Business Method Claims after Bilski: The Federal Circuit Weighs in on Abstractness

By Alexander J. Smolenski

The Federal Circuit has recently provided fresh guidance on what is patentable subject matter. Its decision promises to get many computer-based innovations over the eligibility hump, but alerts inventors to other pitfalls on the path to securing patent protection.

Addressing whether a claimed process is too "abstract" to be patentable under 35 U.S.C. §101 (the statute defining the subject matter eligible for patenting), the court sets a low bar, ruling that an invention's abstractness must "exhibit itself so manifestly as to override the broad statutory categories" of patent eligibility.  This is the court's first elaboration on patent eligibility since the Supreme Court issued its decision in Bilski v. Kappos this past June.

As we have reported, Bilski invalidated a patent related to hedging the seasonal risks of buying energy.  Confirming that abstract ideas, laws of nature and physical phenomena are not patentable, the Supreme Court found that Bilski's patent was fatally abstract.  However, in doing so the Court provided minimal advice as to the definition of abstractness.

Thus, there was much anticipation that, in Research Corporation Technologies Inc. (RCT) v. Microsoft Corp., the Federal Circuit would define the borders of the "abstract idea" exclusion for patentable subject matter.

RCT asserted against Microsoft six patents related to digital image halftoning, a technique that allows computers to present many shades and color tones with a limited number of pixel colors.  The district court judge struck down two of the patents as invalid under 35 U.S.C. §101, finding, in part, that the asserted claims were not patentable subject matter as they did not satisfy the "machine or transformation" test [1] articulated by the Federal Circuit in Bilski [2]. RCT appealed.

In reversing the judge's decision and finding that the two patents claimed patent-eligible inventions, the Federal Circuit emphasized the breadth of this statement in the Patent Act of 1952: "Whoever invents or discovers any new and useful process, machine, manufacture or composition of matter, or any new useful improvement thereof, may obtain a patent...." 

The Supreme Court has enumerated only three exceptions to the principles of broad patent eligibility: "laws of nature, physical phenomena,  and abstract ideas." Neither of the parties in the RCT case asserted that the claims at issue pertained to laws of nature or physical phenomena.  The analysis therefore turned on whether the claims were abstract. 

The Federal Circuit observed that the Supreme Court in Bilski did not ordain a rigid formula or definition for abstractness, but instead "invited this court to develop other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text."

Chief Judge Rader declared, "With that guidance, this court also will not presume to define 'abstract' beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act."   

The court found that there was nothing abstract in the subject matter of the process claims. [3] It noted:

The invention presents functional and palpable applications in the field of computer technology. These inventions address "a need in the art for a method of and apparatus for the halftone rendering of gray scale images ... The fact that some claims in the '310 and '228 patents require a "high contrast film," "a film printer," "a memory," and "printer and display devices" also confirm this court's holding that the invention is not abstract. Indeed, this court notes that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.

While noting that the claimed methods incorporate algorithms and formulas-- usually treated as laws of nature and/or abstract when standing alone--the Federal Circuit said that they "do not bring this invention even close to abstractness that would override the statutory categories and context."  The court emphasized that, instead of patenting a mathematical formula, the claims seek protection for a process of halftoning in computer applications.

Lastly, the Federal Circuit indicated that section 101 patent eligibility is only a threshold test, and that an invention that passes this test may yet be screened out by other sections of the patent statute.  As an example, the Federal Circuit cautioned that "an invention which is not so manifestly abstract as to override the statutory language of section 101 may nonetheless lack sufficient concrete disclosure to warrant a patent."

Thus, while RCT gives comfort that few inventions, especially software-based ones that have specific application to existing technology, will be disqualified on the basis of abstractness, the court did suggest that other hurdles stand in the path of method claims.  These include the written description and enablement requirements of 35 U.S.C. § 112.

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1 To pass the "machine or transformation" a process claim must either be tied to a special-purpose machine/apparatus or transform an article into a "different state or thing."
2
When the district court struck down the two patents, the "machine or transformation" test had yet to be addressed by the Supreme Court.  Subsequently, in Bilski v. Kappos, the Supreme Court held the test to be a useful, but not exclusive test, for determining whether a process is patentable.

3 The claims at issue include claims 1 and 2 of U.S. Patent 5,111,310 and claim 11 of U.S. Patent 5,341,228:

1. A method for the halftoning of gray scale images by utilizing a pixel-by-pixel comparison of the image against a blue noise mask in which the blue noise mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to produce visually pleasing dot profiles when thresholded at any level of said gray scale images.

2. The method of claim 1, wherein said blue noise mask is used to halftone a color image.

11. A method for the halftoning of color images, comprising the steps of utilizing, in turn, a pixel-by-pixel comparison of each of a plurality of color planes of said color image against a blue noise mask in which the blue noise mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to provide visually pleasing dot profiles when thresholded at any level of said color images, wherein a plurality of blue noise masks are separately utilized to perform said pixel-by-pixel comparison and in which at least one of said blue noise masks is independent and uncorrelated with the other blue noise masks.

Alex Smolenski is a partner at Sunstein. He focuses his practice primarily in patent prosecution matters, product clearance, and patent portfolio development.  He counsels clients in developing a comprehensive IP strategy including identification and protection of intellectual property, efficiently prosecuting patents to issuance.