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Patentable Subject Matter

Under United States Patent Laws, only a “process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” can qualify for a patent.” 35 U.S.C. § 101. By limiting the subject matter, it ensures that certain other inventions are exclusively governed by other intellectual property systems (e.g., copyright for literary works), and that people cannot obtain patents for items ordinarily found in nature.

There has been a great deal of litigation in determining whether certain inventions are patentable, especially whether an invention falls into the most ambiguous category of being a “process.” In 2009, the Federal Circuit ruled on In re Bilski, which established a test for the patentability of processes, called the Machine or Transformation Test. 545 F.3d 943 (Fed. Cir. 2008).

Under the Machine or Transformation Test, a process can qualify for a patent if “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” The similarly named, but unrelated case of Bilski v. Kappos clarified that the Machine or Transformation Tests is not the only test for determining whether a process can be patented, but is a strong indicator. 561 U.S. 593 (2010).

Conversely, any process that is too abstract or broad will not qualify for a patent, because patents are meant to promote innovation, and abstract ideas only become innovative when they are focused into detailed, working systems. Common abstract ideas include algorithms, methods of computation, and general principles. Therefore, many business method patents are often heavily scrutinized and invalidated.

The Supreme Court most recently ruled on patentable subject matter in Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). In Alice Corp, Alice Corporation owned four patents generically covering the process of acting as an electronic escrow for payment. CLS Bank developed a computer system and used a similar electronic escrow process for its transactions, so it sued for declaratory relief to invalidate Alice’s patents, arguing that Alice’s patents were just covering unpatentable abstract ideas, rather than patentable source code or processes. Alice countersued for patent infringement.

The district court ruled in CLS Bank’s favor, finding Alice’s subject matter to not be eligible for patent law protection. Alice appealed the decision to the Federal Circuit, and eventually it came before the United States Supreme Court. The Supreme Court unanimously invalidated Alice’s patents, reasoning that the subject matter was not eligible for patent protection because it was too abstract.

The Supreme Court created a two-part test to determine whether a patent is trying to patent an abstract idea (not permitted) or a practical implementation of an idea (permitted). The first step is analyzing whether the patent has an abstract idea, like the examples in the previous paragraph. If no abstract ideas are present, it is patentable, so long as all of the other patent requirements (such as novelty and utility) are satisfied.

On the other hand, if abstract ideas are present, a second step can redeem an abstract idea so long as there is “something extra” that demonstrates an “inventive concept.” Alice’s patents lacked the “inventive concept,” and were thus invalid. In the aftermath of Alice, many speculate that patents on software will continue to be extremely difficult to obtain and defend in court.

If your patent has been rejected based on patentable subject matter, or if you are facing a patent infringement lawsuit based on a software patent and need assistance, call Roland Tong, at 949-298-6867 or email Mr. Tong at [email protected]. Mr. Tong has been obtaining patents for his clients and litigating patent disputes since 2001.