The U.S. Supreme Court's precedents provide three specific exceptions to 35 U.S.C.S. § 101's broad patent-eligibility principles: laws of nature, physical phenomena, and abstract ideas. While these exceptions are not required by the statutory text, they are consistent with the notion that a patentable process must be "new and useful." Even if an invention qualifies as a process, machine, manufacture, or composition of matter, in order to receive the Patent Act's protection the claimed invention must also be novel, 35 U.S.C.S. § 102, nonobvious, 35 U.S.C.S. § 103, and fully and particularly described, 35 U.S.C.S. § 112
Petitioners' patent application seeks protection for a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The key claims are claim 1, which describes a series of steps instructing how to hedge risk, and claim 4, which places the claim 1 concept into a simple mathematical formula. The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to minimize the risks resulting from fluctuations in market demand. The patent examiner rejected the application on the grounds that the invention is not implemented on a specific apparatus, merely manipulates an abstract idea, and solves a purely mathematical problem. The Board of Patent Appeals and Interferences agreed and affirmed. The United States Court of Appeals for the Federal Circuit affirmed. Under the court of appeals' formulation, an invention was a “process” only if it was tied to a particular machine or apparatus, or it transformed a particular article into a different state or thing.
Did the appellate court err in its decision to reject the petitioner’s patent application for a claimed invention?
The judgment of the court of appeals was affirmed by the Supreme Court. Basing its decision to prior precedent, the Court held that petitioners' claims were not patentable processes because they were attempts to patent abstract ideas. Two claims in petitioners' application explained the basic concept of hedging or protecting against risk. The concept of hedging was an unpatentable abstract idea. Petitioners' remaining claims were broad examples of how hedging could have been used in commodities and energy markets. According to the Court, limiting an abstract idea to one field of use or adding token post-solution components did not make the concept patentable.