CLS Bank v. Alice Corp: Patenting Software Ideas

September 7, 2012PatentAbstract Idea, Enablement, Federal Circuit En Banc, First to Invent, obviousness, Subject Matter EligibilityDennis Crouch

By Dennis Crouch

"Settlement risk" is real in almost every transaction. When a lawyer does legal work, how does she know that she'll get paid. Conversely, if a client pays up-front, how does he know that the work will actually be performed. There is always a possibility of filing a lawsuit to demand fulfillment. However, most businesses would prefer a system that better guarantees a more immediate positive result. A trusted (and bonded) escrow agent can help relieve the problem, but even an escrow agent needs assurances. Further, in the age of electronic funding of transactions, we should be able to take advantage of features of a computer network that might not have been available in an offline world.

The recent Federal Circuit decision in CLS Bank v. Alice Corp. focuses on the subject matter eligibility of Alice's claim to a computer system for assisting with closing financial transactions in a way that avoids settlement risk. The system includes two elements: (1) data storage with various "shadow" variables stored therein; and (2) a computer that is programmed to conduct the transaction. Basically, the transaction is initially conducted in the shadow (i.e., mock) system and then, if the shadow system shows that the parties have sufficient funds to conduct the transaction, post the obligation to the real exchange institution.

The claim reads as follows:

1. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and

a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.

The district court initially ruled that the patent claim lacked subject matter eligibility. I wrote about that decision in a 2011 post entitled Bilski Applied to Invalidate Computer System Claims. In 2012, a divided Court of Appeals for the Federal Circuit revered – holding that that, when considered as a whole, the claim is patent eligible. Judge Linn wrote the majority opinion that was joined by Judge O'Malley. In many ways, Judge Linn's opinion follows the advice that Professor Rob Merges and I gave in our paper titled Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making. Judge Linn's approach is to only reach Section 101 issues when subject matter ineligibility is "manifestly evident". Judge Prost wrote in dissent and argued that the majority improperly ignored the Supreme Court's most recent statements on the topic found in Prometheus. Professor Jason Rantanen wrote a nice post on the Federal Circuit decision titled CLS Bank v. Alice: The "Nothing More Than" Limitation on Abstract Ideas.

When I consider this claim, a few thoughts arise:

This is a system claim rather than a method claim. However, the structure of the claim is such that the system is designed around the method that it is intended to perform. This makes me think that the teaching of Bilski and Mayo v. Prometheus cannot be ignored here even though those cases were focused on the eligibility of method claims.
The claim requires computer hardware as an integral portion of the invention. However, the particularly claimed computer hardware is entirely conventional and being used in an unsurprisingly conventional manner. Further, if we relax the claim requirements of a computer and "electronic" communications then this same transaction could be fully conducted offline with paper as the data storage unit and contracts creating the time invariant obligation.
Use of the system does not require any physical transformation recognized by the courts (unless you interpret the claim to be limited to only include data storage units that work by physical transformation). The claim does require changes in bank account values and legal obligations, but those have not traditionally been seen as qualifying transformations in the patent eligibility context.
Finally, and most importantly for me, the invention is designed to solve a particular problem in industry and claims a system that operates by performing a series of identified steps to address that particular problem.

Many of you know that, in my view, the Supreme Court precedent on subject matter eligibility has not been internally reconciled. That ongoing precedential conflict coupled with the fuzziness of boundary lines continue to fuel debate on the topic both within and outside of the courthouse. On balance, both sides of this debate have strong arguments based upon patent law history and precedent and I can understand why someone versed in Supreme Court patent eligibility precedent could end up with a conclusion on either side.

Despite the Federal Circuit opinion, this case has not gone away. In recent days, the accused infringer (CLS Bank) has filed a request for rehearing and that request is supported by three amicus briefs. CLS Bank's main point in its brief is that the CLS Bank computer system claim is unpatentable when fully analyzed against Bilski and Prometheus. The brief asks two questions:

Whether the new test for patent-eligibility articulated by the panel majority is inconsistent with Bilski's and Mayo's approach to 35 U.S.C. § 101; and
Whether the method, system, and media claims at issue are patent ineligible because, albeit computer-implemented, they recite no more than an abstract fundamental mechanism of financial intermediation with no inventive concept.

The CLS Bank brief was filed by Mark Perry and his team at Gibson Dunn in DC. This is a change from the Kaye Scholer firm that represented CLS Bank at the district court and in the original appeal.

An amicus brief filed on behalf of a diverse group of five companies including British Airways and LinkedIN (and who all tend to be defendants in patent cases) spelled out how the "course filter" approach used by Judge Linn went against both recent and old Supreme Court precedent. That brief asks two additional questions:

Should courts enforce the patent eligibility requirement evenhandedly without imposing a "manifestly evident" or "coarse filter" hurdle on the patent challenger?
Is patent eligibility a threshold requirement well suited for decision on the pleadings and on early summary judgment?

John Vandenberg of Klarquist Sparkman filed the BA/LinkedIN brief.

Daryl Joseffer of King & Spalding filed a second amicus brief on behalf of Google, HP, Red Hat and Twitter. The brief explains how Mayo identifies four "guideposts" for determining whether an invention lacks subject matter eligibility under the prohibitions of abstract ideas and laws of nature. The four clues all begin with the notion that a patentable invention must be "significantly more than an abstract idea." Thus, if you begin with an abstract idea, "(1) adding steps that are conventional or obvious is insufficient to confer patentable subject matter (Mayo at 1294, 1298, 1299); (2) adding steps that are so general and non-specific that they do not significantly limit the claim's scope is insufficient (id. at 1300, 1302); (3) limiting an idea to a particular technological environment is insufficient (id. at 1294, 1297); and (4) claims that fail the machine-or-transformation test are likewise dubious (id. at 1296, 1303). Explaining the first point, the brief argues that a claim must contain an "inventive concept" apart from the identified law of nature or abstract idea.

The EFF brief filed by Julie Samuel reminds the court of the extensive literature concluding that software patents are bad – especially when in the hands of "patent trolls."

The patentee's responsive brief is due later this month.

*****

At least two additional software patent cases are pending at the Federal Circuit. In Bancorp v. Sun Life, a different panel of Federal Circuit judges considered software patents similar to those in CLS Bank but found the claims ineligible under Section 101. In WildTangent v. Ultramercial, the Federal Circuit initially ruled that patented method of distributing copyrighted media was eligible. However, that case was vacated and remanded by the Supreme Court following its decision in Mayo and with instructions to reconsider the holding based upon the new Supreme Court precedent. WildTangent has also requested an en banc hearing. WildTangent's petition asks: "When does a patent's reference to the use of a general purpose computer or an Internet website transform an otherwise unpatentable abstract concept into a process that satisfies the subject-matter eligibility requirement of 35 U.S. C. § 101?" Arguing from the other side (asking for its patent to be revalidated), Bancorp identifies the conflict with CLS Bank and argues that the "manifestly abstract" standard should be applied to its case.

*****

Judge Linn, author of the CLS Bank decision has announced his move to Senior Status in November 2012. Senior judges ordinarily do not decide whether to hear cases en banc and do not sit en banc. The one significant exception to that rule is that a senior judge will be a part of the en banc panel if that judge was a part of the original panel that heard the case. For this particular contentious issue, Judge Linn's status may well impact the results.

*****

Counting votes is always difficult and may not be worthwhile, but I pulled-up seven recent software patent eligibility decisions and classified the results based upon how the various panel member voted on the eligibility question. If I leave out judges Schall and Plager (Senior judges), the result is that three of the judges sit on the "claims eligible" side (Chief Judge Rader and Judges O'Malley and Newman); five of the judges are on the "claims ineligible" side (Judges Prost, Bryson, Dyk, Moore, and Wallach); two have decisions on both sides (Judges Linn and Lourie); and one is not in my sample (Judge Reyna).

Case	Claims Eligible	Claims Ineligible
WildTangent	Rader, Lourie, O'Malley
CLS Bank	Linn, O'Malley	Prost
Bancorp		Lourie, Prost, Wallach
RCT v. Microsoft	Rader, Newman, Plager
Cybersource		Bryson, Dyk, Prost
Dealtracker*	Plager	Linn, Dyk
Fort Properties		Prost, Schall, Moore

Continuations-in-Part (CIPs) and Priority Claims

September 7, 2012PatentEnablement, First to Invent, obviousness, Written DescriptionDennis Crouch

By Dennis Crouch

This post considers the meaning of priority in a continuation-in-part application and, in particular, when the claimed priority document can serve as prior art against the child.

Yesterday, I wrote about the majority opinion in Santarus v. Par Pharma (Fed. Cir. 2012). In that case, the patentee was fighting for the validity of its continuation-in-part (CIP) patent. A CIP is a patent filing that claims priority to a previously filed parent patent document but that also adds some amount of new material to the disclosure and/or claims. In CIP applications, priority date is determined on a claim-by-claim basis. Of course the priority date is important because it largely defines the scope of prior art available to potentially invalidate the patent claims.

In its decision, the Court of Appeals for the Federal Circuit ruled that some of the disputed claims were sufficiently disclosed in the parent filing and therefore properly claimed priority to that original filing date. Another set of claims, however, included matter that was added in the CIP. Those claims with new matter were not given priority to the original filing and thus had to rely on the filing date of the CIP application. Thus, for the claims with new matter any patent issued or document published more than one-year before the CIP filing date would count as prior art under 35 U.S.C. 102(b). See Paperless Accounting v. Bay Area Rapid Transit System, 804 F.2d 659, 665 (Fed. Cir. 1986).

At this point in the analysis, there is a major point of contention between the judges on one particular alleged prior art reference – whether the original patent filing counts as prior art against the child. The parent patent (really, the great grandparent patent) was filed in 1996 and issued as a patent in 1998. The descendent patent in being litigated in this case was not filed until 2003 but claims priority back to the original 1996 filing through a series of continuations and CIPs. Under normal circumstances, a 1998 patent would clearly serve as prior art against a 2003 filing under Section 102(b) as discussed above. However the system of priority claiming to parent applications is designed to overcome that problem by treating the child applications as if they had been filed on the same day as the original ancestor – so long as the procedures of 35 U.S.C. § 120 are followed. Interesting for the purposes of this discussion, Section 120 discusses priority at the patent level rather than claim-by-claim and asks whether the “application for patent” satisfies the written description and enablement requirements.

35 U.S.C. 120 Benefit of earlier filing date in the United States.

An application for patent for an invention disclosed in the manner provided by the first paragraph of section 112 of this title in an application previously filed in the United States . . . shall have the same effect, as to such invention, as though filed on the date of the prior application. . .

In Santarus, the invention of only some of the claims were sufficiently disclosed in the original specification. For those claims that lack priority, the big question is whether and to what extent the original patent can be used as 102(b)/103(a) prior art as part of an obviousness rejection.

In a per curiam opinion, the majority (Chief Judge Rader and Judge Moore) held that – since priority is determined on a claim-by-claim basis – that the original patent was prior art against the claims that lacked priority. Writing in dissent, Judge Newman argued that the priority should be given with regard to material disclosed in the priority document. Judge Newman’s approach also breaks the patent apart but divides priority more precisely according to which material was found in the original disclosure. Under Judge Newman’s approach, the original filing cannot be used as a priority document.

Newman writes:

The panel majority forgets that “matter disclosed in the parent application is entitled to the benefit of the filing date of the parent application.” Waldemar Link, GmbH & Co. v. Osteonics Corp., 32 F.3d 556 (Fed. Cir. 1994); see Litton Sys., Inc. v. Whirlpool Corp., 728 F.2d 1423 (Fed. Cir. 1984) (“The earlier filing date of the parent application pertains to material in the C-I-P application also disclosed in the prior application. 35 U.S.C. §120.”). Instead, the panel majority relies upon the common subject matter from the ‘737 [original] patent disclosure to invalidate the ‘885 claims supported by that subject matter. This is incorrect, for the common subject matter in the ‘885 patent is entitled to the ‘737 filing date. That entitlement is not lost by issuance of the ‘737 patent.

Of course, majority did not “forget” as Judge Newman suggested. Rather, the majority found that the patentee had “waived any argument that the ‘737 patent is not prior art to the other claims” by failing to appeal that point.

+ + + + +

Although distinguishable, the most on-point decision relating to this issue may well be In re Chu, 66 F.3d 292 (Fed. Cir. 1995). In that case (and with Judge Newman on the panel), the Federal Circuit ruled that the asserted priority document could be used as prior art because all of the claims included added limitations not found in the priority document. The court wrote:

Chu is entitled to the benefit of the Doyle patent filing date only if the Doyle patent discloses the subject matter now claimed by Chu. This, however, is admitted by Chu not to be the case. In fact, Chu states that “the invention as now claimed[ ] was not described in the [Doyle] patent.” Specifically, Chu concedes that “nothing in Doyle suggests that SCR catalyst be placed inside the bag filter.” Therefore, independent claim 1, which includes this limitation, and dependent claims 2, 4, and 14, are not supported by the Doyle patent disclosure. Accordingly, Chu cannot obtain the benefit of the Doyle patent filing date for these claims and the Doyle patent was properly relied on as prior art.

The obvious difference between the present case and Chu is that some of the claims are supported by the priority document.

K-Tec v. Vita-Mix: Analogous Art and Willful Infringement

September 6, 2012PatentDamages, obviousnessJason Rantanen

By Jason Rantanen

K-Tec, Inc. v. Vita-Mix Corp. (Fed. Cir. 2012) Download 11-1244-1484-1512
Panel: Newman, Lourie (author), Prost

K-TEC and Vita-Mix are manufacturers of high-end blenders. In the early 2000's, K-Tec developed a blender geometry that reduced the problem of cavitation (the formation of an air-pocket around the spinning blade). Figure 11 of K-Tec's patent illustrates the concept:

Vita-Mix used K-TEC's five-sided commercial embodiment to design its own upgraded blending jar. After Vita-Mix released its product, two of K-TEC's patents issue. Upon being notified of the patents, Vita-Mix redesigned its product in an attempt to design-around the patent claims (which reference "four side walls" and "a fifth truncated wall disposed between two of the four side walls.") The redesigned Vita-Mix product looked like this:

During the patent infringement suit, the district court granted summary judgment of infringement and summary judgment that two prior art references asserted by Vita-Mix were not analogous art. The remaining issues were tried to a jury, which found in favor of K-TEC on the remaining issues of validity, willfulness, and damages.

Analogous Art: Following KSR v. Teleflex, there was some question as to the strength of the analogous arts doctrine in light of the Court's repudiation of rigid tests in analyzing nonobviousness. Last year, however, in In re Klein, the Federal Circuit applied a robust analogous art doctrine to limit the scope of prior art that may be considered by the examiner during patent prosecution. K-TEC v. Vita-Mix indicates that the analogous art test continues to remain alive and well in the infringement context, affirming a grant of summary judgment that the references did not constitute analogous art.

Vita-Mix argued that the district court should have permitted the jury to consider two non-blender designs that depict five-sided containers. Design Patent 227,535 ("Grimes") provides an example:

Under Federal Circuit precedent, a prior art reference may not be considered in the obviousness analysis unless it is analogous art. There are two ways to meet this requirement: (1) the reference can be from the same field of endeavor as the claimed invention; or (2) it can be reasonably pertinent to the particular problem with which the inventor is involved. Here, Vita-Mix did not contend that the container design patents were from the same field of endeavor, and thus the CAFC focused its analysis on the second condition.

In affirming the district court's grant of summary judgment that the two design patents were not analogous art, the CAFC concluded that despite the inventor testifying that he "wanted the resulting jar to fit within K-TEC's existing quiet box, there is no dispute that creating a smaller jar was not the problem he set out to solve because K-TEC's existing jars already fit within the quiet box." Slip Op. at 16. (It's unclear from the opinion why needing a smaller jar would caused Grimes to have "commended itself" to an inventor's intention in considering his problem.) A greater problem was that Vita-Mix's expert report "did not 'explain any rational underpinning for [the inventor] to have consulted non-blending containers or food mixers in order to solve the problems he encountered in designing a new blending container.'" Slip Op. at 16, quoting the district court's opinion.

Comment: Why, especially in light of KSR v. Teleflex, should the analogous arts analysis have anything to do with what an inventor thought? Here's how the CAFC is currently articulating the "reasonably pertinent" prong: "A reference is reasonably pertinent if it, as a result of its subject matter, 'logically would have commended itself to an inventor’s attention in considering his problem.'" Slip Op. at 15, quoting Innovention Toys, LLC v. MGA Entm’t, Inc., 637 F.3d 1314, 1321 (Fed. Cir. 2011). Shouldn't the analysis be based on what a person having ordinary skill in the art would have thought, not an inventor (and especially not "the" inventor)?

Willful Infringement Treated as a Question for the Jury: For those seeking to prove willful infringement, this is a good case; for those seeking some consistency with previous opinions on the subject, it may be less so. Following the jury trial, the district court denied Vita-Mix's motion seeking to overturn the finding of willful infringement. In affirming, the opinion makes no reference to the CAFC's recent instruction that the "objective prong" of the Seagate recklessness analysis is a separate question of law. Instead, the opinion barely distinguishes the "objective" prong from the "subjective" prong. Evidence for the "objective" prong:

Vita-Mix's noninfringement theory and most of its invalidity theories were properly disposed of on summary judgment;
Its remaining theories were "soundly" rejected by the jury;
In designing the product illustrated above, Vita-Mix started with a direct copy of K-TEC's five-sided jar (note: the "direct copy" was Vita-Mix's own pre-patent version of K-TEC's commercial embodiment); and
Vita-Mix considered other noninfringing designs, but opted to "produce a container that performed in the same way as the [earlier Vita-Mix product] and employ a design that its customers would not be able to distinguish from [Vita-Mix's earlier product]."

The court continued on to state that "similarly, K-TEC presented substantial evidence that Vita-Mix knew of the objectively high risk of infringing K-TEC's valid patents, but decided to proceed anyway," Slip Op. at 22, indicating that the preceding factors were the factors relevant to that "objectively high risk."

Comment: One area where the K-Tec holding is particularly difficult to square with prior precedent is its reliance on copying as part of the "objective" prong of the Seagate analysis. See DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314 (Fed. Cir. 2009) ("Because we hold that DePuy failed as a matter of law to satisfy Seagate's first prong, we need not address DePuy's arguments concerning “copying” and Medtronic's rebuttal evidence concerning “designing around,” both of which are relevant only to Medtronic's mental state regarding its direct infringement under Seagate's second prong.").

A Higher Written Description Standard for Negative Claim Limitations?

September 6, 2012PatentInequitable Conduct, Licenses, obviousness, Written DescriptionDennis Crouch

By Dennis Crouch

Santarus and the University of Missouri v. Par Pharma (Fed. Cir. 2012)

My employer (University of Missouri) owns several patents covering formulations of omeprazole proton pump inhibitors (PPIs). The patents are exclusively licensed to Santarus who markets the drugs under the brand Zegerid®. Par filed its request to make a generic version which prompted this infringement litigation.

The inventor, Dr. Jeff Phillips is a pharmacist at MU had the simple idea of combining omeprazole with baking soda (sodium bicarbonate). The baking soda helps the drug resist stomach acids long enough to be absorbed in the stomach wall. Although not a blockbuster drug, the approach has been successful for many patients with GERD and Santarus sales are about $40 million per year. (The reported deal is that MU receives about 5% of sales. As the inventor, Phillips receives a small cut from that.)

During litigation the patents were successfully attacked as obvious based upon a preliminary written description challenge.

Written Description Killing Priority and thus Nonobviousness: We know that patent applicants are allowed to narrow patent claims during the prosecution process. The vast majority of issued patent claims are not found in the originally filed patent application but instead are amended during prosecution. This is typically done by adding limitations into the claims as MU did here. The primary constraint on adding limitations is that the newly amended claim must be supported by the original application specification. Thus, a patentee cannot create limitations from thin-air, but must instead identify limitations found in the specification to be added into the claims. In the simple case, newly added claim limitations that are not supported by the specification are rejected for new matter at the USPTO and, once issued, can be invalidated for lacking written description under 35 U.S.C. § 112. The situation is a bit more confusing when the application claims priority to a prior patent filing. Of course, most issued patents do claim priority to a prior patent filing so the family member situation is quite important. In the patent family context, a child application might fully comply with the written description requirement if considered on its own. The child application can also be valid if new matter was added to the specification or claims at the time of filing. However, that new matter (if included within the claims) will mean that the patentee cannot claim priority to the parent application’s filing date. Where the parent case is published more than one year before the patent filing, that parent application can also serve as a prior art against the child application under 35 U.S.C. §102(b) unless priority can be established. (Query how this will works under the AIA?)

In this case, the generic challenger argued that one of the claimed limitations was not supported by the parent patent and, as a consequence, that parent patent serves as a critical piece of prior art that invalidates the claims.

One set of asserted claims were amended from the priority filing to included an exclusionary wherein limitation. In particular, the claims stated that “the composition contains no sucralfate.” The original specification had noted several reasons why omeprazole was preferable to sucralfate. In the same sentence, the specification also indicated that omeprazole is also preferable to sodium bicarbonate for those same reasons. Since sodium bicarbonate is actually an element of the invention, the district court held that the same sentence could not be used to particularly exclude sucralfate without further evidence that sucralfate is contraindicated. On appeal, the Federal Circuit rejected this reasoning – holding that preference statement in the specification was sufficient to justify addition of the exclusionary limitation and that the sodium bicarbonate inclusion (as a buffer) was justified by other portions of the specification.

Higher Bar for Negative Limitations?: The exclusionary limitation here is a negative limitation because it defines what the invention does not contain. Here, the invention does not contain sucralfate. The tradition in patent law has been to avoid negative limitations and, certainly, an invention cannot be wholly defined by negative limitations. However, negative limitations are allowed and are useful at times. It appears that the court sets a higher bar for the inclusion of negative limitations than it does positive elements of a claim. This is done by requiring that the specification include a reason for the exclusion in order to satisfy the written description requirement. The court writes here: “Negative claim limitations are adequately supported when the specification describes a reason to exclude the relevant limitation.” Ordinarily, such justification is not required for positive claim elements – although justifying explanations can be helpful in justifying greater claim breadth.

Although some reasoning is required, the patentee need not disclaim the element in the specification in order to add the exclusionary limitation in the claims. “Such written description support need not rise to the level of disclaimer. In fact, it is possible for the patentee to support both the inclusion and exclusion of the same material.”

With these notions in mind, the court held that the statements in the specification were sufficient to support the exclusionary limitation in this case. “The claim limitation that the Phillips formulations contain no sucralfate is adequately supported by statements in the specification expressly listing the disadvantages of using sucralfate.” And, as a consequence, the parent patent is not a proper prior art reference against those claims supported by the original specification.

Patent with Multiple Priority: In cases with a complex family structure, patent priority is actually determined on a claim-by-claim basis. As discussed above, the Federal Circuit held that some of MU’s claims properly claim priority to the original specification filed with the USPTO. On appeal, the patentee implicitly agreed that some of the other patent claims are not supported by the original specification. For those cases, the original filing qualifies as prior art against the no-priority claims under section 102(b). The question then is whether the newly added material is sufficiently different to avoid invalidation on obviousness.

Without going into detail, the Federal Circuit found that some of the patent claims that qualified for priority were also nonobvious and thus should be treated as valid and enforceable.

Need one to win: In the end, this appears to be a win for Mizzou since a patentee only need a court to find one of its claims is infringed and enforceable.

Notes:

Although I am employed by the University of Missouri, the university is not my client and I have not spoken with any of the university counsel about this case.
Par also appealed the district court’s finding of no inequitable conduct. The Federal Circuit affirmed that holding based upon a lack of clear and convincing evidence of intent deceive the USPTO.

Patently-O Bits & Bytes by Lawrence Higgins

September 5, 2012PatentAIA Trials, anticipation, Inequitable Conduct, IPR, PGRLawrence Higgins

USPTO Patent Review Processing System Preview

The United States Patent and Trademark Office (USPTO) will preview the new electronic filing system for the trials established under the Leahy-Smith America Invents Act. The preview will take place from 10 am – noon on Thursday, September 6, 2012. Representatives from the Patent Trial and Appeal Board will demonstrate the new Patent Review Processing System (PRPS) and show how to register to use the system, to file a petition seeking a trial, to pay petition fees, to join the proceeding as a patent owner and to file motions and other documents. The preview will be helpful for any practitioners or administrative personnel who anticipate filing documents in the new proceedings beginning September 16, 2012 (inter partes review, post-grant review, and the transitional program for covered business methods). There will also be an opportunity to ask questions. You may attend electronically or in person. [Link]

Patent Jobs:

Stevens & Showalter is seeking a patent attorney/agent with at least 2 years of experience and a background in EE or CS to work at their Dayton, Ohio office. [Link]
Connolly Bove Lodge & Hutz is looking for patent attorneys with 3-5 years of experience to work at their Wilmington, DE office. [Link]
Faegre Baker Daniels is searching for a patent associate with a Ph.D. in the life sciences and 2-4 years of experience to work at their Indianapolis office.[Link]
Westerman, Hattor, Daniels & Adrian is seeking a electrical attorney/agent with 1-3 years of experience to work at their D.C. office. [Link]
Maquet is looking for a patent attorney with a minimum of 3 years of patent prosecution experience to work at their Wayne, N.J. office. [Link]
Drinker Biddle & Reath is searching for a patent agent with 3+ years of experience and a degree in EE to work at their Chicago or D.C. office. [Link]
Hiscock & Barclay is seeking a patent attorneys/agents with 3-5 years of experience to work at in their upstate NY office. [Link]
Bass, Berry & Sims is looking for IP associates with 1-4 years of experience to work at their Nashville office. [Link]
Trop, Pruner & Hu is seeking associates with EE/CS backgrounds to work at their Austin or Houston office. [Link]

Upcoming Events:

U.S. Patent Commissioner Speaks: Current Developments in Patents event/webinar will be held on September 13. U.S. Commissioner for Patents, Margaret Focarino, will comment on current developments in patents, especially those occurring at the U. S. Patent and Trademark Office, and participate in questions and answers. [Link] [Webinar]
ACI's FDA Boot Camp conference is scheduled for September 20-21, in Boston. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. [Link] (PatentlyO readers register for with PO 200 for a discount)
C5s 3^rd EU Pharma Regulatory Law conference is scheduled for September 25-26 in Brussels, Belgium. 2012 is set to be a critical year for EU pharma regulation with the implementation of the pharmacovigilance rules, proposals to amend the data protection and clinical trials directives and the new falsified medicinal products directive. [Link] (PatentlyO readers register with PO 10 for a discount)
The 13^th Annual Maximizing Pharmaceutical Patent Lifecycles is scheduled for October 10-11 in New York. The conference will feature, Presentations from key representatives from the USPTO who will provide you with direct insights and the logic of this agency on some of most pressing life cycle management strategies that the industry is facing today, Analyses of recent critical cases affecting patent life cycle planning including: Caraco (use codes); Prometheus (subject matter eligibility); Sun Pharma (double patenting); Ariad (patentability); and Therasense (inequitable conduct) – and strategies for using these cases to your advantage and many more topics. [Link] (PatentlyO readers register for with PO 200 for a discount)
The University of Akron School of Law's Center for IP & Technology will host the 6^th Annual IP Scholars Forum on October 26, 2012, from 9:00AM – 2:00 PM. The Forum's purpose is to bring together a small group of prominent scholars for intensive, high-level discussions on cutting-edge issues of common interest. This year's Forum will discuss "The Impact of IP on Public Health." Guest include: Frank Pasquale, Andrew Torrance, Jim Chen Jay Dratler, Jr., Katherine Van Tassel, and many others. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

September 5, 2012PatentAIA Trials, anticipation, Inequitable Conduct, IPR, PGRDennis Crouch

USPTO Patent Review Processing System Preview

The United States Patent and Trademark Office (USPTO) will preview the new electronic filing system for the trials established under the Leahy-Smith America Invents Act. The preview will take place from 10 am – noon on Thursday, September 6, 2012. Representatives from the Patent Trial and Appeal Board will demonstrate the new Patent Review Processing System (PRPS) and show how to register to use the system, to file a petition seeking a trial, to pay petition fees, to join the proceeding as a patent owner and to file motions and other documents. The preview will be helpful for any practitioners or administrative personnel who anticipate filing documents in the new proceedings beginning September 16, 2012 (inter partes review, post-grant review, and the transitional program for covered business methods). There will also be an opportunity to ask questions. You may attend electronically or in person. [Link]

Patent Jobs:

Stevens & Showalter is seeking a patent attorney/agent with at least 2 years of experience and a background in EE or CS to work at their Dayton, Ohio office. [Link]
Connolly Bove Lodge & Hutz is looking for patent attorneys with 3-5 years of experience to work at their Wilmington, DE office. [Link]
Faegre Baker Daniels is searching for a patent associate with a Ph.D. in the life sciences and 2-4 years of experience to work at their Indianapolis office.[Link]
Westerman, Hattor, Daniels & Adrian is seeking a electrical attorney/agent with 1-3 years of experience to work at their D.C. office. [Link]
Maquet is looking for a patent attorney with a minimum of 3 years of patent prosecution experience to work at their Wayne, N.J. office. [Link]
Drinker Biddle & Reath is searching for a patent agent with 3+ years of experience and a degree in EE to work at their Chicago or D.C. office. [Link]
Hiscock & Barclay is seeking a patent attorneys/agents with 3-5 years of experience to work at in their upstate NY office. [Link]
Bass, Berry & Sims is looking for IP associates with 1-4 years of experience to work at their Nashville office. [Link]
Trop, Pruner & Hu is seeking associates with EE/CS backgrounds to work at their Austin or Houston office. [Link]

Upcoming Events:

U.S. Patent Commissioner Speaks: Current Developments in Patents event/webinar will be held on September 13. U.S. Commissioner for Patents, Margaret Focarino, will comment on current developments in patents, especially those occurring at the U. S. Patent and Trademark Office, and participate in questions and answers. [Link] [Webinar]
ACI's FDA Boot Camp conference is scheduled for September 20-21, in Boston. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. [Link] (PatentlyO readers register for with PO 200 for a discount)
C5s 3^rd EU Pharma Regulatory Law conference is scheduled for September 25-26 in Brussels, Belgium. 2012 is set to be a critical year for EU pharma regulation with the implementation of the pharmacovigilance rules, proposals to amend the data protection and clinical trials directives and the new falsified medicinal products directive. [Link] (PatentlyO readers register with PO 10 for a discount)
The 13^th Annual Maximizing Pharmaceutical Patent Lifecycles is scheduled for October 10-11 in New York. The conference will feature, Presentations from key representatives from the USPTO who will provide you with direct insights and the logic of this agency on some of most pressing life cycle management strategies that the industry is facing today, Analyses of recent critical cases affecting patent life cycle planning including: Caraco (use codes); Prometheus (subject matter eligibility); Sun Pharma (double patenting); Ariad (patentability); and Therasense (inequitable conduct) – and strategies for using these cases to your advantage and many more topics. [Link] (PatentlyO readers register for with PO 200 for a discount)
The University of Akron School of Law's Center for IP & Technology will host the 6^th Annual IP Scholars Forum on October 26, 2012, from 9:00AM – 2:00 PM. The Forum's purpose is to bring together a small group of prominent scholars for intensive, high-level discussions on cutting-edge issues of common interest. This year's Forum will discuss "The Impact of IP on Public Health." Guest include: Frank Pasquale, Andrew Torrance, Jim Chen Jay Dratler, Jr., Katherine Van Tassel, and many others. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

USPTO Patent Grants: Another Record Year (3rd in a Row)

September 5, 2012PatentUSPTO DirectorDennis Crouch

by Dennis Crouch

I am now projecting that the USPTO will issue a record total of more than 250,000 utility patents this calendar year (2012) that is an 11% jump over the previous record set in 2011 and almost 60% more than the office issued just four years ago in 2008. (see the chart below). The rise is largely attributed to President Obama’s choice of David Kappos as director of the USPTO. Kappos has focused the Office’s attention toward addressing the large backlog of cases pending at the PTO. The increasing number of patent grants reflect the results of that focus. Behind the scenes, the USPTO is also rejecting more patent applications than ever before.

Through these efforts, the USPTO’s backlog of unexamined applications dropped by over 100,000 cases in the past year from a starting point of over 700,000 unexamined cases.

I also expect that the USPTO will issue over 22,000 design patents in 2012. Apple’s $1 billion jury verdict is believed to largely rest on the value of Apple’s design patents covering the ornamental shape of their iconic handheld devices.

Apple Escapes Liability for its Cover-Flow & Spotlight OS Features: More on Inducement

September 4, 2012PatentDamagesDennis Crouch

By Dennis Crouch

Mirror Worlds v. Apple (Fed. Cir. 2012)

This is an interesting case to consider in parallel to the recent jury verdict in Apple v. Samsung. In that case, the jury recently found Samsung liable for infringing several Apple patents and awarded the iCompany more than $1 billion in damages. Meanwhile, Samsung has asked the district court to set aside the jury verdict as against the weight of the evidence.

In the present case of Mirror v. Apple, an E.D. Texas jury found Apple liable for infringing several of Mirror's patents and awarded over $600 million in damages. However, on motion from Apple, district court Judge Davis set aside the jury verdict and instead entered a judgment as a matter of law (JMOL) in Apple's favor – concluding that the patentee had failed to provide sufficient evidence of infringement. In a 2-1 decision, the Federal Circuit has affirmed that judgment – agreeing that (despite the jury verdict) "[t]he necessary evidence was not put before the jury to support the verdict of infringement or damages."

In the case, Mirror asserted that the joint operation Apple's Cover Flow GUI (see image below), Time Machine, and Spotlight Search infringes its U.S. Patent Nos. 6,006,227; 6,638,313; and 6,725,427 that cover a GUI implementation of lifestreaming. The inventors listed on these patents are Yale University computer scientists David Gelernter and Eric Freeman and were originally owned by Yale University. Gelernter's 1991 book titled "Mirror Worlds" is the namesake for the company. That book is written largely as a prophesy of what has become the internet as we know it. The original Mirror Worlds company is now defunct, with only its patent enforcement wing moving forward.

The federal circuit agreed that Apple avoided several of the patent claims because its mechanism does not include the equivalent of a cursor or pointer as required by the claims.

Inducement – Proving that the underlying steps were performed: Mirror had presented an inducement theory for several clams. Oddly, the majority began its analysis with a statement of the old law: "Inducement of infringement requires that there be a showing of an underlying act of direct infringement." Citing Linear Tech. Corp. v. Impala Linear Corp., 379 F.3d 1311, 1326 (Fed. Cir. 2004) and not citing Akamai.

Mirror's failure on inducement was that it did not present evidence to the jury showing that anyone had actually performed the steps of the patented method. Mirror did provide user manuals that arguably taught its customers how to use the software in an infringing manner. However, inducement requires evidence that the steps were actually performed.

Mirror Worlds cites no trial testimony of customers actually using each step of the method claims or tying together the various manuals, reviews, and surveys as evidence of actual use of the claimed method.

Regarding user manuals, the Federal Circuit has a somewhat nuanced rule when it comes to inducing infringement. If the infringing method is taught in a compact series of instructions then that can be sufficient to infer that the underlying infringement occurred. However, if the infringing use requires users to pick and choose from various instructions spaced throughout the manual, then a patentee must provide more proof that the underlying steps were actually performed. See E-Pass Techs., Inc. v. 3Com Corp., 473 F.3d 1213 (Fed. Cir. 2007).

In this case, the instruction manual was insufficient and Mirror failed to provide any more direct evidence that the underlying steps were performed. Thus, the appellate panel affirmed that Apple could not be held liable for inducing infringement.

Dissinting in part, Judge Prost would have found sufficient evidence that Apple's customers were infringing and that, therefore, Apple induced the infringement.

Famed attorneys David Boies and Bill Lee argued the case for Mirror World and Apple respectively.

Query: Assume for a minute that Mirror could actually prove that Apple's customers are directly infringing one of the asserted patents and that it simply failed to produce the evidence at trial against Apple. Now that they have lost their case against Apple, an important legal question is whether or not the patentee could now bring a lawsuit against Apple customers and/or Apple retailers (such as Amazon or BestBuy)? As Prof Ochoa points out, this issue is whether defensive nonmutual collateral estoppel (AKA Issue Preclusion) would apply.

USPTO releases new proposed fees

September 4, 2012PatentDennis Crouch

By Dennis Crouch

The USPTO has released a new notice of proposed rulemaking (NPRM). In the press release, the USPTO indicates a 22% drop in fees for “routine patent processes.” Thus, a patent applicant will see a reduction in costs so long as it does not file any appeals; RCEs; petitions; extensions-of-time; excess claims; etc.

Two big kickers are that excess claim fees and the fees for second or subsequent RCEs are significantly increased. Adding a fourth independent claim will cost $420 (up from about $220 on year ago) to encourage applicants to file only “a prudent number of unambiguous claims.” A second or any subsequent request for continued examination will cost $1,700. That increase is seen as a mechanism for discouraging multiple RCE filing.

The USPTO has already finalized the fee structure for new services being offered beginning on September 16 of this year. (e.g., See 8-things to know about September 16). However, this NPRM also suggests that the post grant fees be adjusted (marginally) downward. That change would take place only after these rules are finalized.

The NPRM is scheduled to be published on Thursday 9/6/12 and the public is given 60-days to comment from that date. Comments go to fee.setting@uspto.gov. (ATTN: Michelle Picard).

/media/docs/2012/09/Proposed_Fee_Schedule.pdf

I would expect that the PTO will make some additional changes to this fee structure in response to comments from patent applicants (and others). The final fee structure will likely be implemented in early 2013. Importantly, the micro-entity fees cannot begin until these rules are finalized.

Note: Regarding the $800 surcharge for second or subsequent requests for continued examination (RCE) filing, the PTO would characterize the change as stopping the subsidy of those filings. Up to now, the low RCE fee has not covered the cost of actually performing the re-examination required in the process. The total cost was subsidized from other fees – primarily maintenance and issue fees. Based upon a rudimentary calculation of costs, the USPTO estimates that the new $1,700 fee is set at a point that simply recovers the cost. Thus, with a bit of sophistry, one could argue that the change in fee is not intended to discourage multiple RCE filings but instead is only intended to stop unduly encouraging the filings.

Solvay v. Honeywell and an Alternative Route to a Central Patent Court in Europe

September 3, 2012PatentSupreme CourtDennis Crouch

Guest post by Professor Marketa Trimble (UNLV)

When in 2006 the Court of Justice of the European Communities ("ECJ") clarified the rules of jurisdiction in the European Union ("EU") as they pertained to patent litigation, it left some crucial questions unanswered. The recent judgment of the ECJ in Solvay v. Honeywell (C-616/10, July 12, 2012) provides some additional answers and, most importantly, suggests that there could be a new route open for a central patent court in Europe. A possibility that such a court could informally emerge deserves attention, particularly because of the protracted and complicated negotiations surrounding the creation of a centralized patent court system in Europe, which have generated significant skepticism about the viability of the project as presented by the EU institutions.

In the 2006 judgment GAT v. LuK (Gesellschaft für Antriebstechnik mbH & Co. KG v. Lamellen und Kupplungsbau Beteiligungs KG, C-4/03, July 13, 2006) the ECJ explained that the provision in the Brussels Convention on Jurisdiction (which was replaced by the Brussels I Regulation, Article 22.4, after the original suit), which gives exclusive jurisdiction to decide patent validity to the courts in the country where a patent was granted, applies not only to declaratory judgment suits but to any decisions by a court on patent validity, regardless of how the issue of validity is raised before the court. Commentators concluded that the decision prevented de facto the centralization of litigation of multiple parallel patents in one national court; any time an alleged infringer attacks the validity of foreign patents in suit, the national court has to either dismiss the case or, at a minimum, stay the infringement proceedings until the issue of validity is decided in foreign courts or patent offices.

The problem is that not all court decisions on patent validity are equal; not all result in a final resolution of the question of validity of a patent with erga omnes effects that translate into a cancellation of the patent by the national patent office. The Solvay v. Honeywell case concerned a decision by a Dutch court in which the Dutch court considered the validity of a foreign patent as a preliminary matter to determine whether it could issue a provisional measure, such as a preliminary injunction. In other words, the Dutch court assessed the validity of foreign patents, but its decision in the interim proceedings did not result in the cancellation of those patents by the national patent offices. In Solvay v. Honeywell the ECJ held that Dutch interim proceedings that result in the issuance of provisional measures fall within the scope of Article 31 of the Brussels I Regulation, which establishes a special jurisdictional regime for provisional measures – a regime that does not yield to the exclusive jurisdiction provision. Therefore, as long as proceedings fall within the scope of Article 31, courts may grant provisional measures concerning foreign patents, even if a defendant questions foreign patent validity.

Dutch courts are not the only European courts that make preliminary assessments of patent validity; German courts that decide patent infringement cases regularly assess patent validity as a preliminary question in patent infringement litigation. German court decisions on patent validity made within infringement proceedings also have limited effects, and do not result in the cancellation of patents by the German Patent Office. In the German bifurcated system, where infringement and validity decisions are made by different courts (until the issues meet in the German Supreme Court, if they both proceed that far), infringement courts exercise their discretion to decide whether to stay or continue infringement proceedings based on their assessment of the likelihood of the success of the patent invalidity claim.

The question following Solvay is whether the preliminary assessments by German courts in infringement proceedings should be viewed as being different from the preliminary validity assessments by Dutch courts in interim proceedings. At first glance the Solvay decision seems to suggest that they should be viewed differently; in interim proceedings Dutch courts assert jurisdiction based on Article 31 of the Brussels I Regulation, which does not succumb to the exclusive jurisdiction provision of Article 22.4, while the jurisdiction of German courts in infringement proceedings is based on other provisions of the Brussels I Regulation (Articles 2, 5.3, 6.1), which in cases involving decisions on patent validity must yield to the exclusive jurisdiction of the court of the country in which the patent was granted.

However, there is something in the ECJ decision that suggests that the two types of assessments of patent validity might be viewed similarly. While the ECJ could have stopped at its reference to the structure of the Brussels I Regulation, it continued in paragraphs 49 and 50 of the Solvay decision to analyze the nature of the assessment of validity in Dutch interim proceedings. The ECJ noted that when a preliminary assessment of validity is made, such as the Dutch court's assessment, "there is no risk of conflicting decisions … since the provisional decision … will not in any way prejudice the decision to be taken on the substance" by the court that has exclusive jurisdiction to decide patent validity.

If the application of the exclusive jurisdiction provision in Article 22.4 is to be guided by its primary objective – and if the primary objective is the avoidance of conflicting decisions concerning patent validity (Solvay, par. 47, and GAT, par. 29, but see GAT, par. 21) – and if preliminary assessments of patent validity, such as the ones made by Dutch courts in interim proceedings, cannot, by definition, conflict with any future final decisions on patent validity, then it appears that Article 22.4 should also not apply to German courts' assessments of patent validity in infringement proceedings.

Whether the Solvay judgment supports this interpretation of the applicability of Article 22.4 will have to be tested; although it would seem that the interpretation contradicts the 2006 GAT judgment, a close reading of GAT in light of Solvay suggests that the interpretation might stand a slight chance of success. If provisional assessments of patent validity are held not to be the kinds of decisions on patent validity that can be made only by the courts of the country in which a patent was granted, nothing should prevent German courts from deciding patent infringement cases involving patents granted in foreign countries. Naturally, such infringement cases would proceed only if courts determined that it is likely that the patents will be upheld if their validity is challenged in the countries where the patents were granted. But a patent holder with a strong patent could benefit from centralized patent litigation before the German courts (assuming the courts have jurisdiction over the defendant), and given the extensive expertise of some German courts and some procedural advantages, this possibility could be an attractive, albeit partial, solution to the problem of fragmented patent litigation in Europe.

(For more discussion of patent law and litigation in Germany, particularly in comparison with U.S. patent law and litigation, see Marketa Trimble, Global Patents: Limits of Transnational Enforcement, Oxford University Press, 2012. Chapter 3 from the book is also available at http://ssrn.com/abstract=2130268.)

Dissenting Opinions at the Federal Circuit

September 2, 2012PatentFederal Circuit En BancDennis Crouch

The chart below is based upon an analysis of about 2,300 federal decisions that Westlaw classified as a “patent” decisions based upon the Westlaw Headnote. To make the chart, I tallied the number of times that each Federal Circuit judge was a panel member on a patent decision. Then, I looked to each of those decisions to identify whether a dissenting opinion was filed in the case. The red bar shows the results of this inquiry. Thus, about 27% of the patent decisions that include Judge Pauline Newman as a panel member include a dissenting opinion. Now, Judge Newman is in the majority in some of those cases and dissents in others. The blue bars represent the percent of cases where the given judge joined the dissent. Thus, Judge Newman joined the dissent in about 18% of the patent decisions where she was a panel member.

As is apparent from the chart, Judge Rader has the greatest frequency of being on a unanimous panel and, when there is a dissent, he is the least likely to to be the one dissenting. These are likely good qualities to have in a Chief Judge. Of course, these results primarily rely on decisions that came out before Judge Rader became Chief.

Of course, dissenting views at the Federal Circuit are particularly important because of the lack of other regional circuits deciding patent cases. Highlighting the ongoing debate in dissenting opinions cues attorneys to consider nuanced viewpoints. Dissents also help to highlight cases for the Supreme Court.

A few important caveats with the results.

The search was limited to decisions released between 8/1/2002 and 8/1/2012 that are included in the Westlaw CTAF database and that had been provided with a headnote mentioning the term “patent.” This strategy includes all the major patent decisions and most non-precendential decisions with written opinions. It ordinarily excludes Rule 36 affirmances.
The results include en banc decisions. These very often include dissenting opinions.
The results include includes opinions classified as dissenting opinions by Westlaw. This includes in-part dissents as well as Judge Reyna's recent opinion dubitante.
I included Judge Reyna and O'Malley in the results. However, their low decision total means that their results are not yet stable.

It is not news that Judge Newman is the most frequent dissenter on the Court of Appeals for the Federal Circuit. Gov't contracts attorney Stanfield Johnson recently penned an article titled “The Federal Circuit's Great Dissenter” in the area of government contract jurisprudence. In the view of Mr. Johnson, the dissents arise because Judge Newman is more likely than her colleagues to force the government to defend its actions.

MPEP 2106 Patent Subject Matter Eligibility [R-9]

September 1, 2012PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, anticipation, Broadest Reasonable Interpretation, Claim Construction, Enablement, Licenses, obviousness, PGR, Subject Matter Eligibility, Written DescriptionDennis Crouch

There are two criteria for determining subject matter eligibility and both must be satisfied. The claimed invention (1) must be directed to one of the four statutory categories, and (2) must not be wholly directed to subject matter encompassing a judicially recognized exception, as defined below. The following two step analysis is used to evaluate these criteria.

I. THE FOUR CATEGORIES OF STATUTORY SUBJECT MATTER

Step 1: Is the claim directed to one of the four patent-eligible subject matter categories: process, machine, manufacture, or composition of matter? The subject matter of the claim must be directed to one of the four subject matter categories. If it is not, the claim is not eligible for patent protection and should be rejected under 35 U.S.C. 101 , for at least this reason. A summary of the four categories of invention, as they have been defined by the courts, are:

i. Process – an act, or a series of acts or steps. See Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972) ("A process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing." (emphasis added) (quotingCochrane v. Deener, 94 U.S. 780, 788, 24 L. Ed. 139, 1877 Dec. Comm'r Pat. 242 (1876)); NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1316, 75 USPQ2d 1763, ___(Fed. Cir. 2005) ("A process is a series of acts." (quoting Minton v. Natl. Ass'n. of Securities Dealers, 336 F.3d 1373, , 336 F.3d 1373, 1378, 67 USPQ2d 1614, ___ (Fed. Cir. 2003))). See also 35 U.S.C. 100(b); Bilski v. Kappos, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010).
ii. Machine – a concrete thing, consisting of parts, or of certain devices and combination of devices. Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570, 17 L. Ed. 650 (1863). This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. Corning v. Burden, 56 U.S. 252, 267, 14 L. Ed. 683 (1854).
iii. Manufacture – an article produced from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by handlabor or by machinery. Diamond v. Chakrabarty, 447 U.S. 303, 308, 206 USPQ 193, ___ (1980) (emphasis added) (quoting Am. Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11, 51 S. Ct. 328, 75 L. Ed. 801, 1931 (Dec. Comm'r Pat. 711 (1931))).
iv. Composition of matter – all compositions of two or more substances and all composite articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders or solids, for example. Chakrabarty, 447 U.S. at 308.

Non-limiting examples of claims that are not directed to one of the statutory categories:
i. transitory forms of signal transmission (for example, a propagating electrical or electromagnetic signal per se), In re Nuijten, 500 F.3d 1346, 1357, 84 USPQ2d 1495, ___ (Fed. Cir. 2007);
ii. a naturally occurring organism, Chakrabarty, 447 U.S. at 308;
iii. a human per se, The Leahy-Smith America Invents Act (AIA), Public Law 112-29, sec. 33, 125 Stat. 284 (September 16, 2011);
iv. a legal contractual agreement between two parties, see In re Ferguson, 558 F.3d 1359, 1364, 90 USPQ2d 1035, ___ (Fed. Cir. 2009) (cert. denied);
v. a game defined as a set of rules;
vi. a computer program per se, Gottschalk v. Benson, 409 U.S. at 72;
vii. a company, Ferguson, 558 F.3d at 1366; and
viii. a mere arrangement of printed matter, In re Miller, 418 F.2d 1392, 1396, 164 USPQ 46, ___ (CCPA 1969).

A claim that covers both statutory and non-statutory embodiments (under the broadest reasonable interpretation of the claim when read in light of the specification and in view of one skilled in the art) embraces subject matter that is not eligible for patent protection and therefore is directed to non-statutory subject matter. Such claims fail the first step and should be rejected under 35 U.S.C. 101 , for at least this reason.

For example, machine readable media can encompass non-statutory transitory forms of signal transmission, such as, a propagating electrical or electromagnetic signal per se. See In re Nuijten, 500 F.3d 1346, 84 USPQ2d 1495 (Fed. Cir. 2007). When the broadest reasonable interpretation of machine readable media in light of the specification as it would be interpreted by one of ordinary skill in the art encompasses transitory forms of signal transmission, a rejection under 35 U.S.C. 101 as failing to claim statutory subject matter would be appropriate. Thus, a claim to a computer readable medium that can be a compact disc or a carrier wave covers a non-statutory embodiment and therefore should be rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.

If the claimed invention is clearly not within one of the four categories, it is not patent eligible. However, when the claim fails under Step 1 and it appears from applicant's disclosure that the claim could be amended to be directed to a statutory category, Step 2 below should still be conducted.

II. JUDICIAL EXCEPTIONS TO THE FOUR CATEGORIES

Step 2: Does the claim wholly embrace a judicially recognized exception, which includes laws of nature, physical phenomena, and abstract ideas, or is it a particular practical application of a judicial exception? See Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3225, 95 USPQ2d 1001 (2010) (stating "The Court's precedents provide three specific exceptions to § 101's broad patent-eligibility principles: 'laws of nature, physical phenomena, and abstract ideas.'") (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309, 206 USPQ 193, ___ (1980)).

Determining whether the claim falls within one of the four enumerated categories of patentable subject matter recited in 35 U.S.C. 101 (i.e., process, machine, manufacture, or composition of matter) does not end the analysis because claims directed to nothing more than abstract ideas (such as mathematical algorithms), natural phenomena, and laws of nature are not eligible for patent protection. Diamond v. Diehr, 450 U.S. 175, 185, 209 USPQ 1, 7 (1981); accord, e.g., Chakrabarty, 447 U.S. at 309, 206 USPQ at 197; Parker v. Flook, 437 U.S. 584, 589, 198 USPQ 193, 197 (1978); Benson, 409 U.S. at 67-68 , 175 USPQ at 675. "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." Le Roy v. Tatham,, 55 U.S. (14 How.) 156, 175 (1852). Instead, such "manifestations of laws of nature" are "part of the storehouse of knowledge," "free to all men and reserved exclusively to none." Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 76 USPQ 280, 281 (1948).

Thus, "a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter" under Section 101. Chakrabarty, 447 U.S. at 309, 206 USPQ at 197. "Likewise, Einstein could not patent his celebrated law that E=mc²; nor could Newton have patented the law of gravity." Ibid. Nor can one patent "a novel and useful mathematical formula," Flook, 437 U.S. at 585, 198 USPQ at 195; electromagnetism or steam power, O'Reilly v. Morse, 56 U.S. (15 How.) 62, 113-114 (1853); or "[t]he qualities of … bacteria, … the heat of the sun, electricity, or the qualities of metals," Funk, 333 U.S. at 130, 76 USPQ at 281; see Le Roy, 55 U.S. (14 How.) at 175.

While abstract ideas, physical phenomena, and laws of nature are not eligible for patenting, methods and products employing abstract ideas, physical phenomena, and laws of nature to perform a real-world function may well be. In evaluating whether a claim meets the requirements of 35 U.S.C. 101 , the claim must be considered as a whole to determine whether it is for a particular application of an abstract idea, physical phenomenon, or law of nature, and not for the abstract idea, physical phenomenon, or law of nature itself. Diehr, 450 U.S. at 188-178.

In addition to the terms laws of nature, physical phenomena, and abstract ideas, judicially recognized exceptions have been described using various other terms, including natural phenomena, scientific principles, systems that depend on human intelligence alone, disembodied concepts, mental processes and disembodied mathematical algorithms and formulas, for example. The exceptions reflect the courts' view that the basic tools of scientific and technological work are not patentable.

The claimed subject matter must not be wholly directed to a judicially recognized exception. If it is, the claim is not eligible for patent protection and should be rejected under 35 U.S.C. 101 . However, a claim that is limited to a particular practical application of a judicially recognized exception is eligible for patent protection. A "practical application" relates to how a judicially recognized exception is applied in a real world product or a process, and not merely to the result achieved by the invention. When subject matter has been reduced to a particular practical application having a real world use, the claimed practical application is evidence that the subject matter is not abstract (e.g., not purely mental) and does not encompass substantially all uses (preemption) of a law of nature or a physical phenomenon. See, e.g., Ultramercial v. Hulu, 657 F.3d 1323, 1329, 100 USPQ2d 1140,1145 (Fed. Cir. 2011)(stating that the patent "does not claim a mathematical algorithm, a series of purely mental steps, or any similarly abstract concept. It claims a particular method . . . a practical application of the general concept.").

A. Practical Application of Machines, Manufactures, and Compositions of Matter (Products)

If the claimed product falls within one of the three product categories of invention and does not recite judicially excepted subject matter, e.g., a law of nature, a physical phenomenon, or an abstract idea, it qualifies as eligible subject matter. If a judicial exception is recited in the claim, it must be determined if the judicially excepted subject matter has been practically applied in the product.

Eligible machines, manufactures, and compositions of matter are non-naturally occurring products typically formed of tangible elements or parts that embody a particular or specific, tangible practical application of the invention. Thus, for these product categories, a particular practical application is often self-evident based on the claim limitations that define the tangible embodiment. This is because an idea that is tangibly applied to a structure is no longer abstract, and a law of nature or physical phenomenon that is practically applied to a structure is limited to that particular application of the concept. For example, a cup is the tangible application of the abstract idea of containing a liquid and is one limited embodiment of that idea (which is no longer abstract). As another example, a magnetic door latch is the tangible application of the concept of magnetism and does not wholly embrace the concept of magnetism but, rather, is one limited application of the concept.

A claim that includes terms that imply that the invention is directed to a product, for instance by reciting "a machine comprising…", but fails to include tangible limitations in accordance with its broadest reasonable interpretation is not limited to a practical application, but rather wholly embraces or encompasses the concept upon which the invention is based. This is impermissible as such claim coverage would extend to every way of applying the abstract idea, law of nature or physical phenomenon.

A claim that includes judicially excepted subject matter and whose broadest reasonable interpretation is directed to a man-made tangible embodiment (i.e., structure) with a real world use is limited to a practical application (the subject matter has been practically applied). The reason is that the claim as a whole must be evaluated for eligibility in the same manner that a claim as a whole is evaluated for patentability under 35 U.S.C. 102, 103 and 112.

Once a practical application has been established, the limited occurrence of preemption must be evaluated to determine whether the claim impermissibly covers substantially all practical applications of the judicially excepted subject matter. If so, the claim is not patent-eligible. If the claim covers only a particular practical application of the judicially excepted subject matter, it is patent eligible.

The following examples show the difference between a tangible embodiment that is evidence of a particular practical application and an abstract concept that has no practical application.
(a) A claim that is directed to a machine comprising a plurality of structural elements that work together in a defined combination based on a mathematical relationship, such as a series of gears, pulleys and belts, possesses structural limitations that show that it is a tangible embodiment, providing evidence that the mathematical relationship has been applied (a practical application). Additionally, that tangible embodiment is limited by the claimed structure and would not cover all substantial practical uses of the mathematical relationship. The claim would be eligible for patent protection.
(b) On the other hand, a claim that is directed to a machine ("What is claimed is a machine that operates in accordance with F=ma.") and includes no tangible structural elements under the broadest reasonable interpretation, covers the operating principle based on a mathematical relationship with no limits on the claim scope. Thus, as no tangible embodiment is claimed, there would be no evidence of a practical application. The claim would wholly embrace the mathematical concept of F=ma and would not be eligible subject matter.
(c) As another example, a claim to a non-transitory, tangible computer readable storage medium per se that possesses structural limitations under the broadest reasonable interpretation standard to qualify as a manufacture would be patent-eligible subject matter. Adding additional claim limitations to the medium, such as executable instructions or stored data, to such a statutory eligible claim would not render the medium non-statutory, so long as the claim as a whole has a real world use and the medium does not cover substantially all practical uses of a judicial exception. The claim as a whole remains a tangible embodiment and qualifies as a manufacture. As explained above, the additional claim limitations would be evaluated in terms of whether they distinguish over the prior art.

B. Practical Application of Processes (Methods)

The Supreme Court in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010), clarified the requirements for a claim to be a statutory process. Not every claimed method qualifies as a statutory process. A process claim, to be statutory under 35 U.S.C. 101 , must be limited to a particular practical application. This ensures that the process is not simply claiming an abstract idea, or substantially all practical uses of (preempting) a law of nature, or a physical phenomenon. See MPEP § 2106.01 for further guidance regarding subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations.

A claim that attempts to patent an abstract idea is ineligible subject matter under 35 U.S.C. 101 . See Bilski, 130 S. Ct. at 3230 (''[A]ll members of the Court agree that the patent application at issue here falls outside of § 101 because it claims an abstract idea.''). The abstract idea exception has deep roots in the Supreme Court's jurisprudence. See Bilski, 130 S. Ct. at 3225 (citing Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174–175 (1853)).

Bilski reaffirmed Diehr's holding that ''while an abstract idea, law of nature, or mathematical formula could not be patented, 'an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.''' See Bilski, 130 S. Ct. at 3230 (quoting Diamond v. Diehr, 450 U.S. 175, 187 (1981)) (emphasis in original). The recitation of some structure, such as a machine, or the recitation of some transformative component will in most cases limit the claim to such an application. However, not all such recitations necessarily save the claim: ''Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable.'' See Bilski, 130 S. Ct. at 3231. Moreover, the fact that the steps of a claim might occur in the ''real world'' does not necessarily save it from a 35 U.S.C. 101 rejection. Thus, the Bilski claims were said to be drawn to an ''abstract idea'' despite the fact that they included steps drawn to initiating transactions. The ''abstractness'' is in the sense that there are no limitations as to the mechanism for entering into the transactions.

Consistent with the foregoing, Bilski holds that the following claim is abstract:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
- (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 consumer;
- (b) Identifying market participants for said commodity having a counter-risk position to said consumers; 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 participant transactions balances the risk position of said series of consumer transactions.
Specifically, the Court explains:

The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Bensonand Flook. Allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.

Bilski also held that the additional, narrowing, limitations in the dependent claims were mere field of use limitations or insignificant postsolution components, and that adding these limitations did not make the claims patent-eligible. Claims 1–9 in Bilski are examples of claims that run afoul of the abstract idea exception. The day after deciding Bilski, the Supreme Court denied certiorari in Ferguson v. Kappos, U.S. Supreme Court No. 09–1501, while granting, vacating, and remanding two other Federal Circuit 35 U.S.C. 101 cases. The denial of certiorari left intact the rejection of all of Ferguson's claims. Although the Federal Circuit had applied the machine-or-transformation test to reject Ferguson's process claims, the Supreme Court's disposition of Ferguson makes it likely that the Ferguson claims also run afoul of the abstract idea exception. A representative Ferguson claim is:

1. A method of marketing a product, comprising:
- Developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;
- Using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company [sic], so that different autonomous companies, having different ownerships, respectively produce said related products;
- Obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and
- Obtaining an exclusive right to market each of said plurality of products in return for said using.
The following guidance presents factors that are to be considered when evaluating patent-eligibility of method claims. The factors include inquiries from the machine-or-transformation test, which remains a useful investigative tool, and inquiries gleaned from Supreme Court precedent. See In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2009) (stating that "[a] claimed process is surely patent-eligible under § 101if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing."); and Bilski, 130 S. Ct. at 3227 (stating, "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.'").

While the Supreme Court in Bilski did not set forth detailed guidance, there are many factors to be considered when determining whether there is sufficient evidence to support a determination that a method claim is directed to an abstract idea. The following factors are intended to be useful examples and are not intended to be exclusive or limiting. It is recognized that new factors may be developed, particularly for emerging technologies. It is anticipated that the factors will be modified and changed to take into account developments in precedential case law and to accommodate prosecution issues that may arise in implementing this new practice.

Where the claim is written in the form of a method and is potentially a patentable process, as defined in 35 U.S.C. 100(b), the claim is patent-eligible so long as it is not disqualified as one of the exceptions to 35 U.S.C. 101 's broad patent-eligibility principles; i.e., laws of nature, physical phenomena, and abstract ideas.

Taking into account the following factors, the examiner should determine whether the claimed invention, viewed as a whole, is disqualified as being a claim to an abstract idea. Relevant factors—both those in favor of patent-eligibility and those against such a finding—should be weighed in making the determination. Factors that weigh in favor of patent-eligibility satisfy the criteria of the machine-or-transformation test or provide evidence that the abstract idea has been practically applied. Factors that weigh against patent-eligibility neither satisfy the criteria of the machine-or-transformation test nor provide evidence that the abstract idea has been practically applied. Each case will present different factors, and it is likely that only some of the factors will be present in each application. It would be improper to make a conclusion based on one factor while ignoring other factors.

With respect to the factors listed below, a "field-of-use" limitation does not impose actual boundaries on the scope of the claimed invention. A field-of-use limitation merely indicates that the method is for use in a particular environment, such as "for use with a machine" or "for transforming an article", which would not require that the machine implement the method or that the steps of the method cause the article to transform. A field-of-use limitation does not impose a meaningful limit on the claimed invention. Insignificant "extra-solution" activity means activity that is not central to the purpose of the method invented by the applicant. For example, gathering data to use in the method when all applications of the method would require some form of data gathering would not impose a meaningful limit on the claim.

1.   Factors To Be Considered in an Abstract Idea Determination of a Method Claim

(a)   Whether the method involves or is executed by a particular machine or apparatus

"The machine-or-transformation test is a useful and important clue, and investigative tool, for determining whether some claimed inventions are processes under § 101." Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001, ___ (2010). If so, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn. With respect to these factors, a "machine" is a concrete thing, consisting of parts, or of certain devices and combination of devices. This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. This definition is interpreted broadly to include electrical, electronic, optical, acoustic, and other such devices that accomplish a function to achieve a certain result. An "apparatus" does not have a significantly different meaning from a machine and can include a machine or group of machines or a totality of means by which a designated function or specific task is executed.

Where a machine or apparatus is recited or inherent in a patent claim, the following factors are relevant:

(a) The particularity or generality of the elements of the machine or apparatus; i.e., the degree to which the machine in the claim can be specifically identified (not any and all machines). Incorporation of a particular machine or apparatus into the claimed method steps weighs toward eligibility.

For computer implemented processes, the "machine" is often disclosed as a general purpose computer. In these cases, the general purpose computer may be sufficiently "particular" when programmed to perform the process steps. Such programming creates a new machine because a general purpose computer, in effect, becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software. In re Alappat, 33 F.3d 1526, 1545, 31 USPQ 1545, ___ (Fed. Cir. 1994); see alsoUltramercial v. Hulu, 657 F.3d 1323, 1329, 100 USPQ2d 1140, 1145 (Fed. Cir. 2011) (stating "a programmed computer contains circuitry unique to that computer"). However, "adding a 'computer-aided' limitation to a claim covering an abstract concept, without more, is insufficient to render [a] patent claim eligible" where the claims "are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method." DealerTrack v. Huber, ___ F.3d ___, ___, 101 USPQ2d 1325, 1339-40 (Fed. Cir. 2012). To qualify as a particular machine under the test, the claim must clearly convey that the computer is programmed to perform the steps of the method because such programming, in effect, creates a special purpose computer limited to the use of the particularly claimed combination of elements (i.e., the programmed instructions) performing the particularly claimed combination of functions. If the claim is so abstract and sweeping that performing the process as claimed would cover substantially all practical applications of a judicial exception, such as a mathematical algorithm, the claim would not satisfy the test as the machine would not be sufficiently particular.

(b) Whether the machine or apparatus implements the steps of the method. Integral use of a machine or apparatus to achieve performance of the method weighs toward eligibility, as compared to where the machine or apparatus is merely an object on which the method operates, which weighs against eligibility. See Cybersource v. Retail Decisions, 654 F.3d 1366, 99 USPQ2d 1960 (Fed. Cir. 2011) ("We are not persuaded by the appellant's argument that claimed method is tied to a particular machine because it 'would not be necessary or possible without the Internet.' . . . Regardless of whether "the Internet" can be viewed as a machine, it is clear that the Internet cannot perform the fraud detection steps of the claimed method").

(c) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the machine or apparatus imposes meaningful limits on the execution of the claimed method steps. Use of a machine or apparatus that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility. See Bilski, 138 S. Ct. at 3230 (citing Parker v. Flook, 437 U.S. 584, 590, 198 USPQ 193, ___ (1978)), and Cybersource v. Retail Decisions, 654 F.3d 1366, 99 USPQ2d 1690 (Fed. Cir. 2011) ("while claim 3 requires an infringer to use the Internet to obtain that data . . . [t]he Internet is merely described as the source of the data. We have held that mere '[data-gathering] step[s] cannot make an otherwise nonstatutory claim statutory.'" In re Grams, 888 F.2d 835, 840, 12 USPQ2d 1824, ___ (Fed. Cir. 1989) (quoting In re Meyer, 688 F.2d 789, 794, 215 USPQ 193, ___ (CCPA 1982)))…

(b)   Whether performance of the claimed method results in or otherwise involves a transformation of a particular article

"Transformation and reduction of an article 'to a different state or thing' is the clue to patentability of a process claim that does not include particular machines." Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001 (2010)(quoting Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972). If such a transformation exists, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn.

An "article" includes a physical object or substance. The physical object or substance must be particular, meaning it can be specifically identified. An article can also be electronic data that represents a physical object or substance. For the test, the data should be more than an abstract value. Data can be specifically identified by indicating what the data represents, the particular type or nature of the data, and/or how or from where the data was obtained.

"Transformation" of an article means that the "article" has changed to a different state or thing. Changing to a different state or thing usually means more than simply using an article or changing the location of an article. A new or different function or use can be evidence that an article has been transformed. Manufactures and compositions of matter are the result of transforming raw materials into something new with a different function or use. Purely mental processes in which thoughts or human based actions are "changed" are not considered an eligible transformation. For data, mere "manipulation of basic mathematical constructs [i.e,] the paradigmatic 'abstract idea'," has not been deemed a transformation. Cybersource v. Retail Decisions, 654 F.3d 1366, 1372 n.2, 99 USPQ2d 1690, 1695 n.2 (Fed. Cir. 2011)(quoting In re Warmerdam, 33 F.3d 1354, 1355, 1360 (Fed. Cir. 1994). However, transformation of electronic data has been found when the nature of the data has been changed such that it has a different function or is suitable for a different use. In re Bilski, 545 F.3d 943, 962-63 (Fed. Cir. 2009)(aff'd sub nom Bilski v. Kappos, 130 S. Ct. 3218 (2010)).

Where a transformation occurs, the following factors are relevant:

(a) The particularity or generality of the transformation. The Supreme Court has stated that an invention comprising a process of "'tanning, dyeing, making waterproof cloth, vulcanizing India rubber [or] smelting ores' . . . are instances . . . where the use of chemical substances or physical acts, such as temperature control, changes articles or materials [in such a manner that is] sufficiently definite to confine the patent monopoly within rather definite bounds." Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972) (discussing Corning v. Burden, 15 How.(56 U.S.) 252, 267-68). A more particular transformation would weigh in favor of eligibility.

(b) The degree to which the recited article is particular; i.e., can be specifically identified (not any and all articles). A transformation applied to a generically recited article would weigh against eligibility.

(c) The nature of the transformation in terms of the type or extent of change in state or thing, for instance by having a different function or use, which would weigh toward eligibility, compared to merely having a different location, which would weigh against eligibility.

(d) The nature of the article transformed, i.e., whether it is an object or substance, weighing toward eligibility, compared to a concept such as a contractual obligation or mental judgment, which would weigh against eligibility.

(e) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the transformation imposes meaningful limits on the execution of the claimed method steps. A transformation that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility.

(c)   Whether performance of the claimed method involves an application of a law of nature, even in the absence of a particular machine, apparatus, or transformation

An application of a law of nature may represent patent-eligible subject matter even in the absence of a particular machine, apparatus, or transformation. See, e.g., Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001 (2010)(citing Diamond v. Diehr, 450 U.S. 175, 187, 209 USPQ 1, ___ (1981)) (stating that the Court had previously "explicitly declined to 'hold that no process patent could ever qualify if it did not meet [machine or transformation] requirements.") (quoting Gottschalk v. Benson, 409 U.S. 63, 67, 175 USPQ 673, ___ (1972)). If such an application exists, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn. See MPEP § 2106.01 for further guidance regarding subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations.

Where such an application is present, the following factors are relevant:

(a) The particularity or generality of the application. Application of a law of nature having broad applicability across many fields of endeavor weighs against eligibility, such as where the claim generically recites an effect of the law of nature or claims every mode of accomplishing that effect, such that the claim would monopolize a natural force or patent a scientific fact. See O'Reilly v. Morse, 56 U.S. 62 (1853)(finding unpatentable a claim for "the use of electromagnetism for transmitting signals at a distance"); The Telephone Cases, 126 U.S. 1, 209 (1888)(discussing a method of "transmitting vocal or other sound telepgraphically … by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds," stating "[Bell] had detected a secret of nature . . . .[H]e proceeded promptly to patent, not only a particular method and apparatus for availing of that law, but also the right to avail of that law by any means whatever. Thus considered he has been able to monopolize a natural force, and patent a scientific fact.").

(b) Whether the claimed method recites an application of a law of nature solely involving subjective determinations; e.g., ways to think about the law of nature. Application of a law of nature to a particular way of thinking about, or reacting to, a law of nature would weigh against eligibility. See The Telephone Cases, 126 U.S. at 210 (stating "[counsel for defendant] argued, that in all the cases upholding a claim for a process, the process was one capable of being sensually perceived, verified and proved by oath — not as a matter of opinion, but as a matter of fact."), id. at 211 (discussing Tilghman v. Proctor, 102 U.S. 707 (1880) ("[t]here was a process, all of which lay within ordinary means of observation and verification.").

(c) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the application imposes meaningful limits on the execution of the claimed method steps. An application of the law of nature that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility.

(d)   Whether a general concept (which could also be recognized in such terms as a principle, theory, plan or scheme) is involved in executing the steps of the method

The presence of such a general concept can be a clue that the claim is drawn to an abstract idea. Where a general concept is present, the following factors are relevant:

(a) The extent to which use of the concept, as expressed in the method, would preempt its use in other fields; i.e., that the claim would effectively grant a monopoly over the concept.Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3231, 95 USPQ2d 1001, ___ (2010).

(b) The extent to which the claim is so abstract and sweeping as to cover both known and unknown uses of the concept, and be performed through any existing or future-devised machinery, or even without any apparatus. Gottschalk v. Benson, 409 U.S. 63, 68, 175 USPQ 673, ___ (1972) (stating "[h]ere the process' claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion. The end use may (1) vary from the operation of a train to verification of drivers' licenses to researching the law books for precedents and (2) be performed through any existing machinery or future-devised machinery or without any apparatus").

(c) The extent to which the claim would effectively cover all possible solutions to a particular problem; i.e., that the claim is a statement of the problem versus a description of a particular solution to the problem. See The Telephone Cases, 126 U.S. 1, 161-162 (1888) (discussing Tilghman v. Proctor, 102 U.S. 707 (1880)("'The claim of the patent [in Tilghman] is not for a mere principle.' . . . In that case there was a problem. Find a way, if you can, to combine each atom of water with an atom of acid. If you can do that, then you can reach this important result of resolving the neutral fats into glycerine and acids. And Tilghman's solution of it was: Heat the water under such pressure that the water shall not pass into steam. This was his process; and he claimed, and the court justly allowed, great latitude in its application.")).

(d) Whether the concept is disembodied or whether it is instantiated; i.e., implemented, in some tangible way. A concept that is well-instantiated weighs in favor of eligibility.

See, e.g., Bilski, 138 S. Ct. at 3230 (stating that the Court in Diehr "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." (citing Diehr, 450 U.S. at 192-193)). Accord Research Corp. Technologies v. Microsoft Corp., 677 F.3d 859, 868-869, 97 USPQ2d 1274, ___ (Fed. Cir. 2010) (stating that the claims here "'do not seek to patent a mathematical formula'" but rather a process of halftoning in computer applications, presenting "functional and palpable applications in the field of computer technology" such that applicant's claimed invention requires instantiation (in some claims) through "a 'high contrast film,' 'a film printer,' 'a memory,' and 'printer and display devices'"); Ultramercial v. Hulu, 657 F.3d 1323, 1328, 100 USPQ2d 1140, 1144(Fed. Cir. 2011)(stating that the patent "does not simply claim the age-old idea that advertising can serve as currency, [but instead] a practical application of this idea.").

A concept that is not well-instantiated weighs against eligibility. See DealerTrack v. Huber, ___ F.3d ___, 101 USPQ2d 1325 (2012) where in the court stated:

The claims are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method. The undefined phrase "computer-aided" is no less abstract than the idea of a clearinghouse itself. Because the computer here "can be programmed to perform very different tasks in very different ways," it does not "play a significant part in permitting the claimed method to be performed." Simply adding a "computer aided" limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible… "In order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permit-ting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations."

Dealertrack, ___ F.3d at ___, 101 USPQ2d at 1339-40 (citations omitted). Furthermore, limiting an abstract idea to one field of use or adding token postsolution components does not make the concept patentable.

(e) The mechanism(s) by which the steps are implemented; e.g., whether the performance of the process is observable and verifiable rather than subjective or imperceptible. Steps that are observable and verifiable weigh in favor of eligibility. The Telephone Cases, 126 U.S. at 211 (discussing Tilghman v. Proctor, 102 U.S. 707 (1880) ("[t]here was a process, all of which lay within ordinary means of observation and verification").

(f) Examples of general concepts include, but are not limited to:
• Basic economic practices or theories (e.g., hedging, insurance, financial transactions, marketing);
• Basic legal theories (e.g., contracts, dispute resolution, rules of law);
• Mathematical concepts (e.g., algorithms, spatial relationships, geometry);
• Mental activity (e.g., forming a judgment, observation, evaluation, or opinion);
• Interpersonal interactions or relationships (e.g., conversing, dating);
• Teaching concepts (e.g., memorization, repetition);
• Human behavior (e.g., exercising, wearing clothing, following rules or instructions);
• Instructing ''how business should be conducted.''

See, e.g., Bilski, 138 S. Ct. at 3231 (stating "[t]he concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea."), In re Ferguson, 558 F.3d 1359, 90 USPQ2d 1035 (2009) (cert. denied Ferguson v. PTO, June 29, 2010)(finding ineligible "methods . . . directed to organizing business or legal relationships in the structuring of a sales force (or marketing company);" Benson, 409 U.S. at 67 (stating "mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work."); Bilski, 130 S. Ct. at 3231 (quoting Le Roy v. Tatham, 14 How. (55 U.S.) 156, 175 ("[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")). See also Bilski, 130 S. Ct. at 3259 (Breyer, J. concurring).

2.   Making the Determination of Eligibility

Each of the factors relevant to the particular patent application should be weighed to determine whether the method is claiming an abstract idea by covering a general concept, or combination of concepts, or whether the method is limited to a particular practical application of the concept. The presence or absence of a single factor will not be determinative as the relevant factors need to be considered and weighed to make a proper determination as to whether the claim as a whole is drawn to an abstract idea such that the claim would effectively grant a monopoly over an abstract idea and be ineligible for patent protection.

If the factors indicate that the method claim is not merely covering an abstract idea, the claim is eligible for patent protection under 35 U.S.C. 101 and must be further evaluated for patentability under all of the statutory requirements, including utility and double patenting (35 U.S.C. 101 ); novelty (35 U.S.C. 102); non-obviousness ( 35 U.S.C. 103 ); and definiteness and adequate description, enablement, and best mode (35 U.S.C. 112). 35 U.S.C. 101 is merely a coarse filter and thus a determination of eligibility under 35 U.S.C. 101 is only a threshold question for patentability. 35 U.S.C. 102, 103 , and 112 are typically the primary tools for evaluating patentability unless the claim is truly abstract, see, e.g., Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3229, 95 USPQ2d 1001, ___ (2010). (''[S]ome business method patents raise special problems in terms of vagueness and suspect validity.'').

If the factors indicate that the method claim is attempting to cover an abstract idea, the examiner will reject the claim under 35 U.S.C. 101 , providing clear rationale supporting the determination that an abstract idea has been claimed, such that the examiner establishes a prima facie case of patent-ineligibility. The conclusion made by the examiner must be based on the evidence as a whole. In making a rejection or if presenting reasons for allowance when appropriate, the examiner should specifically point out the factors that are relied upon in making the determination. If a claim is rejected under 35 U.S.C. 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea. Specifically identifying the factors used in the analysis will allow the applicant to make specific arguments in response to the rejection if the applicant believes that the conclusion that the claim is directed to an abstract idea is in error.

III.   Establish on the Record a Prima Facie Case

USPTO personnel should review the totality of the evidence (e.g., the specification, claims, relevant prior art) before reaching a conclusion with regard to whether the claimed invention sets forth patent eligible subject matter. USPTO personnel must weigh the determinations made above to reach a conclusion as to whether it is more likely than not that the claimed invention as a whole either falls outside of one of the enumerated statutory classes or within one of the exceptions to statutory subject matter. "The examiner bears the initial burden … of presenting a prima facie case of unpatentability." In re Oetiker, 977 F.2d 1443, 1445, 24 USPQ2d 1443, 1444 (Fed. Cir. 1992). If the record as a whole suggests that it is more likely than not that the claimed invention would be considered a practical application of an abstract idea, physical phenomenon, or law of nature, then USPTO personnel should not reject the claim.

After USPTO personnel identify and explain in the record the reasons why a claim is for an abstract idea, physical phenomenon, or law of nature with no practical application, then the burden shifts to the applicant to either amend the claim or make a showing of why the claim is eligible for patent protection. See, e.g., In re Brana, 51 F.3d 1560, 1566, 34 USPQ2d 1436, 1441 (Fed. Cir. 1995); see generally MPEP § 2107 (Utility Guidelines).

Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to the patent-eligibility requirement of 35 U.S.C. 101 . Thus, Office personnel should state all non-cumulative reasons and bases for rejecting claims in the first Office action.

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2106.01    ** > Subject Matter Eligibility Analysis of Process Claims Involving Laws of Nature [R-9]

I.   SUMMARY

The following guidance is intended for use in subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations, such as the claims in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __, 132 S.Ct. 1289, 101 USPQ2d 1961 (2012) (Mayo). Process claims that are directed to abstract ideas, such as the claims in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010), should continue to be examined using the guidance set forth in MPEP § 2106.

The guidance set forth in this section should be followed for examination of process claims in which a law of nature, a natural phenomenon, or a naturally occurring relation or correlation (collectively referred to as a natural principle in the guidance) is a limiting element or step. In summary, process claims having a natural principle as a limiting element or step should be evaluated by determining whether the claim includes additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself. If the claim as a whole satisfies this inquiry, the claim is directed to patent-eligible subject matter. If the claim as a whole does not satisfy this inquiry, it should be rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.

II.   ESSENTIAL INQUIRIES FOR SUBJECT MATTER ELIGIBILITY UNDER 35 U.S.C. 101

After determining what applicant invented and establishing the broadest reasonable interpretation of the claimed invention, conduct the following three inquiries on the claim as a whole to determine whether the claim is drawn to patent-eligible subject matter. Further details regarding each inquiry are provided below.
1. Is the claimed invention directed to a process, defined as an act, or a series of acts or steps?

If no, this analysis is not applicable. For product claims see MPEP § 2106. If yes, proceed to Inquiry 2.
2. Does the claim focus on use of a law of nature, a natural phenomenon, or naturally occurring relation or correlation (collectively referred to as a natural principle herein)? (Is the natural principle a limiting feature of the claim?)

If no, this analysis is complete, and the claim should be analyzed to determine if an abstract idea is claimed (see MPEP § 2106). If yes, proceed to Inquiry 3.
3. Does the claim include additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself? (Is it more than a law of nature plus the general instruction to simply "apply it"?)

If no, the claim is not patent-eligible and should be rejected. If yes, the claim is patent-eligible, and the analysis is complete.

III.   DETAILED GUIDANCE FOR USING THE INQUIRIES

A.

Determining What Applicant Invented and the Broadest Reasonable Interpretation

Review the entire specification and claims to determine what applicant believes that he or she invented. Then review the claims to determine the boundaries of patent protection sought by the applicant and to understand how the claims relate to and define what the applicant has indicated is the invention.

Claim analysis begins by identifying and evaluating each claim limitation and then considering the claim as a whole. It is improper to dissect a claimed invention into discrete elements and then evaluate the elements in isolation because it is the combination of claim limitations functioning together that establish the boundaries of the invention and limit its scope.

Establish the broadest reasonable interpretation of the claims when read in light of the specification and from the view of one of ordinary skill in the art. This same interpretation must be used to evaluate the compliance with each statutory requirement. SeeMPEP § 2111 and § 2173 et seq. for further details of claim construction and compliance with 35 U.S.C. 112, second paragraph, respectively.

B.

INQUIRY 1: Process

Under this analysis, the claim must be drawn to a process. A process is defined as an act, or a series of acts or steps. Process claims are sometimes called method claims.

C.

INQUIRY 2: Natural Principle

Does the claim focus on use of a natural principle, i.e., a law of nature, a natural phenomenon, or naturally occurring relation or correlation? (Is the natural principle a limiting feature of the claim?)

A natural principle is the handiwork of nature and occurs without the hand of man. For example, the disinfecting property of sunlight is a natural principle. The relationship between blood glucose levels and diabetes is a natural principle. A correlation that occurs naturally when a man-made product, such as a drug, interacts with a naturally occurring substance, such as blood, is also considered a natural principle because, while it takes a human action to trigger a manifestation of the correlation, the correlation exists in principle apart from any human action. These are illustrative examples and are not intended to be limiting or exclusive.

For this analysis, a claim focuses on a natural principle when the natural principle is a limiting element or step. In that case, the claim must be analyzed (in Inquiry 3) to ensure that the claim is directed to a practical application of the natural principle that amounts to substantially more than the natural principle itself. So, for instance, a claim that recites a correlation used to make a diagnosis focuses on a natural principle and would require further analysis under Inquiry 3.

If a natural principle is not a limitation of the claim, the claim does not focus on the use of a natural principle and requires no further analysis under this procedure. If the claim focuses on an abstract idea, such as steps that can be performed entirely in one's mind, methods of controlling human activity, or mere plans for performing an action, refer to MPEP § 2106 to evaluate eligibility.

D.

INQUIRY 3: Practical Application and Preemption

Does the claim include additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself? (Is it more than a law of nature plus the general instruction to simply "apply it"?)

A claim that focuses on use of a natural principle must also include additional elements or steps to show that the inventor has practically applied, or added something significant to, the natural principle itself. See Mayo, 101 USPQ2d at 1966. To show integration, the additional elements or steps must relate to the natural principle in a significant way to impose a meaningful limit on the claim scope. The analysis turns on whether the claim has added enough to show a practical application. See id. at 1968. In other words, the claim cannot cover the natural principle itself such that it is effectively standing alone. A bare statement of a naturally occurring correlation, albeit a newly discovered natural correlation or very narrowly confined correlation, would fail this inquiry. See id. at 1965, 1971.

It is not necessary that every recited element or step integrate or relate to the natural principle as long as it is applied in some practical manner. However, there must be at least one additional element or step that applies, relies on or uses the natural principle so that the claim amounts to significantly more than the natural principle itself. Elements or steps that do not integrate the natural principle and are merely appended to it would not be sufficient. In other words, the additional elements or steps must not simply amount to insignificant extra-solution activity that imposes no meaningful limit on the performance of the claimed invention. See id. at 1966. For example, a claim to diagnosing an infection that recites the step of correlating the presence of a certain bacterium in a person's blood with a particular type of bacterial infection with the additional step of recording the diagnosis on a chart would not be eligible because the step of recording the diagnosis on the chart is extra-solution activity that is unrelated to the correlation and does not integrate the correlation into the invention.

Along with integration, the additional steps must be sufficient to ensure that the claim amounts to significantly more than the natural principle itself by including one or more elements or steps that limit the scope of the claim and do more than generally describe the natural principle with generalized instructions to "apply it." See id. at 1965, 1968. The additional elements or steps must narrow the scope of the claim such that others are not foreclosed from using the natural principle (a basic tool of scientific and technological work) for future innovation. Elements or steps that are well-understood, purely conventional, and routinely taken by others in order to apply the natural principle, or that only limit the use to a particular technological environment (field-of-use), would not be sufficiently specific. See id. at 1968. A claim with steps that add something of significance to the natural laws themselves would be eligible because it would confine its reach to particular patent-eligible applications of those laws, such as a typical patent on a new drug (including associated method claims) or a new way of using an existing drug. See id. at 1971; see also 35 U.S.C. 100(b). In other words, the claim must be limited so that it does not preempt the natural principle being recited by covering every substantial practical application of that principle. The process must have additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself. See id. at 1968.

A claim that would fail this inquiry includes, for example, a claim having a limitation that describes a law of nature and additional steps that must be taken in order to apply the law of nature by establishing the conditions under which the law of nature occurs such as a step of taking a sample recited at a high level of generality to test for a naturally occurring correlation. See id. at 1970. Adding steps to a natural biological process that only recite well-understood, routine, conventional activity previously engaged in by researchers in the field would not be sufficient. See id. at 1966, 1970. A combination of steps that amounts to nothing significantly more than an instruction to doctors to "apply" applicable natural laws when treating their patients would also not be sufficient. See id. at 1970.

Claims that do not include a natural principle as a limitation do not raise issues of subject matter eligibility under the law of nature exception. For example, a claim directed to simply administering a man-made drug that does not recite other steps or elements directed to use of a natural principle, such as a naturally occurring correlation, would be directed to eligible subject matter. Further, a claim that recites a novel drug or a new use of an existing drug, in combination with a natural principle, would be sufficiently specific to be eligible because the claim would amount to significantly more than the natural principle itself. However, a claim does not have to be novel or non-obvious to qualify as a subject matter eligible claim. Moreover, a claim that is deemed eligible is not necessarily patentable unless it also complies with the other statutory and non-statutory considerations for patentability under 35 U.S.C. 101 (utility and double patenting), 102, 103, 112, and non-statutory double patenting.

The weighing factors used in MPEP § 2106 are useful tools for assisting in the evaluation. For convenience, these factors and how they may assist in the analysis are summarized below.

E.

RELEVANT FACTORS USEFUL FOR INQUIRY 3

The following factors can be used to analyze the additional features in the claim to determine whether the claim recites a patent-eligible practical application of a natural principle and assist in answering Inquiry 3 above. Many of these factors originate from past eligibility factors, including the 'Machine-or-Transformation' (M-or-T) test. However, satisfying the M-or-T factors does not ensure eligibility if the claim features that include a particular machine or transformation do not integrate the natural principle into the claimed invention to show that the natural principle is practically applied, and are not sufficient to ensure that the claim amounts to significantly more than the natural principle itself.
• Appending conventional steps, specified at a high level of generality, to a natural principle does not make the claim patent-eligible.
• Steps that amount to instructions that are well-understood, routine, conventional activity, previously engaged in by those in the field add nothing specific to the natural principle that would render it patent-eligible.
• A claim that covers known and unknown uses of a natural principle and can be performed through any existing or future-devised machinery, or even without any apparatus, would lack features that are sufficient for eligibility.
• A particular machine or transformation recited in more than general terms may be sufficient to limit the application to just one of several possible machines or just one of several possible changes in state, such that the claim does not cover every substantial practical application of a natural principle. This can be contrasted with only adding features that limit the application to a certain technological environment (e.g., for use in catalytic conversion systems), which would cover every substantial practical application in that field.
• Additional limitations that are necessary for all practical applications of the natural principle, such that everyone practicing the natural principle would be required to perform those steps or every product embodying that natural principle would be required to include those features, would not be sufficient.
• A particular machine or transformation recited in a claim can show how the natural principle is integrated into a practical application by describing the details of how that machine and its specific parts implement the natural principle (e.g., the parts of an internal combustion engine apply the concept of combustion to produce energy) or how the transformation relates to or implements the natural principle (e.g., using ionization in a manufacturing process).
• A machine or transformation that is merely nominally, insignificantly, or tangentially related to the steps or elements, e.g., data gathering or data storage, would not show integration. For example, a machine that is simply incidental to execution of the method (using a computer as a counter balance weight and not as a processing device) rather than an object that implements the method or a transformation that involves only a change of position or location of an object rather than a change in state or thing does not show that these additional features integrate the natural principle into the invention as they are incidental to the claimed invention.
• Complete absence of a machine-or-transformation in a claim signals the likelihood that the claim is directed to a natural principle and has not been instantiated (e.g., is disembodied or can be performed entirely in one's mind.)
• A mere statement of a general concept (natural principle) would effectively monopolize that concept/principle and would be insufficient. This can be contrasted with a tangible implementation with elements or steps that are recited with specificity such that all substantial applications are not covered. Such specificity may be achieved with observable and verifiable steps, for example, rather than subjective or imperceptible steps.

IV.

SAMPLE ANALYSIS

A.

Sample Claim Drawn to a Patent-Eligible Practical Application - Diamond v. Diehr

1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,

initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,

constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding, constantly providing the computer with the temperature (Z),

repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is ln v = CZ + x where v is the total required cure time,

repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time,

and opening the press automatically when a said comparison indicates equivalence.

The above claim was found to be a patent-eligible practical application in Diamond v. Diehr, 450 U.S. 175 (1981). Recently, the Supreme Court looked back to this claim as an example of a patent-eligible practical application as explained in the following excerpt from Mayo:

The Court pointed out that the basic mathematical equation, like a law of nature, was not patentable. But it found the overall process patent eligible because of the way the additional steps of the process integrated the equation into the process as a whole. Those steps included "installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly recalculating the appropriate cure time through the use of the formula and a digital computer, and automatically opening the press at the proper time." [ ] It nowhere suggested that all these steps, or at least the combination of those steps, were in context obvious, already in use, or purely conventional. And so the patentees did not "seek to pre-empt the use of [the] equation," but sought "only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process." [ ] These other steps apparently added to the formula something that in terms of patent law's objectives had significance—they transformed the process into an inventive application of the formula. See Mayo at 1969 (emphasis added).

This claim would pass Inquiries 1-3 in the above analysis as it is a process that includes the Arrhenius equation as a limitation, with additional steps that integrate the Arrhenius equation into the process and are sufficient to narrow the scope of the claim so that others are not foreclosed from using the Arrhenius equation in different applications.

B.

Sample Claim Drawn to Ineligible Subject Matter - Mayo v. Prometheus

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8×10⁸ red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8×10⁸ red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

The above claim was found to be ineligible in Mayo. The Supreme Court determined that the claim focused on use of a law of nature that was given weight during prosecution of the claim – specifically the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm. See id.at 1967. The Court analyzed the claim as follows:

The question before us is whether the claims do significantly more than simply describe these natural relations. To put the matter more precisely, do the patent claims add enough to their statements of the correlations to allow the processes they describe to qualify as patent-eligible processes that apply natural laws? We believe that the answer to this question is no. See id. at 1968.

The upshot is that the three steps simply tell doctors to gather data from which they may draw an inference in light of the correlations. To put the matter more succinctly, the claims inform a relevant audience about certain laws of nature; any additional steps consist of well understood, routine, conventional activity already engaged in by the scientific community; and those steps, when viewed as a whole, add nothing significant beyond the sum of their parts taken separately. For these reasons we believe that the steps are not sufficient to transform unpatentable natural correlations into patentable applications of those regularities. See id. at 1968.

This claim would pass Inquiries 1-2 and fail Inquiry 3. It is a process claim that includes a natural principle that was construed as a limiting feature of a claim during prosecution – the natural principle being the naturally occurring relationships noted above, which are a consequence of the ways in which thiopurine compounds are metabolized by the body. The Court emphasized that while it takes a human action to trigger a manifestation of this relation in a particular person, the relation itself exists in principle apart from any human action. See id. at 1967. The additional steps integrate the relationship into the process as the administering step involves the thiopurine drug, the determining step establishes the thiopurine drug level and the wherein clauses set forth the critical levels. The steps are not sufficient, however, to narrow the application such that others could still make use of the naturally occurring relationship in other practical applications. The claim essentially sets forth a law of nature with generalized instructions to apply it.

C.

Making a Rejection

After performing the appropriate Inquiries, a claim that fails Inquiry 3 should be rejected under 35 U.S.C. 101 as not being drawn to patent-eligible subject matter. When making the rejection, identify the natural principle, identify that the claim is effectively directed to a natural principle itself, and explain the reason(s) that the additional claim features or combination of features, when the claim is taken as a whole, fail to integrate the natural principle into the claimed invention so that the natural principle is practically applied, and/or fail to be sufficient to ensure that the claim amounts to significantly more than the natural principle itself.

A sample rejection of the following claim could read as follows:

Claim 1. A method of determining effective dosage of insulin to a patient, comprising the steps of administering a dose of insulin to a patient, testing the patient's blood for the blood sugar level, and evaluating whether the insulin dosage is effective based on the blood sugar level.

Analysis:

The claim passes Inquiry 1 because it is drawn to a process.

The claim passes Inquiry 2 because a naturally occurring correlation between insulin and blood glucose levels is a limitation of the claim.

The claim does not pass Inquiry 3 because, although the additional steps integrate or make use of the correlation in the process by administering insulin in one step and testing for the correlation in another step, the steps are not sufficient to ensure that the claim amounts to significantly more than the correlation itself since every application of the correlation would require an administration of insulin and testing of blood to observe the relationship between insulin and blood glucose levels.

The rejection:

Claim 1 is rejected under 35 U.S.C. 101 because the claimed invention is directed to non-statutory subject matter because it is not a patent-eligible practical application of a law of nature. The claim is directed to a naturally occurring correlation between insulin and blood glucose levels. The combination of steps recited in the claim taken as a whole, including the steps of administering insulin to a patient and testing blood sugar levels, are not sufficient to qualify as a patent-eligible practical application as the claim covers every substantial practical application of the correlation.

D.

Evaluating a Response

A proper response to a rejection based on failure to claim patent-eligible subject matter would be an amendment adding additional steps/features or amending existing steps/features that integrate the natural principle into the process (by practically applying or making use of the principle) and are sufficient to limit the application of the natural principle to more than the principle itself + steps that do more than simply "apply it" at a high level of generality. Examples of both eligible and ineligible hypothetical claims follow. It would also be proper for the applicant to present persuasive arguments that the additional steps add something significantly more to the claim than merely describing the natural principle. A showing that the steps are not routine, well-known or conventional could be persuasive.

For example, a claim that uses the natural disinfecting properties of sunlight would require additional steps beyond exposing an item requiring disinfection to sunlight. The additional steps could involve constructing a sanitizing device that uses ultraviolet light for disinfection with steps that integrate the ultraviolet light into the device and are sufficient to confine the use of the ultraviolet light to a particular application (not so broad as to cover all practical ways of applying ultraviolet light). A claim that sets forth the relationship between blood glucose levels and the incidence of diabetes would require additional steps that do significantly more to apply this principle than conventional blood sample testing or diagnostic activity based on recognizing a threshold blood glucose level. Such additional steps could involve a testing technique or treatment steps that would not be conventional or routine.

See the 2012 Interim Procedure for Laws of Nature guidance memo issued July 3, 2012 and posted on the USPTO web site (http://www.uspto.gov/patents/law /exam/2012_interim_guidance.pdf) for additional examples. <

Joint Infringement: Federal Circuit Changes the Law of Inducement

August 31, 2012PatentFederal Circuit En Banc, Licenses, obviousnessDennis Crouch

by Dennis Crouch

Akamai Tech. v. Limelight Networks (Fed. Cir. 2012) (En Banc)
Mckesson Tech. v. Epic Systems (Fed. Cir. 2012) (En Banc)

In a 6–5 en banc decision, the Federal Circuit has loosened the rules for proving liability under the doctrine of inducing infringement. In particular, the court here rejects the prior rule that inducement requires proof of a single actor directly infringing the patent. Rather, the court now holds that the underlying direct “infringement” of a process claim can still lead to inducement liability so long as all of the steps of the method were actually performed. “[I]t is no longer necessary to prove that all the steps were committed by a single entity.”

Inducement is defined by 35 U.S.C. 271(b). That one sentence provision states in its entirety that “whoever actively induces infringement of a patent shall be liable as an infringer.” Before this case, the Federal Circuit had repeatedly held that inducement requires both (1) the act of knowing inducement to infringe (with knowledge of the patent) and (2) actual direct infringement of the patent as defined by Section 271(a). The patentees in this case had a problem with this structure because the accused infringer had allegedly knowingly encouraged different parties to perform different steps of the patented method. Since direct infringement under 271(a) traditionally requires proof that a single-actor performed all of the claimed steps, the patentee was unable to satisfy the second prong of the inducement test. Now, under the new rule, inducement liability exists where the accused infringer (1) knew of the patent; (2) induced performance of the steps of the method; and (3) those steps were actually performed. It follows also that the accused infringer will also be liable if it performs some of the steps of the method and then actively induces performance of the other steps.

In my view, this decision is important because it closes a major loophole that has allowed some entities to knowingly and intentionally take advantage of a patented invention while avoiding the need to take a license.

The decision is important, but fairly narrow because inducement still requires that the accused infringer have knowingly induced the infringement — that is with knowledge that the steps it is encouraging are covered by the patent. The greatest fear of the case is that it might have created liability for parties who innocently performed one or more of the steps of the claimed invention. That fear has not been realized. Michael Barclay who assisted EFF with its brief noted as much in an e-mail this morning:

It’s not as bad as I thought when I saw that they overruled BMC v. Paymentech. The majority merely holds that an active inducer will be held liable so long as one or more parties are induced to practice all the steps of a claimed method. It appears that innocent actors who were “induced” by someone else will **not** be individually liable (unless, of course, they perform all the steps of the method claim themselves and thus are direct infringers). That was one point of EFF’s amicus brief, so from that standpoint, the decision was not all bad. Our brief urged that innocent third parties (those with no level of intent) not be held strictly liable for direct infringement. It appears that is the law.

Barclay has a good point here (in my view) and the decision does a fairly good job of balancing the competing themes of protecting patentees from intentional infringement and also protecting innocent parties who are only one cog in the machine. One issue going forward will be the scope of knowledge required for inducement and how the changes in willful infringement standards will impact inducement. Judge Newman’s dissent raises a host of additional complications. In her view, the decision opens a can of worms that will continue to squirm for years to come.

The majority opinion is limited to allegations of induced infringement under 35 U.S.C. 271(b) and the court expressly refuses in this case to decide the question joint direct infringement under 271(a). In my reading of the case, however, there are insufficient votes on the court to further expand the law of infringement to include joint direct infringement. The majority also limited its opinion to infringement of method claims.

The majority opinion (36 pages) was filed PER CURIAM and signed by Chief Judge Rader and Judges Lourie, Bryson, Moore, Reyna, and Wallach. Judge Linn’s dissent (29 pages) was joined by Judges Dyk, Prost, and O’Malley. Judge Newman separately dissented (38 pages).

Moving forward, this case obviously adds value to method claims. It also adds value to “bigger” methods that achieve value through the interaction of multiple individuals in perhaps asynchronous fashion.

Judge Linn writes a powerful dissent:

The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did. It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it. When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions. But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Supreme Court concerning the proper interpretation of those acts.

The losing parties here will certainly take Judge Linn’s words to the Supreme Court in search of a new pronouncement.

Eight Points to Know about September 16, 2012: Post-Grant Transitions and Deadlines

August 30, 2012PatentAIA Trials, anticipation, Inequitable Conduct, IPR, PGRDennis Crouch

by Dennis Crouch

September 16, 2012 is a big date for parties considering a post-grant challenge to someone else’s patent. Eight things that your clients should know:

End of Inter Partes Reexamination: September 15, 2012 is the last date to request inter partes reexamination under the old system. That is to say, inter partes patent reexamination filings will no longer be accepted on September 16, 2012. Parties who understand and find the current system valuable may want to accelerate their filing timeline accordingly.
Beginning of Inter Partes Review: The new inter partes review system begins on September 16, 2012 and applies to any issued patent that has been issued for at least 9–months.
Inter Partes TRIAL: Despite the similar name, the procedures involved with an inter partes review will be quite different from inter partes reexamination. In short, the review will be more like a trial and heard by a tribunal of administrative patent judges rather than being considered by an examiner.
$$$ Inter Partes Expense $$$: The trial features will certainly make inter partes reviews significantly more expensive based on greater attorney fees. In addition, the fee for filing an inter partes review petition is $27,200 (plus $600.00 for each claim over 20). Current inter partes reexamination fee is $8,800.
$$$ Ex Parte Reexamination $$$: The AIA barely changes the ex parte reexamination process. Those reexaminations can still be requested by third parties. The major change, however, is that the fee for ex parte reexamination will jump on September 16, 2012 from $2,520 to $17,750. What is $15k worth to your client?
Post Grant Review: Except for “covered business methods,” the post grant review system (with its broad-base of potential challenges) is on hold until 2013. In particular, PGR will only be available to challenge granted patents that are filed as applications after the March 16, 2013 first-to-file changeover
Business Method Post Grant Review: The PGR system does open on September 16, 2012 to challenge “covered business methods.” These challenges are limited by the statute to only patents that cover some sort of financial data processing and that do not involve a novel technological feature or solution.
Supplemental Examination: Although perhaps out of place on this list (b/c not a third party challenge), supplemental examination also becomes available on the 16^th of September 2012. This process can cure inequitable conduct that committed during the original ex parte prosecution.

Woodrow Woods v. DeAngelo: Make a Meaningful Supplementation of Your Contention Rog Responses

August 30, 2012Patentanticipation, Claim Construction, Licenses, obviousnessJason Rantanen

By Jason Rantanen

Woodrow Woods v. DeAngelo Marine Exhaust, Inc. (Fed. Cir. 2012) Download 10-1478
Panel: Linn (author), Dyk, Reyna

Woodrow Woods, the owner of two patents relating to water jacketed marine vessel exhaust systems, and Marine Exhaust Systems, his exclusive licensee, sued DeAngelo Marine Exhaust for infringement. During the discovery phase of the case, MES propounded an interrogatory that read "“State with specificity all prior art that anticipates such claims of one or more of the patents at issue or renders them obvious. In doing so, specify the particular claim being referred to and identify why such prior art anticipates such claims or renders them obvious.” (emphasis added by court). DeAngelo responded with the following statement:

“[the] interrogatory seeks attorney work-product information, and is not discoverable. DeAngelo has not yet decided which prior art references it will use to challenge the validity of the patents in suit . . . [they] shall be disclosed as required by 35 U.S.C. § 282.”

On February 8, 2010, the day before the close of discovery, DeAngelo located several old engineering drawings, which it immediately forwarded to MES, accompanied by a letter stating that "[t]hese documents arguably may anticipate the Woods invention(s), or may be relied upon as showing the state of the art in the early 1990’s," and asked whether MES would object to their use should trial begin before March 10 because otherwise DeAngelos' disclosure would violate 35 U.S.C. § 282 (requiring the disclosure of certain information relating to an accused infringer's defenses at least 30 days before trial). MES did not immediately respond, and trial began on April 5, 2010.

During trial, MES moved under FRCP 26 and 37 to strike the drawings DeAngelo had disclosed on February 8. The district court granted the motion, finding the disclosure and supplementation of the interrogatory response (in the form of the letter) to be untimely. After a jury found the patents valid and infringed, the district court denied DeAngelo's renewed motions for JMOL and DeAngelo appealed.

On appeal, the Federal Circuit rejected DeAngelo's contention that the district court had abused its discretion. While the CAFC agreed with DeAngelo that the documents in question were timely produced (they were disclosed before the close of discovery and before the thirty-day outer limit set by § 282), it disagreed that the supplementation of the interrogatory response was inadequate. DeAngelo's communication of February 8, 2010, stated that the documents "may anticipate the Woods inventions, or may be relied upon as showing the state of the art in the early 1990’s," but this did not suffice to comply with the portion of the contention interrogatory in italics prior to the discovery deadline. Emphasizing the important role contention interrogatories play in "helping to discover facts supporting the theories of the parties" and that they "also serve to narrow and sharpen the issues thereby confining discovery and simplifying trial preparation," Slip Op. at 11, the CAFC concluded that the district court was well within its discretion in excluding the drawings as a discovery sanction.

Additional Rulings: The Federal Circuit also rejected each of DeAngelo's other arguments (claim construction, obviousness, noninfringement, and Rule 11 sanctions). On obviousness, the court disagreed with DeAngelo that Woods' amendment in response to an examiner rejection for anticipation qualifies as an admission that all limitations in the initial claims, existed in the prior art. "A patent applicant is not presumed to have conceded the presence in the prior art of every claim limitation he had no reason to dispute." Slip Op. at 25.

The CAFC also agreed with the district court that MES and Woods had conducted an adequate pre-suit investigation, as required by FRCP 11(b). "Here, the record is replete with evidence supporting the district court’s conclusion that MES conducted a sufficient prefiling investigation including photographing and studying photographs of DeAngelo’s accused products," slip op. at 27. The court distinguished the inadequate investigation in Judin v. United States, 110 F.3d 780 (Fed. Cir. 1997), on the ground that MES also sought access to the products by making a direct request to DeAngelo (DeAngelo did not provide the requested information prior to the lawsuit).

Global Congress on IP and the Public Interest

August 30, 2012PatentDennis Crouch

In December 2012, Rio de Janeiro (Brasil) will host the Global Congress on IP and the Public Interest. Requests for presenting at the conference are due Sept 1, 2012. See http://infojustice.org/public-events/globalcongress2012

Ten Years of Inter Partes Reexamination Data

August 30, 2012PatentAIA Trials, IPRDennis Crouch

Guest Post by Eric Rogers. Eric is a recent graduate of Chicago Kent's JD program and also holds a PhD in molecular genetics. Eric has conducted an extensive analysis of inter partes patent reexaminations that will soon be published in the Santa Clara Computer & High Technology Law. I asked Eric to provide an overview of his results from the study. Read the full article here: http://ssrn.com/abstract=2121917.

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The Inter Partes patent reexamination (IP reexam) playing field is tilted in favor of rejecting patent claims, as shown by comparing third party requestor appeals to patent owner appeals. On appeal, third party requestors are more likely to have a proposed ground of rejection affirmed and/or to add a new ground of rejection than patent owners are likely to have an adopted ground of rejection reversed. In addition, the vast majority of examiner rejections in IP reexams are upheld upon appeal. Of course, readers should be aware of selection bias in bringing an appeal.

An empirical analysis was performed of the first ten years of decisions by the Board Patent Appeals and Interferences (BPAI) regarding appeals of IP reexams. The analysis of 101 cases focused on answering three broad questions: 1) How accurate are the specialist patent examiners of the Central Reexamination Unit (CRU) of the USPTO? 2) Do patent owners or third party requestors fare better in appeals of decisions in IP reexam proceedings? 3) Which types of appeals are more or less likely to be successful?

Observations:

The average IP reexam appeal involved 7.54 grounds of rejection, and the average completed IP reexam proceeding containing an appeal lasted 4 years and 10 months, as measured from filing the IP reexam request to the issuance of the reexam certificate. About half of all IP reexams were patent owner initiated appeals, and the remainder was divided equally among those initiated by the third party requestor and cross-appeals filed by both the patent owner and the third party.

Examiner Accuracy/Error Rate

The examiners' determinations were fully affirmed 76-78% of the time. This is slightly higher than the affirmed percentage for examiners in general, which over the same time period was around 61-76%. This suggests the CRU specialist examiners might be slightly less likely to be reversed by the BPAI.

Appealing Party Differences

Third party requestors tended to be more successful than patent owners at winning appeals. The reversal percentage observed differed from 14-27% for patent owners and 30-36% for third party requestors. Third party requestors' appeals received the most reversals at 30% to 33% while patent owner appeals received reversals in only 14% to 21% of their appeals. Similarly, third party requestors' appeals received the most reversals of grounds of rejection at 36% while patent owner appeals received reversals of grounds of rejection in only 22 to 27% of their appeals.

Regardless of third party participation, the IP reexam proceeding favors third party requestors. This is shown by third party requestors' statistically significant difference in successful appeals of about 14 percentage-points in maintaining patent claim rejections and adding new grounds of rejection as compared to patent owners' tendency to successfully have patent claim rejections reversed on appeal. Based on a comparison to the general ex parte appeal reversal rate, this bias is probably caused by disadvantages to patent owners rather than any special advantage conferred to third party requestors.

Type of Appeal Differences

Appeals solely by third party requestors of unadopted grounds of rejection were the most successful type of appeal, with a reversal rate of 33%. Appeals by patent owners of adopted grounds of rejection were the least successful, with a reversal rate of 14%.

Future

These historical observations can be used to predict the success rates for appeals of Patent Trial and Appeal Board decisions in Inter Partes Review (IPR) proceedings, which will be implemented in September 2012. Appeals of IPR decisions by third party requestors are predicted to have a better success rate, by about 10-15 percentage points, at maintaining patent claim rejections and adding new grounds of rejection than appeals by patent owners will have at receiving reversal of patent claim rejections. Patent owners will probably have a reversal percentage closer to 15-20% while third party will probably have a reversal percentage closer to 30-35%.

USPTO Webinar on Implementation of the America Invents Act (AIA)

August 30, 2012PatentUSPTO DirectorDennis Crouch

WHAT: USPTO America Invents Act (AIA) Webinar

WHEN: Sept. 7, 2012 at 12:30 p.m. EDT

WHO: USPTO Director David Kappos, Deputy Director Terry Rea, Commissioner for Patents Peggy Focarino, General Counsel Bernie Knight, Chief Judge James Smith, and Lead Judge Michael Tierney. Chief Communications Officer Todd Elmer

WEBEX: Event number: 990 842 706

Event password: 123456

Event address for attendees: https://uspto-events.webex.com/uspto-events/onstage/g.php?d=990842706&t=a

Teleconference (US/Canada): +1-408-600-3600
Access code: 990 842 706

Musical Interlude on Patent Law

August 29, 2012PatentDennis Crouch

Its a bit crude and uses a few words that may offend patent attorneys, but its not often that we get Patent Law related music videos — especially ones with a Kappos cameo:

Judge Richard Linn to take Senior Status

August 29, 2012Patentanticipation, Inequitable ConductDennis Crouch

Judge Richard Linn has announced his intention to take “senior status” effective November 1, 2012. Judge Linn has been sitting as a circuit court judge on the Court of Appeals for the Federal Circuit since January 1, 2000. Judge Linn is a longtime patent attorney and began his patent law career as an examiner at the United States Patent & Trademark Office in 1965 – working while also attending Georgetown University Law Center. He holds a degree in electrical engineering from Rensselaer Polytechnic. In recent years, Judge Linn has been instrumental in developing an alliance of intellectual property focused inns of court known as the “Linn Inn Alliance.”

On the bench, Judge Linn has always been skeptical of novel legal theories. It is fair to place him on the “pro-patentee” side of the bench – especially based upon his notion of broad subject matter eligibility and a high bar for inequitable conduct findings. Judge Linn authored almost 300 patent decisions and his voice of reason will certainly be missed.

Judges on senior status continue to hear cases, but typically with a reduced docket. Those judges are also allowed under the law to move outside of the DC area. Of key importance, his senior status will open a seat on the 12-member bench for an additional nominee. The seat created by Chief Judge Michel’s 2010 retirement also remains open. Edward DuMont was originally nominated for the slot by President Obama, but that nomination rescinded after the Senate failed to even schedule a hearing. In November 2011, President Obama nominated Richard Taranto for the slot. The Senate is expected to eventually confirm the Taranto nomination, but that work might be delayed until after the November election.

Judges Newman, Lourie, Bryson, and Dyk are all eligible to take senior status.