of
nature and a useful result was claimed. In decisions
subsequent to O’Reilly, the Court has considered
more subtle and nuanced claims. The dominant
challenge has been to ensure that claimed subject
matter is human-caused and based on manifestations
of nature, but does not in fact preempt a mani-
festation of nature.
iv. Confirming a distinction between
the manifestations of nature applied
and human-caused structures or
steps
As set forth above, Mackay supports the position
that claimed subject matter must apply man-
ifestations of nature. Conversely, the holding in
Benson (409 U.S. 63) confirms that claimed subject
matter must not be directed merely to a
manifestation of nature and thus lack human-caused
18
structures or steps. In Benson, the claims at issue
were directed to a method of converting signals from
binary coded decimal form into binary form. Id. at 73-
4 (appendix). The manifestation of nature applied by
the claimed subject matter was a mathematical
formula. Id. The useful result achieved by the
claimed subject matter was a signal in binary form
for use in a digital computer. Id. at 71-2. The Court
determined that, if patented, the claim “would wholly
preempt the mathematical formula and in practical
effect would be a patent on the algorithm itself.” Id.
The claimed subject matter purporting to be a
human-caused invention was merely a single man-
ifestation of nature, an algorithm.
In
Parker, the claim would not have wholly
preempted a mathematical formula but was nonethe-
less unpatentable. In Parker, the requirement that
patentable subject matter involve three distinct
elements is confirmed. The useful result achieved by
the claimed subject matter was an updated alarm
limit for transient operating conditions of catalytic
conversion processes. Parker, 437 U.S. at 585. The
claim read:
1. A method for updating the value of at
least one alarm limit on at least one process
variable involved in a process comprising the
catalytic chemical conversion of hydro-
carbons wherein said alarm limit has a
current value of Bo+K wherein Bo is the
current alarm base and K is a predetermined
alarm offset which comprises:
19
(1) Determining the present value of said
process variable, said present value being
defined as PVL;
(2) Determining a new alarm base, B1,
using the following equation: B1=Bo(1.0-
F)+PVL(F) where F is a predetermined
number greater than zero and less than 1.0;
(3) Determining an updated alarm limit
which is defined as B1+K; and thereafter
(4) Adjusting said alarm limit to said
updated alarm limit value.
Id. at 596-7 (appendix). Steps 1-3 of the method
represent a formula for arriving at the updated alarm
limit and is the single manifestation of nature
applied. Step 4 is couched in terms of human activity,
but is merely a restatement of the useful result.
“Updating” and “adjusting” both involve change. As
used in the claim, the terms are synonymous. Thus,
the claim simply recites the manifestation of nature
and the useful result. The claim is thus similar to
Morse’s eighth claim in Re117. The claim in Parker
differs from Morse’s eighth claim in Re117 in that the
useful result can be achieved based strictly on the
claimed subject matter. However, the claimed subject
matter recited a single manifestation of nature.
In
Benson and Parker, the Court provided a first
guideline to confirm that claimed subject does not
merely cloak a manifestation of nature: claimed
subject matter reciting a single manifestation of
nature preempts that manifestation of nature. In
Diamond v. Chakrabarty, 447 U.S. 303 (1980), the
20
Court provided a second guideline. The claims at
issue were directed to human-made, genetically
engineered bacteria. Id. at 305. The bacteria achieved
the useful result of breaking down crude oil expelled
during a spill. Id. at n.2. The Court found that the
claims were directed to patentable subject matter
since they were “not nature’s handiwork.” Id. at 310.
This quality of invention was also identified as
relevant in The Telephone Cases. In finding Bell’s
patent valid, the Court stated that electricity in its
natural state would not achieve the useful result of
transmitting sounds. The Telephone Cases, 126 U.S.
at 532 (“electricity, left to itself, will not do what is
wanted”). Claimed subject matter fails to define an
invention if the claim recites things already occurring
in nature.6
The holding in Funk Bros. stands in contrast to,
but reinforces Chakrabarty and The Telephone Cases
on this point. The claims at issue were directed to a
combination of strains of Rhizobium bacteria. Funk
Bros., 333 U.S. at 128-30. Generally, the bacteria
were applied to infect leguminous plants, such as
clover, alfalfa, and soy beans. Id. The bacteria allowed
the leguminous plants to absorb nitrogen from the
air, for subsequent conversion to organic nitrogenous
compounds. Id. There existed numerous species of
6 See also Smith v. Snow, 294 U.S. 1, 22 (1935). “By the use
of materials in a particular manner he secured the performance
of the function by a means which had never occurred in nature,
and had not been anticipated by the prior art; this is a
patentable method or process.”
21
Rhizobium bacteria and various strains of each
species. Id. No one species would infect the roots of all
species of leguminous plants and the various species
would exert an inhibitory effect on each other when
mixed, resulting in reduced efficiency. Id. The
applicant discovered that some strains could be
packaged together without producing the inhibitory
effect. Id.
The claims recited the combination of two or
more strains of bacteria which were “mutually non-
inhibitive” and “unaffected by each other’s ability to
fix nitrogen in the leguminous plant for which they
are specific.” Id. at n.1. The Court acknowledged that
the combination yielded advantages, such as allowing
farmers to buy one package of bacteria instead
of many and simplifying dealer inventory. Id. at
131. However, the Court determined that these
advantages arose from a primary or underlying
useful result, that the strains of bacteria would not
inhibit one another. “All that remains, therefore, are
advantages of the mixed inoculants themselves. They
are not enough.” Id. at 132. The Court explained:
Each species has the same effect it always
had. The bacteria perform in their natural
way. Their use in combination does not im-
prove in any way their natural functioning.
They serve the ends nature originally
provided and act quite independently of any
effort of the patentee. Id. at 131.
Thus, the holding in Funk Bros. confirms that
claimed subject matter fails to define an invention if
22
the useful result is the direct consequence of
unaltered manifestations of nature. Merely
combining two manifestations of nature (different
strains of bacteria) did not make the claims directed
to the necessary effect of the combination patentable.
v. Summary
In
Brenner, claims based on manifestations of
nature and reciting steps that produced something
not naturally occurring were found invalid because a
useful result was lacking. In Mackay, claims that
could be applied to produce something (1) not
naturally occurring and (2) objectively useable were
found invalid because manifestations of nature did
not support the claims. O’Reilly stands for the now
unremarkable position that something human-caused
must be set forth between the manifestations of
nature applied and the useful result achieved. These
cases demonstrate that each element of the tripartite
system must be present for patentable subject matter.
The Telephone Cases, Benson, Parker, Chakrabarty,
and Funk Bros. flesh out a necessary aspect of the
relationship among the three elements: the claimed
subject matter, manifestations of nature applied, and
useful results achieved must be distinct from one
another.
23
D. Benefits of the Tripartite System and
Perspective
i. The model of patentable subject
matter as a tripartite system divides
the analysis into components that
are individually easier to assess
The machine-or-transformation test represents a
good-faith, but misguided attempt to turn the inquiry
under § 101 into two, alternative questions. As amply
demonstrated by precedent, the inquiry is far more
complicated. The tripartite system model that is
proposed herein apportions this complex issue into
several sub-inquiries, while remaining consistent
with precedent.
The first step in the analysis is to confirm that
the result achieved by the claimed subject matter is
in fact useful, pursuant to Brenner. The usefulness
must be objectively verifiable. This first step
presumes that the claimed subject matter will in fact
achieve the useful result. However, if, on its face, the
useful result cannot be verified the claimed subject
matter fails to be patentable. This first step will filter
claims purporting results that can be only be
measured in the mind.
If a useful result is achieved, the relationship
between the useful result and the claimed subject
matter is assessed. The useful result must not arise
naturally from the claimed subject matter, pursuant
to Funk Bros.
24
If the useful result is achieved and does not arise
naturally from claimed subject matter, the rela-
tionship among the useful result, the claimed subject
matter, and the manifestations of nature applied by
the claimed subject matter is assessed. The claim
must recite something human-caused between the
manifestations of nature applied and the useful result
achieved, pursuant to O’Reilly. The human-caused
structure or step must be more than a restatement of
the useful result, pursuant to Parker.7 The claim
must recite a precursor to the useful result that is
necessarily human-caused.
If all three elements of the tripartite system are
present, the reliability or efficacy of the applied
manifestations of nature is confirmed. The claimed
subject matter must be based on dependable
manifestations of nature to ensure the useful result is
achieved, pursuant to Mackay. However, the claimed
subject matter must not preempt a manifestation of
nature in achieving the useful result, pursuant to
Benson.
7 The claims at issue in Laboratory Corp. of America
Holdings v. Metabolite Laboratories Inc., 548 U.S. 124 (2006)
(Stevens, J., dissenting) would be invalid pursuant to Parker.
Specifically, the human-caused step in the claim, the second
step, is merely a restatement of the useful result.
25
ii. The model of patentable subject
matter as a tripartite system is
rigorous and flexible
As set forth above, claimed subject matter can
fail to be patentable under § 101 on at least six
different grounds under the tripartite system.
Claimed subject matter can achieve a useful result
but still fail to be patentable. Conversely, claimed
subject matter can be based on manifestations of
nature and achieve a specific end but nonetheless be
unpatentable.
On the other hand, the tripartite model is flexible
since the nature of the claimed subject matter is
irrelevant. The model is based on the Court’s analysis
of claims directed to products or things (Mackay,
Funk Bros., O’Reilly, Chakrabarty) and of claims
directed to processes (Brenner, Gottschalk, Parker).
The model is focused on the universal characteristics
of invention, not on whether claimed subject falls
under an arbitrarily defined category such as
business methods or technology.
iii. The model of patentable subject
matter as a tripartite system will
encourage focused claiming and
extensive disclosure, especially in
emerging fields
A patent applicant having the tripartite system
as a guide will carefully define the circumstances that
bring about the useful result. Prior to filing a patent
application, proposed claims can be tested to confirm
26
all three elements of the system are present and clearly
distinct from one another. Further, patent applicants in
emerging fields of inventive endeavor will have a
powerful incentive to fully explain the usefulness of the
claimed subject matter and the reliability of the
manifestations of nature being applied.
iv. Perspective
The analysis of claimed subject matter for
conformance with § 101 will not always be straight-
forward. The overall inquiry is about identifying a
line existing only in an abstract sense, between the
patentable and the unpatentable. The model of
patentable subject matter as a tripartite system, as
thus far developed by precedent, will not provide
a bright line test. However, no test should. The
tripartite system represents a flexible set of inquiries
that, collectively, will identify patentable subject
matter in a manner consistent with precedent.
2. APPLICATION OF THE TRIPARTITE MOD-
EL OF PATENTABLE SUBJECT MATTER
TO THE PRESENT CLAIMS
A. The claimed subject matter achieves a
useful result that is objectively veri-
fiable
The claimed subject matter defines a system of
balancing risk.8 A first series of transactions are
8 App. No. 08/833,892, claim 1.
27
initiated between a commodity provider and con-
sumers of the commodity. The consumers purchase
the commodity from the commodity provider at a
fixed rate based on historical averages. The fixed rate
paid by the consumers corresponds to a “risk position”
of the consumers. A second series of transactions are
initiated between the commodity provider and
market participants at a second fixed rate. The
market participants can be a distribution company
for the commodity.9 The second series of market
participant transactions balances the risk position of
the series of consumer transactions.
The lower court provided an exemplary
application of the claimed system:
For example, coal power plants (i.e., the
“consumers”) purchase coal to produce
electricity and are averse to the risk of a
spike in demand for coal since such a spike
would increase the price and their costs.
Conversely, coal mining companies (i.e., the
“market participants”) are averse to the risk
of a sudden drop in demand for coal since
such a drop would reduce their sales and
depress prices. The claimed method
envisions an intermediary, the “commodity
provider,” that sells coal to the power plants
at a fixed price, thus isolating the power
plants from the possibility of a spike in
demand increasing the price of coal above
9 Id. at p. 5, lines 15-16.
28
the fixed price. The same provider buys coal
from mining companies at a second fixed
price, thereby isolating the mining com-
panies from the possibility that a drop in
demand would lower prices below that fixed
price. And the provider has thus hedged its
risk; if demand and prices skyrocket, it has
sold coal at a disadvantageous price but has
bought coal at an advantageous price, and
vice versa if demand and prices fall.
Importantly, however, the claim is not
limited to transactions involving actual
commodities, and the application discloses
that the recited transactions may simply
involve options, i.e., rights to purchase or sell
the commodity at a particular price within a
particular timeframe. In re Bilski, 545 F.3d
at 949-950.
The application does not identify a useful result
achieved by the claimed subject matter precisely.
However, the party practicing the claimed subject
matter may achieve a profit defined as the margin
between the transactions with consumers and the
transactions with market participants.10 This profit
would be a useful result to the practicing party and
would be objectively verifiable.
10 Id. at lines 12-14.
29
B. The useful result does not arise nat-
urally
The useful result is profit obtained by leveraging
the first and second series of commercial transactions
relative to one another. These transactions must be
managed and executed with skill to achieve a profit.
It is therefore submitted that profit does not arise
naturally.
C. The claim recites something human-
caused that links the manifestations of
nature applied and the useful result
achieved
The manifestations of nature applied by the
claimed subject matter are economic principles. The
present claims recite steps that are necessarily
applied and therefore caused by humans.
D. A human-caused step recited in the
claimed subject matter is more than a
restatement of the useful result
At least the first step of initiating transactions is
a prerequisite to achieving the useful result of profit.
This first step represents more than a restatement of
the useful result since the profit is not achieved upon
completion of this step.
30
E. The claimed subject matter is not based
on reliable manifestations of nature
The key to making the system achieve the useful
result is the determination of the risk position with
substantial certainty. If the risk position cannot be
determined, the scope of necessary transactions with
market participants cannot be determined. Further,
the useful result of profit to the practicing party will
not be achieved.
The risk position appears to be qualitative. The
application does not provide an equation defining the
risk position. The Petitioners appear to acknowledge
that the risk position can only be estimated.11
As noted in Brenner, a patent is not awarded for
a hunt. Brenner, 383 U.S. at 536. To be patentable,
the claims at issue must in fact “produce precisely the
[useful] result” alleged. O’Reilly, 56 U.S. at 119.
Therefore, for these claims to be patentable, the claim
must recite a method that will in fact balance the risk
position and generate profit for the commodity
provider. The applicants thus allege to have
discovered a business method with guaranteed
profitability.
Applicants have pointed to benefits accruing to
third parties to avoid this conclusion. Specifically, the
application notes that consumers and market partici-
pants will enjoy isolation from cost and revenue
11 Application 08/833,892 at p. 4, lines 18-19.
31
fluctuations, respectively. However, this attempt to
divert attention from the useful result associated
with the practicing party should be rejected.
The benefits accruing to consumers and market
participants are necessarily dependent on achieving
the useful result of profit to the practicing party.
For example, if the practicing party achieves a true
balance as recited in the claims, wherein no margin
exists between the risk position and the second series
of transactions, the practicing party suffers loss since
some level of administrative costs will be required to
maintain the system. The practicing party suffers a
greater loss if the risk position is not determined
accurately and a negative margin arises.
Thus, if no profit is generated, the claimed
subject matter requires the practicing party to
altruistically serve consumers and market par-
ticipants. If such a willing party exists, there is no
need for a patent. If no such party exists, the claimed
subject matter fails to achieve a result since no one
would practice the invention.
The useful result contemplated by the Petitioners
is profit for the practicing party. Profit is an attribute
that can be objectively verified. However, claimed
subject matter must produce the result it purports to
achieve and it is untenable to suggest that any
business method can produce profit with the certainty
required of patent claims. No readily appreciated
economic principle supports the claimed subject
32
matter and no such principle is articulated in the
Petitioners’ application.
----------------- ♦ -----------------
CONCLUSION
The analysis of claimed subject matter for
conformance with § 101 should be consistent with the
Court’s precedent. In addition, labels like “law of
nature” or “abstract idea” should be rejected in favor
of a precise basis for a conclusion of unpatentability.
Precedent has defined a framework that can be
applied to assess claimed subject matter without
regard to the environment in which it is applied to
achieve a useful result. The judgment of the court
of appeals should be reversed. The case should be
remanded to the U.S. Patent Office to give the
Petitioners an opportunity to provide evidence that
the useful result of profit for the practicing party will
be achieved.
Respectfully submitted,
GREGG W. EMCH
Counsel of Record
MACMILLAN, SOBANSKI & TODD LLC
One Maritime Plaza, Fifth Floor
720 Water Street
Toledo, Ohio 43604
419-255-5900
Attorneys for Amicus Curiae
Document Outline
- 22312 Meiers cv 02
- 22312 Meiers in 03
- 22312 Meiers br 05