Patentable Subject Matter in the United States

Patentable Subject Matter in
the United States Daniel Altman
October 19, 2012 Tokyo

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The Law of Patentable Subject Matter

• 35 U.S.C. § 101: “Whoever invents or discovers any
new and useful process, machine, manufacture, or
composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, . . .”

• Congress intended statutory subject matter to “include
anything under the sun that is made by man.”
Diamond v. Chakrabarty, 447 U.S. 303 (1980).

© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 2

Implicit Exceptions to Patentable Subject Matter

• Judge-made exceptions to Patentable Subject Matter
– Products of Nature
– Natural Laws / Natural Phenomena
– Abstract Ideas / Mental Processes

They are “part of the storehouse of knowledge … free to all men and
reserved exclusively to none.”
Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127
(1948).


Gottschalk v. Benson, 409 U.S. 63 (1972)

Representative Claim
8. The method of converting signals from binary coded decimal form
into binary which comprises the steps of:
(1) storing the binary coded decimal signals . . . ,
(2) shifting the signals to the right by at least three places, until
there is a binary ‘1’ in the second position . . . ,
(3) masking out said binary ‘1’ in said second position . . . ,
(4) adding a binary ‘1’ to the first position . . . ,
(5) shifting the signals to the left by two positions,
(6) adding a ‘1’ to said first position, and
(7) shifting the signals to the right by at least [3] positions in
preparation for a succeeding binary ‘1’ in the second position . . . .


Gottschalk v. Benson, 409 U.S. 63 (1972)

Holding
• The claims are patent ineligible because they merely
recite a formula, rather than its discrete/limited
practical application.
• Phenomena of nature, mental processes, and abstract
ideas are not patentable, for “they are the basic tools of
scientific and technological work.”
• The claim is not compliant with § 101 because it
“would wholly preempt the . . . Formula.”


Parker v. Flook, 437 U.S. 584 (1978)

1. A method for updating the value of at least one alarm limit . . . in .
. . the catalytic chemical conversion of hydrocarbons . . . which
comprises:
(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)…;
(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.


Parker v. Flook, 437 U.S. 584 (1978)
Holding
• The claims cover a formula and are therefore patent
ineligible.
• A formula cannot be patented; the case must “be considered
as if the principle or mathematical formula were well known.”
• “[O]nce that algorithm is assumed to be within the prior art,
the application . . . contains no patentable invention.”
• A patent involving a law of nature or a mathematical formula
must include some other inventive concept in the application
of that law of nature or mathematical formula.
• Post-solution activity is insufficient to render a claim patent
eligible.

Diamond v. Chakrabarty, 447 U.S. 303 (1980)


1. A bacterium from the genus Pseudomonas containing
therein at least two stable energy-generating plasmids,
each of said plasmids providing a separate hydrocarbon
degradative pathway.


Diamond v. Chakrabarty, 447 U.S. 303 (1980)

Holding
• ‘Manufacture’ is a broad term meaning “the production of articles
for use from raw materials prepared by giving to these materials
new forms, qualities, properties, or combinations whether by hand
labor or by machinery.”
• While “a new mineral discovered in the earth or a new plant found
in the wild” or a “hitherto unknown natural phenomenon” is not
patentable subject matter,” a “nonnaturally occurring manufacture
or composition of matter - a product of human ingenuity having a
distinctive name, character and use” is patentable subject matter.
• The relevant distinction is “not between living and inanimate things,
but between products of nature, whether living or not, and human-
made inventions.”

Diamond v. Diehr, 450 U.S. 175 (1981)
1. A method of operating a rubber-molding press for precision
molded compounds with the aid of a digital computer, comprising:
providing said computer with a data base . . . ,
initiating an interval timer in said computer upon the closure of the
press . . . ,
constantly determining the temperature (Z) of the mold . . . and
constantly providing the computer with the temperature (Z),
repetitively performing in the computer … integrations to calculate
from the series of temperature determinations the Arrhenius equation . . .
, which is ln v = CZ + x, where v is the total required cure time,
repetitively comparing in the computer . . . said calculation of the
total required cure time . . . and said elapsed time, and
opening the press automatically when a said comparison indicates
completion of curing.

Diamond v. Diehr, 450 U.S. 175 (1981)

Holding
• Claim is a patent-eligible application of the mathematical
formula.
• Claims are “drawn to an industrial process,” and therefore
do not wholly preempt the use of the equation recited in the
claim.


Bilski v. Kappos, 130 S. Ct. 3218, 561 US ___ (2010)

1. A method for managing the consumption risk costs of a
commodity … comprising the steps of:
(a) initiating a series of transactions … wherein said consumers
purchase said commodity at a fixed rate based upon historical
averages, said fixed rate corresponding to a risk position of said
consumer;
(b) identifying market participants for said commodity having a
counter-risk position to said consumers; and
(c) initiating a series of transactions … at a second fixed rate
such that said series of market participant transactions balances the
risk position of said series of consumer transactions.


Bilski v. Kappos, 130 S. Ct. 3218, 561 US ___ (2010)

Holding
• Hedging risk is an unpatentable abstract idea.
• The claim would wholly preempt the use of this approach in
all fields and grant a monopoly over an abstract idea.
• Limiting this abstract idea to one field of use or adding
token post-solution steps does not render this claim
compliant with §101.
• The machine-or-transformation test is not the definitive test
of patent eligibility, but is merely a useful tool in the
analysis.


Cybersource v. Retail Decisions
3. A method for verifying the validity of a credit card
transaction over the Internet comprising the steps of:
a) obtaining information about other transactions that
have utilized an Internet address that is identified
with the credit card transaction;
b) constructing a map of credit card numbers based
upon the other transactions; and
c) utilizing the map of credit card numbers to
determine if the credit card transaction is valid.


Cybersource v. Retail Decisions
• Holding the claim does not satisfy § 101.
• “[W]e have never suggested that simply reciting the use of a
computer to execute an algorithm that can be performed entirely
in the human mind [is sufficient].”
• “Regardless of what statutory category (‘process, machine,
manufacture, or composition of matter,’ 35 U.S.C. § 101) a
claim’s language is crafted to literally invoke, we look to the
underlying invention for patent-eligibility purposes.”
• “[T]he machine must play a significant part in permitting the
claimed method to be performed.”


Ultramercial v. Hulu
1. A method for distributing products over the Internet via a facilitator,
said method comprising the steps of:
a first step of receiving, from a content provider, media products that
are covered by intellectual property rights protection and are
available for purchase . . . ;
a second step of selecting a sponsor message to be associated with the
media products . . . ;
a third step of providing the media product for sale at an Internet
website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product
without charge to the consumer on the precondition that the
consumer views the sponsor message;
...
an eleventh step of receiving payment from the sponsor of the sponsor
message displayed.


Ultramercial v. Hulu
Holding
• Claim satisfies § 101
• Vacated by the Supreme Court (and remanded to Federal Circuit)
• “[T]he broadly claimed method in the ’545 patent does not specify a
particular mechanism for delivering media content to the consumer
(i.e., FTP downloads, email, or real-time streaming). This breadth
and lack of specificity does not render the claimed subject matter
impermissibly abstract.”
• “[A]s a practical application of the general concept of advertising as
currency and an improvement to prior art technology, the claimed
invention is not ‘so manifestly abstract as to override the statutory
language of section 101.’”


2040 Main Street, 14th Floor
Daniel Altman Irvine, California 92614
Dan.Altman@knobbe.com

Patentable Subject Matter in the United States

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