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


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  • (Slip Opinion)              OCTOBER TERM, 2009                                       1
    Syllabus
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
    being done in connection with this case, at the time the opinion is issued.
    The syllabus constitutes no part of the opinion of the Court but has been
    prepared by the Reporter of Decisions for the convenience of the reader.
    See United States v. Detroit Timber & Lumber Co., 
    200 U. S. 321
    , 337.
    SUPREME COURT OF THE UNITED STATES
    Syllabus
    BILSKI ET AL. v. KAPPOS, UNDER SECRETARY OF
    COMMERCE FOR INTELLECTUAL PROPERTY AND
    DIRECTOR, PATENT AND TRADEMARK OFFICE
    CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
    THE FEDERAL CIRCUIT
    No. 08–964.      Argued November 9, 2009—Decided June 28, 2010
    Petitioners’ patent application seeks protection for a claimed invention
    that explains how commodities buyers and sellers in the energy mar
    ket can protect, or hedge, against the risk of price changes. The key
    claims are claim 1, which describes a series of steps instructing how
    to hedge risk, and claim 4, which places the claim 1 concept into a
    simple mathematical formula. The remaining claims explain how
    claims 1 and 4 can be applied to allow energy suppliers and consum
    ers to minimize the risks resulting from fluctuations in market de
    mand. The patent examiner rejected the application on the grounds
    that the invention is not implemented on a specific apparatus, merely
    manipulates an abstract idea, and solves a purely mathematical
    problem. The Board of Patent Appeals and Interferences agreed and
    affirmed. The Federal Circuit, in turn, affirmed. The en banc court
    rejected its prior test for determining whether a claimed invention
    was a patentable “process” under Patent Act, 
    35 U. S. C. §101
    —i.e.,
    whether the invention produced a “useful, concrete, and tangible re
    sult,” see, e.g., State Street Bank & Trust Co v. Signature Financial
    Group, Inc., 
    149 F. 3d 1368
    , 1373—holding instead that a claimed
    process is patent eligible if: (1) it is tied to a particular machine or
    apparatus, or (2) it transforms a particular article into a different
    state or thing. Concluding that this “machine-or-transformation test”
    is the sole test for determining patent eligibility of a “process” under
    §101, the court applied the test and held that the application was not
    patent eligible.
    Held: The judgment is affirmed.
    2                          BILSKI v. KAPPOS
    Syllabus
    
    545 F. 3d 943
    , affirmed.
    JUSTICE KENNEDY delivered the opinion of the Court, except as to
    Parts II–B–2 and II–C–2, concluding that petitioners’ claimed inven
    tion is not patent eligible. Pp. 4–8, 10–11, 12–16.
    (a) Section 101 specifies four independent categories of inventions
    or discoveries that are patent eligible: “process[es],” “machin[es],”
    “manufactur[es],” and “composition[s] of matter.” “In choosing such
    expansive terms, . . . Congress plainly contemplated that the patent
    laws would be given wide scope,” Diamond v. Chakrabarty, 
    447 U. S. 303
    , 308, in order to ensure that “ ‘ingenuity should receive a liberal
    encouragement,’ ” 
    id.,
     at 308–309. This Court’s precedents provide
    three specific exceptions to §101’s broad principles: “laws of nature,
    physical phenomena, and abstract ideas.” Id., at 309. While not re
    quired by the statutory text, these exceptions are consistent with the
    notion that a patentable process must be “new and useful.” And, in
    any case, the exceptions have defined the statute’s reach as a matter
    of statutory stare decisis going back 150 years. See Le Roy v.
    Tatham, 
    14 How. 156
    , 174. The §101 eligibility inquiry is only a
    threshold test. Even if a claimed invention qualifies in one of the
    four categories, it must also satisfy “the conditions and requirements
    of this title,” §101(a), including novelty, see §102, nonobviousness, see
    §103, and a full and particular description, see §112. The invention
    at issue is claimed to be a “process,” which §100(b) defines as a “proc
    ess, art or method, and includes a new use of a known process, ma
    chine, manufacture, composition of matter, or material.” Pp. 4–5.
    (b) The machine-or-transformation test is not the sole test for pat
    ent eligibility under §101. The Court’s precedents establish that al
    though that test may be a useful and important clue or investigative
    tool, it is not the sole test for deciding whether an invention is a pat
    ent-eligible “process” under §101. In holding to the contrary, the
    Federal Circuit violated two principles of statutory interpretation:
    Courts “ ‘should not read into the patent laws limitations and condi
    tions which the legislature has not expressed,’ ” Diamond v. Diehr,
    
    450 U. S. 175
    , 182, and, “[u]nless otherwise defined, ‘words will be in
    terpreted as taking their ordinary, contemporary, common mean
    ing,’ ” 
    ibid.
     The Court is unaware of any ordinary, contemporary,
    common meaning of “process” that would require it to be tied to a
    machine or the transformation of an article. Respondent Patent Di
    rector urges the Court to read §101’s other three patentable catego
    ries as confining “process” to a machine or transformation. However,
    the doctrine of noscitur a sociis is inapplicable here, for §100(b) al
    ready explicitly defines “process,” see Burgess v. United States, 
    553 U. S. 124
    , 130, and nothing about the section’s inclusion of those
    other categories suggests that a “process” must be tied to one of them.
    Cite as: 561 U. S. ____ (2010)                     3
    Syllabus
    Finally, the Federal Circuit incorrectly concluded that this Court has
    endorsed the machine-or-transformation test as the exclusive test.
    Recent authorities show that the test was never intended to be ex
    haustive or exclusive. See, e.g., Parker v. Flook, 
    437 U. S. 584
    , 588,
    n. 9. Pp. 5–8.
    (c) Section 101 similarly precludes a reading of the term “process”
    that would categorically exclude business methods.            The term
    “method” within §100(b)’s “process” definition, at least as a textual
    matter and before other consulting other Patent Act limitations and
    this Court’s precedents, may include at least some methods of doing
    business. The Court is unaware of any argument that the “ordinary,
    contemporary, common meaning,” Diehr, 
    supra, at 182
    , of “method”
    excludes business methods. Nor is it clear what a business method
    exception would sweep in and whether it would exclude technologies
    for conducting a business more efficiently. The categorical exclusion
    argument is further undermined by the fact that federal law explic
    itly contemplates the existence of at least some business method pat
    ents: Under §273(b)(1), if a patent-holder claims infringement based
    on “a method in [a] patent,” the alleged infringer can assert a defense
    of prior use. By allowing this defense, the statute itself acknowledges
    that there may be business method patents. Section 273 thus clari
    fies the understanding that a business method is simply one kind of
    “method” that is, at least in some circumstances, eligible for patent
    ing under §101. A contrary conclusion would violate the canon
    against interpreting any statutory provision in a manner that would
    render another provision superfluous. See Corley v. United States,
    556 U. S. ___, ___. Finally, while §273 appears to leave open the pos
    sibility of some business method patents, it does not suggest broad
    patentability of such claimed inventions. Pp. 10–11.
    (d) Even though petitioners’ application is not categorically outside
    of §101 under the two atextual approaches the Court rejects today,
    that does not mean it is a “process” under §101. Petitioners seek to
    patent both the concept of hedging risk and the application of that
    concept to energy markets. Under Benson, Flook, and Diehr, how
    ever, these are not patentable processes but attempts to patent ab
    stract ideas. Claims 1 and 4 explain the basic concept of hedging and
    reduce that concept to a mathematical formula. This is an unpat
    entable abstract idea, just like the algorithms at issue in Benson and
    Flook. Petitioners’ remaining claims, broad examples of how hedging
    can be used in commodities and energy markets, attempt to patent
    the use of the abstract hedging idea, then instruct the use of well
    known random analysis techniques to help establish some of the in
    puts into the equation. They add even less to the underlying abstract
    principle than the invention held patent ineligible in Flook. Pp. 12–
    4                            BILSKI v. KAPPOS
    Syllabus
    15.
    (e) Because petitioners’ patent application can be rejected under
    the Court’s precedents on the unpatentability of abstract ideas, the
    Court need not define further what constitutes a patentable “proc
    ess,” beyond pointing to the definition of that term provided in
    §100(b) and looking to the guideposts in Benson, Flook, and Diehr.
    Nothing in today’s opinion should be read as endorsing the Federal
    Circuit’s past interpretations of §101. See, e.g., State Street, 49 F. 3d,
    at 1373. The appeals court may have thought it needed to make the
    machine-or-transformation test exclusive precisely because its case
    law had not adequately identified less extreme means of restricting
    business method patents. In disapproving an exclusive machine-or
    transformation test, this Court by no means desires to preclude the
    Federal Circuit’s development of other limiting criteria that further
    the Patent Act’s purposes and are not inconsistent with its text.
    P. 16.
    KENNEDY, J., delivered the opinion of the Court, except for Parts II–
    B–2 and II–C–2. ROBERTS, C. J., and THOMAS and ALITO, JJ., joined the
    opinion in full, and SCALIA, J., joined except for Parts II–B–2 and II–C–
    2. STEVENS, J., filed an opinion concurring in the judgment, in which
    GINSBURG, BREYER, and SOTOMAYOR, JJ., joined. BREYER, J., filed an
    opinion concurring in the judgment, in which SCALIA, J., joined as to
    Part II.
    Cite as: 561 U. S. ____ (2010)                              1
    Opinion of the Court
    NOTICE: This opinion is subject to formal revision before publication in the
    preliminary print of the United States Reports. Readers are requested to
    notify the Reporter of Decisions, Supreme Court of the United States, Wash
    ington, D. C. 20543, of any typographical or other formal errors, in order
    that corrections may be made before the preliminary print goes to press.
    SUPREME COURT OF THE UNITED STATES
    _________________
    No. 08–964
    _________________
    BERNARD L. BILSKI AND RAND A. WARSAW,
    PETITIONERS v. DAVID J. KAPPOS, UNDER
    SECRETARY OF COMMERCE FOR INTEL-
    LECTUAL PROPERTY AND DIRECTOR,
    PATENT AND TRADEMARK OFFICE
    ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
    APPEALS FOR THE FEDERAL CIRCUIT
    [June 28, 2010]
    JUSTICE KENNEDY delivered the opinion of the Court,
    except as to Parts II–B–2 and II–C–2.*
    The question in this case turns on whether a patent can
    be issued for a claimed invention designed for the business
    world. The patent application claims a procedure for
    instructing buyers and sellers how to protect against the
    risk of price fluctuations in a discrete section of the econ
    omy. Three arguments are advanced for the proposition
    that the claimed invention is outside the scope of patent
    law: (1) it is not tied to a machine and does not transform
    an article; (2) it involves a method of conducting business;
    and (3) it is merely an abstract idea. The Court of Appeals
    ruled that the first mentioned of these, the so-called ma
    chine-or-transformation test, was the sole test to be used
    for determining the patentability of a “process” under the
    Patent Act, 
    35 U. S. C. §101
    .
    ——————
    * JUSTICE SCALIA does not join Parts II–B–2 and II–C–2.
    2                    BILSKI v. KAPPOS
    Opinion of the Court
    I
    Petitioners’ application seeks patent protection for a
    claimed invention that explains how buyers and sellers of
    commodities in the energy market can protect, or hedge,
    against the risk of price changes. The key claims are
    claims 1 and 4. Claim 1 describes a series of steps in
    structing how to hedge risk. Claim 4 puts the concept
    articulated in claim 1 into a simple mathematical formula.
    Claim 1 consists of the following steps:
    “(a) initiating a series of transactions between said
    commodity provider and consumers of said commodity
    wherein said consumers purchase said commodity at a
    fixed rate based upon historical averages, said fixed
    rate corresponding to a risk position of said consum
    ers;
    “(b) identifying market participants for said com
    modity having a counter-risk position to said consum
    ers; and
    “(c) initiating a series of transactions between said
    commodity provider and said market participants at a
    second fixed rate such that said series of market par
    ticipant transactions balances the risk position of said
    series of consumer transactions.” App. 19–20.
    The remaining claims explain how claims 1 and 4 can be
    applied to allow energy suppliers and consumers to mini
    mize the risks resulting from fluctuations in market de
    mand for energy. For example, claim 2 claims “[t]he
    method of claim 1 wherein said commodity is energy and
    said market participants are transmission distributors.”
    
    Id., at 20
    . Some of these claims also suggest familiar
    statistical approaches to determine the inputs to use in
    claim 4’s equation. For example, claim 7 advises using
    well-known random analysis techniques to determine how
    much a seller will gain “from each transaction under each
    Cite as: 561 U. S. ____ (2010)            3
    Opinion of the Court
    historical weather pattern.” 
    Id., at 21
    .
    The patent examiner rejected petitioners’ application,
    explaining that it “ ‘is not implemented on a specific appa
    ratus and merely manipulates [an] abstract idea and
    solves a purely mathematical problem without any limita
    tion to a practical application, therefore, the invention is
    not directed to the technological arts.’ ” App. to Pet. for
    Cert. 148a. The Board of Patent Appeals and Interfer
    ences affirmed, concluding that the application involved
    only mental steps that do not transform physical matter
    and was directed to an abstract idea. 
    Id.,
     at 181a–186a.
    The United States Court of Appeals for the Federal
    Circuit heard the case en banc and affirmed. The case
    produced five different opinions. Students of patent law
    would be well advised to study these scholarly opinions.
    Chief Judge Michel wrote the opinion of the court. The
    court rejected its prior test for determining whether a
    claimed invention was a patentable “process” under
    §101—whether it produces a “ ‘useful, concrete, and tangi
    ble result’ ”—as articulated in State Street Bank & Trust
    Co. v. Signature Financial Group, Inc., 
    149 F. 3d 1368
    ,
    1373 (1998), and AT&T Corp. v. Excel Communications,
    Inc., 
    172 F. 3d 1352
    , 1357 (1999). See In re Bilski, 
    545 F. 3d 943
    , 959–960, and n. 19 (CA Fed. 2008) (en banc).
    The court held that “[a] claimed process is surely patent
    eligible under §101 if: (1) it is tied to a particular machine
    or apparatus, or (2) it transforms a particular article into a
    different state or thing.” Id., at 954. The court concluded
    this “machine-or-transformation test” is “the sole test
    governing §101 analyses,” id., at 955, and thus the “test
    for determining patent eligibility of a process under §101,”
    id., at 956. Applying the machine-or-transformation test,
    the court held that petitioners’ application was not patent
    eligible. Id., at 963–966. Judge Dyk wrote a separate
    concurring opinion, providing historical support for the
    4                    BILSKI v. KAPPOS
    Opinion of the Court
    court’s approach. Id., at 966–976.
    Three judges wrote dissenting opinions. Judge Mayer
    argued that petitioners’ application was “not eligible for
    patent protection because it is directed to a method of
    conducting business.” Id., at 998. He urged the adoption
    of a “technological standard for patentability.” Id., at
    1010. Judge Rader would have found petitioners’ claims
    were an unpatentable abstract idea. Id., at 1011. Only
    Judge Newman disagreed with the court’s conclusion that
    petitioners’ application was outside of the reach of §101.
    She did not say that the application should have been
    granted but only that the issue should be remanded for
    further proceedings to determine whether the application
    qualified as patentable under other provisions. Id., at 997.
    This Court granted certiorari. 556 U. S. ___ (2009).
    II
    A
    Section 101 defines the subject matter that may be
    patented under the Patent Act:
    “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.”
    Section 101 thus specifies four independent categories of
    inventions or discoveries that are eligible for protection:
    processes, machines, manufactures, and compositions of
    matter. “In choosing such expansive terms . . . modified by
    the comprehensive ‘any,’ Congress plainly contemplated
    that the patent laws would be given wide scope.” Dia
    mond v. Chakrabarty, 
    447 U. S. 303
    , 308 (1980). Congress
    took this permissive approach to patent eligibility to en
    sure that “ ‘ingenuity should receive a liberal encourage
    ment.’ ” 
    Id.,
     at 308–309 (quoting 5 Writings of Thomas
    Cite as: 561 U. S. ____ (2010)            5
    Opinion of the Court
    Jefferson 75–76 (H. Washington ed. 1871)).
    The Court’s precedents provide three specific exceptions
    to §101’s broad patent-eligibility principles: “laws of na
    ture, physical phenomena, and abstract ideas.” Chakra
    barty, 
    supra, at 309
    . While these exceptions are not re
    quired by the statutory text, they are consistent with the
    notion that a patentable process must be “new and useful.”
    And, in any case, these exceptions have defined the reach
    of the statute as a matter of statutory stare decisis going
    back 150 years. See Le Roy v. Tatham, 
    14 How. 156
    , 174–
    175 (1853). The concepts covered by these exceptions are
    “part of the storehouse of knowledge of all men . . . free to
    all men and reserved exclusively to none.” Funk Brothers
    Seed Co. v. Kalo Inoculant Co., 
    333 U. S. 127
    , 130 (1948).
    The §101 patent-eligibility inquiry is only a threshold
    test. Even if an invention qualifies as a process, machine,
    manufacture, or composition of matter, in order to receive
    the Patent Act’s protection the claimed invention must
    also satisfy “the conditions and requirements of this title.”
    §101. Those requirements include that the invention be
    novel, see §102, nonobvious, see §103, and fully and par
    ticularly described, see §112.
    The present case involves an invention that is claimed
    to be a “process” under §101. Section 100(b) defines “proc
    ess” as:
    “process, art or method, and includes a new use of a
    known process, machine, manufacture, composition of
    matter, or material.”
    The Court first considers two proposed categorical limita
    tions on “process” patents under §101 that would, if
    adopted, bar petitioners’ application in the present case:
    the machine-or-transformation test and the categorical
    exclusion of business method patents.
    6                     BILSKI v. KAPPOS
    Opinion of the Court
    B
    1
    Under the Court of Appeals’ formulation, an invention is
    a “process” 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.” 
    545 F. 3d, at 954
    . This Court
    has “more than once cautioned that courts ‘should not read
    into the patent laws limitations and conditions which the
    legislature has not expressed.’ ” Diamond v. Diehr, 
    450 U. S. 175
    , 182 (1981) (quoting Chakrabarty, 
    supra, at 308
    ;
    some internal quotation marks omitted). In patent law, as
    in all statutory construction, “[u]nless otherwise defined,
    ‘words will be interpreted as taking their ordinary, con
    temporary, common meaning.’ ” Diehr, 
    supra, at 182
    (quoting Perrin v. United States, 
    444 U. S. 37
    , 42 (1979)).
    The Court has read the §101 term “manufacture” in accor
    dance with dictionary definitions, see Chakrabarty, 
    supra,
    at 308 (citing American Fruit Growers, Inc. v. Brogdex Co.,
    
    283 U. S. 1
    , 11 (1931)), and approved a construction of the
    term “composition of matter” consistent with common
    usage, see Chakrabarty, 
    supra,
     at 308 (citing Shell Devel
    opment Co. v. Watson, 
    149 F. Supp. 279
    , 280 (DC 1957)).
    Any suggestion in this Court’s case law that the Patent
    Act’s terms deviate from their ordinary meaning has only
    been an explanation for the exceptions for laws of nature,
    physical phenomena, and abstract ideas. See Parker v.
    Flook, 
    437 U. S. 584
    , 588–589 (1978). This Court has not
    indicated that the existence of these well-established
    exceptions gives the Judiciary carte blanche to impose
    other limitations that are inconsistent with the text and
    the statute’s purpose and design. Concerns about at
    tempts to call any form of human activity a “process” can
    be met by making sure the claim meets the requirements
    of §101.
    Adopting the machine-or-transformation test as the sole
    Cite as: 561 U. S. ____ (2010)            7
    Opinion of the Court
    test for what constitutes a “process” (as opposed to just an
    important and useful clue) violates these statutory inter
    pretation principles. Section 100(b) provides that “[t]he
    term ‘process’ means process, art or method, and includes
    a new use of a known process, machine, manufacture,
    composition of matter, or material.” The Court is unaware
    of any “ ‘ordinary, contemporary, common meaning,’ ”
    Diehr, supra, at 182, of the definitional terms “process, art
    or method” that would require these terms to be tied to a
    machine or to transform an article. Respondent urges the
    Court to look to the other patentable categories in §101—
    machines, manufactures, and compositions of matter—to
    confine the meaning of “process” to a machine or trans
    formation, under the doctrine of noscitur a sociis. Under
    this canon, “an ambiguous term may be given more precise
    content by the neighboring words with which it is associ
    ated.” United States v. Stevens, 559 U. S. ___, ___ (2010)
    (slip op., at 12) (internal quotation marks omitted). This
    canon is inapplicable here, for §100(b) already explicitly
    defines the term “process.” See Burgess v. United States,
    
    553 U. S. 124
    , 130 (2008) (“When a statute includes an
    explicit definition, we must follow that definition” (inter
    nal quotation marks omitted)).
    The Court of Appeals incorrectly concluded that this
    Court has endorsed the machine-or-transformation test as
    the exclusive test. It is true that Cochrane v. Deener, 
    94 U. S. 780
    , 788 (1877), explained that a “process” is “an act,
    or a series of acts, performed upon the subject-matter to be
    transformed and reduced to a different state or thing.”
    More recent cases, however, have rejected the broad impli
    cations of this dictum; and, in all events, later authority
    shows that it was not intended to be an exhaustive or
    exclusive test. Gottschalk v. Benson, 
    409 U. S. 63
    , 70
    (1972), noted that “[t]ransformation and reduction of an
    article ‘to a different state or thing’ is the clue to the pat
    8                     BILSKI v. KAPPOS
    Opinion of Kthe Court
    Opinion of ENNEDY, J.
    entability of a process claim that does not include particu
    lar machines.” At the same time, it explicitly declined to
    “hold that no process patent could ever qualify if it did not
    meet [machine or transformation] requirements.” 
    Id., at 71
    . Flook took a similar approach, “assum[ing] that a
    valid process patent may issue even if it does not meet
    [the machine-or-transformation test].” 
    437 U. S., at 588, n. 9
    .
    This Court’s precedents establish that the machine-or
    transformation test is a useful and important clue, an
    investigative tool, for determining whether some claimed
    inventions are processes under §101. The machine-or
    transformation test is not the sole test for deciding
    whether an invention is a patent-eligible “process.”
    2
    It is true that patents for inventions that did not satisfy
    the machine-or-transformation test were rarely granted in
    earlier eras, especially in the Industrial Age, as explained
    by Judge Dyk’s thoughtful historical review. See 
    545 F. 3d, at
    966–976 (concurring opinion). But times change.
    Technology and other innovations progress in unexpected
    ways. For example, it was once forcefully argued that
    until recent times, “well-established principles of patent
    law probably would have prevented the issuance of a valid
    patent on almost any conceivable computer program.”
    Diehr, 
    450 U. S., at 195
     (STEVENS, J., dissenting). But
    this fact does not mean that unforeseen innovations such
    as computer programs are always unpatentable. See 
    id.,
    at 192–193 (majority opinion) (holding a procedure for
    molding rubber that included a computer program is
    within patentable subject matter). Section 101 is a “dy
    namic provision designed to encompass new and unfore
    seen inventions.” J. E. M. Ag Supply, Inc. v. Pioneer Hi-
    Bred Int’l, Inc., 
    534 U. S. 124
    , 135 (2001). A categorical
    rule denying patent protection for “inventions in areas not
    Cite as: 561 U. S. ____ (2010)            9
    Opinion of Kthe Court
    Opinion of ENNEDY, J.
    contemplated by Congress . . . would frustrate the pur
    poses of the patent law.” Chakrabarty, 
    447 U. S., at 315
    .
    The machine-or-transformation test may well provide a
    sufficient basis for evaluating processes similar to those in
    the Industrial Age—for example, inventions grounded in a
    physical or other tangible form. But there are reasons to
    doubt whether the test should be the sole criterion for
    determining the patentability of inventions in the Infor
    mation Age. As numerous amicus briefs argue, the ma
    chine-or-transformation test would create uncertainty as
    to the patentability of software, advanced diagnostic medi
    cine techniques, and inventions based on linear program
    ming, data compression, and the manipulation of digital
    signals. See, e.g., Brief for Business Software Alliance 24–
    25; Brief for Biotechnology Industry Organization et al.
    14–27; Brief for Boston Patent Law Association 8–15;
    Brief for Houston Intellectual Property Law Association
    17–22; Brief for Dolby Labs., Inc., et al. 9–10.
    In the course of applying the machine-or-transformation
    test to emerging technologies, courts may pose questions
    of such intricacy and refinement that they risk obscuring
    the larger object of securing patents for valuable inven
    tions without transgressing the public domain. The dis
    sent by Judge Rader refers to some of these difficulties.
    
    545 F. 3d, at 1015
    . As a result, in deciding whether previ
    ously unforeseen inventions qualify as patentable “proc
    ess[es],” it may not make sense to require courts to confine
    themselves to asking the questions posed by the machine
    or-transformation test. Section 101’s terms suggest that
    new technologies may call for new inquiries. See Benson,
    
    supra, at 71
     (to “freeze process patents to old technologies,
    leaving no room for the revelations of the new, onrushing
    technology[,] . . . is not our purpose”).
    It is important to emphasize that the Court today is not
    commenting on the patentability of any particular inven
    10                   BILSKI v. KAPPOS
    Opinion of the Court
    tion, let alone holding that any of the above-mentioned
    technologies from the Information Age should or should
    not receive patent protection. This Age puts the possibil
    ity of innovation in the hands of more people and raises
    new difficulties for the patent law. With ever more people
    trying to innovate and thus seeking patent protections for
    their inventions, the patent law faces a great challenge in
    striking the balance between protecting inventors and not
    granting monopolies over procedures that others would
    discover by independent, creative application of general
    principles. Nothing in this opinion should be read to take
    a position on where that balance ought to be struck.
    C
    1
    Section 101 similarly precludes the broad contention
    that the term “process” categorically excludes business
    methods. The term “method,” which is within §100(b)’s
    definition of “process,” at least as a textual matter and
    before consulting other limitations in the Patent Act and
    this Court’s precedents, may include at least some meth
    ods of doing business. See, e.g., Webster’s New Interna
    tional Dictionary 1548 (2d ed. 1954) (defining “method” as
    “[a]n orderly procedure or process . . . regular way or
    manner of doing anything; hence, a set form of procedure
    adopted in investigation or instruction”). The Court is
    unaware of any argument that the “ ‘ordinary, contempo
    rary, common meaning,’ ” Diehr, supra, at 182, of “method”
    excludes business methods. Nor is it clear how far a pro
    hibition on business method patents would reach, and
    whether it would exclude technologies for conducting a
    business more efficiently. See, e.g., Hall, Business and
    Financial Method Patents, Innovation, and Policy, 56
    Scottish J. Pol. Econ. 443, 445 (2009) (“There is no precise
    definition of . . . business method patents”).
    The argument that business methods are categorically
    Cite as: 561 U. S. ____ (2010)           11
    Opinion of Kthe Court
    Opinion of ENNEDY, J.
    outside of §101’s scope is further undermined by the fact
    that federal law explicitly contemplates the existence of at
    least some business method patents. Under 
    35 U. S. C. §273
    (b)(1), if a patent-holder claims infringement based on
    “a method in [a] patent,” the alleged infringer can assert a
    defense of prior use. For purposes of this defense alone,
    “method” is defined as “a method of doing or conducting
    business.” §273(a)(3). In other words, by allowing this
    defense the statute itself acknowledges that there may be
    business method patents. Section 273’s definition of
    “method,” to be sure, cannot change the meaning of a
    prior-enacted statute. But what §273 does is clarify the
    understanding that a business method is simply one kind
    of “method” that is, at least in some circumstances, eligible
    for patenting under §101.
    A conclusion that business methods are not patentable
    in any circumstances would render §273 meaningless.
    This would violate the canon against interpreting any
    statutory provision in a manner that would render an
    other provision superfluous. See Corley v. United States,
    556 U. S. ___, ___ (2009) (slip op., at 9). This principle, of
    course, applies to interpreting any two provisions in the
    U. S. Code, even when Congress enacted the provisions at
    different times. See, e.g., Hague v. Committee for Indus
    trial Organization, 
    307 U. S. 496
    , 529–530 (1939) (opinion
    of Stone, J.). This established rule of statutory interpreta
    tion cannot be overcome by judicial speculation as to the
    subjective intent of various legislators in enacting the
    subsequent provision. Finally, while §273 appears to
    leave open the possibility of some business method pat
    ents, it does not suggest broad patentability of such
    claimed inventions.
    2
    Interpreting §101 to exclude all business methods sim
    ply because business method patents were rarely issued
    12                   BILSKI v. KAPPOS
    Opinion of Kthe Court
    Opinion of ENNEDY, J.
    until modern times revives many of the previously dis
    cussed difficulties. See supra, at 8–9. At the same time,
    some business method patents raise special problems in
    terms of vagueness and suspect validity. See eBay Inc. v.
    MercExchange, L. L. C., 
    547 U. S. 388
    , 397 (2006)
    (KENNEDY, J., concurring). The Information Age empow
    ers people with new capacities to perform statistical
    analyses and mathematical calculations with a speed and
    sophistication that enable the design of protocols for more
    efficient performance of a vast number of business tasks.
    If a high enough bar is not set when considering patent
    applications of this sort, patent examiners and courts
    could be flooded with claims that would put a chill on
    creative endeavor and dynamic change.
    In searching for a limiting principle, this Court’s prece
    dents on the unpatentability of abstract ideas provide
    useful tools. See infra, at 12–15. Indeed, if the Court of
    Appeals were to succeed in defining a narrower category
    or class of patent applications that claim to instruct how
    business should be conducted, and then rule that the
    category is unpatentable because, for instance, it repre
    sents an attempt to patent abstract ideas, this conclusion
    might well be in accord with controlling precedent. See
    
    ibid.
     But beyond this or some other limitation consistent
    with the statutory text, the Patent Act leaves open the
    possibility that there are at least some processes that can
    be fairly described as business methods that are within
    patentable subject matter under §101.
    Finally, even if a particular business method fits into
    the statutory definition of a “process,” that does not mean
    that the application claiming that method should be
    granted.     In order to receive patent protection, any
    claimed invention must be novel, §102, nonobvious, §103,
    and fully and particularly described, §112. These limita
    tions serve a critical role in adjusting the tension, ever
    Cite as: 561 U. S. ____ (2010)           13
    Opinion of the Court
    present in patent law, between stimulating innovation by
    protecting inventors and impeding progress by granting
    patents when not justified by the statutory design.
    III
    Even though petitioners’ application is not categorically
    outside of §101 under the two broad and atextual ap
    proaches the Court rejects today, that does not mean it is
    a “process” under §101. Petitioners seek to patent both
    the concept of hedging risk and the application of that
    concept to energy markets. App. 19–20. Rather than
    adopting categorical rules that might have wide-ranging
    and unforeseen impacts, the Court resolves this case
    narrowly on the basis of this Court’s decisions in Benson,
    Flook, and Diehr, which show that petitioners’ claims are
    not patentable processes because they are attempts to
    patent abstract ideas. Indeed, all members of the Court
    agree that the patent application at issue here falls out
    side of §101 because it claims an abstract idea.
    In Benson, the Court considered whether a patent appli
    cation for an algorithm to convert binary-coded decimal
    numerals into pure binary code was a “process” under
    §101. 
    409 U. S., at
    64–67. The Court first 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.’ ” 
    Id., at 67
     (quoting Le Roy, 
    14 How., at 175
    ). The Court then held
    the application at issue was not a “process,” but an unpat
    entable abstract idea. “It is conceded that one may not
    patent an idea. But in practical effect that would be the
    result if the formula for converting . . . numerals to pure
    binary numerals were patented in this case.” 
    409 U. S., at 71
    . A contrary holding “would wholly pre-empt the
    mathematical formula and in practical effect would be a
    patent on the algorithm itself.” 
    Id., at 72
    .
    In Flook, the Court considered the next logical step after
    14                    BILSKI v. KAPPOS
    Opinion of the Court
    Benson. The applicant there attempted to patent a proce
    dure for monitoring the conditions during the catalytic
    conversion process in the petrochemical and oil-refining
    industries. The application’s only innovation was reliance
    on a mathematical algorithm. 
    437 U. S., at
    585–586.
    Flook held the invention was not a patentable “process.”
    The Court conceded the invention at issue, unlike the
    algorithm in Benson, had been limited so that it could still
    be freely used outside the petrochemical and oil-refining
    industries. 
    437 U. S., at
    589–590. Nevertheless, Flook
    rejected “[t]he notion that post-solution activity, no matter
    how conventional or obvious in itself, can transform an
    unpatentable principle into a patentable process.” 
    Id., at 590
    . The Court concluded that the process at issue there
    was “unpatentable under §101, not because it contain[ed]
    a mathematical algorithm as one component, but because
    once that algorithm [wa]s assumed to be within the prior
    art, the application, considered as a whole, contain[ed] no
    patentable invention.” Id., at 594. As the Court later
    explained, Flook stands for the proposition that the prohi
    bition against patenting abstract ideas “cannot be circum
    vented by attempting to limit the use of the formula to a
    particular technological environment” or adding “insignifi
    cant postsolution activity.” Diehr, 
    450 U. S., at
    191–192.
    Finally, in Diehr, the Court established a limitation on
    the principles articulated in Benson and Flook. The appli
    cation in Diehr claimed a previously unknown method for
    “molding raw, uncured synthetic rubber into cured preci
    sion products,” using a mathematical formula to complete
    some of its several steps by way of a computer. 
    450 U. S., at 177
    . Diehr explained that while an abstract idea, law of
    nature, or mathematical formula could not be patented,
    “an application of a law of nature or mathematical for
    mula to a known structure or process may well be deserv
    ing of patent protection.” 
    Id., at 187
    . Diehr emphasized
    Cite as: 561 U. S. ____ (2010)           15
    Opinion of the Court
    the need to consider the invention as a whole, rather than
    “dissect[ing] the claims into old and new elements and
    then . . . ignor[ing] the presence of the old elements in the
    analysis.” 
    Id., at 188
    . Finally, the Court concluded that
    because the claim was not “an attempt to patent a
    mathematical formula, but rather [was] an industrial
    process for the molding of rubber products,” it fell within
    §101’s patentable subject matter. Id., at 192–193.
    In light of these precedents, it is clear that petitioners’
    application is not a patentable “process.” Claims 1 and 4
    in petitioners’ application explain the basic concept of
    hedging, or protecting against risk: “Hedging is a funda
    mental economic practice long prevalent in our system of
    commerce and taught in any introductory finance class.”
    
    545 F. 3d, at 1013
     (Rader, J., dissenting); see, e.g., D.
    Chorafas, Introduction to Derivative Financial Instru
    ments 75–94 (2008); C. Stickney, R. Weil, K. Schipper, &
    J. Francis, Financial Accounting: An Introduction to Con
    cepts, Methods, and Uses 581–582 (13th ed. 2010); S.
    Ross, R. Westerfield, & B. Jordan, Fundamentals of Cor
    porate Finance 743–744 (8th ed. 2008). The concept of
    hedging, described in claim 1 and reduced to a mathemati
    cal formula in claim 4, is an unpatentable abstract idea,
    just like the algorithms at issue in Benson and Flook.
    Allowing petitioners to patent risk hedging would pre
    empt use of this approach in all fields, and would effec
    tively grant a monopoly over an abstract idea.
    Petitioners’ remaining claims are broad examples of how
    hedging can be used in commodities and energy markets.
    Flook established that limiting an abstract idea to one
    field of use or adding token postsolution components did
    not make the concept patentable. That is exactly what the
    remaining claims in petitioners’ application do. These
    claims attempt to patent the use of the abstract idea of
    hedging risk in the energy market and then instruct the
    16                   BILSKI v. KAPPOS
    Opinion of the Court
    use of well-known random analysis techniques to help
    establish some of the inputs into the equation. Indeed,
    these claims add even less to the underlying abstract
    principle than the invention in Flook did, for the Flook
    invention was at least directed to the narrower domain of
    signaling dangers in operating a catalytic converter.
    *    *    *
    Today, the Court once again declines to impose limita
    tions on the Patent Act that are inconsistent with the Act’s
    text. The patent application here can be rejected under
    our precedents on the unpatentability of abstract ideas.
    The Court, therefore, need not define further what consti
    tutes a patentable “process,” beyond pointing to the defini
    tion of that term provided in §100(b) and looking to the
    guideposts in Benson, Flook, and Diehr.
    And nothing in today’s opinion should be read as endors
    ing interpretations of §101 that the Court of Appeals for
    the Federal Circuit has used in the past. See, e.g., State
    Street, 
    149 F. 3d, at 1373
    ; AT&T Corp., 
    172 F. 3d, at 1357
    .
    It may be that the Court of Appeals thought it needed to
    make the machine-or-transformation test exclusive pre
    cisely because its case law had not adequately identified
    less extreme means of restricting business method pat
    ents, including (but not limited to) application of our
    opinions in Benson, Flook, and Diehr. In disapproving an
    exclusive machine-or-transformation test, we by no means
    foreclose the Federal Circuit’s development of other limit
    ing criteria that further the purposes of the Patent Act
    and are not inconsistent with its text.
    The judgment of the Court of Appeals is affirmed.
    It is so ordered.
    Cite as: 561 U. S. ____ (2010)            1
    STEVENS, J., concurring in judgment
    SUPREME COURT OF THE UNITED STATES
    _________________
    No. 08–964
    _________________
    BERNARD L. BILSKI AND RAND A. WARSAW,
    PETITIONERS v. DAVID J. KAPPOS, UNDER
    SECRETARY OF COMMERCE FOR INTEL-
    LECTUAL PROPERTY AND DIRECTOR,
    PATENT AND TRADEMARK OFFICE
    ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
    APPEALS FOR THE FEDERAL CIRCUIT
    [June 28, 2010]
    JUSTICE STEVENS, with whom JUSTICE GINSBURG,
    JUSTICE BREYER, and JUSTICE SOTOMAYOR join, concur
    ring in the judgment.
    In the area of patents, it is especially important that the
    law remain stable and clear. The only question presented
    in this case is whether the so-called machine-or
    transformation test is the exclusive test for what consti
    tutes a patentable “process” under 
    35 U. S. C. §101
    . It
    would be possible to answer that question simply by hold
    ing, as the entire Court agrees, that although the ma
    chine-or-transformation test is reliable in most cases, it is
    not the exclusive test.
    I agree with the Court that, in light of the uncertainty
    that currently pervades this field, it is prudent to provide
    further guidance. But I would take a different approach.
    Rather than making any broad statements about how to
    define the term “process” in §101 or tinkering with the
    bounds of the category of unpatentable, abstract ideas, I
    would restore patent law to its historical and constitu
    tional moorings.
    For centuries, it was considered well established that a
    series of steps for conducting business was not, in itself,
    2                         BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    patentable. In the late 1990’s, the Federal Circuit and
    others called this proposition into question. Congress
    quickly responded to a Federal Circuit decision with a
    stopgap measure designed to limit a potentially significant
    new problem for the business community. It passed the
    First Inventors Defense Act of 1999 (1999 Act), 113 Stat.
    1501A–555 (codified at 
    35 U. S. C. §273
    ), which provides a
    limited defense to claims of patent infringement, see
    §273(b), for “method[s] of doing or conducting business,”
    §273(a)(3). Following several more years of confusion, the
    Federal Circuit changed course, overruling recent deci
    sions and holding that a series of steps may constitute a
    patentable process only if it is tied to a machine or trans
    forms an article into a different state or thing. This “ma
    chine-or-transformation test” excluded general methods of
    doing business as well as, potentially, a variety of other
    subjects that could be called processes.
    The Court correctly holds that the machine-or
    transformation test is not the sole test for what constitutes
    a patentable process; rather, it is a critical clue.1 But the
    Court is quite wrong, in my view, to suggest that any
    series of steps that is not itself an abstract idea or law of
    nature may constitute a “process” within the meaning of
    §101. The language in the Court’s opinion to this effect
    can only cause mischief. The wiser course would have
    been to hold that petitioners’ method is not a “process”
    because it describes only a general method of engaging in
    business transactions—and business methods are not
    patentable.     More precisely, although a process is not
    patent-ineligible simply because it is useful for conducting
    business, a claim that merely describes a method of doing
    ——————
    1 Even if the machine-or-transformation test may not define the scope
    of a patentable process, it would be a grave mistake to assume that
    anything with a “ ‘useful, concrete and tangible result,’ ” State Street
    Bank & Trust v. Signature Financial Group, Inc., 
    149 F. 3d 1368
    , 1373
    (CA Fed. 1998), may be patented.
    Cite as: 561 U. S. ____ (2010)            3
    STEVENS, J., concurring in judgment
    business does not qualify as a “process” under §101.
    I
    Although the Court provides a brief statement of facts,
    ante, at 1–4, a more complete explication may be useful for
    those unfamiliar with petitioners’ patent application and
    this case’s procedural history.
    Petitioners’ patent application describes a series of steps
    for managing risk amongst buyers and sellers of commodi
    ties. The general method, described in Claim 1, entails
    “managing the consumption risk costs of a commodity sold
    by a commodity provider at a fixed price,” and consists of
    the following steps:
    “(a) initiating a series of transactions between said
    commodity provider and consumers of said commodity
    wherein said consumers purchase said commodity at
    a fixed rate based upon historical averages, said
    fixed rate corresponding to a risk position of said
    consumers;
    “(b) identifying market participants for said com
    modity having a counter-risk position to said consum
    ers; and
    “(c) initiating a series of transactions between said
    commodity provider and said market participants at a
    second fixed rate such that said series of market par
    ticipant transactions balances the risk position of said
    series of consumer transactions.” App. 19–20.
    Although the patent application makes clear that the
    “method can be used for any commodity to manage con
    sumption risk in a fixed bill price product,” id., at 11, it
    includes specific applications of the method, particularly
    in the field of energy, as a means of enabling suppliers and
    consumers to minimize the risks resulting from fluctua
    tions in demand during specified time periods. See id., at
    20–22. Energy suppliers and consumers may use that
    4                     BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    method to hedge their risks by agreeing upon a fixed
    series of payments at regular intervals throughout the
    year instead of charging or paying prices that fluctuate in
    response to changing weather conditions. The patent
    application describes a series of steps, including the
    evaluation of historical costs and weather variables and
    the use of economic and statistical formulas, to analyze
    these data and to estimate the likelihood of certain out
    comes. See id., at 12–19.
    The patent examiner rejected petitioners’ application on
    the ground that it “is not directed to the technological
    arts,” insofar as it “is not implemented on a specific appa
    ratus and merely manipulates [an] abstract idea and
    solves a purely mathematical problem without any limita
    tion to a practical application.” App. to Pet. for Cert. 148a.
    The Board of Patent Appeals and Interferences (Board)
    affirmed the examiner’s decision, but it rejected the posi
    tion that a patentable process must relate to “technologi
    cal arts” or be performed on a machine. Id., at 180a–181a.
    Instead, the Board denied petitioners’ patent on two alter
    native, although similar, grounds: first, that the patent
    involves only mental steps that do not transform physical
    subject matter, id., at 181a–184a; and, second, that it is
    directed to an “abstract idea,” id., at 184a–187a.
    Petitioners appealed to the United States Court of Ap
    peals for the Federal Circuit. After briefing and argument
    before a three-judge panel, the court sua sponte decided to
    hear the case en banc and ordered the parties to address:
    (1) whether petitioners’ “claim 1 . . . claims patent-eligible
    subject matter under 
    35 U. S. C. §101
    ”; (2) “[w]hat stan
    dard should govern in determining whether a process is
    patent-eligible subject matter”; (3) “[w]hether the claimed
    subject matter is not patent-eligible because it constitutes
    an abstract idea or mental process”; (4) “[w]hether a
    method or process must result in a physical transforma
    tion of an article or be tied to a machine to be patent
    Cite as: 561 U. S. ____ (2010)           5
    STEVENS, J., concurring in judgment
    eligible subject matter”; and (5) whether the court’s deci
    sions in State Street Bank & Trust Co. v. Signature Finan
    cial Group, Inc., 
    149 F. 3d 1368
     (1998) (State Street), and
    AT&T Corp. v. Excel Communications, Inc., 
    172 F. 3d 1352
     (1999), should be overruled in any respect. App. to
    Pet. for Cert. 144a–145a.
    The en banc Court of Appeals affirmed the Board’s
    decision. Eleven of the twelve judges agreed that petition
    ers’ claims do not describe a patentable “process,” §101.
    Chief Judge Michel’s opinion, joined by eight other judges,
    rejected several possible tests for what is a patent-eligible
    process, including whether the patent produces a “ ‘useful,
    concrete and tangible result,’ ” whether the process relates
    to “technological arts,” and “categorical exclusions” for
    certain processes such as business methods. In re Bilski,
    
    545 F. 3d 943
    , 959–960 (2008). Relying on several of our
    cases in which we explained how to differentiate a claim
    on a “fundamental principle” from a claim on a “process,”
    the court concluded that a “claimed process is surely pat
    ent-eligible under §101 if: (1) it is tied to a particular
    machine or apparatus, or (2) it transforms a particular
    article into a different state or thing.” Id., at 954–955.
    The court further concluded that this “machine-or
    transformation test” is “the sole test governing §101
    analyses,” id., at 955 (emphasis added), and therefore the
    “test for determining patent eligibility of a process under
    §101,” id., at 956. Applying that test, the court held that
    petitioners’ claim is not a patent-eligible process. Id., at
    963–966.
    In a separate opinion reaching the same conclusion,
    Judge Dyk carefully reviewed the history of American
    patent law and English precedents upon which our law is
    based, and found that “the unpatentability of processes
    not involving manufactures, machines, or compositions of
    matter has been firmly embedded . . . since the time of the
    Patent Act of 1793.” Id., at 966. Judge Dyk observed,
    6                     BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    moreover, that “[t]here is no suggestion in any of this early
    consideration of process patents that processes for organiz
    ing human activity were or ever had been patentable.”
    Id., at 972.
    Three judges wrote dissenting opinions, although two of
    those judges agreed that petitioners’ claim is not patent
    eligible. Judge Mayer would have held that petitioners’
    claim “is not eligible for patent protection because it is
    directed to a method of conducting business.” Id., at 998.
    He submitted that “[t]he patent system is intended to
    protect and promote advances in science and technology,
    not ideas about how to structure commercial transac
    tions.” Ibid. “Affording patent protection to business
    methods lacks constitutional and statutory support, serves
    to hinder rather than promote innovation[,] and usurps
    that which rightfully belongs in the public domain.” Ibid.
    Judge Rader would have rejected petitioners’ claim on
    the ground that it seeks to patent merely an abstract idea.
    Id., at 1011.
    Only Judge Newman disagreed with the court’s conclu
    sion that petitioners’ claim seeks a patent on ineligible
    subject matter. Judge Newman urged that the en banc
    court’s machine-or-transformation test ignores the text
    and history of §101, id., at 977–978, 985–990, is in tension
    with several of decisions by this Court, id., at 978–985,
    and the Federal Circuit, id., at 990–992, and will invali
    date thousands of patents that were issued in reliance on
    those decisions, id., at 992–994.
    II
    Before explaining in more detail how I would decide this
    case, I will comment briefly on the Court’s opinion. The
    opinion is less than pellucid in more than one respect, and,
    if misunderstood, could result in confusion or upset settled
    areas of the law. Three preliminary observations may be
    clarifying.
    Cite as: 561 U. S. ____ (2010)           7
    STEVENS, J., concurring in judgment
    First, the Court suggests that the terms in the Patent
    Act must be read as lay speakers use those terms, and not
    as they have traditionally been understood in the context
    of patent law. See, e.g., ante, at 6 (terms in §101 must be
    viewed in light of their “ ‘ordinary, contemporary, common
    meaning’ ”); ante, at 10 (patentable “method” is any “or
    derly procedure or process,” “regular way or manner of
    doing anything,” or “set form of procedure adopted in
    investigation or instruction” (internal quotation marks
    omitted)). As I will explain at more length in Part III,
    infra, if this portion of the Court’s opinion were taken
    literally, the results would be absurd: Anything that con
    stitutes a series of steps would be patentable so long as it
    is novel, nonobvious, and described with specificity. But
    the opinion cannot be taken literally on this point. The
    Court makes this clear when it accepts that the “atextual”
    machine-or-transformation test, ante, at 12, is “useful and
    important,” ante, at 8, even though it “violates” the stated
    “statutory interpretation principles,” ante, at 6; and when
    the Court excludes processes that tend to pre-empt com
    monly used ideas, see ante, at 14–15.
    Second, in the process of addressing the sole issue
    presented to us, the opinion uses some language that
    seems inconsistent with our centuries-old reliance on the
    machine-or-transformation criteria as clues to patentabil
    ity. Most notably, the opinion for a plurality suggests
    that these criteria may operate differently when address
    ing technologies of a recent vintage. See ante, at 8–9
    (machine-or-transformation test is useful “for evaluating
    processes similar to those in the Industrial Age,” but is
    less useful “for determining the patentability of inventions
    in the Information Age”). In moments of caution, however,
    the opinion for the Court explains—correctly—that the
    Court is merely restoring the law to its historical state of
    rest. See ante, at 8 (“This Court’s precedents establish
    that the machine-or-transformation test is a useful and
    8                    BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    important clue, an investigative tool, for determining
    whether some claimed inventions are processes under
    §101 ”). Notwithstanding this internal tension, I under
    stand the Court’s opinion to hold only that the machine-or
    transformation test remains an important test for pat
    entability. Few, if any, processes cannot effectively be
    evaluated using these criteria.
    Third, in its discussion of an issue not contained in the
    questions presented—whether the particular series of
    steps in petitioners’ application is an abstract idea—the
    Court uses language that could suggest a shift in our
    approach to that issue. Although I happen to agree that
    petitioners seek to patent an abstract idea, the Court does
    not show how this conclusion follows “clear[ly],” ante, at
    15, from our case law. The patent now before us is not for
    “[a] principle, in the abstract,” or a “fundamental truth.”
    Parker v. Flook, 
    437 U. S. 584
    , 589 (1978) (internal quota
    tion marks omitted). Nor does it claim the sort of phe
    nomenon of nature or abstract idea that was embodied by
    the mathematical formula at issue in Gottschalk v. Ben
    son, 
    409 U. S. 63
    , 67 (1972), and in Flook.
    The Court construes petitioners’ claims on processes for
    pricing as claims on “the basic concept of hedging, or
    protecting against risk,” ante, at 14, and thus discounts
    the application’s discussion of what sorts of data to use,
    and how to analyze those data, as mere “token postsolu
    tion components,” ante, at 15. In other words, the Court
    artificially limits petitioners’ claims to hedging, and then
    concludes that hedging is an abstract idea rather than a
    term that describes a category of processes including
    petitioners’ claims. Why the Court does this is never
    made clear. One might think that the Court’s analysis
    means that any process that utilizes an abstract idea is
    itself an unpatentable, abstract idea. But we have never
    suggested any such rule, which would undermine a host of
    patentable processes. It is true, as the Court observes,
    Cite as: 561 U. S. ____ (2010)                   9
    STEVENS, J., concurring in judgment
    that petitioners’ application is phrased broadly. See ante,
    at 14–15. But claim specification is covered by §112, not
    §101; and if a series of steps constituted an unpatentable
    idea merely because it was described without sufficient
    specificity, the Court could be calling into question some of
    our own prior decisions.2 At points, the opinion suggests
    that novelty is the clue. See ante, at 14. But the fact that
    hedging is “ ‘long prevalent in our system of commerce,’ ”
    ibid., cannot justify the Court’s conclusion, as “the proper
    construction of §101 . . . does not involve the familiar
    issu[e] of novelty” that arises under §102. Flook, 
    437 U. S., at 588
    . At other points, the opinion for a plurality
    suggests that the analysis turns on the category of patent
    involved. See, e.g., ante, at 12 (courts should use the
    abstract-idea rule as a “too[l]” to set “a high enough bar”
    “when considering patent applications of this sort”). But
    we have never in the past suggested that the inquiry
    varies by subject matter.
    The Court, in sum, never provides a satisfying account
    of what constitutes an unpatentable abstract idea. In
    deed, the Court does not even explain if it is using the
    machine-or-transformation criteria. The Court essentially
    asserts its conclusion that petitioners’ application claims
    an abstract idea. This mode of analysis (or lack thereof)
    may have led to the correct outcome in this case, but it
    also means that the Court’s musings on this issue stand
    for very little.
    ——————
    2 For example, a rule that broadly-phrased claims cannot constitute
    patentable processes could call into question our approval of Alexander
    Graham Bell’s famous fifth claim on “ ‘[t]he method of, and apparatus
    for, transmitting 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 sounds,
    substantially as set forth,’ ” The Telephone Cases, 
    126 U. S. 1
    , 531
    (1888).
    10                     BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    III
    I agree with the Court that the text of §101 must be the
    starting point of our analysis. As I shall explain, however,
    the text must not be the end point as well.
    Pursuant to its power “[t]o promote the Progress of . . .
    useful Arts, by securing for limited Times to . . . Inventors
    the exclusive Right to their . . . Discoveries,” U. S. Const.,
    Art. I, §8, cl. 8, Congress has passed a series of patent
    laws that grant certain exclusive rights over certain in
    ventions and discoveries as a means of encouraging inno
    vation. In the latest iteration, the Patent Act of 1952
    (1952 Act), Congress has provided that “[w]hoever invents
    or discovers any new and useful process, machine, manu
    facture, or composition of matter, or any new and useful
    improvement thereof, may obtain a patent therefor, sub
    ject to the conditions and requirements of this title,” 
    35 U. S. C. §101
    , which include that the patent also be novel,
    §102, and nonobvious, §103. The statute thus authorizes
    four categories of subject matter that may be patented:
    processes, machines, manufactures, and compositions of
    matter. Section 101 imposes a threshold condition. “[N]o
    patent is available for a discovery, however useful, novel,
    and nonobvious, unless it falls within one of the express
    categories of patentable subject matter.” Kewanee Oil Co.
    v. Bicron Corp., 
    416 U. S. 470
    , 483 (1974).
    Section 101 undoubtedly defines in “expansive terms”
    the subject matter eligible for patent protection, as the
    statute was meant to ensure that “ ‘ingenuit[ies] receive a
    liberal encouragement.’ ” Diamond v. Chakrabarty, 
    447 U. S. 303
    , 308–309 (1980); see also J. E. M. Ag Supply,
    Inc. v. Pioneer Hi-Bred Int’l, Inc., 
    534 U. S. 124
    , 130
    (2001). Nonetheless, not every new invention or discovery
    may be patented. Certain things are “free for all to use.”
    Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S.
    Cite as: 561 U. S. ____ (2010)                  11
    STEVENS, J., concurring in judgment
    141, 151 (1989).3
    The text of the Patent Act does not on its face give much
    guidance about what constitutes a patentable process.
    The statute defines the term “process” as a “process, art or
    method [that] includes a new use of a known process,
    machine, manufacture, composition of matter, or mate
    rial.” §100(b). But, this definition is not especially help
    ful, given that it also uses the term “process” and is there
    fore somewhat circular.
    As lay speakers use the word “process,” it constitutes
    any series of steps. But it has always been clear that, as
    used in §101, the term does not refer to a “ ‘process’ in the
    ordinary sense of the word,” Flook, 
    437 U. S., at 588
    ; see
    also Corning v. Burden, 
    15 How. 252
    , 268 (1854) (“[T]he
    term process is often used in a more vague sense, in which
    it cannot be the subject of a patent”). Rather, as discussed
    in some detail in Part IV, infra, the term “process” (along
    with the definitions given to that term) has long accumu
    lated a distinctive meaning in patent law. When the term
    was used in the 1952 Patent Act, it was neither intended
    nor understood to encompass any series of steps or any
    way to do any thing.
    With that understanding in mind, the Government has
    ——————
    3 The Court quotes our decision in Diamond v. Chakrabarty, 
    447 U. S. 303
     (1980), for the proposition that, “ ‘[i]n choosing such expansive
    terms . . . modified by the comprehensive “any,” Congress plainly
    contemplated that the patent laws would be given wide scope.’ ” Ante,
    at 4. But the Court fails to mention which terms we were discussing in
    Chakrabarty: the terms “manufacture” and “composition of matter.”
    See 
    447 U. S., at 308
     (“In choosing such expansive terms as ‘manufac
    ture’ and ‘composition of matter,’ modified by the comprehensive ‘any,’
    Congress plainly contemplated that the patent laws would be given
    wide scope”). As discussed herein, Congress’ choice of the term “proc
    ess” reflected a background understanding of what sorts of series of
    steps could be patented, and likely reflected an intentional design to
    codify that settled, judicial understanding. This may not have been the
    case with the terms at issue in Chakrabarty.
    12                    BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    argued that because “a word” in a statute “is given more
    precise content by the neighboring words with which it”
    associates, United States v. Williams, 
    553 U. S. 285
    , 294
    (2008), we may draw inferences from the fact that “[t]he
    other three statutory categories of patent-eligible subject
    matter identified in Section 101—‘machine, manufacture,
    or composition of matter’—all ‘are things made by man,
    and involve technology.’ ” Brief for Respondent 26. Spe
    cifically, the Government submits, we may infer “that the
    term ‘process’ is limited to technological and industrial
    methods.” 
    Ibid.
     The Court rejects this submission cate
    gorically, on the ground that Ҥ100(b) already explicitly
    defines the term ‘process.’ ” Ante, at 6. But §100(b) de
    fines the term “process” by using the term “process,” as
    well as several other general terms. This is not a case,
    then, in which we must either “follow” a definition, ante, at
    7, or rely on neighboring words to understand the scope of
    an ambiguous term. The definition itself contains the very
    ambiguous term that we must define.
    In my view, the answer lies in between the Govern
    ment’s and the Court’s positions: The terms adjacent to
    “process” in §101 provide a clue as to its meaning, al
    though not a very strong clue. Section 101’s list of catego
    ries of patentable subject matter is phrased in the disjunc
    tive, suggesting that the term “process” has content
    distinct from the other items in the list. It would therefore
    be illogical to “rob” the word “process” of all independent
    meaning. Reiter v. Sonotone Corp., 
    442 U. S. 330
    , 338
    (1979). Moreover, to the extent we can draw inferences
    about what is a “process” from common attributes in §101,
    it is a dangerous endeavor to do so on the basis of a per
    ceived overarching theme. Given the many moving parts
    at work in the Patent Act, there is a risk of merely con
    firming our preconceived notions of what should be pat
    entable or of seeing common attributes that track “the
    familiar issues of novelty and obviousness” that arise
    Cite as: 561 U. S. ____ (2010)                    13
    STEVENS, J., concurring in judgment
    under other sections of the statute but are not relevant to
    §101, Flook, 
    437 U. S., at 588
    . The placement of “process”
    next to other items thus cannot prove that the term is
    limited to any particular categories; it does, however, give
    reason to be skeptical that the scope of a patentable “proc
    ess” extends to cover any series of steps at all.
    The Court makes a more serious interpretive error. As
    briefly discussed in Part II, supra, the Court at points
    appears to reject the well-settled proposition that the term
    “process” in §101 is not a “ ‘process’ in the ordinary sense
    of the word,” Flook, 
    437 U. S., at 588
    . Instead, the Court
    posits that the word “process” must be understood in light
    of its “ordinary, contemporary, common meaning,” ante, at
    6 (internal quotation marks omitted). Although this is a
    fine approach to statutory interpretation in general, it is a
    deeply flawed approach to a statute that relies on complex
    terms of art developed against a particular historical
    background.4 Indeed, the approach would render §101
    almost comical. A process for training a dog, a series of
    dance steps, a method of shooting a basketball, maybe
    even words, stories, or songs if framed as the steps of
    typing letters or uttering sounds—all would be patent
    eligible. I am confident that the term “process” in §101 is
    not nearly so capacious.5
    ——————
    4 For example, if this Court were to interpret the Sherman Act accord
    ing to the Act’s plain text, it could prohibit “the entire body of private
    contract,” National Soc. of Professional Engineers v. United States, 
    435 U. S. 679
    , 688 (1978).
    5 The Court attempts to avoid such absurd results by stating that
    these “[c]oncerns” “can be met by making sure that the claim meets the
    requirements of §101.” Ante, at 6. Because the only limitation on the
    plain meaning of “process” that the Court acknowledges explicitly is the
    bar on abstract ideas, laws of nature, and the like, it is presumably this
    limitation that is left to stand between all conceivable human activity
    and patent monopolies. But many processes that would make for
    absurd patents are not abstract ideas. Nor can the requirements of
    novelty, nonobviousness, and particular description pick up the slack.
    14                       BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    So is the Court, perhaps. What is particularly incredi
    ble about the Court’s stated method of interpreting §101
    (other than that the method itself may be patent-eligible
    under the Court’s theory of §101) is that the Court devi
    ates from its own professed commitment to “ordinary,
    contemporary, common meaning.” As noted earlier, the
    Court accepts a role for the “atextual” machine-or
    transformation “clue.” Ante, at 12, 7. The Court also
    accepts that we have “foreclose[d] a purely literal reading
    of §101,” Flook, 
    437 U. S., at 589
    , by holding that claims
    that are close to “laws of nature, natural phenomena, and
    abstract ideas,” Diamond v. Diehr, 
    450 U. S. 175
    , 185
    (1981), do not count as “processes” under §101, even if
    they can be colloquially described as such.6 The Court
    attempts to justify this latter exception to §101 as “a
    matter of statutory stare decisis.” Ante, at 5. But it is
    strange to think that the very same term must be inter
    preted literally on some occasions, and in light of its his
    torical usage on others.
    In fact, the Court’s understanding of §101 is even more
    remarkable because its willingness to exclude general
    principles from the provision’s reach is in tension with its
    apparent willingness to include steps for conducting busi
    ness. The history of patent law contains strong norms
    against patenting these two categories of subject matter.
    Both norms were presumably incorporated by Congress
    into the Patent Act in 1952.
    ——————
    Cf. ante, at 12–13 (plurality opinion). A great deal of human activity
    was at some time novel and nonobvious.
    6 Curiously, the Court concedes that “these exceptions are not re
    quired by the statutory text,” but urges that “they are consistent with
    the notion that a patentable process must be ‘new and useful.’ ” Ante,
    at 5 (emphasis added). I do not see how these exceptions find a textual
    home in the term “new and useful.” The exceptions may be consistent
    with those words, but they are sometimes inconsistent with the “ordi
    nary, contemporary, common meaning,” ante, at 6, 10 (internal quota
    tion marks omitted), of the words “process” and “method.”
    Cite as: 561 U. S. ____ (2010)
    15
    STEVENS, J., concurring in judgment
    IV
    Because the text of §101 does not on its face convey the
    scope of patentable processes, it is necessary, in my view,
    to review the history of our patent law in some detail.
    This approach yields a much more straightforward answer
    to this case than the Court’s. As I read the history, it
    strongly supports the conclusion that a method of doing
    business is not a “process” under §101.
    I am, of course, mindful of the fact that §101 “is a dy
    namic provision designed to encompass new and unfore
    seen inventions,” and that one must therefore view his
    torical conceptions of patent-eligible subject matter at an
    appropriately high level of generality. J. E. M. Ag Supply,
    
    534 U. S., at 135
    ; see also Chakrabarty, 
    447 U. S., at
    315–
    316. But it is nonetheless significant that while people
    have long innovated in fields of business, methods of doing
    business fall outside of the subject matter that has “his
    torically been eligible to receive the protection of our
    patent laws,” Diehr, 
    450 U. S., at 184
    , and likely go beyond
    what the modern patent “statute was enacted to protect,”
    Flook, 
    437 U. S., at 593
    . It is also significant that when
    Congress enacted the latest Patent Act, it did so against
    the background of a well-settled understanding that a
    series of steps for conducting business cannot be patented.
    These considerations ought to guide our analysis. As
    Justice Holmes noted long ago, sometimes, “a page of
    history is worth a volume of logic.” New York Trust Co. v.
    Eisner, 
    256 U. S. 345
    , 349 (1921).
    English Backdrop
    The Constitution’s Patent Clause was written against
    the “backdrop” of English patent practices, Graham v.
    John Deere Co. of Kansas City, 
    383 U. S. 1
    , 5 (1966), and
    early American patent law was “largely based on and
    incorporated” features of the English patent system, E.
    Walterscheid, To Promote the Progress of Useful Arts:
    16                       BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    American Patent Law and Administration, 1789–1836,
    p. 109 (1998) (hereinafter Walterscheid, To Promote the
    Progress).7 The governing English law, the Statute of
    Monopolies, responded to abuses whereby the Crown
    would issue letters patent, “granting monopolies to court
    favorites in goods or businesses which had long before
    been enjoyed by the public.” Graham, 
    383 U. S., at 5
    . The
    statute generally prohibited the Crown from granting such
    exclusive rights, 21 Jam. 1, c. 3, §1 (1623), in 4 Statutes of
    the Realm 1213 (reprint 1963), but it contained exceptions
    that, inter alia, permitted grants of exclusive rights to the
    “working or making of any manner of new Manufacture.”
    §6.
    Pursuant to that provision, patents issued for the
    “mode, method, or way of manufacturing,” F. Campin, Law
    of Patents for Inventions 11 (1869) (emphasis deleted),
    and English courts construed the phrase “working or
    making of any manner of new manufactures” to encom
    pass manufacturing processes, see, e.g., Boulton v. Bull, 2
    H. Bl. 463, 471, 492, 126 Eng. Rep. 651, 655, 666 (C. P.
    1795) (holding that the term “manufacture” “applied not
    only to things made, but to the practice of making, to
    principles carried into practice in a new manner, to new
    results of principles carried into practice”). Thus, English
    courts upheld James Watt’s famous patent on a method
    for reducing the consumption of fuel in steam engines,8 as
    ——————
    7 See Pennock v. Dialogue, 
    2 Pet. 1
    , 18 (1829) (“[M]any of the provi
    sions of our patent act are derived from the principles and practice,
    which have prevailed in the construction of that of England”); Proceed
    ings in Congress During the Years 1789 and 1790 Relating to the First
    Patent and Copyright Laws, 22 J. Pat. Off. Soc. 352, 363 (1940) (ex
    plaining that the 1790 Patent Act was “framed according to the Course
    of Practice in the English Patent Office”); see also Walterscheid, The
    Early Evolution of the United States Patent Law: Antecedents, 76 J.
    Pat. & Trademark Off. Soc. 697, 698 (1994) (describing the role of the
    English backdrop).
    8 See Hornblower v. Boulton, 8 T. R. 95 (K. B. 1799).
    Cite as: 561 U. S. ____ (2010)                    17
    STEVENS, J., concurring in judgment
    well as a variety of patents issued for methods of synthe
    sizing substances or building mechanical devices.9
    Although it is difficult to derive a precise understanding
    of what sorts of methods were patentable under English
    law, there is no basis in the text of the Statute of Monopo
    lies, nor in pre-1790 English precedent, to infer that busi
    ness methods could qualify.10 There was some debate
    throughout the relevant time period about what processes
    could be patented. But it does not appear that anyone
    seriously believed that one could patent “a method for
    organizing human activity.” 
    545 F. 3d, at 970
     (Dyk, J.,
    concurring).11
    There were a small number of patents issued between
    1623 and 1790 relating to banking or lotteries and one for
    a method of life insurance,12 but these did not constitute
    ——————
    9 See,  e.g., Roebuck and Garbett v. William Stirling & Son (H. L.
    1774), reprinted in 1 T. Webster, Reports and Notes of Cases on Letters
    Patent for Inventions 45 (1844) (“method of making acid spirit by
    burning sulphur and saltpetre, and collecting the condensed fumes”);
    id., at 77 (“ ‘method of producing a yellow colour for painting in oil or
    water, making white lead, and separating the mineral alkali from
    common salt, all to be performed in one single process’ ”); see also C.
    MacLeod, Inventing the Industrial Revolution: The English Patent
    System, 1660–1800, pp. 84–93, 100–104, 109–110, 152–155 (1988)
    (listing patents) (hereinafter MacLeod).
    10 Some English cases made reference to the permissibility of patents
    over new “trades.” But so far as I can tell, the term “trade” referred not
    to the methods of conducting business but rather to methods of making
    and using physical items or to the object of the trade. See, e.g., Cloth
    workers of Ipswich Case, 78 Eng. Rep. 147, 148 (K. B. 1603) (“[I]f a
    man hath brought in a new invention and a new trade within the
    kingdom . . . [the King] may grant by charter unto him”).
    11 See also Pollack, The Multiple Unconstitutionality of Business
    Method Patents: Common Sense, Congressional Consideration, and
    Constitutional History, 28 Rutgers Computer & Tech. L. J. 61, 94–96
    (2002) (hereinafter Pollack) (describing English practice).
    12 See id., at 95; B. Woodcroft, Alphabetical Index of Patentees of
    Inventions, from March 2, 1617 (14 James I) to October 1, 1852 (16
    Victoriae) 383, 410 (2d ed. 1969) (hereinafter Woodcroft).
    18                        BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    the “prevail[ing]” “principles and practice” in England on
    which our patent law was based, Pennock v. Dialogue, 
    2 Pet. 1
    , 18 (1829). Such patents were exceedingly rare, and
    some of them probably were viewed not as inventions or
    discoveries but rather as special state privileges13 that
    until the mid-1800’s were recorded alongside inventions in
    the patent records, see MacLeod 1–2 (explaining that
    various types of patents were listed together). It appears
    that the only English patent of the time that can fairly be
    described as a business method patent was one issued in
    1778 on a “Plan for assurances on lives of persons from 10
    to 80 years of Age.” Woodcroft 324.14 And “[t]here is no
    indication” that this patent “was ever enforced or its valid
    ity tested,” 
    545 F. 3d, at 974
     (Dyk, J., concurring); the
    patent may thus have represented little more than the
    whim—or error—of a single patent clerk.15
    In any event, these patents (or patent) were probably
    not known to the Framers of early patent law. In an era
    before computerized databases, organized case law, and
    treatises,16 the American drafters probably would have
    ——————
    13 See,  e.g., C. Ewen, Lotteries and Sweepstakes 70–71 (1932) (de
    scribing the “letters patent” to form a colony in Virginia and to operate
    lotteries to fund that colony).
    14 See also Renn, John Knox’s Plan for Insuring Lives: A Patent of
    Invention in 1778, 101 J. Inst. Actuaries 285, 286 (1974) (hereinafter
    Renn) (describing the patent).
    15 “The English patent system” at that time “was one of simple regis
    tration. Extensive scrutiny was not expected of the law officers admin
    istering it.” MacLeod 41. Thus, as one scholar suggested of the patent
    on life insurance, “perhaps the Law Officer was in a very good humour
    that day, or perhaps he had forgotten the wording of the statute; most
    likely he was concerned only with the promised ‘very considerable
    Consumption of [Revenue] Stamps’ which [the patent holder] declared,
    would ‘contribute to the increase of the Public Revenues.’ ” Renn 285.
    16 See Markman v. Westview Instruments, Inc., 
    517 U. S. 370
    , 381
    (1996) (“[T]he state of patent law in the common-law courts before 1800
    led one historian to observe that ‘the reported cases are destitute of any
    decision of importance’ ” (quoting Hulme, On the Consideration of the
    Cite as: 561 U. S. ____ (2010)                   19
    STEVENS, J., concurring in judgment
    known about particular patents only if they were well
    publicized or subject to reported litigation. So far as I am
    aware, no published cases pertained to patents on busi
    ness methods.
    Also noteworthy is what was not patented under the
    English system. During the 17th and 18th centuries,
    Great Britain saw innovations in business organization,17
    business models,18 management techniques,19 and novel
    solutions to the challenges of operating global firms in
    which subordinate managers could be reached only by a
    long sea voyage.20 Few if any of these methods of conduct
    ing business were patented.21
    ——————
    Patent Grant, Past and Present, 13 L. Q. Rev. 313, 318 (1897)));
    MacLeod 1, 61–62 (explaining the dearth of clear case law); see also
    Boulton v. Bull, 2 H. Bl. 463, 491, 126 Eng. Rep. 651, 665 (C. P. 1795)
    (Eyre, C. J.) (“Patent rights are no where that I can find accurately
    discussed in our books”).
    17 See, e.g., A. DuBois, The English Business Company After the Bub
    ble Act, 1720–1800, pp. 38–40, 435–438 (1938); Harris, The Bubble
    Act: Its Passage and its Effects on Business Organization, 54 J. Econ.
    Hist. 610, 624–625 (1994).
    18 See Pollack 97–100. For example, those who held patents on oil
    lamps developed firms that contracted to provide street lighting. See
    M. Falkus, Lighting in the Dark Ages of English Economic History:
    Town Streets before the Industrial Revolutions, in Trade, Government,
    and Economy in Pre-Industrial England 249, 255–257, 259–260 (D.
    Coleman & A. John eds. 1976).
    19 See, e.g., G. Hammersley, The State and the English Iron Industry
    in the Sixteenth and Seventeenth Centuries, in id., at 166, 173, 175–
    178 (describing the advent of management techniques for efficiently
    running a major ironworks).
    20 See, e.g., Carlos & Nicholas, Agency Problems in Early Chartered
    Companies: The Case of the Hudson’s Bay Company, 50 J. Econ. Hist.
    853, 853–875 (1990).
    21 Nor, so far as I can tell, were business method patents common in
    the United States in the brief period between independence and the
    creation of our Constitution—despite the fact that it was a time of great
    business innovation, including new processes for engaging in risky
    trade and transport, one of which has been called “the quintessential
    business innovation of the 1780s.” T. Doerflinger, A Vigorous Spirit of
    20                        BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    Early American Patent Law
    At the Constitutional Convention, the Founders decided
    to give Congress a patent power so that it might “promote
    the Progress of . . . useful Arts.” Art. I, §8, cl. 8. There is
    little known history of that Clause.22 We do know that the
    Clause passed without objection or debate.23 This is strik
    ing because other proposed powers, such as a power to
    grant charters of incorporation, generated discussion
    about the fear that they might breed “monopolies.”24
    Indeed, at the ratification conventions, some States rec
    ommended amendments that would have prohibited Con
    gress from granting “ ‘exclusive advantages of com
    merce.’ ” 25 If the original understanding of the Patent
    ——————
    Enterprise: Merchants and Economic Development in Revolutionary
    Philadelphia 291 (1986) (describing new methods of conducting and
    financing trade with China).
    22 See Seidel, The Constitution and a Standard of Patentability, 48 J.
    Pat. Off. Soc. 5, 10 (1966) (hereinafter Seidel); Walterscheid, To Pro
    mote the Progress of Science and Useful Arts: The Background and
    Origin of the Intellectual Property Clause of the United States Consti
    tution, 
    2 J. Intell. Prop. L. 1
    , 26 (1994) (hereinafter Walterscheid,
    Background and Origin); Walterscheid, To Promote the Progress 59,
    and n. 12; Prager, A History of Intellectual Property From 1545 to
    1787, 26 J. Pat. Off. Soc. 711, 746 (1944).
    23 Walterscheid, Background and Origin 26; 2 Records of the Federal
    Convention of 1787, pp. 509–510 (M. Farrand ed. 1966).
    24 J. Madison, Notes of Debates in the Federal Convention of 1787,
    pp. 638–639 (Ohio Univ. Press ed. 1966).
    25 See Walterscheid, Background and Origin 38, n. 124, 55–56 (collect
    ing sources); see also The Objections of Hon. George Mason, One of the
    Delegates from Virginia, in the Late Continental Convention, to the
    Proposed Federal Constitution, Assigned as His Reasons For Not
    Signing the Same, 2 American Museum or Repository of Ancient and
    Modern Fugitive Pieces, etc. 534, 536 (1787) (reprint 1965); Ratification
    of the New Constitution by the Convention of the State of New York, 4
    
    id., at 153, 156
     (1789); Remarks on the Amendments to the Federal
    Constitution Proposed by The Conventions of Massachusetts, New
    Hampshire, New York, Virginia, South and North Carolina, with the
    Minorities of Pennsylvania and Maryland by the Rev. Nicholas Collin,
    Cite as: 561 U. S. ____ (2010)     21
    STEVENS, J., concurring in judgment
    Clause included the authority to patent methods of doing
    business, it might not have passed so quietly.
    In 1790, Congress passed the first Patent Act, an “Act to
    promote the progress of useful Arts” that authorized pat
    ents for persons who had “invented or discovered any
    useful art, manufacture, engine, machine, or device, or
    any improvement therein not before known or used,” if
    “the invention or discovery [was] sufficiently useful and
    important.” 
    1 Stat. 109
    –110. Three years later, Congress
    passed the Patent Act of 1793 and slightly modified the
    language to cover “any new and useful art, machine,
    manufacture or composition of matter, or any new and
    useful improvement on any art, machine, manufacture or
    composition of matter.” 
    1 Stat. 319
    .
    The object of the constitutional patent power and the
    statutory authorization for process patents in the early
    patent Acts was the term “useful art.” It is not evident
    from the face of the statutes or the Constitution whether
    the objects of the patent system were “arts” that are also
    useful, or rather a more specific category, the class of arts
    known as “useful arts.” Cf. Graham, 
    383 U. S., at 12
    (describing the “ ‘new and useful’ tests which have always
    existed in the statutory scheme” and apply to all catego
    ries of subject matter). However, we have generally as
    sumed that “useful art,” at least as it is used in the Patent
    Act, is itself a term of art. See Burden, 
    15 How., at
    267–
    268.
    The word “art” and the phrase “useful arts” are subject
    to many meanings. There is room on the margins to de
    bate exactly what qualifies as either. There is room,
    moreover, to debate at what level of generality we should
    understand these broad and historical terms, given that
    “[a] rule that unanticipated inventions are without protec
    tion would conflict with the core concept of the patent
    ——————
    D. D., 6 
    id., at 303, 303
    .
    22                          BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    law,” Chakrabarty, 
    447 U. S., at 316
    . It appears, however,
    that regardless of how one construes the term “useful
    arts,” business methods are not included.
    Noah Webster’s first American dictionary26 defined the
    term “art” as the “disposition or modification of things by
    human skill, to answer the purpose intended,” and differ
    entiated between “useful or mechanic” arts, on the one
    hand, and “liberal or polite” arts, on the other. 1 An
    American Dictionary of the English Language (1828)
    (facsimile edition) (emphasis added). Although other
    dictionaries defined the word “art” more broadly,27 Web
    ster’s definition likely conveyed a message similar to the
    meaning of the word “manufactures” in the earlier English
    statute. And we know that the term “useful arts” was
    used in the founding era to refer to manufacturing and
    similar applied trades.28 See Coulter, The Field of the
    ——————
    26 Some scholars suggest that Webster’s “close proximity to the Con
    stitutional Convention coupled with his familiarity with the delegates
    makes it likely that he played some indirect role in the development” of
    the Constitution’s Intellectual Property Clause—a Clause that estab
    lished not only the power to create patents but also copyrights, a
    subject in which Webster had great interest. Donner, Copyright Clause
    of the U. S. Constitution: Why Did the Framers Include It With
    Unanimous Approval? 36 Am. J. Legal. Hist. 361, 372 (1992). But
    there is no direct evidence of this fact. See Walterscheid, Background
    and Origin 40–41.
    27 See, e.g., 1 S. Johnson, Dictionary of the English Language (1773)
    (reprint 1978) (listing as definitions of an “art”:“[t]he power of doing
    something not taught by nature and instinct,” “[a] science; as, the
    liberal arts,” “[a] trade,” “[a]rtfulness; skill; dexterity,” “[c]unning,” and
    “[s]peculation”). One might question the breadth of these definitions.
    This same dictionary offered as an example of “doing something not
    taught by nature and instinct,” the art of “dance”; and as an example of
    a “trade,” the art of “making sugar.” 
    Ibid.
    28 For examples of this usage, see Book of Trades or Library of Useful
    Arts (1807) (describing in a three-volume work 68 trades, each of which
    is the means of creating a product, such as feather worker or cork
    cutter); 1 J. Bigelow, The Useful Arts Considered in Connexion with the
    Applications of Science (1840) (surveying a history of what we would
    Cite as: 561 U. S. ____ (2010)                    23
    STEVENS, J., concurring in judgment
    Statutory Useful Arts, 34 J. Pat. Off. Soc. 487, 493–500
    (1952); see also Thomas, The Patenting of the Liberal
    Professions, 40 Boston College L. Rev. 1139, 1164 (1999)
    (“[The Framers of the Constitution] undoubtedly contem
    plated the industrial, mechanical and manual arts of the
    late eighteenth Century, in contrast to the seven ‘liberal
    arts’ and the four ‘fine arts’ of classical learning”). Indeed,
    just days before the Constitutional Convention, one dele
    gate listed examples of American progress in “manufac
    tures and the useful arts,” all of which involved the crea
    tion or transformation of physical substances. See T.
    Coxe, An Address to an Assembly of the Friends of Ameri
    can Manufactures 17–18 (1787) (listing, inter alia, meal,
    ships, liquors, potash, gunpowder, paper, starch, articles
    of iron, stone work, carriages, and harnesses). Numerous
    scholars have suggested that the term “useful arts” was
    widely understood to encompass the fields that we would
    now describe as relating to technology or “technological
    arts.”29
    ——————
    today call mechanics, technology, and engineering). See also D. Defoe,
    A General History of Discoveries and Improvements, in Useful Arts
    (1727); T. Coxe, An Address to an Assembly of the Friends of American
    Manufactures 17–18 (1787); G. Logan, A Letter to the Citizens of
    Pennsylvania, on the Necessity of Promoting Agriculture, Manufac
    tures, and the Useful Arts 12–13 (2d ed. 1800); W. Kenrick, An Address
    to the Artists and Manufacturers of Great Britain 21–38 (1774); cf.
    Corning v. Burden, 
    15 How. 252
    , 267 (1854) (listing the “arts of tan
    ning, dyeing, making water-proof cloth, vulcanizing India rubber, [and]
    smelting ores”).
    29 See, e.g., 1 D. Chisum, Patents G1–23 (2010); Lutz, Patents and
    Science: A Clarification of the Patent Clause of the U. S. Constitution,
    
    18 Geo. Wash. L. Rev. 50
    , 54 (1949–1950); Samuelson, Benson Revis
    ited: The Case Against Patent Protection for Algorithms and Other
    Computer-Related Inventions, 39 Emory L. J. 1025, 1033, n. 24 (1990);
    Seidel 10, 13; see also Great Atlantic & Pacific Tea Co. v. Supermarket
    Equipment Corp., 
    340 U. S. 147
    , 154 (1950) (Douglas, J., concurring)
    (explaining that in the Framers’ view, an “invention, to justify a patent,
    had to serve the ends of science—to push back the frontiers of chemis
    24                         BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    Thus, fields such as business and finance were not
    generally considered part of the “useful arts” in the found
    ing Era. See, e.g., The Federalist No. 8, p. 69 (C. Rossiter
    ed. 1961) (A. Hamilton) (distinguishing between “the arts
    of industry, and the science of finance”); 30 The Writings
    of George Washington 1745–1799, p. 186 (J. Fitzpatrick
    ed. 1939) (writing in a letter that “our commerce has been
    considerably curtailed,” but “the useful arts have been
    almost imperceptible pushed to a considerable degree of
    perfection”). Indeed, the same delegate to the Constitu
    tional Convention who gave an address in which he listed
    triumphs in the useful arts distinguished between those
    arts and the conduct of business. He explained that inves
    tors were now attracted to the “manufactures and the
    useful arts,” much as they had long invested in “com
    merce, navigation, stocks, banks, and insurance compa
    nies.” T. Coxe, A Statement of the Arts and Manufactures
    of the United States of America for the Year 1810, (1814),
    in 2 American State Papers, Finance 666, 688 (1832).
    Some scholars have remarked, as did Thomas Jefferson,
    that early patent statutes neither included nor reflected
    any serious debate about the precise scope of patentable
    ——————
    try, physics, and the like; to make a distinctive contribution to scientific
    knowledge”); In re Waldbaum, 
    457 F. 2d 997
    , 1003 (CCPA 1972) (Rich,
    J., concurring) (“ ‘The phrase “technological arts,” as we have used it, is
    synonymous with the phrase “useful arts” as it appears in Article I,
    Section 8 of the Constitution’ ”); Paulik v. Rizkalla, 
    760 F. 2d 1270
    ,
    1276 (CA Fed. 1985) (explaining that “useful arts” is “the process today
    called technological innovation”); Thomas, The Post-Industrial Patent
    System, 10 Fordham Intell. Prop. Media & Ent. L. J. 3, 32–55 (1999)
    (cataloguing early understandings of technological arts). This view
    may be supported, for example, by an 1814 grant to Harvard University
    to create a “Professorship on the Application of Science to the Useful
    Arts,” something that today might be akin to applied science or engi
    neering. See M. James, Engineering an Environment for Change:
    Bigelow, Peirce, and Early Nineteenth-Century Practical Education at
    Harvard, in Science at Harvard University: Historical Perspectives 59
    (C. Elliott & M. Rossiter eds. 1992).
    Cite as: 561 U. S. ____ (2010)                    25
    STEVENS, J., concurring in judgment
    subject matter. See, e.g., Graham, 
    383 U. S., at
    9–10
    (discussing Thomas Jefferson’s observations). It has been
    suggested, however, that “[p]erhaps this was in part a
    function of an understanding—shared widely among
    legislators, courts, patent office officials, and inventors—
    about what patents were meant to protect. Everyone
    knew that manufactures and machines were at the core of
    the patent system.” Merges, Property Rights for Business
    Concepts and Patent System Reform, 14 Berkeley Tech.
    L. J. 577, 585 (1999) (hereinafter Merges). Thus, although
    certain processes, such as those related to the technology
    of the time, might have been considered patentable, it is
    possible that “[a]gainst this background, it would have
    been seen as absurd for an entrepreneur to file a patent”
    on methods of conducting business. 
    Ibid.
    Development of American Patent Law
    During the first years of the patent system, no patents
    were issued on methods of doing business.30 Indeed, for
    some time, there were serious doubts as to “the patentabil
    ity of processes per se,” as distinct from the physical end
    product or the tools used to perform a process. 
    Id.,
     at 581–
    582.31
    Thomas Jefferson was the “ ‘first administrator of our
    patent system’ ” and “the author of the 1793 Patent Act.”
    Graham, 
    383 U. S., at 7
    . We have said that his “conclu
    sions as to conditions of patentability . . . are worthy of
    note.” 
    Ibid. at 7
    . During his time administering the sys
    tem, Jefferson “saw clearly the difficulty” of deciding what
    ——————
    30 See Walterscheid, To Promote the Progress 173–178; Pollack 107–
    108.
    31 These doubts ended by the time of Cochrane v. Deener, 
    94 U. S. 780
    (1877), in which we held that “a process may be patentable irrespective
    of the particular form of the instrumentalities used,” and therefore one
    may patent “an act, or series of acts, performed upon the subject matter
    to be transformed and reduced to a different state or thing.” 
    Id., at 788
    .
    26                      BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    should be patentable.32 Id., at 9. He drafted the 1793 Act,
    id., at 7, and, years later, explained that in that Act “ ‘the
    whole was turned over to the judiciary, to be matured into
    a system, under which every one might know when his
    actions were safe and lawful,’ ” id., at 10 (quoting Letter to
    Issac McPherson, in VI Writings of Thomas Jefferson 181–
    182 (H. Washington ed. 1861)). As the Court has ex
    plained, “Congress agreed with Jefferson . . . that the
    courts should develop additional conditions for patentabil
    ity.” Graham, 
    383 U. S., at 10
    . Thus “[a]lthough the
    Patent Act was amended, revised or codified some 50
    times between 1790 and 1950, Congress steered clear” of
    adding statutory requirements of patentability. 
    Ibid.
     For
    nearly 160 years, Congress retained the term “useful arts,”
    see, e.g., Act of July 4, 1836, ch. 357, 
    5 Stat. 117
    , leaving
    “wide latitude for judicial construction . . . to keep pace
    with industrial development,” Berman, Method Claims, 17
    J. Pat. Off. Soc. 713, 714 (1935) (hereinafter Berman).
    Although courts occasionally struggled with defining
    what was a patentable “art” during those 160 years, they
    consistently rejected patents on methods of doing busi
    ness. The rationales for those decisions sometimes varied.
    But there was an overarching theme, at least in dicta:
    Business methods are not patentable arts. See, e.g.,
    United States Credit Sys. Co. v. American Credit Indem.
    Co., 
    53 F. 818
    , 819 (CC NY 1893) (“method of insuring
    against loss by bad debts” could not be patented “as an
    art”); Hotel Security Checking Co. v. Lorraine Co., 
    160 F. 467
    , 469 (CA2 1908) (“A system of transacting business
    disconnected from the means for carrying out the system
    is not, within the most liberal interpretation of the term,
    ——————
    32 Askeptic of patents, Jefferson described this as “drawing a line
    between things which are worth to the public the embarrassment of a
    patent, and those which are not.” 13 Writings of Thomas Jefferson 335
    (Memorial ed. 1904).
    Cite as: 561 U. S. ____ (2010)                  27
    STEVENS, J., concurring in judgment
    an art”); Guthrie v. Curlett, 
    10 F. 2d 725
    , 726 (CA2 1926)
    (method of abbreviating rail tariff schedules, “if it be
    novel, is not the kind of art protected by the patent acts”);
    In re Patton, 
    127 F. 2d 324
    , 327–328 (CCPA 1942) (holding
    that novel “ ‘interstate and national fire-fighting system’ ”
    was not patentable because, inter alia, “a system of trans
    acting business, apart from the means for carrying out
    such system is not” an art within the meaning of the
    patent law, “nor is an abstract idea or theory, regardless of
    its importance or . . . ingenuity”); Loew’s Drive-In Thea
    tres, Inc. v. Park-In Theatres, Inc., 
    174 F. 2d 547
    , 552 (CA1
    1949) (“[A] system for the transaction of business, such,
    for example, as the cafeteria system for transacting the
    restaurant business . . . however novel, useful, or commer
    cially successful is not patentable apart from the means
    for making the system practically useful, or carrying it
    out”); Joseph E. Seagram & Sons, Inc. v. Marzall, 
    180 F. 2d 26
    , 28 (CADC 1950) (method of focus-group testing
    for beverages is not patentable subject matter); see also
    In re Howard, 
    394 F. 2d 869
    , 872 (CCPA 1968) (Kirk
    patrick, J., concurring) (explaining that a “method of doing
    business” cannot be patented). Between 1790 and 1952,
    this Court never addressed the patentability of business
    methods. But we consistently focused the inquiry on
    whether an “art” was connected to a machine or physical
    transformation,33 an inquiry that would have excluded
    methods of doing business.
    By the early 20th century, it was widely understood that
    a series of steps for conducting business could not be
    patented. A leading treatise, for example, listed “ ‘systems’
    of business” as an “unpatentable subjec[t].” 1 A. Deller,
    ——————
    33 See, e.g., Expanded Metal Co. v. Bradford, 
    214 U. S. 366
    , 383, 385–
    386 (1909); The Telephone Cases, 
    126 U. S., at
    533–537; Cochrane, 
    94 U. S., at
    787–788; Burden, 
    15 How., at
    267–268.
    28                         BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    Walker on Patents §18, p. 62 (1937).34 Citing many of the
    cases listed above, the treatise concluded that a “method of
    transacting business” is not an “ ‘art.’ ” Id., §22, at 69; see
    also L. Amdur, Patent Law and Practice §39, p. 53 (1935)
    (listing “Methods of doing business” as an “Unpatentable
    [A]r[t]”); Berman 718 (“[C]ases have been fairly unani
    mous in denying patentability to such methods”); Tew,
    Method of Doing Business, 16 J. Pat. Off. Soc. 607 (1934)
    (“It is probably settled by long practice and many prece
    dents that ‘methods of doing business,’ as these words are
    generally understood, are unpatentable”). Indeed, “[u]ntil
    recently” it was still “considered well established that
    [business] methods were non-statutory.” 1 R. Moy, Walker
    on Patents §5:28, p. 5–104 (4th ed. 2009).35
    Modern American Patent Law
    By the mid-1900’s, many courts were construing the
    term “art” by using words such as “method, process, sys
    tem, or like terms.” Berman 713; see Expanded Metal Co.
    v. Bradford, 
    214 U. S. 366
    , 382 (1909) (“The word ‘process’
    has been brought into the decisions because it is suppos
    edly an equivalent form of expression or included in the
    ——————
    34 See also 1 A. Deller, Walker on Patents §26, p. 152 (2d ed. 1964) (A
    “ ‘system’ or method of transacting business is not [a process], nor does
    it come within any other designation of patentable subject matter”).
    35 Although a few patents issued before 1952 that related to methods
    of doing business, see United States Patent and Trademark Office,
    Automated Financial or Management Data Processing Methods, online
    at http://www.uspto.gov/web/menu/busmethp/index.html (all Internet
    materials as visited June 26, 2010, and available in Clerk of Court’s
    case file), these patents were rare, often issued through self
    registration rather than any formalized patent examination, generally
    were not upheld by courts, and arguably are distinguishable from pure
    patents on business methods insofar as they often involved the manu
    facture of new objects. See In re Bilski, 
    545 F. 3d 943
    , 974, and n. 18
    (CA Fed. 2008) (case below) (Dyk, J., concurring); Pollack 74–75;
    Walterscheid, To Promote the Progress 243.
    Cite as: 561 U. S. ____ (2010)                   29
    STEVENS, J., concurring in judgment
    statutory designation of a new and useful art”).36 Thus in
    1952, when Congress updated the patent laws as part of
    its ongoing project to revise the United States Code, it
    changed the operative language in §101, replacing the
    term “art” with “process” and adding a definition of “proc
    ess” as a “process, art or method,” §100(b).
    That change was made for clarity and did not alter the
    scope of a patentable “process.” See Diehr, 
    450 U. S., at 184
    . The new terminology was added only in recognition
    of the fact that courts had been interpreting the category
    “art” by using the terms “process or method”; Congress
    thus wanted to avoid “the necessity of explanation that the
    word ‘art’ as used in this place means ‘process or method.’ ”
    S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952) (hereinafter
    S. Rep. 1979); accord, H. R. Rep. No. 1923, 82d Cong., 2d
    Sess., 6 (1952) (hereinafter H. R. Rep. 1923); see also id.,
    at 17 (explaining that “the word ‘art’ ” in §101 “has been
    interpreted by the courts as being practically synonymous
    with process or method,” and that the switch to the word
    “[p]rocess” was intended only for clarity).37
    It appears that when Congress changed the language in
    §101 to incorporate the prevailing judicial terminology, it
    merely codified the prevailing judicial interpretation of
    that category of subject matter. See Diehr, 
    450 U. S., at 184
    ; see also Barber v. Gonzales, 
    347 U. S. 637
    , 641 (1954)
    (“While it is true that statutory language should be inter
    preted whenever possible according to common usage,
    some terms acquire a special technical meaning by a
    process of judicial construction”). Both the Senate and
    House Committee Reports explained that the word “proc
    ——————
    36 For examples of such usage, see The Telephone Cases, 
    126 U. S., at 533
    , and Burden, 
    15 How., at 267
    .
    37 See also 98 Cong. Rec. A415 (1952) (remarks of Rep. Bryson) (de
    scribing, after the fact, the 1952 Patent Act, and explaining that “[t]he
    word ‘art’ was changed to ‘process’ in order to clarify its meaning. No
    change in substance was intended”).
    30                         BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    ess” was used in §101 “to clarify the present law as to the
    patentability of certain types of processes or methods as to
    which some insubstantial doubts have been expressed.”
    S. Rep. 1979, at 5; accord, H. Rep. 1923, at 6. And both
    noted that those terms were used to convey the prevailing
    meaning of the term “art,” “as interpreted” by courts,
    S. Rep. 1979, at 17; accord, H. Rep. 1923, at 17. Indeed,
    one of the main drafters of the Act explained that the
    definition of the term “process” in §100(b) reflects “how the
    courts have construed the term ‘art.’ ” Tr. of address by
    Judge Giles S. Rich to the New York Patent Law Associa
    tion 7–8 (Nov. 6, 1952).
    As discussed above, by this time, courts had consistently
    construed the term “art” to exclude methods of doing
    business. The 1952 Act likely captured that same mean
    ing.38 Cf. Graham, 
    383 U. S., at
    16–17 (reasoning that
    because a provision of the 1952 Act “paraphrases language
    which has often been used in decisions of the courts” and
    was “added to the statute for uniformity and definiteness, ”
    that provision should be treated as “a codification of judi
    cial precedents”).39 Indeed, Judge Rich, the main drafter
    ——————
    38 The 1952 Act also retained the language “invents or discovers,”
    which by that time had taken on a connotation that would tend to
    exclude business methods. See B. Evans & C. Evans, A Dictionary of
    Contemporary Usage 137 (1957) (explaining that “discover; invent”
    means “to make or create something new, especially, in modern usage,
    something ingeniously devised to perform mechanical operations”).
    39 As explained in Part II, supra, the Court engages in a Jekyll-and-
    Hyde form of interpretation with respect to the word “process” in §101.
    It rejects the interpretation I proffer because the words “process” and
    “method” do not, on their face, distinguish between different series of
    acts. Ante, at 10. But it also rejects many sorts of processes without a
    textual basis for doing so. See ante, at 4–5, 7, 12–15. And while the
    Courts rests a great deal of weight on Parker v. Flook, 
    437 U. S. 584
    (1978), for its analysis of abstract ideas, the Court minimizes Flook’s
    rejection of “a purely literal reading of §101,” as well as Flook’s reliance
    on the historical backdrop of §101 and our understanding of what “the
    statute was enacted to protect,” id., at 588–590, 593; see also Diamond
    Cite as: 561 U. S. ____ (2010)                   31
    STEVENS, J., concurring in judgment
    of the 1952 Act, later explained that “the invention of a
    more effective organization of the materials in, and the
    techniques of teaching a course in physics, chemistry, or
    Russian is not a patentable invention because it is outside
    of the enumerated categories of ‘process, machine, manu
    facture, or composition of matter, or any new and useful
    improvement thereof.’ ” Principles of Patentability, 
    28 Geo. Wash. L. Rev. 393
    , 394 (1960). “Also outside that
    group,” he added, was a process for doing business: “the
    greatest inventio[n] of our times, the diaper service.”
    Ibid.40
    “Anything Under the Sun”
    Despite strong evidence that Congress has consistently
    authorized patents for a limited class of subject matter
    and that the 1952 Act did not alter the nature of the then
    existing limits, petitioners and their amici emphasize a
    single phrase in the Act’s legislative history, which sug
    gests that the statutory subject matter “ ‘include[s] any
    thing under the sun that is made by man.’ ” Brief for
    Petitioners 19 (quoting Chakrabarty, 
    447 U. S., at 309
    , in
    turn quoting S. Rep. 1979, at 5). Similarly, the Court
    relies on language from our opinion in Chakrabarty that
    was based in part on this piece of legislative history. See
    ante, at 4, 6.
    This reliance is misplaced. We have never understood
    ——————
    v. Diehr, 
    450 U. S. 175
    , 192 (1981) (explaining that a “claim satisfies
    the requirements of §101” when it “is performing a function which the
    patent laws were designed to protect”).
    40 Forty years later, Judge Rich authored the State Street opinion that
    some have understood to make business methods patentable. But State
    Street dealt with whether a piece of software could be patented and
    addressed only claims directed at machines, not processes. His opinion
    may therefore be better understood merely as holding that an otherwise
    patentable process is not unpatentable simply because it is directed
    toward the conduct of doing business—an issue the Court has no
    occasion to address today. See State Street, 
    149 F. 3d, at 1375
    .
    32                    BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    that piece of legislative history to mean that any series of
    steps is a patentable process. Indeed, if that were so, then
    our many opinions analyzing what is a patentable process
    were simply wastes of pages in the U. S. Reports. And to
    accept that errant piece of legislative history as widening
    the scope of the patent law would contradict other evi
    dence in the congressional record, as well as our presump
    tion that the 1952 Act merely codified the meaning of
    “process” and did not expand it, see Diehr, 
    450 U. S., at 184
    .
    Taken in context, it is apparent that the quoted lan
    guage has a far less expansive meaning. The full sentence
    in the Committee Reports reads: “A person may have
    ‘invented’ a machine or a manufacture, which may include
    anything under the sun that is made by man, but it is not
    necessarily patentable under section 101 unless the condi
    tions of [this] title are fulfilled.” S. Rep. 1979, at 5; H. R.
    Rep. 1923, at 6. Viewed as a whole, it seems clear that
    this language does not purport to explain that “anything
    under the sun” is patentable. Indeed, the language may
    be understood to state the exact opposite: that “[a] person
    may have ‘invented’ . . . anything under the sun,” but that
    thing “is not necessarily patentable under section 101.”
    Thus, even in the Chakrabarty opinion, which relied on
    this quote, we cautioned that the 1952 Reports did not
    “suggest that §101 has no limits or that it embraces every
    discovery.” 
    447 U. S., at 309
    .
    Moreover, even if the language in the Committee Re
    ports was meant to flesh out the meaning of any portion of
    §101, it did not purport to define the term “process.” The
    language refers only to “manufacture[s]” and “machine[s],”
    tangible objects “made by man.” It does not reference the
    “process” category of subject matter (nor could a process be
    comfortably described as something “made by man”). The
    language may also be understood merely as defining the
    term “invents” in §101. As Judge Dyk explained in his
    Cite as: 561 U. S. ____ (2010)          33
    STEVENS, J., concurring in judgment
    opinion below, the phrase “made by man” “is reminiscent”
    of a 1790’s description of the limits of English patent law,
    that an “invention must be ‘made by man’ ” and cannot be
    “ ‘a philosophical principle only, neither organized or capa
    ble of being organized’ from a patentable manufacture.”
    
    545 F. 3d, at 976
     (quoting Hornblower v. Boulton, 8 T. R.
    95, 98 (K. B. 1799)).
    The 1952 Act, in short, cannot be understood as expand
    ing the scope of patentable subject matter by suggesting
    that any series of steps may be patented as a “process”
    under §101. If anything, the Act appears to have codified
    the conclusion that subject matter which was understood
    not to be patentable in 1952 was to remain unpatentable.
    Our recent case law reinforces my view that a series of
    steps for conducting business is not a “process” under
    §101. Since Congress passed the 1952 Act, we have never
    ruled on whether that Act authorizes patents on business
    methods. But we have cast significant doubt on that
    proposition by giving substantial weight to the machine
    or-transformation test, as general methods of doing busi
    ness do not pass that test. And more recently, Members of
    this Court have noted that patents on business methods
    are of “suspect validity.” eBay Inc. v. MercExchange, L. L.
    C., 
    547 U. S. 388
    , 397 (2006) (KENNEDY, J., concurring).
    *    *    *
    Since at least the days of Assyrian merchants, people
    have devised better and better ways to conduct business.
    Yet it appears that neither the Patent Clause, nor early
    patent law, nor the current §101 contemplated or was
    publicly understood to mean that such innovations are
    patentable. Although it may be difficult to define with
    precision what is a patentable “process” under §101, the
    historical clues converge on one conclusion: A business
    method is not a “process.” And to the extent that there is
    ambiguity, we should be mindful of our judicial role. “[W]e
    34                    BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    must proceed cautiously when we are asked to extend
    patent rights” into an area that the Patent Act likely was
    not “enacted to protect,” Flook, 
    437 U. S., at 596, 593
    , lest
    we create a legal regime that Congress never would have
    endorsed, and that can be repaired only by disturbing
    settled property rights.
    V
    Despite the strong historical evidence that a method of
    doing business does not constitute a “process” under §101,
    petitioners nonetheless argue—and the Court suggests in
    dicta, ante, at 10–11—that a subsequent law, the First
    Inventor Defense Act of 1999, “must be read together”
    with §101 to make business methods patentable. Brief for
    Petitioners 29. This argument utilizes a flawed method of
    statutory interpretation and ignores the motivation for the
    1999 Act.
    In 1999, following a Federal Circuit decision that inti
    mated business methods could be patented, see State
    Street, 
    149 F. 3d 1368
    , Congress moved quickly to limit
    the potential fallout. Congress passed the 1999 Act, codi
    fied at 
    35 U. S. C. §273
    , which provides a limited defense
    to claims of patent infringement, see §273(b), regarding
    certain “method[s] of doing or conducting business,”
    §273(a)(3).
    It is apparent, both from the content and history of the
    Act, that Congress did not in any way ratify State Street
    (or, as petitioners contend, the broadest possible reading
    of State Street). The Act merely limited one potential
    effect of that decision: that businesses might suddenly find
    themselves liable for innocently using methods they as
    sumed could not be patented. The Act did not purport to
    amend the limitations in §101 on eligible subject matter.
    Indeed, Congress placed the statute in Part III of Title 35,
    which addresses “Patents and Protection of Patent
    Rights,” rather than in Part II, which contains §101 and
    Cite as: 561 U. S. ____ (2010)          35
    STEVENS, J., concurring in judgment
    addresses “Patentability of Inventions and Grant of Pat
    ents.” Particularly because petitioners’ reading of the
    1999 Act would expand §101 to cover a category of proc
    esses that have not “historically been eligible” for patents,
    Diehr, 
    450 U. S., at 184
    , we should be loath to conclude
    that Congress effectively amended §101 without saying so
    clearly. We generally presume that Congress “does not,
    one might say, hide elephants in mouseholes.” Whitman
    v. American Trucking Assns., Inc., 
    531 U. S. 457
    , 468
    (2001).
    The Act therefore is, at best, merely evidence of 1999
    legislative views on the meaning of the earlier, 1952 Act.
    “[T]he views of a subsequent Congress,” however, “form a
    hazardous basis for inferring the intent of an earlier one.”
    United States v. Price, 
    361 U. S. 304
    , 313 (1960). When a
    later statute is offered as “an expression of how the . . .
    Congress interpreted a statute passed by another Con
    gress . . . a half century before,” “such interpretation has
    very little, if any, significance.” Rainwater v. United
    States, 
    356 U. S. 590
    , 593 (1958).
    Furthermore, even assuming that Congress’ views at
    the turn of the 21st century could potentially serve as a
    valid basis for interpreting a statute passed in the mid
    20th century, the First Inventor Defense Act does not aid
    petitioners because it does not show that the later Con
    gress itself understood §101 to cover business methods. If
    anything, it shows that a few judges on the Federal Cir
    cuit understood §101 in that manner and that Congress
    understood what those judges had done. The Act appears
    to reflect surprise and perhaps even dismay that business
    methods might be patented. Thus, in the months follow
    ing State Street, congressional authorities lamented that
    “business methods and processes . . . until recently were
    thought not to be patentable,” H. R. Rep. No. 106–464,
    p. 121 (1999); accord, H. R. Rep. No. 106–287, pt. 1, p. 31
    36                        BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    (1999).41 The fact that Congress decided it was appropri
    ate to create a new defense to claims that business method
    patents were being infringed merely demonstrates recog
    nition that such claims could create a significant new
    problem for the business community.
    The Court nonetheless states that the 1999 Act “ac
    knowledges that there may be business method patents,”
    thereby “clarify[ing]” its “understanding” of §101. Ante, at
    11. More specifically, the Court worries that if we were to
    interpret the 1952 Act to exclude business methods, our
    interpretation “would render §273 meaningless.” Ibid. I
    agree that “[a] statute should be construed so that effect is
    given to all its provisions.” Corley v. United States, 556
    U. S. ___, ___ (2009) (slip op., at 9) (internal quotation
    marks omitted). But it is a different matter altogether
    when the Court construes one statute, the 1952 Act, to
    give effect to a different statute, the 1999 Act. The canon
    on which the Court relies is predicated upon the idea that
    “[a] statute is passed as a whole.” 2A N. Singer & J.
    Singer, Statutes and Statutory Construction §46:5, p. 189
    (7th ed. 2007). But the two statutes in question were not
    passed as a whole.
    Put another way, we ordinarily assume, quite sensibly,
    that Congress would not in one statute include two provi
    sions that are at odds with each other. But as this case
    shows, that sensible reasoning can break down when
    ——————
    41 See also 145 Cong. Rec. 30985 (1999) (remarks of Sen. Schumer)
    (explaining that “[i]n State Street, the Court did away with the so-called
    ‘business methods’ exception to statutory patentable subject matter,”
    and “[t]he first inventor defense will provide . . . important, needed
    protections in the face of the uncertainty presented by . . . the State
    Street case”); id., at 31007 (remarks of Sen. DeWine) (“Virtually no one
    in the industry believed that these methods or processes were pat
    entable”); id., at 19281 (remarks of Rep. Manzullo) (“Before the State
    Street Bank and Trust case . . . it was universally thought that meth
    ods of doing or conducting business were not patentable items”).
    Cite as: 561 U. S. ____ (2010)                    37
    STEVENS, J., concurring in judgment
    applied to different statutes.42 The 1999 Act was passed to
    limit the impact of the Federal Circuit’s then-recent state
    ments on the 1952 Act. Although repudiating that judicial
    dictum (as we should) might effectively render the 1999
    Act a nullity going forward, such a holding would not
    mean that it was a nullity when Congress enacted it.
    Section 273 may have been a technically unnecessary
    response to confusion about patentable subject matter, but
    it appeared necessary in 1999 in light of what was being
    discussed in legal circles at the time.43 Consider the logi
    cal implications of the Court’s approach to this question:
    If, tomorrow, Congress were to conclude that patents on
    business methods are so important that the special in
    fringement defense in §273 ought to be abolished, and
    thus repealed that provision, this could paradoxically
    strengthen the case against such patents because there
    would no longer be a §273 that “acknowledges . . . business
    method patents,” ante, at 11. That is not a sound method
    of statutory interpretation.
    In light of its history and purpose, I think it obvious
    ——————
    42 The  Court opines that “[t]his principle, of course, applies to inter
    preting any two provisions in the U. S. Code, even when Congress
    enacted the provisions at different times.” Ante, at 11 (emphasis
    added). The only support the Court offers for this proposition is a 1937
    opinion for three Justices, in Hague v. Committee for Industrial Or
    ganization, 
    307 U. S. 496
    , 528–530 (1939) (opinion of Stone, J.). But
    that opinion is inapposite. Although Justice Stone stated that two
    provisions “must be read together,” 
    id., at 530
    , he did so to explain that
    an ambiguity in a later-in-time statute must be understood in light of
    the earlier-in-time framework against which the ambiguous statute
    was passed, 
    id.,
     at 528–530, particularly because the later statute
    explicitly stated that it “shall not be construed to apply” to the provi
    sion created by an earlier Act, 
    id., at 528
    .
    43 I am not trying to “overcome” an “established rule of statutory in
    terpretation” with “judicial speculation as to the subjective intent of
    various legislators,” ante, at 11, but, rather, I am explaining why the
    Court has illogically expanded the canon upon which it relies beyond
    that canon’s logical underpinnings.
    38                        BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    that the 1999 Congress would never have enacted §273 if
    it had foreseen that this Court would rely on the provision
    as a basis for concluding that business methods are pat
    entable. Section 273 is a red herring; we should be focus
    ing our attention on §101 itself.
    VI
    The constitutionally mandated purpose and function of
    the patent laws bolster the conclusion that methods of
    doing business are not “processes” under §101.
    The Constitution allows Congress to issue patents “[t]o
    promote the Progress of . . . useful Arts,” Art. I, §8, cl. 8.
    This clause “is both a grant of power and a limitation.”
    Graham, 
    383 U. S., at 5
    . It “reflects a balance between the
    need to encourage innovation and the avoidance of mo
    nopolies which stifle competition without any concomitant
    advance in the ‘Progress of Science and useful Arts.’ ”
    Bonito Boats, 489 U. S., at 146. “This is the standard
    expressed in the Constitution and it may not be ignored.
    And it is in this light that patent validity ‘requires refer
    ence to [the] standard written into the Constitution.’ ”
    Graham, 
    383 U. S., at 6
     (quoting Great Atlantic & Pacific
    Tea Co. v. Supermarket Equipment Corp., 
    340 U. S. 147
    ,
    154 (1950) (Douglas, J., concurring) (emphasis deleted));
    see also Grant v. Raymond, 
    6 Pet. 218
    , 241–242 (1832)
    (explaining that patent “laws which are passed to give
    effect to this [constitutional] purpose ought, we think, to
    be construed in the spirit in which they have been
    made”).44
    ——————
    44 See also Quanta Computer, Inc. v. LG Electronics, Inc., 
    553 U. S. 617
    , 626 (2008) (“ ‘[T]he primary purpose of our patent laws is not the
    creation of private fortunes for the owners of patents but is “to promote
    the progress of science and useful arts” ’ ” (quoting Motion Picture
    Patents Co. v. Universal Film Mfg. Co., 
    243 U. S. 502
    , 511 (1917)));
    Pfaff v. Wells Electronics, Inc., 
    525 U. S. 55
    , 63 (1998) (“[T]he patent
    system represents a carefully crafted bargain that encourages both the
    creation and the public disclosure of new and useful advances in
    Cite as: 561 U. S. ____ (2010)         39
    STEVENS, J., concurring in judgment
    Thus, although it is for Congress to “implement the
    stated purpose of the Framers by selecting the policy
    which in its judgment best effectuates the constitutional
    aim,” Graham, 
    383 U. S., at 6
    , we interpret ambiguous
    patent laws as a set of rules that “wee[d] out those inven
    tions which would not be disclosed or devised but for the
    inducement of a patent,” 
    id., at 11
    , and that “embod[y]”
    the “careful balance between the need to promote innova
    tion and the recognition that imitation and refinement
    through imitation are both necessary to invention itself
    and the very lifeblood of a competitive economy,” Bonito
    Boats, 489 U. S., at 146. And absent a discernible signal
    from Congress, we proceed cautiously when dealing with
    patents that press on the limits of the “ ‘standard written
    into the constitution,’ ” Graham, 
    383 U. S., at 6
    , for at the
    “fringes of congressional power,” “more is required of
    legislatures than a vague delegation to be filled in later,”
    Barenblatt v. United States, 
    360 U. S. 109
    , 139–140 (1959)
    (Black, J., dissenting); see also Greene v. McElroy, 
    360 U. S. 474
    , 507 (1959) (“[D]ecisions of great constitutional
    import and effect” “requir[e] careful and purposeful con
    sideration by those responsible for enacting and imple
    menting our laws”). We should not casually risk exceeding
    the constitutional limitation on Congress’ behalf.
    The Court has kept this “constitutional standard” in
    mind when deciding what is patentable subject matter
    under §101. For example, we have held that no one can
    patent “laws of nature, natural phenomena, and abstract
    ideas.” Diehr, 
    450 U. S., at 185
    . These “are the basic tools
    of scientific and technological work,” Benson, 
    409 U. S., at 67
    , and therefore, if patented, would stifle the very pro
    gress that Congress is authorized to promote, see, e.g.,
    O’Reilly, 
    15 How., at 113
     (explaining that Morse’s patent
    on electromagnetism for writing would preempt a wide
    ——————
    technology”).
    40                      BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    swath of technological developments).
    Without any legislative guidance to the contrary, there
    is a real concern that patents on business methods would
    press on the limits of the “standard expressed in the Con
    stitution,” Graham, 
    383 U. S., at 6
    , more likely stifling
    progress than “promot[ing]” it. U. S. Const., Art. I, §8,
    cl. 8. I recognize that not all methods of doing business
    are the same, and that therefore the constitutional “bal
    ance,” Bonito Boats, 489 U. S., at 146, may vary within
    this category. Nevertheless, I think that this balance
    generally supports the historic understanding of the term
    “process” as excluding business methods. And a categori
    cal analysis fits with the purpose, as Thomas Jefferson
    explained, of ensuring that “ ‘every one might know when
    his actions were safe and lawful,’ ” Graham, 
    383 U. S., at 10
    ; see also Festo Corp. v. Shoketsu Kinzoku Kogyo Kabu
    shiki Co., 
    535 U. S. 722
    , 730–731 (2002) (“The monopoly is
    a property right; and like any property right, its bounda
    ries should be clear. This clarity is essential to promote
    progress”); Diehr, 
    450 U. S., at 219
     (STEVENS, J., dissent
    ing) (it is necessary to have “rules that enable a conscien
    tious patent lawyer to determine with a fair degree of
    accuracy” what is patentable).
    On one side of the balance is whether a patent monopoly
    is necessary to “motivate the innovation,” Pfaff v. Wells
    Electronics, Inc., 
    525 U. S. 55
    , 63 (1998). Although there
    is certainly disagreement about the need for patents,
    scholars generally agree that when innovation is expen
    sive, risky, and easily copied, inventors are less likely to
    undertake the guaranteed costs of innovation in order to
    obtain the mere possibility of an invention that others can
    copy.45 Both common sense and recent economic scholar
    ship suggest that these dynamics of cost, risk, and reward
    ——————
    45 See generally W. Landes & R. Posner, The Economic Structure of
    Intellectual Property Law 13–15 (2003).
    Cite as: 561 U. S. ____ (2010)                  41
    STEVENS, J., concurring in judgment
    vary by the type of thing being patented.46 And the func
    tional case that patents promote progress generally is
    stronger for subject matter that has “historically been
    eligible to receive the protection of our patent laws,” Diehr,
    
    450 U. S., at 184
    , than for methods of doing business.
    Many have expressed serious doubts about whether
    patents are necessary to encourage business innovation.47
    Despite the fact that we have long assumed business
    methods could not be patented, it has been remarked that
    “the chief business of the American people, is business.”48
    Federal Express developed an overnight delivery service
    and a variety of specific methods (including shipping
    through a central hub and online package tracking) with
    out a patent. Although counterfactuals are a dubious form
    of analysis, I find it hard to believe that many of our en
    trepreneurs forwent business innovation because they
    could not claim a patent on their new methods.
    “[C]ompanies have ample incentives to develop business
    methods even without patent protection, because the
    competitive marketplace rewards companies that use
    more efficient business methods.” Burk & Lemley 1618.49
    Innovators often capture advantages from new business
    methods notwithstanding the risk of others copying their
    innovation. Some business methods occur in secret and
    ——————
    46 See, e.g., Burk & Lemley, Policy Levers in Patent Law, 
    89 Va. L. Rev. 1575
    , 1577–1589 (2003) (hereinafter Burk & Lemley).
    47 See, e.g., Burk & Lemley 1618; Carrier, Unraveling the Patent-
    Antitrust Paradox, 
    150 U. Pa. L. Rev. 761
    , 826 (2002) (hereinafter
    Carrier); Dreyfuss, Are Business Methods Patents Bad for Business?
    16 Santa Clara Computer & High Tech. L. J. 263, 274–277 (2000)
    (hereinafter Dreyfuss); Posner, The Law and Economics of Intellectual
    Property, 131 Daedalus 5 (Spring 2002).
    48 C. Coolidge, The Press Under a Free Government, in Foundations
    of the Republic: Speeches and Addresses 187 (1926).
    49 See also Pollack 75–76 (“Since business methods are ‘useful’ when
    they directly earn revenue, they are inherently unlikely to be under
    produced”).
    42                       BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    therefore can be protected with trade secrecy.50 And for
    those methods that occur in public, firms that innovate
    often capture long-term benefits from doing so, thanks to
    various first mover advantages, including lockins, brand
    ing, and networking effects.51 Business innovation, more
    over, generally does not entail the same kinds of risk as
    does more traditional, technological innovation. It gener
    ally does not require the same “enormous costs in terms of
    time, research, and development,” Bicron, 
    416 U. S., at 480
    , and thus does not require the same kind of “compen
    sation to [innovators] for their labor, toil, and expense,”
    Seymour v. Osborne, 
    11 Wall. 516
    , 533–544 (1871).52
    Nor, in many cases, would patents on business methods
    promote progress by encouraging “public disclosure.”
    Pfaff, 
    525 U. S., at 63
    ; see also Brenner v. Manson, 
    383 U. S. 519
    , 533 (1966) (“[O]ne of the purposes of the patent
    system is to encourage dissemination of information con
    cerning discoveries and inventions”). Many business
    methods are practiced in public, and therefore a patent
    does not necessarily encourage the dissemination of any
    thing not already known. And for the methods practiced
    in private, the benefits of disclosure may be small: Many
    such methods are distributive, not productive—that is,
    they do not generate any efficiency but only provide a
    means for competitors to one-up each other in a battle for
    pieces of the pie. And as the Court has explained, “it is
    ——————
    50 See R. Levin et al., Appropriating the Returns from Industrial Re
    search and Development, in 3 Brookings Papers on Econ. Activity 794–
    795 (1987).
    51 See Burk & Lemley 1618; Dreyfuss 275; see generally Carrier 821–
    823. Concededly, there may some methods of doing business that do
    not confer sufficient first-mover advantages. See Abramowicz & Duffy,
    Intellectual Property for Market Experimentation, 83 N. Y. U. L. Rev.
    337, 340–342 (2008).
    52 See Burk & Lemley 1618; Carrier 826; Olson, Taking the Utilitar
    ian Basis for Patent Law Seriously: The Case For Restricting Pat
    entable Subject Matter, 
    82 Temp. L. Rev. 181
    , 231 (2009).
    Cite as: 561 U. S. ____ (2010)              43
    STEVENS, J., concurring in judgment
    hard to see how the public would be benefited by disclo
    sure” of certain business tools, since the nondisclosure of
    these tools “encourages businesses to initiate new and
    individualized plans of operation,” which “in turn, leads to
    a greater variety of business methods.” Bicron, 
    416 U. S., at 483
    .
    In any event, even if patents on business methods were
    useful for encouraging innovation and disclosure, it would
    still be questionable whether they would, on balance,
    facilitate or impede the progress of American business.
    For even when patents encourage innovation and disclo
    sure, “too much patent protection can impede rather than
    ‘promote the Progress of . . . useful Arts.’ ” Laboratory
    Corp. of America Holdings v. Metabolite Laboratories, Inc.,
    
    548 U. S. 124
    , 126–127 (2006) (BREYER, J., dissenting
    from dismissal of certiorari). Patents “can discourage
    research by impeding the free exchange of information,”
    for example, by forcing people to “avoid the use of poten
    tially patented ideas, by leading them to conduct costly
    and time-consuming searches of existing or pending pat
    ents, by requiring complex licensing arrangements, and by
    raising the costs of using the patented” methods. 
    Id., at 127
    . Although “[e]very patent is the grant of a privilege of
    exacting tolls from the public,” Great Atlantic, 340 U. S.,
    at 154 (Douglas, J., concurring), the tolls of patents on
    business methods may be especially high.
    The primary concern is that patents on business meth
    ods may prohibit a wide swath of legitimate competition
    and innovation. As one scholar explains, “it is useful to
    conceptualize knowledge as a pyramid: the big ideas are
    on top; specific applications are at the bottom.” Dreyfuss
    275. The higher up a patent is on the pyramid, the
    greater the social cost and the greater the hindrance to
    further innovation.53 Thus, this Court stated in Benson
    ——————
    53 See   Dreyfuss 276; Merges & Nelson, On the Complex Economics of
    44                       BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    that “[p]henomena of nature . . . , mental processes, and
    abstract intellectual concepts are not patentable, as they
    are the basic tools of scientific and technological work,”
    
    409 U. S., at 67
    ; see also, Joseph E. Seagram & Sons, Inc.,
    
    180 F. 2d, at 28
     (“To give appellant a monopoly, through
    the issuance of a patent, upon so great an area . . . would
    in our view impose without warrant of law a serious re
    straint upon the advance of science and industry”). Busi
    ness methods are similarly often closer to “big ideas,” as
    they are the basic tools of commercial work. They are
    also, in many cases, the basic tools of further business
    innovation: Innovation in business methods is often a
    sequential and complementary process in which imitation
    may be a “spur to innovation” and patents may “become an
    impediment.” Bessen & Maskin, Sequential Innovation,
    Patents, and Imitation, 
    40 RAND J. Econ. 611
    , 613
    (2009).54 “Think how the airline industry might now be
    structured if the first company to offer frequent flyer miles
    had enjoyed the sole right to award them.” Dreyfuss 264.
    “[I]mitation and refinement through imitation are both
    necessary to invention itself and the very lifeblood of a
    competitive economy.” Bonito Boats, 489 U. S., at 146.
    If business methods could be patented, then many busi
    ness decisions, no matter how small, could be potential
    patent violations. Businesses would either live in constant
    fear of litigation or would need to undertake the costs of
    searching through patents that describe methods of doing
    business, attempting to decide whether their innovation is
    one that remains in the public domain. See Long, Infor
    mation Costs in Patent and Copyright, 
    90 Va. L. Rev. 465
    ,
    ——————
    Patent Scope, 
    90 Colum. L. Rev. 839
    , 873–878 (1990).
    54 See also Raskind, The State Street Bank Decision, The Bad Busi
    ness of Unlimited Patent Protection for Methods of Doing Business, 10
    Fordham Intell. Prop. Media & Ent. L. J. 61, 102 (1999) (“Interactive
    emulation more than innovation is the driving force of business method
    changes”).
    Cite as: 561 U. S. ____ (2010)                   45
    STEVENS, J., concurring in judgment
    487–488 (2004) (hereinafter Long). But as we have long
    explained, patents should not “embaras[s] the honest
    pursuit of business with fears and apprehensions of con
    cealed liens and unknown liabilities to lawsuits and vexa
    tious accountings for profits made in good faith.” Atlantic
    Works v. Brady, 
    107 U. S. 192
    , 200 (1883).55
    These effects are magnified by the “potential vagueness”
    of business method patents, eBay Inc., 
    547 U. S., at 397
    (KENNEDY, J., concurring). When it comes to patents,
    “clarity is essential to promote progress.” Festo Corp., 
    535 U. S., at
    730–731. Yet patents on methods of conducting
    business generally are composed largely or entirely of
    intangible steps. Compared to “the kinds of goods . . .
    around which patent rules historically developed,” it thus
    tends to be more costly and time consuming to search
    through, and to negotiate licenses for, patents on business
    methods. See Long 539, 470.56
    The breadth of business methods, their omnipresence in
    our society, and their potential vagueness also invite a
    particularly pernicious use of patents that we have long
    criticized. As early as the 19th century, we explained that
    the patent laws are not intended to “creat[e] a class of
    ——————
    55 There is substantial academic debate, moreover, about whether the
    normal process of screening patents for novelty and obviousness can
    function effectively for business methods. The argument goes that
    because business methods are both vague and not confined to any one
    industry, there is not a well-confined body of prior art to consult, and
    therefore many “bad” patents are likely to issue, a problem that would
    need to be sorted out in later litigation. See, e.g., Dreyfuss 268–270;
    Eisenberg, Analyze This: A Law and Economics Agenda for the Patent
    System, 
    53 Vand. L. Rev. 2081
    , 2090 (2000); Merges 589–590.
    56 See also J. Bessen & M. Meurer, Patent Failure: How Judges, Bu
    reaucrats, and Lawyers Put Innovators at Risk 46–72 (2008) (hereinaf
    ter Bessen & Meurer); P. Menell & S. Scotchmer, Intellectual Property
    Law, in 2 Handbook of Law and Economics 1500–1501, 1506 (M.
    Polinsky & S. Shavell eds. 2007). Concededly, alterations in the rem
    edy structure, such as the First Inventor Defense Act of 1999, §4301 et
    seq., 
    113 Stat. 1536
    , codified at 
    35 U. S. C. §273
    , mitigate these costs.
    46                      BILSKI v. KAPPOS
    STEVENS, J., concurring in judgment
    speculative schemers who make it their business to watch
    the advancing wave of improvement, and gather its foam
    in the form of patented monopolies, which enable them to
    lay a heavy tax upon the industry of the country, without
    contributing anything to the real advancement of the
    arts.” Atlantic Works, 
    107 U. S., at 200
    . Yet business
    method patents may have begun to do exactly that. See
    eBay Inc., 
    547 U. S., at
    396–397 (opinion of KENNEDY, J.).
    These many costs of business method patents not only
    may stifle innovation, but they are also likely to “stifle
    competition,” Bonito Boats, 489 U. S., at 146. Even if a
    business method patent is ultimately held invalid, patent
    holders may be able to use it to threaten litigation and to
    bully competitors, especially those that cannot bear the
    costs of a drawn out, fact-intensive patent litigation.57
    That can take a particular toll on small and upstart busi
    nesses.58 Of course, patents always serve as a barrier to
    competition for the type of subject matter that is patented.
    But patents on business methods are patents on business
    itself. Therefore, unlike virtually every other category of
    patents, they are by their very nature likely to depress the
    dynamism of the marketplace.59
    ——————
    57 See generally Farrell & Shapiro, How Strong Are Weak Patents?
    98 Amer. Econ. Rev. 1347 (2008); Meurer, Controlling Opportunistic
    and Anti-Competitive Intellectual Property Litigation, 44 Boston
    College L. Rev. 509 (2003); Moore, Populism and Patents, 82 N. Y.
    U. L. Rev. 69, 90–91 (2007).
    58 See Bessen & Meurer 176; Lessig, The Death of Cyberspace, 
    57 Wash. & Lee L. Rev. 337
    , 346–347 (2000).
    59 Congress and the courts have worked long and hard to create and
    administer antitrust laws that ensure businesses cannot prevent each
    other from competing vigorously. If methods of conducting business
    were themselves patentable, then virtually any novel, nonobvious
    business method could be granted a federally protected monopoly. The
    tension this might create with our antitrust regime provides yet an
    other reason for skepticism that Congress would have wanted the
    patent laws to extend to business methods.
    Cite as: 561 U. S. ____ (2010)          47
    STEVENS, J., concurring in judgment
    *     *     *
    The constitutional standard for patentability is difficult
    to apply with any precision, and Congress has significant
    discretion to “implement the stated purpose of the Fram
    ers by selecting the policy which in its judgment best
    effectuates the constitutional aim,” Graham, 383 U. S., at
    6. But Congress has not, either explicitly or implicitly,
    determined that patents on methods of doing business
    would effectuate this aim. And as I understand their
    practical consequences, it is hard to see how they would.
    VII
    The Constitution grants to Congress an important
    power to promote innovation. In its exercise of that power,
    Congress has established an intricate system of intellec
    tual property. The scope of patentable subject matter
    under that system is broad. But it is not endless. In the
    absence of any clear guidance from Congress, we have only
    limited textual, historical, and functional clues on which
    to rely. Those clues all point toward the same conclusion:
    that petitioners’ claim is not a “process” within the mean
    ing of §101 because methods of doing business are not, in
    themselves, covered by the statute. In my view, acknowl
    edging as much would be a far more sensible and re
    strained way to resolve this case. Accordingly, while I
    concur in the judgment, I strongly disagree with the
    Court’s disposition of this case.
    Cite as: 561 U. S. ____ (2010)            1
    BREYER, J., concurring in judgment
    SUPREME COURT OF THE UNITED STATES
    _________________
    No. 08–964
    _________________
    BERNARD L. BILSKI AND RAND A. WARSAW,
    PETITIONERS v. DAVID J. KAPPOS, UNDER
    SECRETARY OF COMMERCE FOR INTEL-
    LECTUAL PROPERTY AND DIRECTOR,
    PATENT AND TRADEMARK OFFICE
    ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
    APPEALS FOR THE FEDERAL CIRCUIT
    [June 28, 2010]
    JUSTICE BREYER, with whom JUSTICE SCALIA joins as to
    Part II, concurring in the judgment.
    I
    I agree with JUSTICE STEVENS that a “general method of
    engaging in business transactions” is not a patentable
    “process” within the meaning of 
    35 U. S. C. §101
    . Ante, at
    2 (STEVENS, J., concurring in judgment). This Court has
    never before held that so-called “business methods” are
    patentable, and, in my view, the text, history, and pur
    poses of the Patent Act make clear that they are not.
    Ante, at 10–47. I would therefore decide this case on that
    ground, and I join JUSTICE STEVENS’ opinion in full.
    I write separately, however, in order to highlight the
    substantial agreement among many Members of the Court
    on many of the fundamental issues of patent law raised by
    this case. In light of the need for clarity and settled law in
    this highly technical area, I think it appropriate to do so.
    II
    In addition to the Court’s unanimous agreement that
    the claims at issue here are unpatentable abstract ideas, it
    is my view that the following four points are consistent
    2                     BILSKI v. KAPPOS
    BREYER, J., concurring in judgment
    with both the opinion of the Court and JUSTICE STEVENS’
    opinion concurring in the judgment:
    First, although the text of §101 is broad, it is not with
    out limit. See ante, at 4–5 (opinion of the Court); ante, at
    10 (STEVENS, J., concurring in judgment). “[T]he underly
    ing policy of the patent system [is] that ‘the things which
    are worth to the public the embarrassment of an exclusive
    patent,’ . . . must outweigh the restrictive effect of the
    limited patent monopoly.” Graham v. John Deere Co. of
    Kansas City, 
    383 U. S. 1
    , 10–11 (1966) (quoting Letter
    from Thomas Jefferson to Isaac McPherson (Aug. 13,
    1813), in 6 Writings of Thomas Jefferson 181 (H. Washing
    ton ed.)). The Court has thus been careful in interpreting
    the Patent Act to “determine not only what is protected,
    but also what is free for all to use.” Bonito Boats, Inc. v.
    Thunder Craft Boats, Inc., 
    489 U. S. 141
    , 151 (1989). In
    particular, the Court has long held that “[p]henomena of
    nature, though just discovered, mental processes, and
    abstract intellectual concepts are not patentable” under
    §101, since allowing individuals to patent these funda
    mental principles would “wholly pre-empt” the public’s
    access to the “basic tools of scientific and technological
    work.” Gottschalk v. Benson, 
    409 U. S. 63
    , 67, 72 (1972);
    see also, e.g., Diamond v. Diehr, 
    450 U. S. 175
    , 185 (1981);
    Diamond v. Chakrabarty, 
    447 U. S. 303
    , 309 (1980).
    Second, in a series of cases that extend back over a
    century, the Court has stated 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.” Diehr, 
    supra, at 184
     (em
    phasis added; internal quotation marks omitted); see also,
    e.g., Benson, 
    supra, at 70
    ; Parker v. Flook, 
    437 U. S. 584
    ,
    588, n. 9 (1978); Cochrane v. Deener, 
    94 U. S. 780
    , 788
    (1877). Application of this test, the so-called “machine-or
    transformation test,” has thus repeatedly helped the Court
    to determine what is “a patentable ‘process.’ ” Flook, 
    supra,
    Cite as: 561 U. S. ____ (2010)           3
    BREYER, J., concurring in judgment
    at 589.
    Third, while the machine-or-transformation test has
    always been a “useful and important clue,” it has never
    been the “sole test” for determining patentability. Ante, at
    8; see also ante, at 1 (STEVENS, J., concurring in judg
    ment); Benson, 
    supra, at 71
     (rejecting the argument that
    “no process patent could ever qualify” for protection under
    §101 “if it did not meet the [machine-or-transformation]
    requirements”). Rather, the Court has emphasized that a
    process claim meets the requirements of §101 when, “con
    sidered as a whole,” it “is performing a function which the
    patent laws were designed to protect (e.g., transforming or
    reducing an article to a different state or thing).” Diehr,
    
    supra, at 192
    . The machine-or-transformation test is thus
    an important example of how a court can determine pat
    entability under §101, but the Federal Circuit erred in this
    case by treating it as the exclusive test.
    Fourth, although the machine-or-transformation test is
    not the only test for patentability, this by no means indi
    cates that anything which produces a “ ‘useful, concrete,
    and tangible result,’ ” State Street Bank & Trust Co. v.
    Signature Financial Group, Inc., 
    149 F. 3d 1368
    , 1373 (CA
    Fed. 1998), is patentable. “[T]his Court has never made
    such a statement and, if taken literally, the statement
    would cover instances where this Court has held the con
    trary.” Laboratory Corp. of America Holdings v. Metabo
    lite Laboratories, Inc., 
    548 U. S. 124
    , 136 (2006) (BREYER,
    J., dissenting from dismissal of certiorari as improvidently
    granted); see also, e.g., O’Reilly v. Morse, 
    15 How. 62
    , 117
    (1854); Flook, 
    supra, at 590
    . Indeed, the introduction of
    the “useful, concrete, and tangible result” approach to
    patentability, associated with the Federal Circuit’s State
    Street decision, preceded the granting of patents that
    “ranged from the somewhat ridiculous to the truly ab
    surd.” In re Bilski, 
    545 F. 3d 943
    , 1004 (CA Fed. 2008)
    (Mayer, J., dissenting) (citing patents on, inter alia, a
    4                     BILSKI v. KAPPOS
    BREYER, J., concurring in judgment
    “method of training janitors to dust and vacuum using
    video displays,” a “system for toilet reservations,” and a
    “method of using color-coded bracelets to designate dating
    status in order to limit ‘the embarrassment of rejection’ ”);
    see also Brief for Respondent 40–41, and n. 20 (listing
    dubious patents). To the extent that the Federal Circuit’s
    decision in this case rejected that approach, nothing in
    today’s decision should be taken as disapproving of that
    determination. See ante, at 16; ante, at 2, n. 1 (STEVENS,
    J., concurring in judgment).
    In sum, it is my view that, in reemphasizing that the
    “machine-or-transformation” test is not necessarily the
    sole test of patentability, the Court intends neither to de
    emphasize the test’s usefulness nor to suggest that many
    patentable processes lie beyond its reach.
    III
    With these observations, I concur in the Court’s
    judgment.
    

Document Info

Docket Number: 08-964

Citation Numbers: 177 L. Ed. 2d 792, 130 S. Ct. 3218, 561 U.S. 593, 2010 U.S. LEXIS 5521

Judges: Kennedy, Ii-B-, Ii-C-, Roberts, Thomas, Alito, Scalia, Stevens, Ginsburg, Breyer, Sotomayor

Filed Date: 6/28/2010

Precedential Status: Precedential

Modified Date: 11/15/2024

Authorities (46)

Bonito Boats, Inc. v. Thunder Craft Boats, Inc. , 109 S. Ct. 971 ( 1989 )

Quanta Computer, Inc. v. LG Electronics, Inc. , 128 S. Ct. 2109 ( 2008 )

Atlantic Works v. Brady , 2 S. Ct. 225 ( 1883 )

Motion Picture Patents Co. v. Universal Film Manufacturing ... , 37 S. Ct. 416 ( 1917 )

Corning v. Burden , 14 L. Ed. 683 ( 1854 )

O'Reilly v. Morse , 14 L. Ed. 601 ( 1854 )

Gottschalk v. Benson , 93 S. Ct. 253 ( 1972 )

Guthrie v. Curlett , 10 F.2d 725 ( 1926 )

Parker v. Flook , 98 S. Ct. 2522 ( 1978 )

Diamond v. Diehr , 101 S. Ct. 1048 ( 1981 )

Rainwater v. United States , 78 S. Ct. 946 ( 1958 )

Whitman v. American Trucking Assns., Inc. , 121 S. Ct. 903 ( 2001 )

J. E. M. Ag Supply, Inc. v. Pioneer Hi-Bred International, ... , 122 S. Ct. 593 ( 2001 )

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. , 122 S. Ct. 1831 ( 2002 )

Joseph E. Seagram & Sons, Inc. v. Marzall, Commissioner of ... , 180 F.2d 26 ( 1950 )

Expanded Metal Co. v. Bradford , 29 S. Ct. 652 ( 1909 )

Frank E. Paulik and Robert G. Schultz v. Nabil Rizkalla and ... , 760 F.2d 1270 ( 1985 )

MARKMAN Et Al. v. WESTVIEW INSTRUMENTS, INC., Et Al. , 116 S. Ct. 1384 ( 1996 )

Burgess v. United States , 128 S. Ct. 1572 ( 2008 )

Shell Development Company v. Watson , 149 F. Supp. 279 ( 1957 )

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