Bilski v. Kappos ( 2010 )

(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
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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
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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 loathe 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.