Overview of Interim Guidelines for Subject Matter Eligibility - Sent Using Google Toolbar

Overview of Interim Guidelines for Subject Matter Eligibility

Overview of Interim Guidelines for Subject Matter Eligibility

Robert Weinhardt – Business Practice Specialist TC3600.

Interim Guidelines

• Purpose: To assist examiners in determining whether a claim is directed to statutory subject matter under 35 U.S.C. § 101.
• Published in the O.G. 11/22/2005
• Period for public commentary runs until June 30, 2006.
• Submit comments via email addressed to: AB98.Comments@uspto.gov

Additional submission information found in the Federal Register Vol. 70, No. 243, 75451-75452 (Tues, Dec. 20, 2005)

The Interim Guidelines, hereinafter "Guidelines," are intended to assist examiners in determining whether a claim is directed to statutory subject matter under 35 USC 101. They were posted on the USPTO web site on October 26, 2005, and published in the Official Gazette on November 22, 2005. These Guidelines are based on the USPTO's current understanding of the law and are believed to be fully consistent with binding precedent of the Supreme Court, the Federal Circuit and the Federal Circuit's predecessor courts.

These Guidelines do not constitute substantive rulemaking and hence do not have the force and effect of law. The Guidelines set forth the procedures USPTO personnel will follow when examining applications. USPTO personnel are to rely on these Guidelines in the event of any inconsistent treatment of issues between these Guidelines and any earlier provided guidance, including existing MPEP 2106, from the USPTO.

The Guidelines are not meant to be all encompassing for every possible scenario that may occur. Instead, they are intended to provide the rationale examiners and other USPTO personnel should follow to determine whether statutory subject matter is being claimed on a case-by-case basis.

Interim Guidelines Intro

What's In:

• Statutory Categories
• Judicial Exceptions
• Practical Application
• Preemption

There were numerous tests being applied by examiners to determine whether patent eligible subject matter was being claimed. The Guidelines clarify the analysis to be applied and illustrate the prior tests not to be applied.

The statutory categories of invention. USPTO personnel must first identify whether the claim falls within one of the four enumerated categories of patentable subject matter recited in section 101 (process, machine, manufacture or composition of matter);

Judicial Exceptions. Claims directed to nothing more than abstract ideas (such as mathematical algorithms), natural phenomena, and laws of nature are not eligible and therefore are excluded from patent protection.

Practical Application. To be patent eligible, claims including limitation(s) that set forth subject matter excluded by a judicial exception must be for a practical application, e.g. of an abstract idea, law of nature, or natural phenomenon. A practical application results, for example, if the claimed invention "transforms" an article or physical object to a different state or thing; or if the claimed invention produces a useful, concrete and tangible result.

Preemption. Even when a claim applies an abstract idea as part of a seemingly patent eligible product or process, USPTO personnel must ensure that it does not in reality provide patent protection for every substantial practical application (including undisclosed applications) of the abstract idea. That would be, in effect, a patent on the abstract idea itself. Notice how this criterion meshes with 112, first paragraph.

What's Out:

• "Not in the Technological Arts"
• Freeman-Walter-Abele
• Mental Steps or Human Steps
• Machine Implemented
• Data Transformation

The following tests previously applied by some examiners are not determinative of patent-eligible subject matter and should not be used as rationale for rejecting claims under 35 USC 101.

The "Not in the technological arts" criterion. USPTO personnel should no longer rely on the technological arts test to determine whether a claimed invention is directed to statutory subject matter. There are no other recognized exceptions to eligible subject matter other than laws of nature, natural phenomena, and abstract ideas.

Freeman-Walter-Abele. USPTO personnel should not rely on the Freeman-Walter-Abele test, i.e., "data gathering steps" or "insignificant post solution activity," to determine whether a claimed invention is directed to statutory subject matter.

Mental steps or human steps. Even if all the steps of a claimed process can be carried out in the human mind, examiners must still determine whether the claimed process produces a useful, concrete, and tangible result, i.e., apply the practical application test set forth in State Street. The fact that some or all steps of a claimed process can be performed by a human is likewise not an appropriate rationale for rejection. To be patent-eligible, however, the steps must produce either a physical transformation or a useful, concrete and tangible result.

Machine implemented. Whether a claim recites a machine implemented process is not determinative of whether that process claim is statutory. Thus, a finding that a claim fails to recite a computer-implemented process is not determinative in whether that claim passes muster under § 101.

Data transformation. Identifying that a claim transforms data from one value to another is not by itself sufficient for determining whether the claim is eligible for patent protection.

Claims previously rejected under any of the above rationale are not necessarily patent-eligible (i.e., statutory). A rejection may still be reasonable under 101 after applying the appropriate tests set forth in the Interim Guidelines.

Prerequisites to Analysis Under 101

Determine what applicant invented

• Review the spec and claims.
• Identify and understand:
• Any utility and/or practical application asserted by applicant;
• The meaning of claim terms; and Claim scope.

Conduct a thorough search.

• What is known in the art can contribute to understanding the invention.

Prior to any analysis under §101, it is critical that the examiner determine what applicant invented and is seeking to patent. This starts by a review of the specification and the claims. From this, the examiner needs to identify and understand:

Any utility and/or practical application asserted by the applicant. The claimed invention as a whole must be useful and accomplish a practical application. The applicant is in the best position to explain why an invention is believed useful. Accordingly, a complete disclosure should contain some indication of the practical application for the claimed invention, i.e., why the applicant believes the claimed invention is useful. MPEP 2107 provides details for the analysis of utility, but can be summarized in that practical application must be specific, substantial and credible.

The meaning of claim terms. The claims define the property rights provided by a patent, and thus require careful scrutiny. USPTO personnel must always remember to use the perspective of one of ordinary skill in the art in determining the meaning of claim terms. Claims and disclosures are not to be evaluated in a vacuum. The goal of claim analysis is to identify the boundaries of the protection sought by the applicant and to understand how the claims relate to and define what the applicant has indicated is the invention. Only where an explicit definition is provided in the disclosure by the applicant for a term will that definition control interpretation of the term as it is used in the claim. The courts have indicated that such a definition constitutes an unambiguous surrender of subject matter outside such a definition.

Claim scope. The variance in claim scope among the claims must be ascertained. This often provides guidance as to applicant's intent for what is to be included in the coverage of some claims with respect to others. Likewise, the specification may provide evidence of what Applicant intends to be included within the metes and bounds of particular terms used in the claims.

Conduct a thorough search. What is known in the art can contribute to understanding the invention. Because the perspective of one of ordinary skill in the art is used in the analysis, the result of such a search will contribute to USPTO personnel's understanding of the invention.

Analysis Under 101

The prerequisites having been completed, now the analysis can begin. Analysis for determining patent eligible subject matter under §101 is a 4 step process:

1. Does the claimed invention fall within one of the four statutory categories?
2. Does the claimed invention fall within a judicial exception?
3. Does the claimed invention provide a practical application?
4. Does the claimed invention wholly preempt all substantial applications of a judicial exception?

All four steps must be applied to each and every claim to form a complete analysis.

1) Statutory Categories

What do we grant patents for?

• 35 U.S.C. §101 reads: "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."

First step, answer the question, "Does the claimed invention fall within one of the four categories of invention?"

Note that it does not matter which of the four statutory categories of invention as long as it falls within one of the four. The analysis is the same regardless to which category the claim is directed.

The statutory categories of invention are set forth in 35 USC 101, which reads, "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."

• A "machine", "manufacture", and "composition of matter" all define things or products.
• A "process" defines actions i.e. inventions that set forth a series of steps or acts to performed.

A "machine", "manufacture", and "composition of matter" all define things or products.

A "process" defines actions i.e. inventions that set forth a series of steps or acts to performed. This is often done in the form of method claims. This is not to be confused with a manufacture (e.g., memory, computer-readable medium) having instructions stored in or on it for causing steps to be performed when the instructions are executed. Such claims are directed to the manufacture. Likewise, a machine that is claimed in terms of statements of intended use or field of use, "adapted to/for" or "configured to/for" clauses, "wherein" clauses, or "whereby" clauses is a claim directed to the machine. If it appears the claim is directed to multiple statutory categories of invention, see the analysis in MPEP 2173.05(p).

Not in One of the Statutory Categories

Some examples of things that are not included in one of the statutory categories of invention are:

1. Literary works, per se, including story lines and movie plots.
2. Rules to play a game, per se.
3. Legal agreements, per se. For example, a claim to an insurance policy, as contrasted with the method of creating the characteristics of such a policy, would not be patent eligible subject matter.
4. Signals, per se. This includes signals carrying instructions or other functional descriptive material and is covered more thoroughly in Annex IV of the Guidelines.
5. A computer program, logic or language, per se.

These are only a few of the myriad of examples of subject matter which applicants have sought to patent but are not currently believed to be patent eligible subject matter under §101.

If Not, Don't Stop

• If the examiner can establish that a claim does not fall into a statutory category, that does not preclude complete examination for all other conditions of patentability.
• The examiner must continue with the 101 analysis and must still examine the claims for compliance with 102, 103 and 112.

Even if the examiner can establish that a claim does not fall into a statutory category and sets forth a reasonable position in a rejection that the claims are non-statutory, that does not preclude complete examination for all other conditions of patentability. The examiner must continue with the §101 analysis, including that for double patenting, and do a complete analysis under §112. A search must be completed based on the claims as best understood, and any applicable prior art used to formulate rejections under §102 or §103. In short, don't stop or short circuit the examination. Make sure to include all appropriate rejections and objections at the time of the first action on the merits.

2) Judicial Exceptions

Does the claimed invention fall within a judicial exception?

Despite the apparent sweeping breadth of 35 USC 101, and the often quoted "anything under the sun that is made by man." statement made by the Supreme Court in Diamond v. Chakrabarty, 447 U.S. 303, 308-09, 206 USPQ 193, 197 (1980), the Supreme Court has identified three judicial exception categories of nonstatutory subject matter.

They are:

• Laws of nature, per se;
• Natural phenomena, per se; and
• Abstract ideas, per se.

Judicial Exception Examples

Examples of Judicial Exceptions are:

• Laws of nature
• e=mc²; f=ma
• Natural phenomena
• the heat of the sun; electricity; a new mineral; electromagnetism (Charles Morse)
• Abstract ideas
• mathematical algorithms; legal rights

While it's not likely you would see a claim in the exact form listed in any of the above examples, it is quite possible that you may encounter a product claim with characteristics that are nothing more than a law of nature, a method claim which includes steps to an abstract idea, or a composition of matter claim which turns out to include a natural phenomena. Such claims are common and further analysis is required to determine if they are attempting to, per se, claim a judicial exception.

If Yes, Don't Stop

• If a judicial exception is found in the claim, further analysis under 101 is required.
• If a judicial exception is not found in the claim, the claim must fall within a statutory category and meet the other conditions of 101.

Even if the examiner can establish that a judicial exception is found in the claim, further analysis is required to determine whether a practical application of the exception is being claimed and whether preemption applies. A complete examination for all other conditions of patentability must occur. The examiner must continue with the §101 analysis, including double patenting, and do a complete analysis under §112. A search must be completed based on the claims as best understood, and any applicable prior art used to formulate rejections under §102 or §103. In short, don't stop the examination. The reason is easily seen – the subject matter rejection may be overcome by amendment, leaving the remaining issues on the table unless the examiner has raised them already.

If a judicial exception is not found in the claim, and the claim does fall within a statutory category, it is considered eligible for patenting but must still meet the other conditions of 101, e.g., utility.

3) Practical Application

• Two ways to provide a practical application of a judicial exception:
• Physical Transformation,

OR
• Produce A Useful, Concrete, and Tangible Result

Does the claimed invention provide a practical application of a judicial exception?

As mentioned previously, even if the claim does not appear to fall within a statutory category of invention, the analysis under §101 must continue to determine if the claim recites a practical application. If not, that would be further rationale in support of the rejection. Likewise, even if a claim recites a judicial exception, the analysis must continue. The next step in the analysis is to determine if the claim recites a practical application of the exception or just the judicial exception. A claim directed to a practical application of the exception may be directed to patent eligible subject matter, while a claim directed to the exception itself is not. A claim is directed to a practical application when there is either a physical transformation or when a useful, concrete and tangible result is produced. An easily seen instance of such a result is a physical transformation performed by the process or machine claimed, so looking for a physical transformation as a result of the claimed subject matter is an efficient manner of passing this test.

Physical Transformation

• The claimed invention transforms an article or physical object to a different state or thing.
• If transformation is found, this ends the analysis for statutory subject matter.
• Transformation of data is not "physical transformation," nor are physical acts necessarily a "physical transformation."
• Example: manufacturing a tire by curing rubber.

Physical transformation occurs when the claimed invention transforms an article or physical object to a different structural state or thing. Physical transformation is an indication that the claim is statutory because such a transformation itself is a useful, tangible and concrete result. However, data transformation is not a physical transformation. Data, by definition, is intangible, so the claim must go further to have a tangible result. Thus, manipulation of data in a computer is not, in and of itself, sufficient for establishing that a claim is statutory. Likewise, a physical act is not necessarily a physical transformation. A physical act may, however, provide a useful, concrete and tangible result to establish patent-eligible subject matter. An example of physical transformation rendering a practical application of a judicial exception statutory is a claim to manufacturing a tire by curing rubber, where the curing time is calculated according to a mathematical equation.

• Even if a judicial exception is a limitation of the claimed invention, e.g. a law of nature, if it is applied in the physical transformation, a practical application is provided.
• The claims still need to be checked for utility under 101 however.

Inclusion of a judicial exception as a limitation of a claimed invention does not preclude the claim from being statutory where the claim as a whole is directed to a practical application because a physical transformation has taken place. However, the claim still needs to be checked to determine if it meets the utility requirement under 35 USC 101. For example, claims directed to production of excess energy or perpetual motion may arguably involve a physical transformation, yet they would raise the issue of lacking utility and/or inoperative to be addressed under 101.

Useful, Concrete, Tangible

• If no physical transformation appears in the claim, check for a "useful, concrete and tangible result".
• The focus is on the result, not the steps or structure used to produce the result.
• A useful, concrete and tangible result must be either specifically recited in the claim or flow inherently therefrom.

If no physical transformation appears in the claim then the next step in the analysis is to determine if the claim is otherwise directed to a useful, concrete and tangible result. The focus is on the result of the claim as a whole, not the individual steps or structure used to produce the result.

A useful, concrete and tangible result must be either specifically recited in the claim or flow inherently therefrom. To flow inherently therefrom, it must occur. If there is a reasonable exception or it is merely likely that it would occur, it does not "flow inherently therefrom" and the claim would need to be amended to specifically recite the result.

• Even if a judicial exception is a limitation of the claimed invention, e.g. a law of nature, if it is applied to produce a useful, concrete and tangible result, a practical application is provided.

Inclusion of a judicial exception as a limitation of a claimed invention does not preclude the claim from being statutory where the claim as a whole is directed to a practical application because a useful, concrete and tangible result has taken place. However, the claim still needs to be checked to determine if it meets the utility requirement under 35 USC 101.

"Useful"

• The claimed invention as a whole must satisfy the utility requirement of 101:
• specific,
• substantial, and
• credible utility.
• These criteria require evaluation of the specification and the knowledge in the art.

When no physical transformation is found, the first factor of the second test for practical application is a determination of whether the claimed invention produces a useful result. For an invention to be "useful" it must satisfy the utility requirement of section 101. The USPTO's official interpretation of the utility requirement provides that the utility of a claimed invention has to be (i) specific, (ii) substantial and (iii) credible. See MPEP 2107 for further guidance on these 3 points.

Determining whether the claimed invention is specific, substantial and credible also requires evaluation of the specification and knowledge in the art, hence the need for the prerequisites of determining what applicant invented and conducting a thorough search prior to analysis under 101.

The disclosure may have met the requirements for utility, but what's claimed does not produce a result that reflects it or is too preliminary in and of itself to be a useful result. In these instances, the claimed invention may not provide a useful result even though an appropriate utility has been disclosed, and a rejection as non-statutory would be appropriate.

• A complete disclosure should contain some indication of why the claimed invention is useful.
• If the claimed invention does not fulfill any of the disclosed utilities, determine if the utility would have been recognized by those in the art.

When checking the disclosure to determine what applicant invented, a complete disclosure should contain some indication of why the claimed invention is useful.

If the specification discloses a practical application of a 101 judicial exception, but the claim is broader than the disclosure such that it does not require a practical application, then the claim must be rejected.

If the claimed invention does not produce a useful result, i.e. fulfill any of the disclosed utilities, determine if any utility of the claimed result would have been recognized by those in the art as being specific, substantial and credible. If no utility for the result would have been recognized, then the claim must be rejected as non-statutory for failing to comply with 35 USC 101, i.e., not providing a useful, concrete and tangible result.

"Concrete"

• Usually, a claimed invention is not concrete when a result cannot be assured or is not reproducible.
• Concrete is not a requirement that the result must be 100% accurate (e.g., a claim directed to estimating, predicting or approximating something does not necessarily lack concreteness)
• May require a determination of the level of ordinary skill in the art.

The second factor in this test for practical application is a determination of whether the claimed invention produces a concrete result.

Usually, this question arises when a result cannot be assured. In other words, the process must have a result that can be substantially repeated. Note that the focus is on the result, not the steps themselves. For example, concrete data processing steps could still produce an unrepeatable result if the data being processed is subjective. However, the mere fact that the result is an estimate, prediction or other approximation that may not ultimately be found to be accurate is not a determinative factor for concreteness. Thus, an assured result refers to repeatability and ability to achieve a result rather than ultimate accuracy of the result.

As with the useful test, the prerequisites of determining what applicant invented and conducting a thorough search prior to analysis under 101 are needed in order to ascertain whether a particular result can be assured.

Enablement

• In instances where the invention cannot be used as intended without undue experimentation, an appropriate rejection of the claim as being nonstatutory under 35 U.S.C. 101 should be accompanied by a lack of enablement rejection under 35 U.S.C. 112 first paragraph.

When a rejection under §101 is made for lacking concreteness and the invention cannot operate as intended without undue experimentation because of the lack of repeatability or predictability, the §101 rejection should be accompanied by a lack of enablement rejection under 35 U.S.C. § 112, first paragraph.

Note that contrary to rejections made for lack of utility or inoperativeness under §101 which are always accompanied by a §112, first paragraph, rejection, the only time a §112, first paragraph rejection necessarily accompanies a §101 non-statutory rejection is when the issue is a lack of concreteness.

"Tangible"

• "Real world" result.
• Not necessarily tied to a machine; not a duplicate of "physical transformation".
• In other words, the opposite of "tangible" is "abstract".
• Thoughts are not "real world" results.
• Example: Calculating a price of an item to sell and then conveying the calculated price to a potential customer

The third and final factor in this test for practical application is a determination of whether the claimed invention produces a tangible result. The tangible requirement does not necessarily mean that a claim must either be tied to a particular machine or apparatus, or must operate to change articles or materials to a different state or thing. To be tangible the claim must recite more than a § 101 judicial exception, in that the process claim must set forth a practical application of that § 101 judicial exception to produce a real-world result.

If the result is merely a thought, this is not a tangible or real-world result. For example, merely determining or calculating a price may not be held to be a tangible result, instead reasonably being interpreted as just a thought or a computation within a processor; however, calculating a price of an item to sell and then conveying the calculated price to a potential customer would be a tangible result.

Descriptive Material and Practical Application

Computer-data related products such as software, data structures and collections of data are also evaluated for a practical application.

Computer-data related products are classified into one of two groups, either

1. functional descriptive material,

or
2. non-functional descriptive material.

Functional Descriptive Material

• "Functional descriptive material" includes data structures and computer programs which impart functionality when employed as a computer component.
• The definition of "data structure" is "a physical or logical relationship among data elements, designed to support specific data manipulation functions."
• See The New IEEE Standard Dictionary of Electrical and Electronics Terms 308 (5th ed. 1993).

Functional descriptive material includes data structures and computer programs which impart functionality when employed as a computer component.

Computer programs may be explicitly claimed as, for example, a series of code or instructions for performing functions or may be implicitly claimed as, for example, a system or a tool or a logic or a module. Where there is no evidence in the specification that a term or phrase which may be interpreted as software, hardware or combinations thereof necessarily includes hardware, it should be interpreted in its broadest reasonable sense as software.

The definition of "data structure" from the 5th edition of the IEEE Standard Dictionary of Electrical and Electronics terms is "a physical or logical relationship among data elements, designed to support specific data manipulation functions."

Note that mere use of the term "data structure" does not mean a data structure is being claimed. The elements of the data structure must be evaluated to determine if, when taken as a whole, they constitute a data structure in accordance with the IEEE definition (may be statutory) or are a mere compilation of data (non-statutory).

• Functional Descriptive material per se is not statutory.
• Cf. In re Warmerdam, disembodied data structure claim.
• Functional Descriptive material in combination with an appropriate computer readable medium must be capable of producing a useful, concrete and tangible result when used in a computer system.
• Cf. In re Warmerdam – data structure stored in a computer memory, and In re Lowry, 32 USPQ2d 1031 (Fed. Cir. 1994) – data structure in a "computer readable medium".
• The "computer readable medium" must be physical structure, not a signal, which permits the functionality to be realized with the computer.

Functional descriptive material, per se, is not statutory. This is exemplified in In re Warmerdam 31 USPQ2d 1754 where the rejection of a claim to a disembodied data structure was affirmed. Thus a claim to a data structure, per se, or other functional descriptive material, including computer programs, per se, is not patent eligible subject matter.

Functional descriptive material claimed in combination with an appropriate computer readable medium to enable the functionality to be realized is patent eligible subject matter if it is capable of producing a useful, concrete and tangible result when used in the computer system. Compare Warmerdam to In re Lowry 32 USPQ2d 1031 where a memory with a data structure that increased computing efficiency was patentable.

The computer readable medium must be physical structure which provides the functional descriptive material in usable form to permit the functionality to be realized with the computer. A program product which does not explicitly include such a medium, a program per se, a signal or other type of transmission media that fails to include the hardware necessary to realize the functionality (e.g., a transmitter or a receiver), and a piece of paper with the functional descriptive material written on it are all examples of media which are not believed to enable the functionality to be realized with the computer. 

Non-Functional Descriptive Material

• Non-functional descriptive material per se is an abstract idea, and therefore is not statutory.
• Non-Functional Descriptive Material is not statutory even if in combination with a physical medium.
• No useful, concrete or tangible result is produced since there is no functionality.

Examples of Non-Functional Descriptive Material

• Music
• Literature
• Art
• Photographs
• Data formats, frames or packets
• Data base per se
• Mere arrangements of facts or compilations of data
• Share price on a disk

Even when non-functional descriptive material is stored to be read or outputted by a computer without any functional interrelationship, they do not impart functionality to the computer, i.e., they are not computer components.

This last example is a reference to the State Street decision. While the CAFC determined that a claim to an apparatus that produced a share price and allocated funds in accordance therewith produces a useful, concrete and tangible result, a claim just to the result itself in this case is non-functional descriptive material.

These examples are merely stored to be read or outputted by a computer without any functional interrelationship with the computer, and thus they do not impart any functionality to the computer. That is, they are not computer components. Again, consider In re Lowry, the data structure functioned as a computer component and increased computing efficiency.

Practical Application

• A claim to a proper computer readable medium (not e.g. a signal) encoded with functional descriptive material that can function with a computer to effect a useful, concrete and tangible result (e.g. running an assembly line or executing a stock transaction) satisfies the practical application test.

Another example of a practical application within the context of computer related inventions is a claim to a computer program on a computer readable medium where the program when executed causes the computer to produce a useful, concrete and tangible result. Please take note that it is possible for a computer program on a computer readable medium to not include a practical application and thus be non-statutory. For example, a computer program on the requisite computer readable medium which merely sets forth generic instructions for solving the mathematical equation e=mc2 does not satisfy the practical application test. On the other hand, a claim to an algorithm that imparts increased efficiency to a computer in computing a particular equation may satisfy such a test. Therefore, a claim to a proper computer readable medium (not e.g. a signal or program listing on paper) encoded with functional descriptive material that can function with a computer to effect a useful, concrete and tangible result (e.g. running an assembly line or executing a stock transaction) satisfies the practical application test. Note that the specification may provide evidence as to what Applicant intends to be included within the metes and bounds of the claimed medium. If there is evidence the medium is intended to cover embodiments which are non-statutory, i.e., the medium is not limited to those media which fall within a statutory category of invention and enable the functionality of what's stored thereon to be realized, the claim must be so rejected. At this time, if Applicant provides no evidence of intent, the reasonable interpretation of computer or machine readable medium conveyed to one of ordinary skill is appropriate tangible physical articles or objects.

If Yes, Don't Stop

Finding a practical application does not end the analysis under 101.

4) Preemption

• A claim may not preempt abstract ideas, laws of nature or natural phenomena.
• Further, a claim may not preempt every "substantial practical application" of an abstract idea, law of nature or natural phenomena because it would in practical effect be a patent on the judicial exceptions themselves.

Does the claimed invention wholly preempt a judicial exception?

Even if the claimed invention recites a seemingly practical application of a judicial exception (for instance an abstract idea or mathematical formula), the examiner must ensure that the claim does not in reality seek patent protection for every substantial practical application of the claimed judicial exception. A claim may not preempt abstract ideas, laws of nature or natural phenomena.

Therefore, a claim may not preempt every "substantial practical application" of an abstract idea, law of nature or natural phenomena because it would in practical effect be a patent on the judicial exceptions itself.

• Thus, even though a practical application is found in the claim, we must determine if every "substantial practical application" is being claimed.
• If every substantial practical application is being claimed, the claim is non-statutory under 101.

Thus, even though a practical application is found in the claim, we must determine if every "substantial practical application" is being claimed. Here is an example of a claim which preempts an abstract idea. A computer comprising: memory; and a processor, where the processor is programmed to perform mathematical algorithm AxBxCxD, where A, B, C and D are real numbers. In this case, even though the claim recites a seemingly statutory apparatus (that is a computer with memory and a processor), the claim in reality provides patent protection for every substantial practical application of the mathematical algorithm itself.

If you believe you have an issue of preemption, contact members of your TC-specific 101 Help Panel at the e-mail address which is provided as part of the Final Points of this presentation.

Thank You

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USPTO White Paper - Automated Financial or Management Data Processing Methods [Business Methods] - Sent Using Google Toolbar

USPTO White Paper - Automated Financial or Management Data Processing Methods [Business Methods]

EXECUTIVE SUMMARY Recently there has been a marked increase in public attention to the operations of the United States Patent and Trademark Office (USPTO), and specifically, the workgroup responsible for examining patent applications in automated business data processing technologies, Class 705. On March 29, 2000, the USPTO announced a plan to improve the quality of the examination process in technologies related to electronic commerce and business methods. This white paper discusses the patent history of business data processing, the transition this technology is beginning, and the initiatives the USPTO is engaged in to keep pace with this transition and to improve quality in the examination of this technology.

Origin and Evolution - Business data processing has followed an unbroken evolutionary path from mechanical technology up to today's software controlled microprocessors. Automated business data processing itself dates back over a hundred years. The business method claim format has been used in various forms throughout that period. The increase in its use today is an inevitable end result of our progress over the last century. Class 705 (Modern Business Data Processing) - This class contains numerous small groupings and four major groupings directed to specific and general business data processing machines and methods. These machines and methods still heavily reflect the electrical and computer engineering that underlay them. Class 705 saw about 1% of the total patent applications filed at the USPTO in FY 1999. Its 2658 applications did not even place it among the top five Communications and Information Processing technologies. Resources In Transition - In 1998, the State Street decision triggered an awareness of the "business method claim" as a viable form of patent protection. We are at the beginning of a change in the approach to how inventors choose to describe their inventions. This change is in turn driving a shift in the required examiner knowledge base for the examination of Class 705 inventions. As it has for over a century, the USPTO is responding appropriately and is adapting its knowledge base as the needs of the business technologies evolve. Improving Quality - It is universally agreed that high quality examination by USPTO Patent Examiners must be ensured. Quality initiatives are continuously updated. This white paper highlights initiatives in place prior to March 2000, as well as, quality initiatives announced in March by Q. Todd Dickinson, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Customer Partnerships - These are important to improving quality as the USPTO gauges the future needs of Class 705. Customers will know first the future evolution of business data processing technology. Customers' application filings will control the transition of patent application format towards the "business method form" and any future shift that will be required in the knowledge base of Class 705 examiners. They are also in a unique position to assist in providing training needed as part of adapting the knowledge base.

I. INTRODUCTION On September 23, 1975, Ivan E. Sutherland of the Rand Corporation received the 1975 Award for Outstanding Accomplishment of the Systems, Man, and Cybernetics Society. In his acceptance address entitled "Computerized Commerce" (Footnote 1), Mr. Sutherland states "What we should be building is a system of computerized commerce: a "smart" communications network which can remember, process, forward, remind and schedule as well as merely communicating". Mr. Sutherland continues "Computers will become the repositories of manufacturing know-how. Parts lists, purchasing specifications, lists of qualified vendors, design information, fabrication directions, and production history will all be stored in computers. Individuals will be free to take on new tasks more easily than ever before, because the instructions required for those tasks will be available through a variety of on-line computer terminals". In the mid-1990s, Mr. Sutherland's proposed "smart" communication network, now called "Electronic Commerce" or "e-commerce" began finding its niche in the business world. In recent years, the growth of the business technologies, especially the electronic commerce business industry has been phenomenal. This growth has resulted in an increase of business technology patent application filings. Concomitant with this increase in filings there has been a marked increase in public attention to the operations of Workgroup 2760 of the United States Patent and Trademark Office (USPTO) currently responsible for examining patent applications in business related data processing methods and technologies, Class 705. One prominent portion of business method patents is the area of "Automated Financial/Management Business Data Processing Method Patents." Such automated business methods are found in U.S. Patent Class 705..

II. ORIGINS OF FINANCIAL/MANAGEMENT BUSINESS PATENTS - PRODUCT, APPARATUS AND METHOD The creation of a patent system was one of the acts performed by the First Congress of the United States. The first patent statute was passed on April 5, 1790, by the Congress of the twelve United States and signed into law on April 10 by President Washington. Rhode Island ratified the Constitution and joined the Union 49 days later on May 29, 1790. The "Commissioners for the Promotion of the Useful Arts" granted the first United States patent on July 31, 1790. The Commission consisted of Secretary of State Thomas Jefferson, Secretary of War Henry Knox, and Attorney General Edmund Randolph. This first patent was to a chemical method for making potash and pearl ash.(Footnote 2) Financial apparatus and method patents date back to this period. These early financial patents were largely paper-related products and methods. The first financial patent was granted on March 19, 1799, to Jacob Perkins of Massachusetts for an invention for "Detecting Counterfeit Notes." All details of Mr. Perkins invention, which we presume was a device or process in the printing art, were lost in the great Patent Office fire of 1836. We only know of its existence from other sources. Mr. Perkins was perhaps our young nation's most prolific early inventor with nearly 1% of all patents from our first quarter century. Upon his death in 1849, his obituary filled three pages of the Commissioner of Patents annual report to Congress.(Footnote 3) The first financial patent for which any detailed written description survives was to a printing method entitled "A Mode of Preventing Counterfeiting" granted to John Kneass on April 28, 1815. The first fifty years of the U.S. Patent Office saw the granting of forty-one financial patents in the arts of bank notes (2 patents), bills of credit (1), bills of exchange (1), check blanks (4); detecting and preventing counterfeiting (10), coin counting (1), interest calculation tables (5), and lotteries (17).(Footnote 4) Financial patents in the paper-based technologies have been granted continuously for over two-hundred years. See Appendix A for sample Patents. Automated financial/management business data processing method patents cannot trace their origins back to the founding of our nation. However, contrary to popular view, they did not suddenly spring into being in the late 1990's. On January 8, 1889, the era of automated financial/management business data processing method patents was born. United States patents 395,781; 395,782; and 395,783 were granted to inventor-entrepreneur Herman Hollerith on that date.(Footnote 5) See Appendix B for Mr. Hollerith's Patents. Mr. Hollerith's method and apparatus patents automated the tabulating and compiling of statistical information for businesses and enterprises. They were acclaimed nationally and viewed as revolutionizing business data processing. The protection of his patents allowed his fledgling Tabulating Machine Company to succeed and thrive. In 1924, Thomas J. Watson, Sr. changed the company name to International Business Machine Corporation. Hollerith manual punch cards (IBM punch cards) and his methods for processing business data were still being used up until the birth of the personal computer era.(Footnote 6) The financial/management business data processing method patents of today are more numerous and more sophisticated than those of 1889. However, this is not a function of the business method ingenuity of our forebears. Rather, this is directly a function of high cost, low speed, and limited availability of automated data processing machines in the 1890's versus the low cost, high speed, and wide spread use of today's computers. Put another way, we invented some automated business data processing methods over the last one hundred years, but we spent the bulk of that time perfecting the automated business data processing machines upon which we will run the methods. It is only recently that data processing systems have become sufficiently developed to begin to allow us to fully tap our ingenuity in the business method arts. The development of today's business data processing systems follows an unbroken evolutionary path back to simple manually operated mechanical registering devices that predate electrically controlled Hollerith type machines. See Appendix C - 1870 to 1905. Purely mechanical business data processing reached its zenith in the early 20th century. For about $100 ($2000 today), a 1909 merchant could purchase a cash register system that even now is one of the most sophisticated mechanical devices ever constructed. See Appendix D - 1906 to 1920. Unfortunately, business data processing was simplistic in even the most powerful of these totally mechanical registering systems. None were able to match the data processing power of the electrical-mechanical systems such as the Hollerith tabulator. However, manufacturing cost was a key issue and it was not until the 1930s that electrical-mechanical superseded purely mechanical in day-to-day business data processing systems. See Appendix E - 1921 to 1940. The full arrival of electricity as a component in business data processing system was a watershed event. Electrical-mechanical devices provided far more business data processing power than their mechanical predecessors did. By the 1930s it was cost effective to build far more complex data processing systems. A pattern was set that has repeated itself in successive evolutionary steps since the 1930s. Electrical-mechanical switches were replaced by individual transistors. Individual transistors were replaced in turn by small-scale integrated circuits which were replaced by large-scale integrated circuits. Each new generation resulted in increased business data processing power and new inventions. However, one key thing was not significantly improved by each of these generations. Even with the arrival of larger-scale integrated circuits, each data processing system had to be individually designed at the transistor level and hard-wired to perform the correct business data processing functions. The time from innovation through design and manufacturing to market was too long and needed to be improved. The replacement of specific function large-scale integrated circuits by software controlled microprocessors allowed this to occur and was the latest evolutionary step to bring us to the business data processing systems of today. See Appendix F - 1941-1995.

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Business Methods Allowance Checklist

 

 

 

q       Useful, concrete, and tangible result.

 

q       Not a judicial exception per se

                                                         

q       Not just data per se.

 

q       Not simply automating a known or obvious                                  process on a computer or on the internet.

 

q       Not a computer program per se.

 

q       Not merely non-functional data on a storage                                     device, i.e., music on a cd.

 

q       If functional signal is being claimed, must be statically embedded in a computer-readable medium.

 

q       The feature that appears to distinguish over the prior art                  does not merely appear in a recitation of intended use, the            name or title of a feature or in non-functional descriptive                material.

 

q       Searches for analogous art related to the distinguishing                feature were conducted.

 

q       The meanings attributed to the words of the claim are the plain, ordinary, meanings unless criteria for a special definition have          been met.

 

 

 

*You must be able to answer yes to all of these statements.