The Court is also to consider whether the Federal Circuit’s “machine-or-transformation” test contradicts Congressional intent that patents protect “method[s] of doing or conducting business” under 35 U.S.C. § 273.  The Supreme Court has not considered what is patentable subject matter since 1981. This case may decide if patents also should protect business processes that do not depend on a particular machine or device.

The en banc Federal Circuit held that Bilski’s claims are not eligible for patenting and set forth a single, “definitive” test for determining whether a process is patent-eligible under § 101: a process is patent-eligible only if  “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”

In Bilski, the Federal Circuit seized on a sentence from Diamond v. Diehr, 450 U.S. 175, 184 (1981), quoted from Benson, 409 U.S. at 70, 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” (emphasis added).

The majority held that this test was not “optional or merely advisory” but rather “the only applicable test” for patent-eligible processes.  In doing so, the Federal Circuit majority overruled its earlier decisions in State Street Bank and AT&T to the extent they relied on a “useful, concrete, and tangible result” as the test for patent eligibility under § 101.

At oral argument, the Supreme Court seemed skeptical about extending patent protection beyond the traditional labors of manufacture.  Some questions took an extreme definition:

BREYER: Do you think that the framers would have wanted to require anyone successful in this great, vast, new continent because he thinks of something new to have had to run to Washington and to force any possible competitor to do a search and then stop the wheels of progress unless they get permission? Is that a plausible view of the patent clause?

BREYER: So you are going to answer this question yes. You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things — (Laughter) … It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

Other questions danced around the issue of how inventions can be tied to “technology” — whatever that means:

SOTOMAYOR: So how do we limit it to something that is reasonable? Meaning, if we don’t limit it to inventions or to technology, as some amici have, or to some tie or tether, borrowing the Solicitor General’s phraseology, to the sciences, to the useful arts, then why not patent the method of speed dating?

GINSBURG: Isn’t that the basis on which the patent law rests in Europe, in other countries? They do not permit business method patents. It has to be tied to technology, to science or technology. So if other systems are able to work with the notion of technology-based, why not ours?

Other questions looked at whether there is a real shift in what is patentable or whether certain patentable subject matter just didn’t exist before:

SCALIA: You know, you mention that there are all these — these new areas that didn’t exist in the past because of modern business and what-not, but there are also areas that existed in the past that don’t exist today. Let’s take training horses. Don’t you think that — that some people, horse whisperers or others, had some, you know, some insights into the best 8 way to train horses? And that should have been patentable on your theory.

JAKES: They might have, yes.

SCALIA: Well, why didn’t anybody patent those things?

JAKES: I think our economy was based on industrial process.

SCALIA: It was based on horses, for Pete’s sake. You — I would really have thought somebody would have patented that.

JAKES: There are also issues with enforcement. I can’t really answer why somebody wouldn’t have. There are teaching methods that were patented. There are a number of them that we’ve included in our brief where there were patents issued for teaching methods, and I don’t think that we’ve had a serious enforcement problem with people being sued for using teaching methods. But there have been those 2 people who have sought to patent them rather than keep them as secrets or just use them.

In the end, the justices seemed to be conflicted with wanting to limit patent eligible subject matter to exclude frivilous matters but not wanting to cut out valuable technological advances that happened to be unconnected to a machine or transformation.

SOTOMAYOR: How about if we say something as simple as patent law doesn’t cover business matters instead of what the Federal circuit has begun to say, which is technology is tied to a machine or a transformation of the substance, but I have no idea what the limits of that ruling will impose in the computer world, in the biomedical world, all of the amici who are talking about how it will destroy industries? If we are unsure about that, wouldn’t the safer practice be simply to say it doesn’t involve business methods?

On its face, the Court Justices appear unwilling to allow patent claims for a strategy of hedging risk in buying energy but also reluctant to use this as the definitive case for deciding what should or should not fall within all patentable subject matter.  For that, we may have to wait to see if the Court takes up the Prometheus  v. Mayo case.

You can see the complete transcript of the oral argument here.  More reflective commentary is available from Patent Docs and PrawfsBlawg.

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In Moral Panics and the Copyright Wars, William Patry describes the Copyright Wars as a campaign by copyright owners to create a sense of siege, of urgency, of a clear and present danger that must be eliminated by either Congress or the courts:

The Copyright Wars should be seen as a classic and classically wrong response to innovation.  It is innovation, not the status quo. that keeps the economy fresh. … The Copyright Wars are an effort to accomplish the impossible: to stop time, to stop innovation, to stop new ways of learning and new ways of creating.  The Copyright Wars are wars to ensure that old business models are frozen into place, and innovative approaches are frozen out.

While Patry has been a copyright lawyer for 27 years as a professor, practitioner and government attorney, it’s hard to forget that he’s Google’s senior copyright counsel.  And, if you don’t know, Google is currently at odds with the copyright holders of the planet in a four-year-old copyright lawsuit over Google’s ambitious book-scanning project.

The book scanning case involves Google’s plans to scan millions of books and make them searchable and available for purchase online. A proposed $125 million settlement would give Google digital rights to those works. But the government told a federal judge that the agreement threatens to give Google the power to increase book prices and discourage competition.

That aside, Patry sees copyright as a social relationship.  He argues that copyright holders have avoided regulation by describing their rights as “intellectual property” to take it outside any need for any empirical, social justification.  But, Patry sees it as a social situation which involves burdens, not just benefits.

When we regard copyright as a system for furthering social relationships, the inquiry shifts away from whether we should regulate — because the entire enterprise is regulatory — and toward what kind of relationships we want to create.  The answer is clear, based on constitutional text:  We want to (and constitutionally can only) create relationships that further learning.

Patry sees an industry that creates moral panics — a false public perception created by emotional threats in order to increase support for risky behaviors  — in a tug-of-war that has persisted from the development of Edison’s kinestoscope to the Sony Betamax recorder to the Redbox DVD rental kiosks.

It has been argued that copyright laws have gone too far in trying to protect the rights of authors and are now a dangerous, blunt instrument more abused against innocents than Tasers.  The RIAA goes after P2P file-sharing users.  Copryright owners fight infringers across the globe.

Yet, there are plenty of reports of companies misusing the Digital Millennium Copyright Act (DMCA) perhaps for anti-competitive reasons. One USC/Berkeley report suggests that over 30% of DMCA takedown notices may have been improper and potentially illegal. In most of those cases, the notices demanded information be taken offline when it had a perfectly legitimate argument for remaining online.

Patry concludes with a call for remaking our copyright laws so that they are more in balance as they were intended.

About the Author

William Patry is Senior Copyright Counsel at Google Inc. He previously served as copyright counsel to the U.S. House of Representatives, Committee on the Judiciary, a Policy Planning Advisor to the Register of Copyrights, a law professor, and in the private practice of law. He is the most prolific scholar of copyright in history, including being the author of an eight-volume treatise and a separate treatise on the fair use doctrine.

“Moral Panics and the Copyright Wars, ” by William Patry”  (292 pages; Oxford University Press, USA)  is available through Amazon.

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The lawsuit, Association for Molecular Pathology, et al. v. United States Patent and Trademark Office, et al., was filed in the United States District Court for the Southern District of New York against the PTO, Myriad Genetics and the University of Utah Research Foundation, which hold the patents on the BRCA genes.  The plaintiffs in the lawsuit include several patients and more than a dozen universities, genetic specialists and medical associations, such as the Association for Molecular Pathology and the American College of Medical Genetics.

The challenged patents cover diagnostic tests for mutations along the genes, known as BRCA1 and BRCA2, which are responsible for most cases of hereditary breast and ovarian cancers. The patents, held by Myriad Genetics, have been a source of contention since Myriad’s lab is the only place in the country where the diagnostic testing can be performed.

While far from over, the district court judge denied a motion filed by the US Patent and Trademark Office, Myriad Genetics, and the University of Utah Research Foundation to dismiss a lawsuit for lack standing to sue the USPTO, lack of subject matter jurisdiction, and because the action is barred by the sovereign immunity.

The judge felt that there was enough to get over the challenges saying that the plaintiffs had the necessary standing to bring their claims against the defendants and that the facts alleged in the case are plausible, specific, and form a sufficient basis for the plaintiff’s legal arguments.  The court also denied motions by the defendants to dismiss the case based on jurisdictional and other issues.

The court’s opinion stated:

“The widespread use of gene sequence information as the foundation for biomedical research means that resolution of these issues will have far-reaching implications, not only for gene-based health care and the health of millions of women facing the specter of breast cancer, but also for the future course of biomedical research… The novel circumstances presented by this action against the USPTO, the absence of any remedy provided in the Patent Act, and the important constitutional rights the Plaintiffs seek to vindicate establish subject matter jurisdiction over the Plaintiffs’ claim against the USPTO.”

The ACLU’s lawsuit is, in effect, challenging the entire practice of gene patenting so the case could have wide-reaching effects for the research and genetic diagnostics fields.  A draft report by the NIH shows that around 20 percent of human genes currently are patented, including genes associated with Alzheimer’s disease, muscular dystrophy, colon cancer, and asthma, and corresponding to 4,382 of the 23,688 genes as of 2007.  The genes found in the claims of over 4,270 patents.

While it is surprising that the suit is still in existence, I think the district court judge is allowing the plaintiff’s to at least make their best case.  Eventually, the suit will probably sputter out for lack of merit.   Even if semi-successful on some issues, a fight over the patentability of isolated genes is misplaced and is not likely to change the overall landscape of diagnostic and therapeutic costs.  Very often, patents are obtained not just on the isolated gene but also on methods of use and as part of more complex assays or kits.  Preventing just one kind of claim might provide some additional competition in the marketplace but any impact would likely be muted.

A copy of the complaint is available here: myriad-brca1-complaint (pdf)

A copy of the court’s decision is available here:  MTD_decision (pdf)

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John Dragseth, a Partner at Fish & Richardson, gave an overview of the Mayo v. Prometheus case after filing a Petition for a Writ of Certiorari with the Supreme Court just hours earlier.  The Federal Circuit, reversing the district court, upheld Prometheus’s patent claims covering a process for correlating the level of certain chemicals in a patient’s blood with the patient’s health.

Earlier, the Supreme Court granted certiorari in Laboratory Corp. of Am. Holdings v. Metabolite Labs but — despite being hit with 20 amicus briefs — the Supreme Court turned around and opted out of ruling on the case saying that it had “improvidently” agreed to hear the case in the first place and it dismissed the appeal. At that time, thousands of patents on medical tests and genes dodged a serious bullet since the Court could have deemed such tests “natural phenomena.”

Now, the Court may have another shot to clarify the situation in Mayo and the answer may hinge on preemption of natural phenomenon.  The question presented is as follows:

Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations

The Mayo case asks how a method can be patentable if anyone performing the test for other reasons can’t avoid infringing the claims if they do the test for any other reason but happen to “think” about the correlation knowing that it exists.

J. Michael Jakes, a Partner at Finnegan, gave an update on the Bilski v. Doll case as he prepares to argue the case before the U.S. Supreme Court.  The briefing is completed and argument is set for November 9.  The not so surprising note was that Bilski has garnered 65 amicus curiae briefs, which break down as 17 supporting the Federal Circuit decision, 22 against and 26 supporting neither.

Here, the questions presented are:

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.

Jakes pointed out that the Government-filed brief seems to want to resurrect the technological arts test by the CCPA, which was rejected by the CAFC in Bilski.  The examiner applied this test but it was overruled by the Board of Patent Appeals as not a proper test.  The technological arts test is problematic since technology is always evolving and not co-extensive with the test.

The problem of methods not tied to a specific machine or having a transformation is not solely related to business methods.  What about a method for seismic exploration?  In addition, the quality of the science is not a good measure of what is patentable.  While there are plenty of ridiculous business method patents, plenty of devices would meet the “not worthy” test, too.

See U.S. Pat. No. 5,443,036:

1. A method of inducing aerobic exercise in an unrestrained cat comprising the steps of:

(a) directing an intense coherent beam of invisible light produced by a hand-held laser apparatus to produce a bright highly-focused pattern of light at the intersection of the beam and an opaque surface, said pattern being of visual interest to a cat; and

(b) selectively redirecting said beam out of the cat’s immediate reach to induce said cat to run and chase said beam and pattern of light around an exercise area.

Is Bilski important?  Some estimates say as many as 200,000 patents could be invalidated if Bilski is held to strictly apply to all method patents.  In the end, it is doubtful that this will be the seminal case for biotech.  For that, we need a detailed court opinion on a solid diagnostic method patent.

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Chad Shear of Fish & Richardson pointed out that the time for inter partes reexamination is quite long and defendants will often try everything to slow down a parallel litigation case so that the USPTO can catch up and possible pass the litigation case since their (perceived) chances are better at the reexam level given the approximately 50% reversal rate by the federal circuit.  Shear pointed out that juries are all about damages and willfulness, not the infringement itself.

Under Reexamination, each claim of a patent is presumed valid under 35 U.S.C. 282 and may be enforced notwithstanding the presence of a pending reexamination proceeding.  Although litigation may move forward in parallel with a reexamination proceeding, at the district court’s discretion, the results of the reexamination proceeding may have an effect on the litigation. To proceed with a reexamination, a request for reexamination must establish the existence of at least one new technological teaching affecting any claim of the patent for which reexamination has been requested that was not considered by the Office in a prior Office proceeding involving the patent (substantial new question). The SNQ is established based on prior patents and/or printed publications.

Ex Parte Reexamination

A proceeding in which any person may request reexamination of a U.S. Patent based on one or more prior patents or printed publications. A requester who is not the patent owner (i.e., a “third party requester”) has only limited participation rights in the proceeding. [MPEP 2209]

Inter Partes Reexamination

A proceeding in which any person who is not the patent owner and is not otherwise estopped may request reexamination of a U.S. Patent issued from an original application filed on or after November 29, 1999 based on one or more prior patents or printed publications. Both patent owner and third party requester have participation rights throughout the proceeding, including appeal rights. [MPEP 2609]

What are the risks to reexamination?  In reexam, the patentee can throw in additional claims carefully crafted around the art you might want to use to invalidate the patent.  It is not unusual for a patent to come out of reexam upheld but with many additional claims, which are then added to the lawsuit against you.

What favors reexam for a defendant?  First, what court will you be sued in?  Is it an unfavorable venue?  Second, if the art is extremely technical, your chances are better in reexam than with a jury that will get frustrated by the technology.  Finally, do you have a good “story” to tell so that the jury can understand your actions.

What if the inventor won the Nobel Prize (or is otherwise a really favorable patentee)?  You want to be in the USPTO.

See reexamination historical statistics for requests for reexamination filed since 7/1/1981 (for ex parte) or since 11/29/1999 (for inter partes) here:

• Ex parte reexamination historical statistics [PDF]
• Inter partes reexamination historical statistics [PDF]

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