In re Ferguson

In re Ferguson
558 F.3d 1359 (Fed. Cir. 2009)

Applicants’ ‘823 application is “directed to a marketing paradigm for bringing products to market” and includes both method claims and “paradigm” claims. The applicants’ method claims include a method for “marketing a product” that uses a “shared marketing force to market a plurality of different products that are made by a plurality of autonomous producing company.” The applicants’ paradigm claims include a “paradigm for marketing software” that utilizes “a marketing company that markets software from a plurality of different independent and autonomous software companies . . . while allowing all of said software companies to retain their autonomy.”

Procedural posture:
The PTO examiner rejected all of the applicants’ claims under 35 U.S.C. §§ 102, 103, and/or 112. On appeal, the Board of Patent Appeals and Interferences reversed the examiner but rejected the claims under 35 U.S.C. § 101. Upon the applicants’ request for rehearing, the Board again rejected the claims under § 101; in its second rejection, the Board clarified that it was rejecting the method claims as unpatentable “abstract ideas” and the paradigm claims as failing to fall within any of the four categories of § 101 subject matter. The applicants appealed this rejection.

Whether the applicants’ method and paradigm claims are patent-eligible subject matter under 35 U.S.C. § 101.

Applicants’ claims are not within the statutory requirements of patentable subject matter, especially in light of the Federal Circuit’s decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008).

Critical analysis/Reasoning:
35 U.S.C. § 101 recites four categories of patentable subject matter: processes, machines, manufactures, and compositions of matter. Claims that fit within these categories may still be unpatentable if they are deemed phenomena of nature, abstract intellectual concepts, or mental processes. Gottschalk v. Benson, 409 U.S. 63, 67 (1972).

The Federal Circuit’s Bilski decision further contributed to § 101 jurisprudence by holding that the machine-or-transformation test is the “definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself.” 545 F.3d at 954. Under the machine-or-transformation test, a claimed process is patentable if it is “tied to a particular machine or apparatus” or “transforms a particular article into a different state or thing.” Id.

The court considered the applicants’ method and paradigm claims separately. The court notes that although the method claims may fall within the statutory category of process claims, they are not tied to any “concrete parts, devices, or combination of devices” and thus do not meet Bilski’s “machine” prong. The method claims also fail to satisfy the “transformation” prong as their methods of transforming business or legal relationships are “abstractions” and “cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.” Id. at 963. Failing to satisfy either of the Bilski prongs, the court holds that the method claims are unpatentable subject matter.

In determining the validity of the applicants’ paradigm claims, the court clarifies that the proper first step in determining patentable subject matter under § 101 is to “consider whether the claimed subject matter fits into any of the four enumerated categories of statutory subject matter.” Here, the court summarily holds that the paradigm claims do not fall within the process, manufacture, or composition of matter statutory categories. In holding that the paradigm claims also do not fall within the “machine” category, the court rejects the applicants’ contention that “a company is a physical thing, and as such analogous to a machine.” The court notes that a company is an abstract idea and not “a concrete thing, consisting of parts, or of certain devices and combination of devices” and thus does not fall within the § 101’s machine category. Nuijten v. Dudas, 129 S. Ct. 70 (2008). Failing to fall within any of § 101’s enumerated categories of patentable subject matter, the court holds that the paradigm claims are unpatentable subject matter.

Important Dicta:
The court takes great pains to clarify that the machine-or-transformation test is the sole test for process claims under § 101; it specifically states that Bilski rejected the “useful, concrete, and tangible result” test and uses Bilski to reject applicants’ “scintilla of interaction with the real world in a specific way” test.

The concurrence states that the applicants’ marketing method should fail for nonobviousness, rather than patentable subject matter. Although the concurrence takes issue with the majority’s suggestion that Bilski overturned the “useful, concrete, and tangible result,” “technological arts,” and “physical steps” tests, the thrust of the concurring opinion lies in its criticism of the majority opinion based on policy grounds. The concurrence notes that “today’s ‘knowledge economy’ arose and thrived under the past law of patent eligibility” and questions whether the majority’s strict application of Bilski is supported by any “policy or benefit to either society or commerce.” Furthermore, the concurrence notes that in the current harsh economic times, “enhanced incentives to innovation and investment in new things” are needed rather than “reduction in the existing incentives.”

Josh Nightingale

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