Board rejects "technological arts" test for process patents
The Board of Patent Appeals and Interferences addressed whether there was a separate "technological arts" test aside from the statutory subject matter test used to decide if an invention is eligible for patent protection. The pending patent application was for a method of compensating a manager who controls operations of a firm for the purpose of reducing the degree to which prices exceed marginal costs in an industry. The issue was whether the method was a process that could be excluded from patent protection. The board found that there was no separate test for "technological arts" and therefore reversed the decision of the patent examiners that the applicant's process was not patentable.
Originally, the patent application was rejected for non-statutory subject matter pursuant to 35 USC § 101. 35 USC § 101 provides that "whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title." On appeal, the decision was reversed. The Examining Corps requested reconsideration, however, based on the issues of (1) whether the invention is in the technological arts and (2) if it is, whether the claim transferring compensation to a manager is a practical application. After further consideration the patent examiner maintained a rejection of the application under 35 USC § 101. The examiner stated that the invention and practical application were outside of the "technological arts" because the invention was "an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of computer, automated means, apparatus of any kind." The appellant filed another appeal.
The Board of Patent Appeals and Interferences reversed the decision of the patent examiner, finding that the method in the patent claim was a process and rejecting the "technological arts" test. The patent examiner drew on In re Musgrave, 57 C.C.P.A. 1352 (C.C.P.A. 1970), to argue "mental steps" are not included within the "technological arts." However, the Board held that there was no "technological arts" test in Musgrave and declined to create one.
After holding that Musgrave did not apply, the Board cited two precedents to show that the applicant's method was a process and eligible for a patent. In AT&T Corp. v. Excel Communications, Inc, 172 F.3d 1352 (Fed. Cir. 1999), the Federal Circuit held that a process claim that applied a mathematical algorithm to "produce a useful, concrete, tangible result without pre-empting other uses of the mathematical principle, on its face comfortably falls within the scope of § 101." Also, the applicant's method did not come within the limits that the Supreme Court set for 35 USC § 101 in Diamond v. Diehr, 450 U.S. 175 (1981), excluding from patent protection "laws of nature, physical phenomena and abstract ideas." The applicant was therefore eligible for a process patent.
Administrative Patent Judge Smith dissented. Judge Smith stated that he would have upheld the examiner's rejection, finding a constitutionally mandated "technological arts" standard that requires a "threshold nexus to some field of technology." Judge Smith asserted that the "technological arts" standard "is intended to represent a more modern term for the reference to 'useful arts' in the Constitution." Judge Smith opinied that any laws passed by Congress to grant patents should be applied in a manner consistent with the constitutional mandate. Judge Smith stated that his view of the constitutional mandate "is that an invention must in some manner be tied to a recognized science or technology in order to promote the progress of the useful arts." Finally, Judge Smith warned that "[t]he majority's position that essentially anything that can be claimed as a process is entitled to a patent under 35 U.S.C. § 101 opens the floodgate for patents on essentially any activity which can be pursued by human beings without regard to whether those activities have anything to do with the traditional sciences or whether they enhance the technological arts in any manner."
In a separate and lengthy dissent, Administrative Patent Judge Barrett, joined by Judge Smith, opined that the process at issue was unpatentable subject matter under section 101. Judge Barrett asserted that the proper test for subject matter patentability under section 101 is that the steps of the process must "operate to physically transform physical subject matter (matter or some form of energy) to a different state or thing."
