In Re Comiskey , 554 F.3d 967 ( 2009 )

United States Court of Appeals for the Federal Circuit
2006-1286
(Serial No. 09/461,742)
IN RE STEPHEN W. COMISKEY
Thomas J. Scott, Jr., Hunton & Williams LLP, of Washington, DC, argued for
appellant. With him on the brief was Robert L. Kinder. Of counsel was Yisum Song.
Raymond T. Chen, Associate Solicitor, United States Patent and Trademark
Office, of Arlington, Virginia, argued for the Director of the United States Patent and
Trademark Office. With him on the brief was Thomas W. Krause, Associate Solicitor.
Appealed from: United States Patent and Trademark Office
Board of Patent Appeals and Interferences
United States Court of Appeals for the Federal Circuit
2006-1286
(Serial No. 09/461,742)
IN RE STEPHEN W. COMISKEY
Appeal from the United States Patent and Trademark Office, Board of Patent Appeals
and Interferences.
___________________________
DECIDED: January 13, 2009
___________________________
Before MICHEL, Chief Judge, DYK and PROST, Circuit Judges.
DYK, Circuit Judge.
Acting en banc, the court today vacated the September 20, 2007, judgment in
this case, and the panel’s original opinion, which is reported at 499 F.3d 1365 (Fed. Cir.
2007), was withdrawn. The en banc court reassigned the opinion to the panel for
revision. The panel’s original opinion is revised as follows:
Appellant Stephen W. Comiskey (“Comiskey”) appeals the decision of the Board
of Patent Appeals and Interferences (“Board”) affirming the examiner’s rejection of
claims 1-59 of his patent application as obvious in view of the prior art and therefore
unpatentable under 35 U.S.C. § 103. We do not reach the Board’s obviousness
rejection of the independent claims under § 103. We conclude that Comiskey’s
independent claims 1 and 32 and most of their dependent claims are unpatentable
subject matter under 35 U.S.C. § 101. With respect to independent claims 17 and 46
(and dependent claims 18-29, 31, 47-57, and 59) and dependent claims 15, 30, 44, and
58, we remand to the PTO to consider the § 101 question in the first instance. We
therefore affirm-in-part, vacate-in-part, and remand.
BACKGROUND
I
Comiskey’s patent application No. 09/461,742 claims a method and system for
mandatory arbitration involving legal documents, such as wills or contracts. According
to the application, the claimed “program . . . requires resolution by binding arbitration of
any challenge or complaint concerning any unilateral document . . . [or] contractual
document.”
Independent claim 1 recites a “method for mandatory arbitration resolution
regarding one or more unilateral documents” involving the following steps. First, the
unilateral document and its author are enrolled. Second, arbitration language is
incorporated in the unilateral document requiring that any contested issue related to the
document be presented to the pre-chosen arbitration program for binding arbitration.
Third, the method “requir[es] a complainant [sic] to submit a request for arbitration
resolution.” Fourth, the method conducts arbitration resolution. Fifth, the method
provides “support to the arbitration.” Finally, the method determines “an award or
decision . . . [that] is final and binding.” 1 Independent claim 32 is practically identical to
1
Claim 1 states in full:
A method for mandatory arbitration resolution regarding one or more
unilateral documents comprising the steps of:
2006-1286 2
claim 1, except that it refers to contractual documents rather than unilateral
documents. 2 Although the application’s written description references “an automated
system and method for requiring resolution through binding arbitration” and “a
mandatory arbitration system through a computer on a network,” claims 1 and 32 do not
enrolling a person and one or more unilateral documents associated with
the person in a mandatory arbitration system at a time prior to or as of the
time of creation of or execution of the one or more unilateral documents;
incorporating arbitration language, that is specific to the enrolled person,
in the previously enrolled unilateral document wherein the arbitration
language provides that any contested issue related to the unilateral
document must be presented to the mandatory arbitration system, in
which the person and the one or more unilateral documents are enrolled,
for binding arbitration wherein the contested issue comprises one or more
of a challenge to the documents, interpretation of the documents,
interpretation or application of terms of the documents and execution of
the documents or terms of the documents;
requiring a complainant to submit a request for arbitration resolution to the
mandatory arbitration system wherein the request is directed to the
contested issue related to the unilateral document containing the
arbitration language;
conducting arbitration resolution for the contested issue related to the
unilateral document in response to the request for arbitration resolution;
providing support to the arbitration resolution; and
determining an award or a decision for the contested issue related to the
unilateral document in accordance with the incorporated arbitration
language, wherein the award or the decision is final and binding with
respect to the complainant.
2
In addition, Claim 32 notes that the inserted arbitration language would
cover a challenge to the contractual document “by any party to the Contract or by any
alleged third party beneficiary of the Contract.” It also notes that the party submitting a
request for arbitration resolution could be “a party to the Contractual document [or] a
party so designated in the contractual document.”
2006-1286 3
reference, and the parties agree that these claims do not require, the use of a
mechanical device such as a computer.
Independent claim 17 recites a “system for mandatory arbitration resolution
regarding one or more unilateral documents.” It includes the following limitations: (1) “a
registration module” to register the unilateral document and its executor; (2) “an
arbitration module” for incorporating arbitration language that requires any contested
issue related to the unilateral document be presented to the system; (3) “an arbitration
resolution module” that requires “a complainant to submit a request for arbitration
resolution”; and (4) “a means for selecting an arbitrator from an arbitrator database” and
“providing support to the arbitrator . . . where the arbitrator determines an award or a
decision . . . [that] is final and binding.” 3 Independent claim 46 is practically identical to
3
Claim 17 states in full:
A system for mandatory arbitration resolution regarding one or more
unilateral documents comprising:
a registration module for enrolling a person who is executing and one or
more unilateral documents associated with the person in a mandatory
arbitration system at a time prior to or as of the time of creation of or
execution of the one or more unilateral documents;
an arbitration module for incorporating arbitration language, that is specific
to the enrolled person, in the previously enrolled unilateral document
wherein the arbitration language provides that any contested issue related
to the unilateral document must be presented to the mandatory arbitration
system, in which the person and the one or more unilateral documents are
enrolled, for binding arbitration wherein the contested issue comprises one
or more of a challenge to the documents, interpretation of the documents,
interpretation or application of terms of the documents and execution of
the documents or terms of the documents; and for providing this
arbitration language to the enrolled person;
2006-1286 4
claim 17, except that it refers to contractual documents rather than unilateral
documents. 4 Four dependent claims (claims 15, 30, 44, and 58) also explicitly require
use of a computer or other machine. Each states, in full: “[t]he method[/system] of claim
[1, 17, 32, or 46] wherein access to the mandatory arbitration is established through the
Internet, intranet, World Wide Web, software applications, telephone, television, cable,
video [or radio], magnetic, electronic communication, or other communication means.”
II
Comiskey filed his patent application with the United States Patent and
Trademark Office (“PTO”) on December 16, 1999. On March 28, 2001, the examiner
issued a first office action rejecting claims 1-9, 11-24, 26-38, 40-52, and 54-59 under 35
U.S.C. § 103(a) as unpatentable over Ginter, U.S. Patent No. 6,185,683 (’683 patent),
in view of Perry, U.S. Patent No. 5,241,466 (’466 patent), and Walker, U.S. Patent No.
5,794,207 (’207 patent). Ginter discloses an electronic system for securely delivering
documents from the sender to the recipient through the electronic equivalent of a
an arbitration resolution module for requiring a complainant to submit a
request for arbitration resolution to the mandatory arbitration system
wherein the request is directed to the contested issue related to the
unilateral document containing the arbitration language; and
a means for selecting an arbitrator from an arbitrator database to conduct
an arbitration resolution for the contested issue related to the unilateral
document in response to the request for arbitration resolution, for
providing support to the arbitrator, and where the arbitrator determines an
award or a decision for the contested issue related to the unilateral
document in accordance with the incorporated arbitration language,
wherein the award or the decision is final and binding with respect to the
complainant.
4
Claim 46 also notes that the party submitting a request for arbitration may
be “a party to the contractual document [or] a party so designated in the contractual
document.”
2006-1286 5
“personal document carrier” that can validate transactions as well as actively participate
in the transaction by, among other things, providing arbitration. ’683 patent “Abstract.”
Walker discloses an electronic system that allows buyers to submit binding purchase
offers and sellers to create contracts by accepting a purchase offer on its terms. It also
teaches the inclusion of language in the purchase offers “requiring that both parties
submit to binding arbitration of all disputes” and suggests that a “central
controller . . . can support the arbitration process by providing an arbiter for each
dispute.” ’207 patent col.30 ll.47-54. Perry discloses an electronic central depository
for secure storage and rapid retrieval of unilateral documents such as wills. The
examiner also found claims 10, 25, 39, and 53 (which added the additional limitation of
displaying an “arbitration schedule”) unpatentable over Ginter in view of a document
entitled “Arbitration Fee Schedule.” The examiner’s final office action on May 30, 2001,
provided the same basis for rejection.
Comiskey filed an amendment after final rejection on August 29, 2001, “to more
distinctly claim and particularly point out” the aspects of his invention that he believed
were novel, namely pre-enrolling the person in a mandatory arbitration system,
including language in the document requiring submission of disputes to this pre-chosen
system, and enabling a person to submit a dispute pertaining to the document to this
pre-chosen system for binding arbitration. On December 31, 2001, the examiner mailed
a final rejection of the amended claims, which rejected the claims on the same basis.
After Comiskey filed a request for continued examination, the finality of the prior office
action was withdrawn, and the examiner mailed another non-final rejection on July 9,
2002, based again on the same grounds. In response, Comiskey submitted a
2006-1286 6
“declaration of long felt need” on October 1, 2002, claiming that based on his
experience representing clients involved in family disputes concerning unilateral
documents, he believed his invention addressed an area of long felt need. On
November 6, 2002, the examiner mailed a final rejection based on the same reasons as
the prior office actions and rejected Comiskey’s assertion of long felt need on the
ground that the cited prior art references had recognized and addressed the problem
prior to Comiskey.
Comiskey appealed, and on November 30, 2005, the Board affirmed the
examiner’s rejection. The Board concluded that because all of the independent claims
were argued together they stood or fell together, and it chose claim 32 as
representative. It concluded that the combination of Ginter and Walker rendered this
claim obvious. Despite concluding that all of the independent claims stood or fell
together, the Board proceeded to consider claims 1 and 17, directed to unilateral
documents, separately. It concluded that the addition of Perry to Ginter and Walker
rendered these claims obvious. Finally, the Board considered and affirmed the
examiner’s rejection of claims 10, 25, 39, and 53 as obvious in light of Ginter, Perry,
Walker, and the “Arbitration Fee Schedule.”
Comiskey timely appealed to this court. We have jurisdiction under 28 U.S.C.
§ 1295(a)(4)(A) (2000). After oral argument, we requested supplemental briefing
directed at the patentability of the subject matter of Comiskey’s application under 35
U.S.C. § 101. In the supplemental briefing, Comiskey argued for the first time that we
lacked the power to consider a ground for rejection not relied on below. Alternatively,
Comiskey argued that his application was patentable under § 101, and that the subject
2006-1286 7
matter of his application did not fall within an exception to patentability, such as an
abstract idea, natural phenomena, or law of nature.
The PTO urged that this court could properly consider the § 101 issue. Indeed,
the PTO urged that this court resolve the case on this ground to “give the Office needed
guidance in this area.” PTO Supp. Br. 15. The PTO argued that Comiskey’s
independent claims were directed at an unpatentable abstract idea, and not a
patentable process, because they neither were tied to a particular machine nor operated
to change materials to a different state or thing. Rather the claims impermissibly
“encompasse[d] a method of controlling how humans interact with each other to resolve
a dispute, based on a human arbitrator’s perception of the dispute.” PTO Supp. Br. 12.
DISCUSSION
We do not reach the ground relied on by the Board below—that the claims were
unpatentable as obvious over Ginter in view of Walker, Perry, and “Arbitration Fee
Schedule”—because we conclude that many of the claims are “barred at the threshold
by § 101.” Diamond v. Diehr, 450 U.S. 175, 188 (1981). It is well-established that “[t]he
first door which must be opened on the difficult path to patentability is § 101.” State St.
Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1372 n.2 (Fed. Cir.
1998) (quoting In re Bergy, 596 F.2d 952, 960 (CCPA 1979)). Only if the requirements
of § 101 are satisfied is the inventor “allowed to pass through to” the other requirements
for patentability, such as novelty under § 102 and, of pertinence to this case, non-
obviousness under § 103. See id. As the Supreme Court stated in Parker v. Flook,
“[t]he obligation to determine what type of discovery is sought to be patented [so as to
determine whether it is “the kind of ‘discoveries’ that the statute was enacted to protect”]
2006-1286 8
must precede the determination of whether that discovery is, in fact, new or obvious.”
437 U.S. 584, 593 (1978) (emphases added).
The PTO acknowledges that the examiner, consistent with his obligation under
the cases, must have addressed the predicate issue of patentable subject matter and
implicitly concluded that the claims met the requirements of § 101. See Oral Arg. Tr.
18:40. For the reasons discussed below, we disagree that § 101 is satisfied. See also
Manual of Patent Examining Procedures (“MPEP”) § 2106 “Guidelines Flowchart” (Rev.
5, Aug. 2006) (listing the steps an examiner should follow in determining patentability,
with “determine whether the claimed invention complies with . . . 101” listed before
“determine whether the claimed invention complies with 35 U.S.C. 102 and 103”).
I
We first address Comiskey’s argument that we cannot properly address the issue
of patentable subject matter. At oral argument, Comiskey admitted that the court “could
affirm on [the § 101] ground if in fact [we] came to the conclusion that . . . the subject
matter of this claim does not address the statutory subject matter.” In his supplemental
briefing, Comiskey attempts to “withdraw[] any statement made at oral argument which
would infer that this Court could even consider a new statutory grounds for rejecti[on].”
Appellant’s Supp. Br. 19. Comiskey now asserts that “[t]his Court lacks the power to
sua sponte raise and thereafter decide a statutory ground of patentability never raised
during the agency proceeding below” because our review of the Board’s decision is
required to be “on the record before the Patent and Trademark Office” under 35 U.S.C.
§ 144 and the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. Id. at 16-17.
2006-1286 9
Over sixty years ago in Securities & Exchange Commission v. Chenery Corp.,
318 U.S. 80 (1943), the Supreme Court made clear that a reviewing court can (and
should) affirm an agency decision on a legal ground not relied on by the agency if there
is no issue of fact, policy, or agency expertise. The Court said:
In confining our review to a judgment upon the validity of the grounds
upon which the Commission itself based its action, we do not disturb the
settled rule that, in reviewing the decision of a lower court, it must be
affirmed if the result is correct although the lower court relied upon a
wrong ground or gave a wrong reason. . . . It would be wasteful to send a
case back to a lower court to reinstate a decision which it had already
made but which the appellate court concluded should properly be based
on another ground within the power of the appellate court to formulate.
But it is also familiar appellate procedure that where the correctness of the
lower court's decision depends upon a determination of fact which only a
jury could make but which has not been made, the appellate court cannot
take the place of the jury. Like considerations govern review of
administrative orders. If an order is valid only as a determination of policy
or judgment which the agency alone is authorized to make and which it
has not made, a judicial judgment cannot be made to do service for an
administrative judgment.
Id. at 88 (emphases added; internal citations and quotation marks omitted). We have
repeatedly applied Chenery and have said that “[w]e may, however, where appropriate,
affirm the [agency] on grounds other than those relied upon in rendering its decision,
when upholding the [agency’s] decision does not depend upon making a determination
of fact not previously made by the [agency].” Killip v. Office of Pers. Mgmt., 991 F.2d
1564, 1568-69 (Fed. Cir. 1993) (emphases added); see also Newhouse v. Nicholson,
497 F.3d 1298, 1301 (Fed. Cir. 2007) (“[T]he Chenery doctrine is not implicated when
the new ground for affirmance is not one that calls for a determination or judgment
which an administrative agency alone is authorized to make.” (internal quotation marks
omitted)); Spears v. Merit Sys. Prot. Bd., 766 F.2d 520, 523 (Fed. Cir. 1985). We note
2006-1286 10
that the APA specifically states that “the reviewing court shall decide all relevant
questions of law.” 5 U.S.C. § 706. The Supreme Court has emphasized that in general
the PTO should be treated like other administrative agencies, and that patent cases are
subject to the same general administrative law legal principles. Dickinson v. Zurko, 527
U.S. 150, 154-55 (1999). Thus, the same rules governing affirmance of agency action
on a ground not relied on below necessarily apply in the PTO context as in the
administrative context generally.
As Comiskey points out, some of our cases have concluded that “it is
inappropriate for this court to consider rejections that had not been considered by or
relied upon by the Board.” In re Margolis, 785 F.2d 1029, 1032 (Fed. Cir. 1986). But
these statements referred to situations that required factual determinations not made by
the agency. For example, in Margolis and other cases the new grounds for decision
would require this court to make factual determinations involving “the scope and content
of the prior art [and] differences between the prior art and the claims at issue,” Dippin’
Dots, Inc. v. Mosey, 476 F.3d 1337, 1343 (Fed. Cir. 2007), which had not been
2006-1286 11
considered by the PTO. 5 We decline to read these cases as rejecting the breadth of the
Chenery decision on which they explicitly relied.
It is well-established that “whether the asserted claims . . . are invalid for failure
to claim statutory subject matter under 35 U.S.C. § 101, is a question of law which we
review without deference.” AT&T Corp. v. Excel Commc’ns, Inc., 172 F.3d 1352, 1355
(Fed. Cir. 1999). As a question of law, lack of statutory subject matter is a “ground [for
affirmance] within the power of the appellate court to formulate.” Chenery, 318 U.S. at
88. While there may be cases in which the legal question as to patentable subject
matter may turn on subsidiary factual issues, Comiskey has not identified any relevant
fact issues that must be resolved in order to address the patentability of the subject
matter of Comiskey’s application. Moreover, since we would review a Board decision
on the issue of patentability without deference, see AT&T, 172 F.3d at 1355, the legal
5
See In re Thrift, 298 F.3d 1357, 1367 (Fed. Cir. 2002) (refusing to sustain
an obviousness rejection based on a new prior art reference not relied on by the Board
because it would require a determination of the scope of that reference and whether it
provided a motivation to combine); Margolis, 785 F.2d at 1031-32 (refusing to consider
anticipation and obviousness grounds based on prior art references submitted to the
examiner but not considered by the examiner or the Board); In re Hounsfield, 699 F.2d
1320, 1324 (Fed. Cir. 1983) (refusing to consider new ground for affirmance that would
require determination of scope of a prior patent and a comparison between the claims of
the prior patent and the claims of the application); Application of Fisher, 448 F.2d 1406,
1407 (CCPA 1971) (refusing to consider technical authorities urged by the PTO on
appeal but not in the record). In other cases the issue, while perhaps now viewed as
legal, was not at the time seen as legal in nature. See Application of Fleissner, 264
F.2d 897, 900 (CCPA 1959) (noting that a finding of indefiniteness with respect to a
means plus function claim requires an examination of the “record” to ascertain
corresponding structure); see also Hazeltine Research, Inc. v. Dage Elec. Co., 271 F.2d
218, 220-21 (7th Cir. 1959) (finding “no evidence in this record” to support the district
court’s “finding[] of fact” that the “language of the claims of the patent in suit is invalid in
that it is vague and indefinite”).
2006-1286 12
issue concerning patentability is not “a determination of policy or judgment which the
agency alone is authorized to make.” Chenery, 318 U.S. at 88.
In these circumstances, Chenery not only permits us to supply a new legal
ground for affirmance, but encourages such a resolution where, as here, “[i]t would be
wasteful to send” the case back to the agency for a determination as to patentable
subject matter. 318 U.S. at 88. 6 We therefore may consider the patentability of
Comiskey’s claims under § 101, and we turn to the merits of that question. 7
II
Comiskey’s application may be viewed as falling within the general category of
“business method” patents. At one time, “[t]hough seemingly within the category of
process or method, a method of doing business [was] rejected as not being within the
statutory classes.” State St. Bank, 149 F.3d at 1377 (quoting MPEP § 706.03(a)
(1994)). In State Street Bank, we addressed the “business method” exception to
statutory subject matter, and stated that “[w]e take this opportunity to lay this ill-
conceived exception to rest.” Id. at 1375. State Street Bank involved “a data
processing system for managing a financial services configuration of a portfolio
established as a partnership,” and “[g]iven the complexity of the calculations, a
6
The situation is quite different where a party seeks for the first time on
appeal to raise a new ground on appeal for setting aside agency action. See Boston
Scientific Scimed, Inc. v. Medtronic Vascular, Inc., 497 F.3d 1293, 1298 (Fed. Cir.
2007).
7
As we recently noted in our en banc decision in In re Seagate Technology,
LLC, “a court may consider an issue ‘antecedent to . . . and ultimately dispositive of’ the
dispute before it, even an issue the parties fail to identify and brief.” 497 F.3d 1360,
1372 (Fed. Cir. 2007) (quoting U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc.,
508 U.S. 439, 447 (1993) (quoting Arcadia v. Ohio Power Co., 498 U.S. 73, 77 (1990))).
The § 101 issue is an antecedent question to the § 103 issue, as discussed above.
2006-1286 13
computer or equivalent device [wa]s a virtual necessity to perform the task.” Id. at 1371.
We held that this system was patentable, concluding that patentability does “not turn on
whether the claimed subject matter does ‘business’ instead of something else.” Id. at
1377.
Although it has been suggested that State Street Bank supports the patentability
of business methods generally, 8 State Street Bank explicitly held that business methods
are “subject to the same legal requirements for patentability as applied to any other
process or method.” Id. at 1375; see also MPEP § 2106(I) (Rev. 4, Oct. 2005) (“Claims
should not be categorized as methods of doing business. Instead, such claims should
be treated like any other process claims.”). We must then consider the requirements of
§ 101 in determining whether Comiskey’s claims 1 and 32 for a method of mandatory
arbitration for unilateral and contractual documents claim statutory subject matter.
A
The very constitutional provision that authorized Congress to create a patent
system, Article I, § 8, also limited the subject matter eligible for patent protection to the
“useful Arts.” 9 According to the Supreme Court, this constitutional limitation on
patentability “was written against the backdrop of the [English] practices—eventually
8
See, e.g., Leo J. Raskind, The State Street Bank Decision: The Bad
Business of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham
Intell. Prop. Media & Ent. L.J. 61, 61 (1999).
9
Article I, § 8 states in full: “The Congress shall have Power . . . To promote
the Progress of Science and useful Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective Writings and Discoveries.” The
Supreme Court has concluded that the references to “Science” (i.e., knowledge
generally) and “Writings” creates the right to copyright protection and the references to
“useful Arts” and “Discoveries” creates the right to patent protection. See Graham v.
John Deere Co. of Kansas City, 383 U.S. 1, 5 (1966).
2006-1286 14
curtailed by the Statute of Monopolies—of the Crown in granting monopolies to court
favorites in goods or businesses which had long before been enjoyed by the public.”
Graham, 383 U.S. at 5. In the 16th and 17th centuries, the English Crown granted
monopolies over entire types of business to specific individuals, for example the grant
by James I to Darcy in 1600 of the exclusive right to manufacture or sell playing cards
or the exclusive right to the printing business held by the London guild of booksellers
and printers. See Peter Meinhardt, Inventions, Patents, and Monopoly 31 (2d ed.
1950); Eldred v. Ashcroft, 537 U.S. 186, 200 n.5 (2003). The purpose of such
monopolies “was to enrich the King . . . as well as the grantee, at the expense of the
community.” Meinhardt, supra, at 31. With this background in mind, the framers
consciously acted to bar Congress from granting letters patent in particular types of
business. The Constitution explicitly limited patentability to “the national purpose of
advancing the useful arts—the process today called technological innovation.” Paulik v.
Rizkalla, 760 F.2d 1270, 1276 (Fed. Cir. 1985) (en banc).
Beginning with the first patent act, the Patent Act of 1790, “Congress []
responded to the bidding of the Constitution,” Graham, 383 U.S. at 6, by including
provisions limiting patentable subject matter. See An Act to Promote the Progress of
Useful Arts, Ch. 7, 1 Stat. 109, 110 (1790). The standard used by the Patent Act of
1793, which limited patentability to “any new and useful art, machine, manufacture, or
composition of matter, or any new or useful improvement [thereof],” is essentially the
same as that used today. An Act to Promote the Progress of Useful Arts; and to Repeal
the Act Heretofore Made for that Purpose, Ch. 11, 1 Stat. 318, 319 (1793). The Patent
2006-1286 15
Act of 1952 did replace the word “art” with the word “process” so that current § 101
states:
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, subject to the
conditions and requirements of this title. 10
However, the Supreme Court has made clear that the 1952 language change had no
substantive effect, stating that “[a]nalysis of the eligibility of a claim of patent protection
for a ‘process’ did not change with the addition of that term to § 101.” Diehr, 450 U.S. at
184.
Patentable subject matter under the 1952 Act is extremely broad. Given the
breadth of the categories listed in § 101, it is not surprising that the legislative history of
the 1952 Act noted that “Congress intended statutory subject matter to include anything
under the sun that is made by man.” Chakrabarty, 447 U.S. at 309 (quoting S. Rep. No.
1979, 82d Cong., 2d Sess., 5 (1952); H.R. Rep. No. 1923, 82d Cong., 2d Sess., 6
(1952) (internal quotation marks omitted)). On the other hand, the Supreme Court has
made clear that this statement does “not . . . suggest that § 101 has no limits or that it
embraces every discovery.” Id.
Specifically, Supreme Court decisions after the 1952 Patent Act have rejected a
“purely literal reading” of the process provision and emphasized that not every “process”
10
The Supreme Court has defined “manufacture” to mean “the production of
articles for use from raw or prepared materials by giving to these materials new forms,
qualities, properties, or combinations, whether by hand-labor or machinery” and
“composition of matter” to mean “all compositions of two or more substances and all
composite articles, whether they be results of chemical union, or of mechanical mixture,
or whether they be gases, fluids, powders or solids.” Diamond v. Chakrabarty, 447 U.S.
303, 308 (1980) (quotation marks and alteration omitted).
2006-1286 16
is patentable. Flook, 437 U.S. at 589. Instead “[t]he question is whether the method
described and claimed is a ‘process’ within the meaning of the Patent Act.” Gottschalk
v. Benson, 409 U.S. 63, 64 (1972); see also Flook, 437 U.S. at 593 (“[R]espondent
incorrectly assumes that if a process application implements a principle in some specific
fashion, it automatically falls within the patentable subject matter of § 101.”). “Abstract
ideas” are one type of subject matter that the Supreme Court has consistently held fall
beyond the broad reaches of patentable subject matter under § 101. As early as Le
Roy v. Tatham, 55 U.S. 156, 175 (1852), the Supreme Court explained that “[a]
principle, in the abstract, is a fundamental truth; an original cause; a motive; these
cannot be patented, as no one can claim in either of them an exclusive right.” Since
then, the unpatentable nature of abstract ideas has repeatedly been confirmed. See,
e.g., Diehr, 450 U.S. at 185; Chakrabarty, 447 U.S. at 309; Flook, 437 U.S. at 589;
Benson, 409 U.S. at 67; Rubber-Tip Pencil Co. v. Howard, 87 U.S. 498, 507 (1874).
The very cases of this court that recognized the patentability of some business methods
have reaffirmed that abstract ideas are not patentable. See AT&T, 172 F.3d at 1355;
State St. Bank, 149 F.3d at 1373; see also In re Alappat, 33 F.3d 1526, 1542-43 (Fed.
Cir. 1994) (en banc).
The prohibition against the patenting of abstract ideas has two distinct (though
related) aspects. First, when an abstract concept has no claimed practical application, it
is not patentable. The Supreme Court has held that “[a]n idea of itself is not
patentable.” Rubber-Tip Pencil, 87 U.S. at 507 (emphasis added). In Benson, the claim
was for a method of converting binary-coded decimal numerals into pure binary
numerals that was “not limited to any particular art or technology, to any particular
2006-1286 17
apparatus or machinery, or to any particular end use.” 409 U.S. at 64. Since the claim
would therefore “wholly pre-empt the mathematical formula and in practical effect would
be a patent on the algorithm itself,” the claim was unpatentable because its “practical
effect” was to “patent an idea” in the abstract. Id. at 71-72. 11 See also AT&T, 172 F.3d
at 1358 (holding that a mathematical algorithm must produce “a useful, concrete, and
tangible result” to be patentable); State St. Bank, 149 F.3d at 1373 (same); MPEP
§ 2106 (Rev. 5, Aug. 2006) (“[C]laims define nonstatutory processes if they . . . simply
manipulate abstract ideas . . . without some claimed practical application.”).
Second, the abstract concept may have a practical application. The Supreme
Court has reviewed process patents reciting algorithms or abstract concepts in claims
directed to industrial processes. In that context, the Supreme Court has held that a
claim reciting an algorithm or abstract idea can state statutory subject matter only if, as
employed in the process, it is embodied in, operates on, transforms, or otherwise
involves another class of statutory subject matter, i.e., a machine, manufacture, or
composition of matter. 35 U.S.C. § 101. As the PTO notes, “[t]he Supreme Court has
recognized only two instances in which such a method may qualify as a section 101
process: when the process ‘either [1] was tied to a particular apparatus or [2] operated
to change materials to a ‘different state or thing.’’” See PTO Supp. Br. 4 (quoting Flook,
437 U.S. at 588 n.9). In Diehr, the Supreme Court confirmed that a process claim
reciting an algorithm could state statutory subject matter if it: (1) is tied to a machine or
11
In Benson, the Supreme Court reversed a decision by our predecessor
court that had, in turn, relied on earlier decisions, such as Application of Musgrave, 431
F.2d 882, 893 (CCPA 1970), suggesting that a process of human thinking in and of itself
could be patentable.
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(2) creates or involves a composition of matter or manufacture. 12 450 U.S. at 184.
There, in the context of a process claim for curing rubber that recited an algorithm, the
Court concluded 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.” Id. (quoting Benson, 409 U.S. at 70); 13 see also In re Schrader, 22 F.3d
290, 295 (Fed. Cir. 1994) (holding when a claim does not invoke a machine, Ҥ 101
requires some kind of transformation or reduction of subject matter”). Thus, a claim that
involves both a mental process and one of the other categories of statutory subject
matter (i.e., a machine, manufacture, or composition) may be patentable under § 101.
See Diehr, 450 U.S. at 184 (holding a process that involved calculations using the
“Arrhenius equation” patentable because the claim “involve[d] the transformation of an
article, in this case raw, uncured synthetic rubber, into a different state or thing”). For
example, we have found processes involving mathematical algorithms used in computer
12
Of course, process claims not limited to claiming an abstract concept or
algorithm (i.e., a mental process) may not be subject to the same requirements.
13
See also Diehr, 450 U.S. at 184 (“Industrial processes . . . are the types
which have historically been eligible to receive the protection of our patent laws.”
(emphasis added)); Tilghman v. Proctor, 102 U.S. 707, 722 (1880) (“A manufacturing
process is clearly an art, within the meaning of the law.” (emphasis added)); Cochrane
v. Deener, 94 U.S. 780, 788 (1876) (“A process is a mode of treatment of certain
materials to produce a given result. It is an act, or a series of acts, performed upon the
subject-matter to be transformed and reduced to a different state or thing.”).
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technology patentable because they claimed practical applications and were tied to
specific machines. 14
However, mental processes—or processes of human thinking—standing alone
are not patentable even if they have practical application. The Supreme Court has
stated that “[p]henomena of nature, though just discovered, mental processes, and
abstract intellectual concepts are not patentable, as they are the basic tools of scientific
and technological work.” Benson, 409 U.S. at 67 (emphasis added). In Flook the
patentee argued that his claims did not seek to patent an abstract idea (an algorithm)
because they were limited to a practical application of that idea—updating “alarm limits”
for catalytic chemical conversion of hydrocarbons. 437 U.S. at 586, 589-90. The Court
rejected the notion that mere recitation of a practical application of an abstract idea
makes it patentable, concluding that “[a] competent draftsman could attach some form
of post-solution activity to almost any mathematical formula.” Id. at 590. Since all other
features of the process were well-known, including “the use of computers for ‘automatic
monitoring-alarming,’” the Court construed the application as “simply provid[ing] a new
and presumably better method for calculating alarm limit values.” Id. at 594-95. The
14
See AT&T, 172 F.3d at 1355, 1358 (holding patentable “a process that
uses the Boolean principle in order to determine the value of the PIC indicator” and that
“require[d] the use of switches and computers”); State St. Bank, 149 F.3d at 1373 (“[W]e
hold that the transformation of data . . . by a machine through a series of mathematical
calculations into a final share price, constitutes a practical application of a mathematical
algorithm.” (emphases added)); Alappat, 33 F.3d at 1544 (“This is not a disembodied
mathematical concept which may be characterized as an ‘abstract idea,’ but rather a
specific machine to produce a useful, concrete, and tangible result.” (emphases
added)); Arrhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1058-59
(Fed. Cir. 1992) (holding patentable a method for analyzing electrocardiograph signals
for the detection of a specific heart condition that used “electronic equipment
programmed to perform mathematical computation”).
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Court held the application unpatentable because “if a claim [as a whole] is directed
essentially to a method of calculating, using a mathematical formula, even if the solution
is for a specific purpose, the claimed method is nonstatutory.” Id. at 595 (quoting In re
Richman, 563 F.2d 1026, 1030 (CCPA 1977)).
Following the lead of the Supreme Court, this court and our predecessor court
have refused to find processes patentable when they merely claimed a mental process
standing alone and untied to another category of statutory subject matter even when a
practical application was claimed. In Schrader we held unpatentable a “method
constitut[ing] a novel way of conducting auctions” by allowing competitive bidding on a
plurality of related items. 22 F.3d at 291. In doing so, we rejected the patentee’s
argument that the process used a machine. Two of the alleged machines—a “display”
in the front of the auction room and “a closed-circuit television system” for bidders in
different cities—were not claimed by the patent, and the third—a “record” in which bids
could be entered—could be “a piece of paper or a chalkboard.” Id. at 293-94. We
therefore concluded that the patent impermissibly claimed unpatentable subject matter.
Similarly, in In re Warmerdam, 33 F.3d 1354, 1359-60 (Fed. Cir. 1994), we held
unpatentable a process for controlling objects so as to avoid collisions because the key
steps of “‘locating’ a medial axis” and “‘creating’ a bubble hierarchy” described “nothing
more than the manipulation of basic mathematical constructs, the paradigmatic ‘abstract
idea.’” A machine was not required, id. at 1358, nor was there any indication that the
process operated on a manufacture or composition of matter.
Decisions of our predecessor court are in accord. In re Meyer, 688 F.2d 789,
795-96 (CCPA 1982), held that “a mental process that a neurologist should follow” was
2006-1286 21
not patentable because it was “not limited to any otherwise statutory process, machine,
manufacture, or composition of matter.” Similarly, In re Maucorps held that an invention
“[u]ltimately . . . directed toward optimizing the organization of sales representatives in a
business” was unpatentable. 609 F.2d 481, 482, 486 (CCPA 1979); see also Alappat,
33 F.3d at 1541 (“Maucorps dealt with a business methodology for deciding how
salesmen should best handle respective customers and Meyer involved a ‘system’ for
aiding a neurologist in diagnosing patients. Clearly, neither of the alleged ‘inventions’ in
those cases falls within any § 101 category.”). 15
It is thus clear that the present statute does not allow patents to be issued on
particular business systems—such as a particular type of arbitration—that depend
entirely on the use of mental processes. In other words, the patent statute does not
allow patents on particular systems that depend for their operation on human
intelligence alone, a field of endeavor that both the framers and Congress intended to
be beyond the reach of patentable subject matter. Thus, it is established that the
application of human intelligence to the solution of practical problems is not in and of
itself patentable.
B
Having considered the governing legal principles, we now turn to Comiskey’s
application and begin with independent claims 1 and 32 which recite “[a] method for
mandatory arbitration resolution” regarding unilateral and contractual documents.
15
In Musgrave, our predecessor court concluded that the claims at issue in
that case included non-mental steps and claimed patentable subject matter. 431 F.2d
at 893. To the extent that language in the opinion might suggest that mental processes
standing alone are patentable, the broad language in the opinion was significantly
cabined by Benson. See 1 Chisum on Patents § 1.03[6][c].
2006-1286 22
Comiskey has conceded that these claims do not require a machine, and these claims
evidently do not describe a process of manufacture or a process for the alteration of a
composition of matter. Comiskey’s independent claims 1 and 32 claim the mental
process of resolving a legal dispute between two parties by the decision of a human
arbitrator. They describe in essence “conducting arbitration resolution for [a] contested
issue” and “determining an award or a decision for the contested issue” through a pre-
determined “mandatory” arbitration system, and thus claim the use of mental processes
to resolve a legal dispute. Thus, like the claims that the Supreme Court found
unpatentable in Benson and Flook and the claims found unpatentable in our own cases,
Comiskey’s independent claims 1 and 32 seek to patent the use of human intelligence
in and of itself. Like the efforts to patent “a novel way of conducting auctions” which
Schrader, 22 F.3d at 291, found to be directed to an abstract idea itself rather than a
statutory category, Comiskey’s independent claims 1 and 32 describe an allegedly
novel way of requiring and conducting arbitration and are unpatentable.
C
We consider independent claims 17 and 46 separately. They recite the use of
“module[s],” including “a registration module for enrolling” a person, “an arbitration
module for incorporating arbitration language,” and “an arbitration resolution module for
requiring a complainant [or party] to submit a request for arbitration resolution to the
mandatory arbitration system.” Claim 17 also recites “a means for selecting an
arbitrator from an arbitrator database.” These claims, under the broadest reasonable
interpretation, could require the use of a machine as part of Comiskey’s arbitration
system. See Alan Freedman, The Computer Glossary 268 (8th ed. 1998) (defining
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module as “[a] self-contained hardware or software component that interacts with a
larger system); id. at 90 (defining database as “any electronically-stored collection of
data”). Similarly, even though Comiskey did not separately argue his dependent claims,
our decision is based on a different ground than the Board’s, and we think it is
appropriate to separately consider dependent claims 15, 30, 44, and 58. Each of these
claims adds the following limitation to its corresponding independent claim: “wherein
access to the mandatory arbitration is established through the Internet, intranet, World
Wide Web, software applications, telephone, television, cable, video [or radio],
magnetic, electronic communication, or other communications means.”
As to all of these claims, which under the broadest reasonable interpretation
recite the use of a machine, we think that the § 101 question should be addressed in the
first instance by the PTO. We therefore remand to the PTO to consider whether
independent claims 17 and 46 (with dependent claims 18-29, 31, 47-57, and 59) and
dependent claims 15, 30, 44, and 58 recite patentable subject matter under § 101.
CONCLUSION
We conclude that Comiskey’s independent claims 1 and 32 and dependent
claims 2-14, 16, 33-43, and 45 do not claim patentable subject matter. With respect to
independent claims 17 and 46 (with dependent claims 18-29, 31, 47-57, and 59) and
dependent claims 15, 30, 44, and 58, we remand to the PTO to determine in the first
instance whether § 101 is satisfied. If the Board had relied on the new § 101 ground for
rejection in the first instance, Comiskey would have had the opportunity to amend his
application under 37 C.F.R. § 41.50(b). We think that it is appropriate to afford
2006-1286 24
Comiskey the same protections in this respect as he would have had before the Board
with respect to the claims that we have held unpatentable.
AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED
COSTS
No costs.
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