001 FUNK BROTHERS v. CALO (VILLAVICENCIO) will infect well defined groups of those plants.
February 16, 1948 | Douglas, J. | Natural products and substances 7. Each species of root nodule bacteria is made up of distinct strains which vary in
PETITIONER: Funk Brothers Seed Company
RESPONDENTS: Kalo Inoculant Company
SUMMARY: Bond discovered that there are strains of each species of root nodule
bacteria that do not exert a mutually inhibitive effect on each other (Bond’s Patent).
It was the general practice, prior to the Bond patent, to manufacture and sell
inoculants containing only one species of root nodule bacteria. Different species of
the Rhizobia bacteria produced an inhibitory effect on each other when mixed in a
common base, with the result that their efficiency was reduced. Hence, it has been
assumed that the different species were mutually inhibitive. In this case, Kalo filed a
suit of patent infringement against Funk Brothers for using the same technique of
Bond covered in Bond’s patent, specifically Patent No. 2,200,532. The District Court
held the product claims invalid for want of invention, and dismissed the complaint.
The Circuit Court of Appeals reversed, holding that the product claims were valid
and infringed. WoN Bond’s patent is a valid patent – NO, because it is a discovery
of a phenomenon of nature. The combination of species produces no new bacteria,
no change in the six species of bacteria, and no enlargement of the range of their
utility. Each species has the same effect it always had. The bacteria perform in their
natural way. Their use in combination does not improve in any way their natural
functioning. (See concurring and dissenting opinions.)
DOCTRINE: Discovery of the fact that certain strains of each species of these
bacteria can be mixed without harmful effect on the properties of either is not
patentable, since it is no more than the discovery of a phenomenon of nature.
FACTS:
1. This is a patent infringement suit brought by Kalo Company. The charge of
infringement is limited to certain product claims of Patent No. 2,200,532 issued
to Bond on May 14, 1940.
2. Funk Brothers filed a counterclaim asking for a declaratory judgment that the
entire patent be adjudged invalid.
3. The District Court held the product claims invalid for want of invention, and
dismissed the complaint. It also dismissed the counterclaim.
4. The Circuit Court of Appeals reversed, holding that the product claims were valid
and infringed.
5. The process that was discussed in this case was about leguminous plants.
Leguminous plants are able to take nitrogen from the air and fix it in the plant for
conversion to organic nitrogenous compounds. The ability of these plants to fix
nitrogen from the air depends on the presence of bacteria of the genus Rhizobium
which infect the roots of the plant and form nodules on them.
6. These root nodule bacteria of the genus Rhizobium fall into at least six species.
No one species will infect the roots of all species of leguminous plants. But each
efficiency.
8. Methods of selecting the strong strains and of producing a bacterial culture from
them have long been known. The bacteria produced by the laboratory methods of
culture are placed in a powder or liquid base and packaged for sale to and use by
agriculturists in the inoculation of the seeds of leguminous plants. This also has
long been well known.
9. It was the general practice, prior to the Bond patent, to manufacture and sell
inoculants containing only one species of root nodule bacteria.
10. If a farmer had crops of clover, alfalfa, and soybeans, he would have to use three
separate inoculants.
11. Different species of the Rhizobia bacteria produced an inhibitory effect on each
other when mixed in a common base, with the result that their efficiency was
reduced. Hence, it has been assumed that the different species were mutually
inhibitive.
12. BOND’S PATENT: Bond discovered that there are strains of each species of root
nodule bacteria that do not exert a mutually inhibitive effect on each other.
13. He also ascertained that those mutually noninhibitive strains can, by certain
methods of selection and testing, be isolated and used in mixed cultures. Thus, he
provided a mixed culture of Rhizobia capable of inoculating the seeds of plants
belonging to several cross-inoculation groups.
ISSUE/s:
1. WoN Bond’s patent is a valid patent – NO, because it is a discovery of a
phenomenon of nature.
RULING: Reversed Circuit Court of Appeals.
RATIO:
1. Bond does not create state of inhibition or of noninhibition in the bacteria. Their
qualities are the work of nature. Those qualities are, of course, not patentable. For
patents cannot issue for the discovery of the phenomena of nature.
2. The qualities of these bacteria, like the heat of the sun, electricity, or the qualities
of metals, are part of the storehouse of knowledge of all men.
3. They are manifestations of laws of nature, free to all men and reserved exclusively
to none.
4. The Circuit Court of Appeals thought that Bond did much more than discover a
law of nature, since he made an new and different composition of noninhibitive
strains which contributed utility and economy to the manufacture and distribution
of commercial inoculants.
5. The Supreme Court thinks that that aggregation of species fell short of invention
within the meaning of the patent statutes.
6. The combination of species produces no new bacteria, no change in the six species
of bacteria, and no enlargement of the range of their utility. Each species has the
same effect it always had. The bacteria perform in their natural way. Their use in
 combination does not improve in any way their natural functioning.
7. There is, of course, an advantage in the combination. The farmer need not buy six
different packages for six different crops. He can buy one package and use it for
any or all of his crops of leguminous plants
8. But a product must be more than new and useful to be patented; it must also satisfy
the requirements of invention or discovery.
groups named in the opinion of the Court.
20. The record thus indicates that the description is sufficiently full, clear, concise,
and exact to enable persons skilled in the art or science to
which this discovery appertains or with which it is most nearly connected to make,
construct, compound, and use the same.

Mr. Justice Frankfurter, concurring:

9. If this is a correct analysis of Bond's endeavors, two different claims of originality

are involved: (1) the idea that there are compatible strains, and (2) the
experimental demonstration that there were in fact some compatible strains.
10. Insofar as the court below concluded that the packaging of a particular mixture of
compatible strains is an invention, and, as such, patentable, Frankfurter agrees,
provided not only that a new and useful property results from their combination,
but also that the particular strains are identifiable and adequately identified.
11. Frankfurter does not find that Bond's combination of strains satisfies these
requirements. The strains by which Bond secured compatibility are not identified,
and are identifiable only by their compatibility.
12. The Circuit Court of Appeals seems to have proceeded on the assumption that
only "a particular composite culture" was devised and patented by Bond, and then
applies it to "any composite culture" arrived at by deletion of mutually inhibiting
strains, but strains which may be quite different from Bond's composite culture.
13. The consequences of such a conclusion call for its rejection.
14. Its acceptance would require, for instance, in the field of alloys, that if one
discovered a particular mixture of metals which, when alloyed, had some
particular desirable properties, he could patent not merely this particular mixture,
but the idea of alloying metals for this purpose, and thus exclude everyone else
from contriving some other combination of metals which, when alloyed, had the
same desirable properties

Mr. Justice Burton, with whom Mr. Justice Jackson concurs, dissenting:

15. They agree with agree with MR. JUSTICE FRANKFURTER that the
combinations so produced satisfied the statutory requirements of invention or
discovery.
16. However, they do not agree that the patent issued for such products is invalid for
want of a clear, concise description of how the combinations were made and used.
17. The completeness and character of the description must vary with the subject to
be described.
18. In the present case, the patentee has defined the combinations in terms of their
mutually inhibiting and noninhibiting effects upon their respective abilities to take
free nitrogen from the air and place it in the soil.
19. It is these effects that differentiate them from the other bacteria heretofore
generally identified only as common members of the same species, and not
commercially valuable for use with leguminous plants of more than one of the
 002 PARKE-DAVIS & CO. v. H.K. MULFORD & CO. (GUECO)
April 28, 1911 | Billings Learned Hand, J. | Patentability of Adrenaline
PETITIONER: Parke-Davis & Co.
RESPONDENTS: H.K. Mulford & Co.
SUMMARY: Takamine, a Japanese chemist, discovered a way to isolate and
purify the hormone, adrenaline, from the suprarenal glands of animals. When he
initially applied for a patent on the adrenaline, it was rejected by the examiner on
the ground that, a discovery, which merely separates the hormone from its natural
surroundings and without introducing any changes, is unpatentable. Because of
this, Takamine changed the chemical nature of the extracted adrenaline by
changing it from salt (which is the natural form found in the suprarenal gland)
into a base. He filed a patent application for such entitled as “Glandular Extractive
Product”. This patent application was granted.
Subsequently, however, Mulford, the rival company of Parke-Davis (where
Takamine worked), began selling a similar product called Adrin. When Parke-
Davis and Takamine knew of this, they sued Mulford for patent infringement.
Mulford argues that the patent issued to Takamine was invalid because
adrenaline, a naturally occurring hormone in the body, is unpatentable. ISSUE:
WoN a patent could be obtained for the isolation of a purified substance that is a
naturally occurring product of nature—YES. THE COURT TOOK NOTE OF
THE FACT THAT TAKAMINE’S PURIFIED ADRENALINE WAS NOVEL
AND THAT IT WAS SUITABLE FOR CERTAIN THERAPEUTIC USES
WHICH THE PREVIOUS FORMS OF ADRENALINE DID NOT AND
COULD NOT EFFECTUATE. RULING: What Takamine had invented was
unique and therefore deserves an important distinction. The base which Takamine
had created was an original production. It differs from previous forms of
adrenaline in that the latter were not suitable for commercial or therapeutic uses,
whereas Takamine’s adrenaline was suitable for such purposes. The invention
was, therefore, novel. While it can be argued that it is merely a purification of the
principle, still his invention introduced a practical purpose that can be used
commercially and therapeutically.
DOCTRINE: Patents on purified naturally occurring substances are valid, and
the creation of a new invention that has commercial and therapeutic novelty is
patentable.
FACTS:
1. Dr. Jokichi Takamine applied for and was granted a patent for Adrenaline.
His invention came in two versions (both patented)—one in the dry powder
1
An American biochemist and pharmacologist who took great interest in isolating pure form of internal
gland hormones. He conducted an extraction once and thought that he had isolated ephinephrine from an
adrenal medulla, but it turns out that he was only able to isolate a monobenzoyl derivative of epinephrine.
form and the other in the form of sodium chloride solution of the boric acid
salt of the dry powder.
2. The crucial step which Takamine discovered was that the base, though with
some impurities, could be directly precipitated by an addition of ammonia or
strictly of caustic alkali and ammonium chloride, which together liberate the
ammonia, and in turn effects precipitation. This substance, ammonium
magnesium phosphate, is a new and inorganic substance arising from the
regrouping of atoms which have been a part of the gland-tissue, but which
have been broken from the molecules which constituted their original form.
(Human language: Takamine found a way to isolate and purify the hormone,
adrenaline, from the suprarenal glands of animals. The purified adrenaline
that he “invented” was more or less free from inert and associated gland
tissue.)
3. Takamine was able to do this because he followed John Jacob Abel’s1 method
for removing fat and protein by partitioning a concentrated extract with
acidified water and then precipitating the active principle with ammonia.
4. When Takamine originally applied for a patent, the examiner rejected his
claim because no patent could be granted if the discovery was merely
separated from its natural surroundings and remained unchanged. Because of
this, Takamine changed the chemical nature of the extracted adrenaline by
changing it from salt (which is the natural form found in the suprarenal gland)
into a base. He filed a patent application for such entitled as “Glandular
Extractive Product”.
5. This was granted.
6. He also obtained British and Japanese patent rights on the said drug.
7. Later on, however, H.K. Mulford, a rival company of Parke, Davis (company
where Takamine worked for), sold a similar product called Adrin.
8. Parke-Davis sued Mulford for patent infringement.
9. Mulford attacked Takamine’s patent with the argument that the hormone
covered by his patent existed in nature or was naturally occurring in the body;
hence, unpatentable.
ISSUE/s:
2. WoN a patent could be obtained for isolation of a purified substance that is a
naturally occurring product of nature—YES. THE COURT TOOK NOTE
OF THE FACT THAT TAKAMINE’S PURIFIED ADRENALINE WAS
NOVEL AND THAT IT WAS SUITABLE FOR CERTAIN
THERAPEUTIC USES WHICH THE PREVIOUS FORMS OF
ADRENALINE DID NOT AND COULD NOT EFFECTUATE.
RATIO:
21. Judge Learned Hand ruled in favor of Takamine and Parke-Davis. He points
out that what Takamine had invented was unique and therefore deserves an
important distinction.
While he was impriving this process of extraction, Takamine, who visited his lab was able to successfully
isolate the neutral base of ephinephrine by adding ammonium to a concentrated extract. Dito na nagstart
yung sa adrenaline.
22. According to Learned Hand, the base which Takamine had created was an
original production. It differs from previous forms of adrenaline in that the
latter were not suitable for commercial or therapeutic uses, whereas
Takamine’s adrenaline was suitable for such purposes.
23. The invention was, therefore, novel. While it can be argued that it is merely
a purification of the principle, still his invention introduced a practical
purpose that can be used commercially and therapeutically.
24. The transformation that took place was a result of human ingenuity, which
produces a product, an innovation as socially marketable and publicly useful
is deserving of a patent grant.
25. The line between different substances and degrees of the same substance is
to be drawn from the common usages of men than from nice considerations
of dialectic.
003 ASSOCIATION FOR MOLECULAR PATHOLOGY vs. MYRIAD
GENETICS INC. (HIRANG)
June 13, 2013 |Thomas, J. | Patentable/Non-Patentable
PETITIONER: ASSOCIATION FOR MOLECULAR PATHOLOGY
RESPONDENTS: MYRIAD GENETICS INC.
SUMMARY: Myriad Genetics was able to precisely locate the BRCA 1 and 2 genes
which are responsible for dramatically increasing an individual’s risk of developing
breast and ovarian cancer. Myriad was able to locate them on chromosomes 17 and
13 of a human’s DNA. Myriad sought and obtained a number of patent and 3 of those
claims are the issue in this case (Please see Facts 3-6). Dr. Ostrer (Researcher in the
New York University School of Medicine), along with medical patients, advocacy
groups, and other doctors, filed this lawsuit seeking a declaration that Myriad’s
patents are invalid under 35 U. S. C. §101. The District Court ruled that both the
isolated DNA and the cDNA are non-patentable as they are naturally occuring. The
Federal Circuit Court on the other hand ruled that the isolated DNA and the cDNA
are patent eligible. (See Fact #10) The issue in this case is WoN the isolated DNA
and the cDNA are patent eligible. The court ruled that the isolated DNA is not patent
eligible while the cDNA is patent eligible. As for the isolated DNA, the court ruled
that Myriad did not create or alter any new gene, genetic structure or genetic
information. The principal contribution of Myriad was to precisely locating the
BRCA 1 and 2 genes using the isolated DNA. The court said that such already existed
even before the discovery of Myriad. Myriad did not create anything. To be sure, it
found an important and useful gene, but separating that gene from its surrounding
genetic material is not an act of invention. As for cDNA, the court ruled that such is
not naturally occuring as only the exons part are left from the DNA and not both
exons and introns which make up the whole DNA sequence. Such is done in a
laboratory without which such separation wouldn’t occur. Even though the cDNA
retains the naturally occuring exons, the court ruled that it is already distinct from
the DNA is was derived from.
DOCTRINE: In order to be considered as patentable, it must not be just an unknown
natural phenomenon but it must instead be a nonnaturally occuring manufacture or
composition of matter – a product of human ingenuity ‘having a distinctive name,
characted and use.
FACTS:
1. This case involves patents filed by Myriad after it discovered the precise location
and sequence of what are now known as the BRCA 1 and BRCA 2 genes.
2. BRCA 1 and 2 are the genes responsible for dramatically increasing an
individual’s risk of developing breast and ovarian cancer. Myriad was able to
locate them on chromosomes 17 and 13 of a human’s DNA
3. Once it found the location and sequence of the BRCA1and BRCA2 genes, Myriad
sought and obtained a number of patents. Nine composition claims from three (3)
of those patents are at issue in this case (Claims 1, 2 and 5)
4. Claim 1 - asserts the patent over the isolated DNA code that tells a cell to produce
a string of BRCA 1 amino acids
5. Claim 2 – asserts the patent over Complementary DNA (cDNA)
a. Here only the exons are present instead of both exons and introns
which compose a full DNA sequence (Parang hiniwalay nila tapos
yung natira lang is yung exons part ng DNA and not both exons and
introns)
6. Claim 5 (together with Claim 6 perahas lng sila ng laman but claim 5 is for
DNA under Claim 1 and Claim 6 is for cDNA under claim 2) – asserts patent
over an isolated DNA having at least 15 nucleotides of the DNA of claim 1
(DNA) and claim 2 (cDNA)
7. Myriad’s patents would, if valid, give it the exclusive right to isolate an
individual’s BRCA1 and BRCA2 genes. The patents would also give Myriad
the exclusive right to synthetically create BRCA cDNA.
8. Dr. Ostrer (Researcher in the New York University School of Medicine),
along with medical patients, advocacy groups, and other doctors, filed this
lawsuit seeking a declaration that Myriad’s patents are invalid under 35 U. S.
C. §101
9. The district court first ruled in their favor stating that both the claims over the
isolation of DNA and that of the cDNA cannot be patented as both are
products of nature
10. The Federal Circuit on the other hand ruled that both the claims over the DNA
and the cDNA are patent eligible stating that:
a. Isolating the DNA is an inventive act that entitles the individuals
who firsts isolates it to patent
b. The process of isolating the DNA technically creates new molecules
with unique chemical compostions
c. Isolating a particular strand of the DNA creates a nonnaturally
occuring molecule, even though the chemical alteration does not
change the information transmitted
d. The United States Patent and Trademark Office has a practice of
granting such patents
e. As for the cDNA, all of the judges agreed that such is a nonnaturally
occuring because it must be created in the laboratory since the
introns that are found in the native gene are removed from the cDNA
segment – yung exons nalang matitira
ISSUE/s:
- WoN a naturally occurring segment of DNA is patent eligible by virtue of its
isolation from the human genome – No, the court ruled that the DNA, even
if isolated, is still considered as a product of nature thus, non-patentable
- WoN the Complementary DNA (cDNA) is patentable – Yes, court ruled that
the cDNA is not a naturally occuring and therefore within the bounds of
what can be patented.
RULING: For the foregoing reasons, the judgement of the Federal Circuit is affiremed
in part and reversed in part.
4. As a result, cDNA is considered not a product of nature
Note: Court also discussed the fact that Myriad did not file a claim for creating an
innovative method of manipulating genes while looking for BRCA 1 and 2 genes
The process of isolating the DNA which was used by Myriad is the same method that
other geneticists are using. Moreover, such was not the issue in the case. The main
issue remains to be the patentability of the isolated DNA and the creation of the cDNA.

RATIO:
For the DNA : Non-Patentable

1. Laws of nature, natural phenomena, and abstract ideas are not patentable.
Rather, “‘they are the basic tools of scientific and technological work’” that
lie beyond the domain of patent protection.
2. Without this exception there would be a considerable danger that the grant of
patents would “tie up” the use of such tools and thereby “inhibit future
innovation premised upon them.”
3. It is undisputed that Myriad did not create or alter any of the genetic
information encoded in the BRCA 1 and 2 genes. The location and order of
the nucleotides existed in nature before Myriad found them
4. Nor did Myriad create or alter the genetic structure of the DNA.
5. The principal contribution of Myriad was uncovering the precise location and
the genetic sequence of the BRCA 1 and 2 genes within chromosomes 17 and
13
6. As explained in the case of Chakrabarty, in order to be considered as
patentable, it must not be just an unknown natural phenomenon but it must
instead be a nonnaturally occuring manufacture or composition of matter – a
product of human ingenuity ‘having a distinctive name, characted and use.
7. In this case, by contrast, Myriad did not create anything. To be sure, it found
an important and useful gene, but separating that gene from its surrounding
genetic material is not an act of invention
8. Groundbreaking, innovative, or even brilliant discovery does not by itself
satisfy the §101 inquiry.
9. Myriad found the location of the BRCA1 and BRCA2 genes, but that
discovery, by itself, does not render the BRCA genes “new . . . composition[s]
of matter,” §101,that are patent eligible.

For the cDNA : Patentable

1. cDNA does not present the same obstacles to patentability as naturally

occurring, isolated DNA segments. As provided, the creation of the cDNA
which results to an exons-only molecule that is not naturally occuring.
2. In the process of creating the cDNA, the non-coding regions of the DNA are
removed
3. Even of the cDNA retains the naturally occuring exons of a DNA, it is distinct
for the DNA from which it was derived.
 001 GOTTSCHALK v. BENSON (VICENCIO)
Nov. 20, 1972 | Douglas, J. | Definition of a Computer Program
PETITIONER: Gottschalk
RESPONDENTS: Benson, et al.
SUMMARY: Benson et al. filed applied for an invention with the Patent Office. It
was described as being related “to the processing of data by program and more
particularly to the programmed conversion of numerical information” in general
purpose digital computers. They claimed a method for converting binary-coded
decimal (BCD) numerals into pure binary numerals. The claims were not limited to
any particular art or technology, to any particular apparatus or machinery, or to any
particular end use. They purported to cover any use of the claimed method in a
general purpose digital computer of any type. Claims 8 and 13 were rejected by the
Patent Office but sustained by the Court of Customs and Patent Appeals.
The Court reverses the lower court decision. Benson et al.’s method for converting
numerical information from binary-coded decimal numbers into pure binary
numbers, is merely a series of mathematical calculations or mental steps, and
does not constitute a patentable “process” within the meaning of the Patent Act,
35 U.S.C. § 100(b). The mathematical formula involved here has no substantial
practical application except in connection with a digital computer, which means that,
if the judgment below is affirmed, the patent would wholly preempt the mathematical
formula and, in practical effect, would be a patent of the algorithm itself. One cannot
patent an idea. Copyright protection for these programs are available.
DOCTRINE (from reviewer): Scientific Truth (ST) or Mathematical Expression
(ME) Not Patentable – While a scientific truth, or the mathematical expression of it,
is not a patentable invention, a novel and useful structure created with the aid of
knowledge of scientific truth MAY be.
Must Apply ST or ME into New and Useful Invention - If there is to be invention
from such discovery, it must come from the application of the law of nature to a new
and useful end.
2 (1) testing each binary digit position '1,' beginning with the least significant binary digit position, of the
Claim 8 reads: The method of converting signals from binary coded decimal form into binary which
comprises the steps of:
(1) storing the binary coded decimal signals in a reentrant shift register, (2) shifting the signals to the right
by at least three places, until there is a binary '1' in the second position of said register,
(3) masking out said binary '1' in said second position of said register,
(4) adding a binary '1' to the first position of said register,
(5) shifting the signals to the left by two positions,
(7) shifting the signals to the right by at least three positions in preparation
for a succeeding binary '1' in the second position of said register.
Claim 13 reads: A data processing method for converting binary coded decimal number representations into
binary number representations, comprising the steps of:
FACTS:
10. Benson et al. filed in the Patent Office an application for an invention which
was described as being related “to the processing of data by program and
more particularly to the programmed conversion of numerical information"
in general purpose digital computers.
11. They claimed a method for converting binary-coded decimal (BCD)
numerals into pure binary numerals. The claims were not limited to any
particular art or technology, to any particular apparatus or machinery, or to
any particular end use.
12. They purported to cover any use of the claimed method in a general purpose
digital computer of any type.
13. Claims 8 and 132 were rejected by the Patent Office but sustained by the
Court of Customs and Patent Appeals. The case is here on a petition for a writ
of certiorari. (Note: These are the only facts from the case)
ISSUE/s:
1. WoN the method described and claimed is a “process” within the meaning of
the Patent Act. – NO, the mathematical formula involved here has no
substantial practical application except in connection with a digital computer,
and if the judgment is affirmed, the patent would wholly preempt the
mathematical formula and, in practical effect, would be a patent of the
algorithm itself.
RULING: Reversed the Court of Customs and Patent Appeals decision.
RATIO:
1. A digital computer, as distinguished from an analog computer, operates on
data expressed in digits, solving a problem by doing arithmetic as a person
would do it by head and hand. Some of the digits are stored as components
of the computer. Others are introduced into the computer in a form which it
is designed to recognize. The computer operates then upon both new and
previously stored data. The general purpose computer is designed to perform
operations under many different programs.
2. The method or program is a sequence of coded instructions for a digital
computer.
most significant decimal digit representation for a binary '0' or a binary '1';
(2) if a binary '0' is detected, repeating step (1) for the next least significant binary digit position of said
most significant decimal digit representation;
(3) if a binary '1' is detected, adding a binary '1' at the (i+1)th and (i+3)th least significant binary digit
positions of the next lesser significant decimal digit representation, and repeating step (1) for the next least
significant binary digit position of said most significant decimal digit representation;
(4) upon exhausting the binary digit positions of said most significant decimal digit representation, repeating
steps (1) through (3) for the next lesser significant decimal digit representation as modified by the previous
execution of steps (1) through (3); and
(5) repeating steps (1) through (4) until the second least significant decimal digit representation has been so
processed.
3. The patent sought is on a method of programming a general purpose
digital computer to convert signals from binary-coded decimal form into
pure binary form.
4. A procedure for solving a given type of mathematical problem is known as
an "algorithm." The procedures set forth in the present claims are of that kind;
that is to say, they are a generalized formulation for programs to solve
mathematical problems of converting one form of numerical representation
to another. From the generic formulation, programs may be developed as
specific applications.
5. The decimal system uses as digits the 10 symbols 0, 1, 2, 3, 4, 5, 6, 7, 8, and
9. The value represented by any digit depends, as it does in any positional
system of notation, both on its individual value and on its relative position in
the numeral.
6. Decimal numerals are written by placing digits in the appropriate positions
or columns of the numerical sequence, i.e., "unit" (10^0), "tens" (10^1),
"hundreds" (10^2), "thousands" (10^3), etc. Accordingly, the numeral 1492
signifies (1 x 10^3)+(4 x 10^2)+(9 x 10^1)+(2 x 10^0).
7. The pure binary system of positional notation uses two symbols as digits -- 0
and 1, placed in a numerical sequence with values based on consecutively
ascending powers of 2. In pure binary notation, what would be the tens
position is the twos position; what would be hundreds position is the fours
position; what would be the thousands position is the eights.
8. Any decimal number from 0 to 10 can be represented in the binary system
with four digits or positions as indicated in the following table.
Shown as the sum of powers of 2
2^3 2^2 2^1 2^0
Decimal (8) (4) (2) (1) Pure Binary
0 = 0 0 0 0 = 0000
1 = 0 0 0 2^0 = 0001
2 = 0 0 2^1 0 = 0010
3 = 0 0 2^1 2^0 = 0011
4 = 0 2^2 0 0 = 0100
5 = 0 2^2 0 2^0 = 0101
6 = 0 2^2 2^1 0 = 0110
7 = 0 2^2 2^1 2^0 = 0111
8 = 2^3 0 0 0 = 1000
9 = 2^3 0 0 2^0 = 1001
10 = 2^3 0 2^1 0 = 1010
9. The BCD system using decimal numerals replaces the character for each
component decimal digit in the decimal numeral with the corresponding four-
digit binary numeral, shown in the right-hand column of the table.
10. Thus, decimal 53 is represented as 0101 0011 in BCD, because decimal 5 is
equal to binary 0101 and decimal 3 is equivalent to binary 0011. In pure
binary notation, however, decimal 53 equals binary 110101. The conversion
of BCD numerals to pure binary numerals can be done mentally through use
of the foregoing table.
11. The method sought to be patented varies the ordinary arithmetic steps a
human would use by changing the order of the steps, changing the
symbolism for writing the multiplier used in some steps, and by taking
subtotals after each successive operation. The mathematical procedures
can be carried out in existing computers long in use, no new machinery
being necessary. And, as noted, they can also be performed without a
computer.
12. The Court stated in Mackay Co. v. Radio Corp. that, “[w]hile a scientific
truth, or the mathematical expression of it, is not a patentable invention,
a novel and useful structure created with the aid of knowledge of
scientific truth may be.”
13. That statement followed the longstanding rule that “[a]n idea, of itself, is not
patentable.” (Rubber-Tip Pencil Co. v. Howard)
14. “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.”
15. Le Roy v. Tatham: Phenomena of nature, though just discovered, mental
processes, and abstract intellectual concepts are not patentable, as they are
the basic tools of scientific and technological work.
16. As we stated in Funk Bros. Seed Co. v. Kalo Co., “He who discovers a
hitherto unknown phenomenon of nature has no claim to a monopoly of it
which the law recognizes. If there is to be invention from such a discovery, it
must come from the application of the law of nature to a new and useful end.”
17. We dealt there with a “product” claim, while the present case deals with
a “process” claim. But we think the same principle applies.
18. Here the “process” claim is so abstract and sweeping as to cover both
known and unknown uses of the BCD to pure binary conversion.
19. 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.
20. (Note: The Court enumerated jurisprudence related to the matter. Placing
them here in small font just for basis)
21. In O'Reilly v. Morse, Morse was allowed a patent for a process of using electromagnetism to
produce distinguishable signs for telegraphy. But the Court denied the eighth claim in which
Morse claimed the use of “electro magnetism, however developed for marking or printing
intelligible characters, signs, or letters, at any distances.”
22. The Court, in disallowing that claim, said, “If this claim can be maintained, it matters not by
what process or machinery the result is accomplished. For aught that we now know, some
future inventor, in the onward march of science, may discover a mode of writing or printing at a
distance by means of the electric or galvanic current, without using any part of the process or
combination set forth in the plaintiff's specification. His invention may be less complicated --
less liable to get out of order -- less expensive in construction, and in its operation. But yet, if it
is covered by this patent, the inventor could not use it, nor the public have the benefit of it,
without the permission of this patentee."
23. In The Telephone Cases, Bell's invention was the use of electric current to transmit vocal or other
sounds. The claim was not “for the use of a current of electricity in its natural state as it comes
from the battery, but for putting a continuous current in a closed circuit into a certain specified
condition suited to the transmission of vocal and other sounds, and using it in that condition for
that purpose.”
24. The claim, in other words, was not “one for the use of electricity distinct from the particular
process with which it is connected in his patent.” The patent was for that use of electricity “both
 for the magneto and variable resistance methods.” Bell's claim, in other words, was not one for
all telephonic use of electricity.
25. In Corning v. Burden, the Court said, “One may discover a new and useful improvement in the
process of tanning, dyeing, etc., irrespective of any particular form of machinery or mechanical
device.” The examples given were the “arts of tanning, dyeing, making waterproof cloth,
vulcanizing India rubber, smelting ores.”
26. Those are instances, however, where the use of chemical substances or physical acts, such as
temperature control, changes articles or materials. The chemical process or the physical acts
which transform the raw material are, however, sufficiently definite to confine the patent
monopoly within rather definite bounds.
27. Cochrane v. Deener involved a process for manufacturing flour so as to improve its quality. The
process first separated the superfine flour and then removed impurities from the middlings by
blasts of air, reground the middlings, and then combined the product with the superfine. The
claim was not limited to any special arrangement of machinery.
28. The Court said, “That a process may be patentable, irrespective of the particular form of
the instrumentalities used, cannot be disputed. If one of the steps of a process be that a certain
substance is to be reduced to a powder, it may not be at all material what instrument or machinery
is used to effect that object, whether a hammer, a pestle and mortar, or a mill. Either may be
pointed out; but if the patent is not confined to that particular tool or machine, the use of
the others would be an infringement, the general process being the same. 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.”
29. Transformation and reduction of an article “to a different state or thing” is the clue to the
patentability of a process claim that does not include particular machines. So it is that a patent in
the process of “manufacturing fat acids and glycerine from fatty bodies by the action of water at
a high temperature and pressure” was sustained in Tilghman v. Proctor.
30. The Court said, “The chemical principle or scientific fact upon which it is founded is that the
elements of neutral fat require to be severally united with an atomic equivalent of water in order
to separate from each other and become free. This chemical fact was not discovered by Tilghman.
He only claims to have invented a particular mode of bringing about the desired chemical union
between the fatty elements and water.”
31. Expanded Metal Co. v. Bradford sustained a patent on a “process” for expanding metal. A
process “involving mechanical operations, and producing a new and useful result,” was held to
be a patentable process, process patents not being limited to chemical action.
32. Smith v. Snow, and Taxham v. Smith: involved a process for setting eggs in staged incubation
and applying mechanically circulated currents of air to the eggs.
33. The Court, in sustaining the function performed (the hatching of eggs) and the means or process
by which that is done, said: “By the use of materials in a particular manner, he secured the
performance of the function by a means which had never occurred in nature, and had not
been anticipated by the prior art; this is a patentable method or process. . . . A method
which may be patented irrespective of the particular form of the mechanism which may be
availed of for carrying it into operation is not to be rejected as 'functional' merely because the
specifications show a machine capable of using it.”
34. It is argued that a process patent must either be tied to a particular
machine or apparatus or must operate to change articles or materials to
a “different state or thing.” We do not hold that no process patent could
ever qualify if it did not meet the requirements of our prior precedents.
It is said that the decision precludes a patent for any program servicing a
computer. We do not so hold.
35. It is said that we have before us a program for a digital computer but extend
our holding to programs for analog computers. We have, however, made clear
from the start that we deal with a program only for digital computers. It is
said we freeze process patents to old technologies, leaving no room for the
revelations of the new, onrushing technology. Such is not our purpose. (Note:
My translation of this paragraph into understandable words: This Decision
might be attacked as freezing the progress of technology since the ruling here
can be applied for all programs, hampering patents of programs for both
analog and digital computers. The Court however clarified that from the start,
they have already proclaimed that this Ruling is only applicable for digital
computers).
36. It is conceded that one may not patent an idea. But, in practical effect,
that would be the result if the formula for converting BCD numerals to
pure binary numerals were patented in this case.
37. The mathematical formula involved here has no substantial practical
application except in connection with a digital computer, which means
that, if the judgment below is affirmed, the patent would wholly preempt
the mathematical formula and, in practical effect, would be a patent of
the algorithm itself.
38. It may be that the patent laws should be extended to cover these
programs, a policy matter to which we are not competent to speak.
39. The President's Commission on the Patent System rejected the proposal that
these programs be patentable: “Uncertainty now exists as to whether the
statute permits a valid patent to be granted on programs. Direct attempts to
patent programs have been rejected on the ground of nonstatutory subject
matter. Indirect attempts to obtain patents and avoid the rejection, by
drafting claims as a process, or a machine or components thereof
programmed in a given manner, rather than as a program itself, have confused
the issue further, and should not be permitted.”
40. “The Patent Office now cannot examine applications for programs
because of a lack of a classification technique and the requisite search
files. Even if these were available, reliable searches would not be feasible
or economic because of the tremendous volume of prior art being
generated. Without this search, the patenting of programs would be
tantamount to mere registration, and the presumption of validity would be all
but nonexistent.”
41. “It is noted that the creation of programs has undergone substantial and
satisfactory growth in the absence of patent protection, and that
COPYRIGHT protection for programs is presently available.”
42. If these programs are to be patentable, considerable problems are raised
which only committees of Congress can manage, for broad powers of
investigation are needed, including hearings which canvass the wide variety
of views which those operating in this field entertain. The technological
problems tendered in the many briefs before usindicate to us that considered
action by the Congress is needed.
 002 PARKER v. FLOOK (ARCENAS)
June 22, 1978 | Stevens, J. | Definition of a computer program3
PETITIONER Parker, Acting Commissioner of Patents and Trademarks
RESPONDENT: Flook
SUMMARY: Flook applied for a patent on a "Method for Updating Alarm Limits”.
In essence, the method consists of three steps: an initial step - which merely measures
the present value of the process variable (e.g., the temperature); an intermediate step
- which uses an algorithm to calculate an updated alarm limit value; and a final step
- in which the actual alarm limit is adjusted to the updated value. The only difference
between the conventional methods of changing alarm limits and that described in
Flook’s application rests in the second step -- the mathematical algorithm or formula.
The patent examiner rejected the application which was upheld by the Board of
Appeals of the Patent and Trademark Office. However, the Court of Customs and
Patent Appeals reversed. Hence, the Acting Commissioner of Patents and
Trademarks (Parker) filed a petition for a writ of certiorari, urging that the decision
of the Court of Customs and Patent Appeals will have a debilitating effect on the
rapidly expanding computer "software" industry.
The issue before the court is whether the identification of a limited category of useful,
though conventional, post-solution applications of such a formula makes Flook's
method eligible for patent protection. The court held that it was not patentable. A
process is not unpatentable simply because it contains a law of nature or a
mathematical algorithm; Flook's process is unpatentable under § 101 not because it
contains a mathematical algorithm as one component, but because, once that
algorithm is assumed to be within the prior art, the application, considered as a whole,
contains no patentable invention.
Flook’s method for updating alarm limits during catalytic conversion processes, in
which the only novel feature is a mathematical formula, held not patentable under §
101 of the Patent Act. The identification of a limited category of useful, though
conventional, post-solution applications of such a formula does not make the method
eligible for patent protection, since, assuming the formula to be within prior art, as it
must be, Flook’s application contains no patentable invention. The chemical
processes involved in catalytic conversion are well known, as are the monitoring of
process variables, the use of alarm limits to trigger alarms, the notion that alarm limit
values must be recomputed and readjusted, and the use of computers for "automatic
process monitoring." Flook's application simply provides a new and presumably
better method for calculating alarm limit values. As the Court of Customs and Patent
Appeals has explained, "if a claim is directed essentially to a method of calculating,
using a mathematical formula, even if the solution is for a specific purpose, the
claimed method is nonstatutory."
3
Flook was reaffirmed in another case saying that simply implementing an abstract idea on a computer
could not confer patent eligibility
DOCTRINE: The obligation to determine what type of discovery is sought to be
patented must precede the determination of whether that discovery is, in fact, new or
obvious. Even though a phenomenon of nature or mathematical formula may be well
known, an inventive application of the principle may be patented. Conversely, the
discovery of such a phenomenon cannot support a patent unless there is some other
inventive concept in its application.
DOCTRINE 2: (Not much was said about computer programs except sa footnote)
The term "software" is used in the industry to describe computer programs. The value
of computer programs in use in the United States in 1976 was placed at $43.1 billion,
and projected at $70.7 billion by 1980 according to one industry estimate. See Brief
for the Computer & Business Equipment Manufacturers Assn. as Amicus Curiae 17-
18, n. 16.
FACTS:
1. In Gottschalk v. Benson, we held that the discovery of a novel and useful
mathematical formula may not be patented.
2. An "alarm limit" is a number. During catalytic conversion processes,
operating conditions such as temperature, pressure, and flow rates are
constantly monitored. When any of these "process variables" exceeds a
predetermined "alarm limit," an alarm may signal the presence of an
abnormal condition indicating either inefficiency or perhaps danger.
a. Fixed alarm limits may be appropriate for a steady operation, but
during transient operating situations, such as start-up, it may be
necessary to "update" the alarm limits periodically.
3. Flook applied for a patent on a "Method for Updating Alarm Limits”. In
essence, the method consists of three steps:
a. an initial step - which merely measures the present value of the
process variable (e.g., the temperature);
b. an intermediate step - which uses an algorithm to calculate an
updated alarm limit value; and
c. a final step - in which the actual alarm limit is adjusted to the
updated value.
4. The only difference between the conventional methods of changing alarm
limits and that described in Flook’s application rests in the second step --
the mathematical algorithm or formula.
d. Using the formula, an operator can calculate an updated alarm limit
once he knows the original alarm base, the appropriate margin of
safety, the time interval that should elapse between each updating,
the current temperature (or other process variable), and the
appropriate weighting factor to be used to average the original alarm
base and the current temperature.
 e. The patent claims cover any use of Flook’s formula for updating the
value of an alarm limit on any process variable involved in a process
comprising the catalytic chemical conversion of hydrocarbons.
f. Since there are numerous processes of that kind in the petrochemical
and oil-refining industries, the claims cover a broad range of
potential uses of the method. They do not, however, cover every
conceivable application of the formula.
g. The patent application does not purport to explain how to select the
appropriate margin of safety, the weighting factor, or any of the
other variables. Nor does it purport to contain any disclosure relating
to the chemical processes at work, the monitoring of process
variables, or the means of setting off an alarm or adjusting an alarm
system.
5. The patent examiner rejected the application. The examiner concluded
that the claims did not describe a discovery that was eligible for patent
protection.
h. He found that the mathematical formula constituted the only
difference between Flook’s claims and the prior art (referring to
previous systems), and therefore a patent on this method "would, in
practical effect, be a patent on the formula or mathematics itself."
6. The Board of Appeals of the Patent and Trademark Office sustained the
examiner's rejection.
i. The Board also concluded that the "point of novelty in [Flook's]
claimed method" lay in the formula or algorithm described in the
claims, a subject matter that was unpatentable under Benson case.
2. The Court of Customs and Patent Appeals reversed.
a. It read Benson as applying only to claims that entirely preempt a
mathematical formula or algorithm, and noted that Flook was only
claiming on the use of his method to update alarm limits in a process
comprising the catalytic chemical conversion of hydrocarbons.
b. The court reasoned that, since the mere solution of the algorithm
would not constitute infringement of the claims, a patent on the
method would not preempt the formula.
3. The Acting Commissioner of Patents and Trademarks (Parker) filed a
petition for a writ of certiorari, urging that the decision of the Court of
Customs and Patent Appeals will have a debilitating effect on the rapidly
expanding computer "software" industry, and will require him to process
thousands of additional patent applications. Because of the importance of the
question, we granted certiorari.
ISSUE/s:
3. whether the identification of a limited category of useful, though
conventional, post-solution applications of such a formula makes Flook's
method eligible for patent protection – NO. Process is not unpatentable
simply because it contains a law of nature or a mathematical algorithm;
Flook's process is unpatentable under § 101 not because it contains a
mathematical algorithm as one component, but because, once that algorithm
is assumed to be within the prior art, the application, considered as a whole,
contains no patentable invention.
RULING: The judgment of the Court of Customs and Patent Appeals is Reversed.
RATIO:
1. This case turns entirely on the proper construction of § 101 of the Patent Act,
which describes the subject matter that is eligible for patent protection.
a. The plain language of § 101 does not answer the question whether
the discovery of this feature makes an otherwise conventional
method eligible for patent protection.
b. The holding that the discovery of that method could not be
patented as a "process" forecloses a purely literal reading of §
101. Reasoning that an algorithm, or mathematical formula, is
like a law of nature, Benson applied the established rule that a
law of nature cannot be the subject of a patent. Quoting from
earlier cases, we said:
i. “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.
Phenomena of nature, though just discovered, mental
processes, and abstract intellectual concepts are not
patentable, as they are the basic tools of scientific and
technological work."
2. The line between a patentable "process" and an unpatentable "principle" is
not always clear. Both are "conception[s] of the mind, seen only by [their]
effects when being executed or performed."
a. In Benson, we concluded that the process application in fact sought
to patent an idea, noting that "[t]he mathematical formula involved
here has no substantial practical application except in connection
with a digital computer, which means that, if the judgment below
is affirmed, the patent would wholly preempt the mathematical
formula and, in practical effect, would be a patent on the
algorithm itself."
3. Flook correctly points out that this language does not apply to his claims.
a. It is true, as Flook argues, that his method is a "process" in the
ordinary sense of the word. But that was also true of the algorithm,
which described a method for converting binary-coded decimal
numerals into pure binary numerals, that was involved in Gottschalk
v. Benson.
4. He does not seek to "wholly preempt the mathematical formula," since
there are uses of his formula outside the petrochemical and oil refining
industries that remain in the public domain.
a. And he argues that the presence of specific "post-solution" activity
-- the adjustment of the alarm limit to the figure computed according
 to the formula -- distinguishes this case from Benson and makes
his process patentable.
5. SC did not agree. The notion that post-solution activity, no matter how
conventional or obvious in itself, can transform an unpatentable principle into
a patentable process exalts form over substance (i.e. the Court did not agree
with Flook's assertion that the existence of a limitation to a specific field
of use made the formula patent-eligible)
a. A competent draftsman could attach some form of post-solution
activity to almost any mathematical formula; the Pythagorean
theorem would not have been patentable, or partially patentable,
because a patent application contained a final step indicating that the
formula, when solved, could be usefully applied to existing
surveying techniques.
6. (Not all patent applications involving formulas are patent-ineligible by
saying) Yet it is equally clear that a process is not unpatentable simply
because it contains a law of nature or a mathematical algorithm.
a. For instance, in Mackay Radio & Telegraph Co. v. Radio Corp. of
America, the applicant sought a patent on a directional antenna
system in which the wire arrangement was determined by the logical
application of a mathematical formula:
i. "While a scientific truth, or the mathematical expression of
it, is not patentable invention, a novel and useful structure
created with the aid of knowledge of scientific truth may
be."
b. Funk Bros. Seed Co. v. Kalo Co., expresses a similar approach:
i. "He who discovers a hitherto unknown phenomenon of
nature has no claim to a monopoly of it which the law
recognizes. If there is to be invention from such a
discovery, it must come from the application of the law
of nature to a new and useful end."
7. Mackay Radio and Funk Bros. point to the proper analysis for this case: the
process itself, not merely the mathematical algorithm, must be new and
useful.
a. Indeed, the novelty of the mathematical algorithm is not a
determining factor at all.
b. Whether the algorithm was in fact known or unknown at the time
of the claimed invention, as one of the "basic tools of scientific and
technological work," it is treated as though it were a familiar part
of the prior art.
8. This is also the teaching of our landmark decision in O'Reilly v. Morse.
a. In that case, the Court rejected Samuel Morse's broad claim
covering any use of electromagnetism for printing intelligible
signs, characters, or letters at a distance.
4 which involved the circulation of heated air in a furnace system to increase its efficiency
b. In reviewing earlier cases applying the rule that a scientific principle
cannot be patented, the Court placed particular emphasis on the
English case of Neilson v. Harford4. The English court rejected the
argument that the patent merely covered the principle that furnace
temperature could be increased by injecting hot air, instead of cold
into the furnace. That court's explanation of its decision was relied
on by this Court in Morse:
i. "'It is very difficult to distinguish it [the Neilson patent]
from the specification of a patent for a principle, and this
at first created in the minds of the court much difficulty;
but after full consideration, we think that the plaintiff does
not merely claim a principle, but a machine, embodying
a principle, and a very valuable one…”
9. Flook argues that this approach improperly imports into § 101 the
considerations of "inventiveness" which are the proper concerns of §§ 102
and 103. This argument is based on two fundamental misconceptions, thus
were held untenable by the SC.
a. First, Flook incorrectly assumes, if a process application implements
a principle in some specific fashion, it automatically falls within the
patentable subject matter of § 101 and the substantive patentability
of the particular process can then be determined by the conditions
of §§ 102 and 103.
i. It would make the determination of patentable subject
matter depend simply on the draftsman's art, and would ill
serve the principles underlying the prohibition against
patents for "ideas" or phenomena of nature.
ii. The rule that the discovery of a law of nature cannot be
patented rests not on the notion that natural phenomena
are not processes, but rather on the more fundamental
understanding that they are not the kind of "discoveries"
that the statute was enacted to protect.
b. Second, Flook assumes that the fatal objection to his application is
the fact that one of its components -- the mathematical formula --
consists of unpatentable subject matter.
i. Our approach to Flook's application is, however, not at all
inconsistent with the view that a patent claim must be
considered as a whole.
ii. Flook's process is unpatentable under § 101 not because it
contains a mathematical algorithm as one component, but
because, once that algorithm is assumed to be within the
prior art, the application, considered as a whole, contains
no patentable invention.
10. SC RULING: Here it is absolutely clear that Flook's application contains
no claim of patentable invention.
 a. The chemical processes involved in catalytic conversion of
hydrocarbons are well known, as are the practice of monitoring the
chemical process variables, the use of alarm limits to trigger alarms,
the notion that alarm limit values must be recomputed and
readjusted, and the use of computers for "automatic monitoring
alarming."
11. Flook's application simply provides a new and presumably better
method for calculating alarm limit values. As the Court of Customs and
Patent Appeals has explained, "if a claim is directed essentially to a
method of calculating, using a mathematical formula, even if the solution
is for a specific purpose, the claimed method is nonstatutory."
a. In re Richman, 563 F.2d 1026, 1030 (1977).
i. To a large extent, our conclusion is based on reasoning
derived from opinions written before the modern business
of developing programs for computers was conceived. The
youth of the industry may explain the complete absence
of precedent supporting patentability. Neither the dearth
of precedent nor this decision should therefore be
interpreted as reflecting a judgment that patent protection
of certain novel and useful computer programs will not
promote the progress of science and the useful arts, or that
such protection is undesirable as a matter of policy.
Difficult questions of policy concerning the kinds of
programs that may be appropriate for patent protection and
the form and duration of such protection can be answered
by Congress on the basis of current empirical data not
equally available to this tribunal.
b. It is our duty to construe the patent statutes as they now read, in light
of our prior precedents, and we must proceed cautiously when we
are asked to extend patent rights into areas wholly unforeseen by
Congress.
APPENDIX TO OPINION OF THE COURT (technical explanation of Flook’s patent,
can totally skip)
Claim 1 of the patent describes the method as follows:
1. "A method for updating the value of at least one alarm limit on at least one
process variable involved in a process comprising the catalytic chemical
conversion of hydrocarbons wherein said alarm limit has a current value of"
"Bo + K"
"wherein Bo is the current alarm base and K is a predetermined alarm offset which
comprises: "
"(1) Determining the present value of said process variable, said present value
being defined as PVL;"
"(2) Determining a new alarm base B1, using the following equation:"
"B1=Bo(1.0-F) + PVL(F)"
"where F is a predetermined number greater than zero and less than 1.0;"
"(3) Determining an updated alarm limit which is defined as B1 + K; and
thereafter"
"(4) Adjusting said alarm limit to said updated alarm limit value."
2. In order to use Flook's method for computing a new limit, the operator
must make four decisions.
a. Based on his knowledge of normal operating conditions, he first
selects the original "alarm base" (Bo); if a temperature of 400
degrees is normal, that may be the alarm base. He next decides on
an appropriate margin of safety, perhaps 50 degrees; that is his
"alarm offset" (K). The sum of the alarm base and the alarm offset
equals the alarm limit. Then he decides on the time interval that will
elapse between each updating; that interval has no effect on the
computation, although it may, of course, be of great practical
importance. Finally, he selects a weighting factor (F), which may be
any number between 99% and 1% and which is used in the updating
calculation.
3. If the operator has decided in advance to use an original alarm base (Bo) of
400 degrees, a constant alarm offset (K) of 50 degrees, and a weighting factor
(F) of 80%, the only additional information he needs in order to compute an
updated alarm limit (UAV), is the present value of the process variable
(PVL). The computation of the updated alarm limit according to Flook's
method involves these three steps:
a. First, at the predetermined interval, the process variable is
measured; if we assume the temperature is then 425 degrees, PVL
will then equal 425.
b. Second, the solution of Flook's novel formula will produce a new
alarm base (B1) that will be a weighted average of the preceding
alarm base (Bo) of 400 degrees and the current temperature (PIL) of
425. It will be closer to one or the other, depending on the value of
the weighting factor (F) selected by the operator. If F is 80%, that
percentage of 425 (340) plus 20% (1-F) of 400 (80) will produce a
new alarm base of 420 degrees.
c. Third, the alarm offset (K) of 50 degrees is then added to the new
alarm base (B1) of 420 to produce the updated alarm limit (UAV)
of 470.
4. The process is repeated at the selected time intervals. In each updating
computation, the most recently calculated alarm base and the current
measurement of the process variable will be substituted for the corresponding
numbers in the original calculation, but the alarm offset and the weighting
factor will remain constant.
* More precisely, it is defined as a number greater than 0, but less than 1.
 003 DIAMOND v. DIEHR (PELIÑO)
March 3, 1981| Rehnquist, J. | Computer Program
PETITIONER: Diamond and the Commissioner of Patents and Trademarks
RESPONDENT: Diehr and Lutton
SUMMARY: Diehr and Lutton filed a patent application for the invention of a process for
molding raw, uncured synthetic rubber into cured precision products. They characterized
their contribution to the art to reside in the process of constantly measuring the actual
temperature inside the mold. So the temp measurements are automatically fed into a
computer which repeatedly recalculates the cure time by using the Arrhebius equation.
When the recalculated time equals the actual time that has elapsed since the press was
closed, the computer signals a device to open the press. The continuous measuring of the
temp inside the mold cavity, the feeding of this info to a digital computer which constantly
recalculates the cure time, and the singaling by the computer to open the press are all new
in the art. In essence, this is the process: installing rubber in press  closing mold 
constantly determining temp of mold  constantly recalculating the appropriate cure time
through the use of the formula and a digital computer  automatically opening the press
at the proper time. The patent examiner rejected Diehr’s claims since the remaining steps,
like installing rubber in the press and closing the press, were conventional and necessary to
the process and can’t be the basis of patentability. The Patent and Trademark Office Board
of Appeals agreed with the examiner, but the Court of Customs and Patent Appeals
reversed, saying that Diehr’s claims were not directed to a mathematic algorithm or an
improved method of calculation, rather, it recited an improved process for molding rubber
articles by solving a practical problem which had arisen in the molding of rubber products.
Hence, this petition. The issue in this case is whether or not a process for curing synthetic
rubber, which includes in several of its steps the use of a mathematical formula and a
programmed digital computer, is patentable subject matter. The SC held in the affirmative.
The SC defined process as an act or a series of acts performed upon the subject matter to
be transformed and reduced to a different state or thing. If new and useful, it is just as
patentable as is a piece of machinery. And in this case, the process being claimed by Diehr
and Lutton, have historically been eligible to receive patent law protection. Second, while
a mathematical formula cannot be the subject of a patent, Diehr and Lutton do not seek to
patent the formula, rather, they seek protection for the process of curing synthetic rubber.
Although their process uses the Arrhenius equation, they do not seek to preempt the use of
such, except in conjunction with all of the other steps in their claimed process. The
questions of whether a particular invention meets the novelty requirement do not affect the
determination of whether the invention falls into a category of subject matter that is eligible
for patent protection. Lastly, when a claim containing a mathematical formula implements
or applies the formula in a structure or process, which, when considered as a whole, is
performing a function which the patent laws were designed to protect, then the claim
satisfies Section 101’s requirements.
DOCTRINE: When a claim recites a math formula, scientific principle, or a
phenomenon of nature, an inquiry must be made into whether the claim is seeking
patent protection for that formula in the abstract. It is to be remembered that math
formulas are not protected under patent laws. However, when a claim containing a math
5
ln v = CZ + x (ln v – total required cure time; C – activation constant; Z – temp of te mold; x – constant
dependent on the geometry of the particular mold in the press
formula implements or applies that formula in a structure or process which, when
considered as a whole, is performing a function which the patent laws were designed to
protect, then the claim satisfies the requirements.
FACTS:
1. A patent application was filed by Diehr on August 6, 1975. The claimed invention
is a process for molding raw, uncured synthetic rubber into cured precision
products.
a. The process uses a mold for precisely shaping the uncured material under
heat and pressure and then curing the synthetic rubber in the mold so that the
product will retain the shape and be functionally operative after the molding
is completed.
2. Diehr claims the following:
a. Their process ensures the production of molded articles which are properly
cured.
i. Achieving the perfect cure depends upon several factors: thickness of
the article to be molded, the temperature of the molding process,
amount of time that the article is allowed to remain in the press.
ii. It is possible using well-known time, temp, and cure relationships, to
calculate by means of the Arrhenius equation5 when to open the
press and remove the cured product.
b. That the industry has not been able to obtain uniformly accurate cures
because the temperature of the molding press could not be measured
precisely.
i. Because the temperature inside the press has been seen as an
uncontrollable variable, the conventional industry practice has been
to calculate the cure time as the shortest time in which all parts of the
product will definitely be cured.
ii. But the shortcoming of this is that operating with an uncontrollable
variable led in some instances to overestimating the mold-opening
time and sometimes underestimating the time.
c. They characterized their contribution to the art to reside in the process of
constantly measuring the actual temperature inside the mold.
i. The temperature measurements are automatically fed into a computer
which repeatedly recalculates the cure time by using the Arrhenius
equation. When the recalculated time equals the actual time that has
elapsed since the press was closed, the computer signals a device to
open the press.
ii. The continuous measuring of the temperature inside the mold cavity,
the feeding of this info to a digital computer which constantly
recalculates the cure time, and the signaling by the computer to open
the press are all new in the art.
3. The patent examiner rejected Diehr’s claims on the sole ground that they were
drawn to nonstatutory subject matter. He determined that:
a. Steps in Diehr’s claims are carried out by a computer under control of a
stored program constituted nonstatutory subject matter under the Gottschalk
 v. Benson decision.
b. The remaining steps, like installing rubber in the press and closing the press,
were conventional and necessary to the process and can’t be the basis of
patentability. Thus, Diehr’s claims defined and sought protection of a
computer program for operating a rubber-molding rpess.
4. The Patent and Trademark Office Board of Appeals agreed with the examiner,
but the Court of Customs and Patent Appeals reversed.
a. The Court of Customs and Patent Appeals said that Diehr’s claims were not
directed to a mathematic algorithm or an improved method of calculation,
rather, it recited an improved process for molding rubber articles by solving
a practical problem which had arisen in the molding of rubber products.
5. Hence, this petition.
ISSUE/s:
1. WON a process for curing synthetic rubber, which includes in several of its steps
the use of a mathematical formula and a programmed digital computer, is
patentable subject matter. – YES, the process being claimed by Diehr and Lutton,
have historically been eligible to receive patent law protection. Second, while a
mathematical formula cannot be the subject of a patent, Diehr and Lutton do not seek
to patent the formula, rather, they seek protection for the process of curing synthetic
rubber. Although their process uses the Arrhenius equation, they do not seek to
preempt the use of such, except in conjunction with all of the other steps in their
claimed process. The questions of whether a particular invention meets the novelty
requirement do not affect the determination of whether the invention falls into a
category of subject matter that is eligible for patent protection.
RULING: We AFFIRM the judgment of the Court of Customs and Patent Appeals.
RATIO:
On whether a process for curing synthetic rubber which includes the use of a mathematical
formula and a programmed digital computer is patentable subject matter
1. The historical purpose for patent laws is found in Diamond v. Chakrabarty, 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 therefor, subject to the conditions and requirements of this title.
2. The Patent Act of 1973 defined ‘statutory subject matter’ – any new and useful
art, machine, manufacture or composition of matter, or any new or useful
improvement. Congress later changed art with process.
a. Although ‘process’ was not added until 1952, a process has historically
enjoyed patent protection because it was considered a form of “art”.
b. Nature of a patentable process: 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; if new and useful, it is just as patentable as is a piece of machinery.
Process requires that certain things should be done with certain substances,
6
Installing rubber in press  closing mold  constantly determining temp of mold  constantly
recalculating the appropriate cure time through the use of the formula and a digital computer 
automatically opening the press at the proper time.
in a certain order, but the tools to be used may be of secondary consequence.
c. Cochrane v. Deener: Transformation and reduction of an article to a different
state or thing is the clue to the patentability of a process claim that does not
include particular machines.
3. In this case, the Court thinks that physical and chemical process for molding
precision synthetic rubber products fall within Sec. 101 categories of
possibly patentable subject matter.
a. Their claims involve the transformation of a raw uncured synthetic rubber
into a different thing.
b. Diehr’s claims describe in detail a step-by-step method for
accomplishing such, beginning with the loading of a mold with raw,
uncured rubber and ending with the eventual opening of the press at the
conclusion of the cure.
c. Industrial processes such as this are the types which have historically
been eligible to receive the protection of our patent laws.
4. The Court’s finding is not altered by the fact that several of the steps use a
mathematical equation and a programmed digital computer.
a. Excluded from patent protection: laws of nature, natural phenomena, abstract
ideas.
b. Rubber-Tip Pencil Co. v. Howard: 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.
c. Le Roy v. Tatham: New mineral discovered in the earth or a new planet is
not patentable subject matter. And Einstein couldn’t patent E=mc2 or
Newton’s laws on gravity since these discoveries are manifestations of
nature.
d. Gottschalk v. Benson: Claims for an algorithm used to convert the binary
code decimal numbers to equivalent pure numbers are unpatentable, since
the sole practical application of the algorithm was in connection with the
programming of a general purpose digital computer. The Court here defined
algorithm – procedure for solving a given type of mathematical problem, and
that it’s like a law of nature, so it can’t be the subject of a patent.
e. Parker v. Flook: Alarm limit – number; application sought to protect a
formula for computing this number. Using this formula, the updated alarm
limit could be calculated if several other variables were known.
5. The difference between the mentioned cases and the case of Diehr is that
Diehr, et. al. do not seek to patent a mathematical formula. What they seek
patent protection for is the process of curing synthetic rubber. Their process
admittedly employs a well-known mathematical equation, but they do not
seek to preempt the use of that equation, rather, they seek only to foreclose
from others the use of that equation in conjunction with all the other steps
in their claimed process.6
a. One does not need the computer to cure natural or synthetic rubber, but if
such is incorporated, then it lessens the problem of either overcuring or
undercuring. The process, as a whole, does not become unpatentable subject
 matter.
6. Parker v. Flook: A process is not unpatentable simply because it contains a
law of nature or a mathematical algorithm.
a. An application of a law of nature or mathematical formula to a known
structure or process may well be deserving of patent protection.
b. Moreover, in another case, the Court has already said that while a scientific
truth or mathematical expression is not a patentable invention, a novel and
useful structure created with the aid of such can be.
7. Arrhenius’ equation is not patentable but when a process for curing rubber
is devised which incorporates in it a more efficient solution of the equation,
that process is, at the very least, not barred at the threshold by Sec. 101.
a. When a claim containing a mathematical formula implements or applies the
formula in a structure or process, which, when considered as a whole, is
performing a function which the patent laws were designed to protect, then
the claim satisfies Section 101’s requirements.
8. In determining the eligibility of Diehr’s claimed process for patent protection,
their claims must be considered as a whole; it is inappropriate to dissect the claims
into old and new elements and then ignore the presence of the old elements in the
analysis.
a. A new combination of steps in a process may be patentable even though
all the constituents of the combinaton were well known and in common
use before the combination was made.
b. “Novelty” of any element or steps in a process or even the process itself is
of no relevance in determining whether the subject matter of a claim falls
within Sec. 101 categories of possibly patentable subject matter.
c. The questions of whether a particular invention meets the novelty
requirement do not affect the determination of whether the invention falls
into a category of subject matter that is eligible for patent protection.
9. In conclusion, the Court views Diehr’s claims as nothing more than a process
for molding rubber products and not as an attempt to patent a math
formula. When a claim recites a math formula, scientific principle, or a
phenomenon of nature, an inquiry must be made into whether the claim is
seeking patent protection for that formula in the abstract.
a. It is to be remembered that math formulas are not protected under patent
laws. However, when a claim containing a math formula implements or
applies that formula in a structure or process which, when considered as a
whole, is performing a function which the patent laws were designed to
protect, then the claim satisfies the requirements.
Stevens, J. Dissenting (Justice Brennan, Marshall, and Blackmun also join):
**He cited several jurisprudence with regard to the mental steps doctrine and the function
of a machine doctrine, where there were decisions rejecting the mental steps doctrine, and
also how the Court has decided on several cases which are similar to this, like involving
processes and algorithms, but the most important cases are Gottschalk and Flook**
1. Mental steps doctrine – a scientific concept or mere idea cannot be the subject of
a valid patent.
2. Function of a machine doctrine – a process which amounted to nothing more than
a description of the function of a machine was unpatentable.
3. Justice Stevens dissents, in that Diehr and Lutton do not claim to have discovered
anything new about the process for curing synthetic rubber.
a. It teaches nothing about the chemistry of the synthetic rubber curing process,
nothing about the raw materials to be used in curing synthetic rubber, nothing
about the equipment to be used in the process, and nothing about the
significance or effect of any process variable.
4. Their discovery is an improved method of calculating the time that the mold
should remain closed during the curing process.
5. 3 reasons why he doesn’t agree that Diehr discovered a new method:
a. Not a word in the patent application that suggests that there is anything
unusual about the temp reading devices used in this process-or indeed that
any particular species of temp reading device should be used in it.
b. Since devices for constantly measuring actual temps have been familiar
articles for quite some time, he finds it difficult to believe that a patent
application filed in 1975 was premised on the notion that “a process of
constantly measuring the actual temperature” had just been discovered.
c. Patent and Trademark Office Board of Appeals found that the only
difference between the conventional methods of operating a molding press
and that claimed by Diehr in their application rests in those steps of the
claims which related to the calculation incident to the solution of the math
problem or formula.
6. Reading the application, it’s clear that what Diehr and Lutton claim to have
discovered is a method of using a digital computer to determine the amount of
time that a rubber molding press should remain closed during the synthetic rubber
process.
a. There is no suggestion that there is anything novel in the instrumentation of
the mold, actuating a timer when the press is closed, etc.
b. The application likewise doesn’t suggest that Diehr and Lutton have
discovered anything about the temperatures in the mold or the amount of
curing time that will produce the best cure.
c. What they claim to have discovered, in essence, is a method of updating
the original estimated curing time by repetitively calcultating that time
pursuant to a well-known math formula.
d. He finds that what they are trying to patent here is similar to that in Parker
v. Flook, where a digital computer repetitively recalculated the alarm limit –
a number that might signal the need to terminate or modify the catalytic
conversion process.
 004 IN RE BILSKI v. KAPPOS (PUNSALAN)
Oct. 30, 2008 | Michel, J. | Patent-eligible invention
PETITIONER: Bernard Bilski and Rand Warsaw
RESPONDENTS: Patent Examiner Kappos, Board of Patent Appeals and
Interferences
SUMMARY: Applicants Bernard Bilski and Rand Warsaw submitted a patent
application containing 11 claims related to a method for managing consumption risk
of a consumer commodity. They admitted that the commodity may not be a physical
commodity but could be options for future purchases. The examiner determined the
method was manipulating an abstract idea, did not involve specific equipment,
and therefore was not directed to the "technological arts." The examiner rejected
all 11 claims of the application. Bilski et al. appealed to the Board, which held that
the examiner had applied the wrong test when using the "technological arts" test
and should not have required specific equipment because "transformation" of physical
subject matter was eligible for patent and may not require specific equipment. The
Board sustained the rejection, but, on the grounds the claims did not involve a
transformation, attempted to patent an abstract idea, and did not produce a
"useful, concrete and tangible result."
ISSUE: WoN the claimed method by Bilski is a patent-eligible "process," as the patent
statute (35 U.S.C. § 101) uses that term – NO
The SC considered the Machine-or-transformation test (MOTT) as the best test to
determine patent-eligibility. MOTT: A claimed process is surely patent-eligible
under § 101 (sec 101 is the Patent Statute) if: (1) it is tied to a particular machine or
apparatus, or (2) it transforms a particular article into a different state or thing (this
supports past case decisions accdg to the court)
Applied in this case, Bilski’s process as claimed does not transform any artcle to a
different state or thing. Purported transformations or manipulations simply of
public or private legal obligations or relationships, business risks, or other such
abstractions cannot meet the test because they are not physical objects or substances,
and they are not representative of physical objects or substances. Applicants process
at most incorporates only such ineligible transformations.
DOCTRINE: A claim is NOT a patent-eligible “process” if it claims “laws of
nature, natural phenomena, or abstract ideas.” Although the only limit to patent-
eligibility imposed by Congress is that the invention fall within one of the four
categories enumerated in § 101, we must apply the Supreme Court's test (machine-
or-transformation test) to determine whether a claim to a process is drawn to a
statutory “process” within the meaning of § 101.
FACTS:
6. Applicants Bernard Bilski and Rand Warsaw filed their application on April
10, 1997.
7. The application contains 11 claims. Claim 1 reads:
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
8. In essence, the claim is for a method of hedging risk in the field of
commodities trading. (through fixed bill system)
9. This is illustrated in an example where coal power plants (consumers)
purchase coal to produce electricity and are averse to the risk of a spike in
demand for coal since a spike would increase the price and costs. Or that coal
mining companies (market participants) are averse to the risk of a sudden
drop in demand for coal since it would reduce their sales and depress prices.
a. The claimed method envisions an intermediary, the “commodity
provider,” that sells coal to the power plants at a fixed price, thus
isolating the power plants from the possibility of a spike in demand
increasing the price of coal above the fixed price.
b. The same provider buys coal from mining companies at a second
fixed price, thereby isolating the mining companies from the
possibility that a drop in demand would lower prices below that
fixed price, and vice versa if demand and prices fall
c. Claim is not limited to transactions involving actual commodities; it
may simply involve options (ex. Rights to purchase or sell the
commodity at a particular price within a particular timeframe)
10. Unfortunately, the Patent Examiner rejected the claims as “the invention is
not implemented on a specific apparatus and merely manipulates [an]
abstract idea and solves a purely mathematical problem without any
limitation to a practical application, therefore, the invention is not directed to
the technological arts.”
11. The Board of Patent Appeals and Interferences (Board) upheld the rejection
of the claims of Bilski and Warsaw but on different grounds:
a. The Board held that the examiner erred to the extent he relied on a
"technological arts" test because the case law does not support such
a test.
b. The requirement of a specific apparatus was also erroneous because
a claim that does not recite a specific apparatus may still be
directed to patent-eligible subject matter "if there is a
transformation of physical subject matter from one state to
 another."
c. (IMPT) The Board concluded that Bilski and Warsaw’s claims did
not involve any patent-eligible transformation, holding that
transformation of "non-physical financial risks and legal
liabilities of the commodity provider, the consumer, and the
market participants" is not patent-eligible subject matter.
d. The Board also held that applicants Bilski and Warsaw’s claims
"pre-empt[] any and every possible way of performing the steps of
the [claimed process], by human or by any kind of machine or by
any combination thereof," and thus only claim an abstract idea
ineligible for patent protection.
e. Finally, the Board held that Applicants' process as claimed did not
produce a "useful, concrete and tangible result," and for this
reason as well was not drawn to patent-eligible subject matter.
12. The applicants appealed the rejection to the Federal Circuit. They also
affirmed the rejection.
ISSUE/s:
1. WoN Bilski et al is seeking to claim a fundamental principle/mental process
– YES, the claim only refers to “transactions” involving the exchange of these
legal rights at a fixed rate corresponding to a risk position. Claim 1 does not
involve the transformation of any physical object or substance, or an
electronic signal representative of any physical object or substance.
2. (main) WoN the claimed method by Bilski is a patent-eligible "process," as
the patent statute (35 U.S.C. § 101) uses that term– NO, because although the
only limit imposed by Congress is that the invention fall within one of the 4
categories in the statute, it does not pass the machine-or-transformation test
provided by the SC in which definition of “process” is within the law’s
statutory meaning.
3. What test governs the determination as to whether a claim to a process is
patentable under Patent Statute aforementioned – Machine or Transformation
Test
RULING: Judgment in question is affirmed.
RATIO:
Patent Statute 35 U.S.C. § 101
1. The statute states: “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 therefor, subject to
the conditions and requirements of this title.”
2. The statute recites four categories of patent-eligible subject matter: (1)
processes, (2) machines, (3) manufacturers, and (4) compositions of matter.
3. It is undisputed that Bilski’s claims are not directed to a machine,
manufacturer or a composition of matter so the main issue involves what the
term “process” means and how to determine whether a given claim (Bilski’s
Claim 1, in particular) is a “new and useful process.”
4. Congress defined the ordinary meaning of “process” which is “procedure, a
series of actions, motions, or operations definitely conducing to an end,
whether involuntary or voluntary.” (Webster Dictionary sila kumuha ng
definition)
5. But, the SC has held that the meaning of “process” in the provision is
narrower than its ordinary meaning. The Court has held that a claim is not a
patent-eligible “process” if it claims “laws of nature, natural phenomena,
or abstract ideas.”
a. Such fundamental principles are “part of the storehouse of
knowledge of all men… free to all men and reserved exclusively to
none.”
Whether Bilski et al are seeking to claim a fundamental principle or a mental process
6. The SC cited different cases (Diehr, Flook, and Benson) but the facts of the
case were of limited usefulness because they represented polar cases on the
abstraction and concreteness spectrum.
7. Patents grant the power to exclude others from practicing that which the
patent claims.
a. Diehr suggested that whether a claim is drawn only to a
fundamental principle is essentially an inquiry into the scope of
that exclusion; i.e., whether the effect of allowing the claim would
be to allow the patentee to pre-empt substantially all uses of that
fundamental principle. If so, the claim is not drawn to patent-
eligible subject matter.
8. The SC has enunciated a definitive test to determine whether a process claim
is tailored narrowly enough to encompass only a particular application of a
fundamental principle ranther than to pre-empt the principle itself. (The
machine-or-transformation test or MOTT)
9. MOTT: A claimed process is surely patent-eligible under § 101 if: (1) it is
tied to a particular machine or apparatus, or (2) it transforms a particular
article into a different state or thing (this supports past case decisions accdg
to the court)
a. It is only deemed as a process within the statutory definition
when it is either tied to a particular apparatus or operated to change
materials to a different state or thing.
b. The use of a specific machine or transformation of an article must
impose meaningful limits on the claim’s scope to be patent-eligible.
c. Also, the involvement of the machine or transformation in the
claimed process must not merely be an insignificant extra-solution
activity. This transformation must be central to the purpose of the
claimed process.
10. The court then turned their attention to whether this two-branch test should
be considered all-inclusive, that is, as stating indispensable conditions of
patent-eligibility. It concluded that the answer was affirmative, even though
much of the language in the Supreme Court's patent-eligibility trilogy was
 more reserved
11. Among several other tests is the "technological arts" test (a patent-eligible
advance must be "technological" in nature) and the SC rejected it on
several grounds:
a. The meanings of "technological arts" and "technology" are disputed
and ambiguous. No court has ever adopted the test.
b. The technological-arts test is not an equivalent of or "shortcut,"
the court insisted, that can be used instead of the transformation-
machine test. "Rather, the machine-or-transformation test is the
only applicable test and must be applied, in light of the guidance
provided by the Supreme Court and this court, when evaluating
the patent-eligibility of process claims."
12. There was also a Useful, Concrete, Tangible Results Test but such was
inadequate. This was useful in determining whether an application is seeking
to patent a fundamental principles however Machine-or-transformation test
is a better test to take.
13. The Court refused to adopt a test that barred business methods. While
the court stated that the machine-or-transformation test was the applicable
test, the SC in Benson had stated that there could be cases where a claim that
fails the "requirements of its prior precedents" may still nonetheless be
patent-eligible subject matter.
14. Software could not categorically be excluded. The court stated that future
developments may alter the standing or the application of the test.
With regard to Bilski’s method
15. It is patent-ineligible.
a. Bilski did not argue that the rejected claims recited any specific
or "particular" machine, so that the court found it unnecessary
to decide any issues relating to the machine-implementation
branch of the test. "We leave to future cases the elaboration of the
precise contours of machine implementation, as well as the answers
to particular questions, such as whether or when recitation of a
computer suffices to tie a process claim to a particular machine."
b. (NOTE: you can skip (b) and (c) of this number if you want; medj
informational lang ito sa point) The court turned to transformation
of articles from one thing or state to another and Benson, in
defining “article,” had made it clear that tanning hides, smelting
ores, and vulcanizing rubber were all instances of transforming
articles.
i. Some amici curiae articulated it: one physical substance is
transformed into a second physical substance.
ii. But what of electronic signals and electronically
manipulated data? Or even more abstract constructs
such as legal obligations, which the Bilski case
involved? No Supreme Court precedents addressed
such entities.
c. Some Federal Circuit decisions, however, had held some
transformations of signals and data patent-eligible.
i. For example, the Abele decision approved a dependent
claim to a method transforming X-ray attenuation data
produced in a X-Y field by an X-ray tomographic scanner
to an image of body organs and bones — while at the same
time the Abele court rejected a more generic and abstract
independent claim to a process of graphically displaying
variances from their average values of unspecified data
obtained in an unspecified manner.
16. (IMPT) Bilski’s process as claimed does not transform any artcle to a
different state or thing.
a. Purported transformations or manipulations simply of public or
private legal obligations or relationships, business risks, or
other such abstractions cannot meet the test because they are not
physical objects or substances, and they are not representative of
physical objects or substances
b. Applicants process at most incorporates only such ineligible
transformations.
17. The process as claimed encompasses the exchange of only options, which are
simply legal rights to purchase some commodity at a given price in a given time
period. The claim only refers to “transactions” involving the exchange of these
legal rights at a “fixed rate corresponding to a risk position.”
18. Thus, claim 1 does not involve the transformation of any physical object or
substance, or an electronic signal representative of any physical object or
substance. Given its admitted failure to meet the machine implementation part of
the test as well, the claim entirely fails the machine-or-transformation test and is
not drawn to patent-eligible subject matter.
19. Bilski’s argument is unavailing:
a. They argue that claim 1 produces useful, concrete and tangible
results. But this is insufficient to establish patent-eligibility under §
101.
b. They also argue that their claimed process does not comprise only
“steps that are totally or substantially practiced in the mind but
clearly require physical activity which has a tangible result.” But the
correct analysis is whether the claim meets the Machine or
Transformation Test, not whether it recites “physical steps.”
c. Its clear failure to satisfy the test is fatal despite the argument that
the claim can only be practiced by a series of physical acts.
20. Thus, while we agree with Applicants that the only limit to patent-eligibility
imposed by Congress is that the invention fall within one of the four
categories enumerated in § 101, we must apply the Supreme Court's test
to determine whether a claim to a process is drawn to a statutory
“process” within the meaning of § 101.
a. Applied here, Bilski's claim fails that test so it is not drawn to a
“process” under § 101 as that term has been interpreted.
 005 BILSKI v. KAPPOS 2010 case (RAYOS)
June 28, 2010 | Kennedy J. | Machine transformation test
PETITIONER: Bilski et. al
RESPONDENTS: Kappos (undersecretary of commerce for IP & patent, Trade Mark
office
SUMMARY: Bilski et. al developed a method to hedge against price fluctuations in
the energy market, which included a simple mathematical concept and familiar
statistical approaches. They applied for a patent on their claimed invention, but the
patent examiner rejected the application, claiming it involved an abstract idea and was
not implemented on a specific apparatus. They appealed and the Federal Circuit
affirmed. The Federal Circuit held the test for patentability under § 101 was the
machine-or-transformation test: (1) the claimed process was tied to a particular
machine; or (2) the process transformed an article into something else. One of the
dissenting judges argued it failed because it was a method of conduction business. A
second dissenting judge argued the invention was an abstract idea and therefore
unpatentable. A third dissenter would have remanded to determine patentability under
other provisions. Petitioners appealed and the United States Supreme Court granted
certiorari. Issue: Is the machine-or-transformation test the only test for patent
eligibility under § 101 of the Patent Act? No. The machine-or-transformation test is
not the only test for patent eligibility under § 101 of the Patent Act. The Patent Act §
101 defines patent eligibility with exceptions for “laws of nature, physical phenomena,
and abstract ideas.” Section 101 is a threshold test and the claimed invention must also
be novel, nonobvious, and fully described. The invention here is claimed to be a
“process” under § 101. “Process is defined within the Patent Act at § 101(b). The
Federal Circuit adopted the machine-or-transformation test as the sole test for what
constitutes a “process.” Section 100(b) explicitly defines “process”, so the Federal
Circuit’s further definition and limitation is unnecessary and does not apply here.
Adopting such an exclusionary rule creates uncertainty for the patentability of computer
software and other emerging technologies. Similarly, the definition of “process” does
not exclude business methods. Federal law explicitly contemplates at least some
business method patents as a “method” eligible for a patent under § 101. The
limitations of novelty, nonobviousness, and full description protects against unjustified
patents. W/N it is patentable? NO, NOT PATENTABLE. Their process, however,
may not be a “process” under § 101 because it claims an abstract idea. The majority,
penned by Justice Kennedy, affirmed the ruling of the Federal Circuit that Bilski’s
claims were unpatentable, while holding that the Federal Circuit was incorrect in setting
out the “machine-or-transformation” test as the sole test for whether a process claim
encompasses patentable subject matter. The majority further explained that while
business method patents are not categorically outside the realm of patentable subject
matter, the specific claims in the Bilski application were not patentable subject matter.
The claims, which were directed to a method of hedging risk in commodities trading in
general, and energy markets in particular, were unpatentable because they encompassed
an abstract idea.
DOCTRINE: The machine-or-transformation test is not the only test for patent
eligibility under § 101 of the Patent Act. Section 101: 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 therefor, subject to the
conditions and requirements of this title. Three exceptions section 101’s broad patent-
eligibility principles: laws of nature, physical henomena and abstract ideas.
While the Bilski opinion clearly states that the “machine-or-transformation” test is not
the sole test for whether a process claim encompasses patentable subject matter, the
decision has seemingly done little in the way of giving lower courts further guidance
in making this determination. Additionally, the decision leaves the question of the
extent to which business methods claims are patentable up to later decisions.
FACTS:
1. 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.
2. 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.
3. 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 for energy.
4. 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 without any
limitation to a practical application, therefore, the invention is not directed to
the technological arts.
5. The Board of Patent Appeals and Interferences agreed and affirmed. They
concluded that the application involved only MENTAL STEPS that do not
transform physical matter and was directed to an ABSTRACT IDEA. The
Federal Circuit, in turn, affirmed.
6. The en banc court rejected its prior test for determining whether a claimed
invention was a patentable “process” under Patent Act, 35 U. S. C. §101—
i.e., whether the invention produced a “useful, concrete, and tangible result,”
holding instead that a claimed process is patent eligible if: (1) it is tied to a
particular machine or apparatus, or (2) it transforms a particular article
into a different state or thing. Concluding that this “machine-or-
transformation test” is the sole test for determining patent eligibility of a
“process” under §101, the court applied the test and held that the application
was not patent eligible.
7. Hence this petition by Bilski.
ISSUES:
1. Whether or not the Machine-Or-Transformation Test is the sole test to
determine patent eligibility for a process? No, not the only test. But it is
a useful and important clue, an investigative tool, for determining whether
 some claimed inventions are processes under § 101, but not the sole test in
making the determination.
2. Whether or not business methods can be patentable? Yes, patentable.
The majority further concluded that business methods are within the realm of
patentable subject matter. Similar to the reasoning used to evaluate the
“machine-or-transformation” test, the majority found that the “ordinary,
contemporary, common meaning” of “process” does not exclude business
methods.
3. Whether or not Bilski’s application is a patentable subject matter? NO,
not patentable. Even though the “machine-or-transformation” test is not the
sole test for whether a process is patentable subject matter, and business
methods may at times be patentable, the majority still found the Bilski claims
unpatentable as falling into one of the judicially created exceptions to the
patentable subject matter. Specifically, the Court found the Bilski claims as
encompassing an abstract idea.
RULING: The judgement of the Court of appeals is affirmed.
RATIO:
Machine-Or-Transformation Test
1. Under the “machine-or-transformation” test a process is patentable if: “
a. (1) it is tied to a particular machine or apparatus, or
b. (2) it transforms a particular article into a different state or thing.”
2. The majority concluded that the test is improper as the sole test for whether
process claims are patentable subject matter because doing so would “impose
limitations on the Patent Act that are inconsistent with the Act’s text.”
3. The Court was unaware of any “ordinary, contemporary, common meaning”
of a process as defined in the Patent Act that requires a process to be tied to
a machine, or to transform an article. Accordingly, the Court declined to
impose these added limitations on process claims.
4. The majority also makes clear that while they disagreed with the Federal
Circuit’s decision with regard to sole use of the “machine-or-transformation”
test, it was not the majority’s intent to “foreclose the Federal Circuit’s
development of other limiting criteria that further the purposes of the Patent
Act and are not inconsistent with its text.”
5. In discussing the usefulness of the “machine-or-transformation” test, Justices
Kennedy, Alito, Thomas and the Chief Justice take care to note that the
opinion should not be read as commenting on the patentability of
technologies other than those represented in the Bilski claims, particularly
emerging technologies. The four Justices suggest that new inquiries may
be required to evaluate the patentability of “Information Age”
technologies, such as software, advanced diagnostic medicine techniques,
and inventions based on linear programming, data compression, and the
manipulation of digital signals.
Business Methods Can be Patentable
1. The majority further reasoned that categorically denying the
patentability of business methods would render meaningless 35 U.S.C. §
273 which explicitly refers to “methods of doing or conducting business.”
Even so, the majority does show a certain level of skepticism towards
business patents, stating, “Finally, while § 273 appears to leave open the
possibility of some business method patents, it does not suggest broad
patentability of such claimed inventions.”
2. While Section 273 appears to leave open the possibility of some business
method patents, it does not suggest broad patentability of such claimed
inventions.
Bilski’s application not patentable
1. The majority felt that the claims simply “explain the concept of hedging
or protecting against risk,” and this is nothing more than an abstract
idea.
2. The Court affirmed the judgment of the Federal Circuit in In re Bilski, the
(case digest by Casey). However, it rejected the machine-or-transformation
test as a sole test of patentability based on an interpretation of the language
of § 101. The Court rejected the Federal Circuit's statutory
interpretation regarding the word "process," finding the definition in §
100(b) to be sufficient without turning to the canon of noscitur a sociis.[4]
Section 100(b) defines process as a "process, art or method, and includes
a new use of a known process, machine, manufacture, composition of
matter, or material."
3. The Court looked to Gottschalk v. Benson and Parker v. Flook, and noted
that both had explicitly refused to rely on the machine-or-transformation test
as the sole test for patent eligibility.
a. Benson case – pure binary code was a process. 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. The application at issue was not a process but
an unpatentable abstract idea.
b. Flook case – The applicant here attempted to apatent a
procedure for monitoring the conditions during the catalytic
conversion process in the petrochemical & oil-refining
industries. The application’s only innovation was reliance on a
mathematical algorithm. The invention was not a patentable
process because considered as a whole it contained no
patentable invention.
c. Dieht case – 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.”
4. Regarding Bilski's claimed subject matter, the Court found that his
method of optimizing a fixed bill system for energy markets was an
 unpatentable abstract idea. Despite taking a broader reading of patent
eligibility for processes, according to the majority opinion "this Court
by no means desires to preclude the Federal Circuit’s development of
other limiting criteria that further the Patent Act’s purposes and are not
inconsistent with its text."
5. In the plurality sections of Kennedy's opinion, an overall Court minority
opinion as not joined by Scalia, he notes that strict adherence to only
"the machine-or-transformation test would create uncertainty as to the
patentability of software, advanced diagnostic medicine techniques, and
inventions based on linear programming, data compression, and the
manipulation of digital signals" but "the Court today is not commenting
on the patentability of any particular invention, let alone holding that
any of the above-mentioned technologies from the Information Age
should or should not receive patent protection." Kennedy also suggests
that a categorical exclusion of some types of business methods from
patent eligibility might be legitimate if that rule was based on the idea
that purely abstract ideas are not patentable.
Stevens, J. Concurring opinion:
1. The Court’s opinion requires some clarifications. First, the Court’s opinion
should not be read literally to mean that the terms in the Patent Act must be
read as lay speakers use those terms, and not as they have been understood
traditionally in the context of patent law. To do otherwise would lead to
ridiculous results. In addition, the opinion should not be interpreted to mean
that the machine-or-transformation test cannot be applied to digital
technologies. Rather, it should be read as holding that few, if any, processes
cannot effectively be evaluated using the test’s criteria. Plus, the Court does
not provide a clear account of what constitutes an unpatentable abstract idea.
Instead, the Court artificially limits the claims at bar to hedging, and
then concludes that hedging is an abstract idea rather than a term that
describes a category of processes including the claims. Therefore, the
Court fails to show how its conclusion follows clearly from precedents in this
area.
2. Consequently, one might conclude that the Court’s analysis means that any
process that utilizes an abstract idea is itself an unpatentable, abstract idea,
but such a rule has never been suggested; if this were the rule, it would
undermine a host of patentable processes. Looking to the language of §
101, clearly it should not be interpreted to mean, in a lay sense, that the
word “process” constitutes any series of steps. Instead, “process” has a
distinctive, term-of-art meaning in patent law that does not encompass
any series of steps or any way to do anything. Therefore, the Court makes
a serious interpretive error by its willingness to exclude general principles
from the provision’ reach while apparently willing to include steps for
conducting business.
3. The history of patent law contains strong norms against patenting either of
these two categories of subject matter, and such history provides a much clear
resolution to the issue presented here. That history strongly supports the
conclusion that a method of doing business is not a “process” under § 101.
Early on, patents were used to protect industrial innovations, not those in
business or finance, and by the early 20th century, it was established that a
series of steps for conducting business could not be patented. This
understanding was carried into the 1952 Patent Act. Also, the legislative
history does not support an interpretation of the 1952 Act that means that
anything created by man is patentable. To the contrary, the legislative history
should be understood to mean that not everything created by man is
patentable. Even though people have been developing better and better ways
to conduct business throughout history, it has never been understood that
these ways of conducting business were patentable.
4. Although it may be hard to define what exactly a patentable “process” is
under § 101, the historical clues unite on one conclusion: A business method
is not a “process.” The constitutionally mandated purpose and function of
the patent laws also support this conclusion. One of the purposes of patents,
through the grant of a limited monopoly, is to promote innovation that
would be stifled without the grant of the patent. It is generally agreed
that when innovation is expensive, risky, and easily copied, inventors are
less likely to undertake the guaranteed costs of innovation in order to
obtain the mere possibility of an invention that others can copy.
Breyer, J. Concurring Opinion:
1. Justice Stevens is correct that this case should have been decided on the
grounds that business methods are not patentable. With that being said, it is
also important to clarify the patent law principles on which the majority of
Justices agree.
a. First, although the text of § 101 is broad, it is not without limit.
b. Second, the transformation and reduction of an article to a different
state or thing is the clue to the patentability of a process claim that
does not include particular machines. T
c. hird, although the machine-or-transformation test has always been a
useful and important clue that helps in determining whether a
process is patentable, this test has never been the “sole test”for
determining patentability.
d. Finally, although the machine-or-transformation test is not the only
test for patentability, this by no means indicates that anything that
produces a useful, concrete, and tangible result is patentable.
Therefore, in reemphasizing that the “machine-or-transformation”
test is not necessarily the only test of patentability, the court does
not intend to deemphasize the test’s usefulness or to suggest that
many patentable processes lie beyond its reach.
 006 ALICE CORP v. CLS BANK (TIMBOL)
June 19, 2014 | Thomas J. | Programs for Computers
PETITIONER: Alice Corporation PTY. LTD
RESPONDENTS: CLS Bank International
SUMMARY: ALICE is the assignee of several patents that disclose schemes to
manage certains forms of financial risk. Basically, the computer ask as a intermediary
to facilitate the exchange of financial obligations between two parties by creating
“shadow” debit and credit records; and at the end of the day, the computer wil instruct
the relevant institutions to carry out the permitted transactions. CLS BANK operates
a global network that facilitates currency trnasactions and filed a suit against ALICE
arguing that the patent claims are invalid and unenforceable. As counterclaim,
ALICE alleged infringement. The District Court ruled in favor of CLS BANK ruling
that the claims a patent ineligible because they are directed to the abstract idea of
employing a neutral intermediary to facilitate exchange of obligationsto minize risk.
On appeal, the CA affirmed the ruling further stating that the abstract idea and the
use of the computer added nothing to such. Hence this petition.
Whether or not the claims of ALICE are patent eligible under Section 101 of the
Patent Act
The SC held that the claims of ALICE are not patent eligible. The claims were simply
drawn from an abstract idea, and that requiring the use of generic computer does not
transform that idea into a patent eligble invention. Such use of computer added
nothing more to the abstract idea; rather the use of an intermediary (i.e. computer)
was a common economic practice, and building block of the modern economy.
Moreover, the computer components adds nothing to that of the existing line of
computers long in use. If the Court would have allowed the claims to be patent-
eligible, it would go against the purpose of patents – which is to promote innovation.
The Court also disussed, as in several jurisprudence, that generally the use of
computers does not transform an abstract idea into patent-eligible. However, the
exception is when such use of computer provides an additional feature such as in the
case of Diehr.
DOCTRINE: At some level, all inventions embody, use, reflect, rest upon, or apply
laws of nature, natural phenomena, or abstract ideas. Thus, an invention is not
rendered ineligible for patent simply because it involes an abstract concept
Applications of such concepts to a new and useful end, remain eligible for patent
protection
FACTS:
14. Alice Corporation (ALICE) is the assignee of several patents that disclose
schemes to manage certain forms of financial risk:
a) The invention enables the management of risk relating to specified,
yet unknown, future events
b) The specification further explains that the invention relates to
methods and apparatues, including electrical computers and data
processing systems applied to financial matters and risk
management
15. The claims at issue relate to a computerized scheme for mitigating
“settlement risk”. In particular:
a) The claims are designed to facilitate the exchange of financial
obligations between two parties by using a computer system as a
third-party intermediary
b) The intermediary creates “shadow” credit and debit records that
mirror the balances in the parties’ real-world accounts at “exchange
institutions”
c) The intermediary updates the shadow records in real time as
transactions are entered, allowing “only those transactions for which
the parties’ updated shadow records indicate sufficient resources to
satisfy their mutual obligations”
d) At the end of the day, the intermediary instructs the relevant
financial institutions to carry out the “permitted” transactions in
accordance wih the updated shadow records, thus mitiagating te risk
that only one party will perfrom the agree-upon exchange
16. In sum, the patents in suit claim:
a) The foregoing method for exchanging obligations (the method
claims);
b) A computer system configured to carry out the method for
exchanging obligations (the system claims); and
c) A computer-readable medium containing program code for
performing the method of exchanging obligations (the media claims
17. CLS Bank International (BANK) operate a global network that facilitates
currency transactions
a) BANK filed suit against ALICE, seeking a declaratory judgment
that the claims at issue are invalid, unenforceable, or not infringed
b) ALICE counterclaimed, alleging infringement
18. The District Court held that all of the claims are patent ineligible because
they are directed to the abstract idea of employing a neutral intermediary to
facilitate simultaneous exchange of obligations in order to minimize risk
19. On appeal, CA held that ALICE’s claims draw on the abstract idea of
reducing settlement risk by effecting trades through a third-party
intermediary,” and that the use of a computer to maintain, adjust, and
reconcile shadow accounts added nothing of substance to that abstract idea
20. Hence this petition
ISSUE/s:
4. WoN ALICE’s claims are patent eligible under Sec. 101 of the Patent Act–
NO, the claims at issue are drawn to the abstract idea of intermediated
 settlement, and that merely requiring generic computer implementation fails
to transform that abstract idea into a patent-eligible invention
RULING: For the foregoing reasons, the judgment of the Court of Appeals for the
Federal Circuit is affirmed.
RATIO:
26. Sec. 101 of the Patent Act defines the subject matter eligible for patent
protection:
1. “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 therefor,
subject to the conditions and requirements of this title
27. We have long held that this provision contains an important implicit
exception:
1. Laws of nature, natural phenomena, and abstract ideas are not
patentable
2. Because these are considered the basic tools of scientific and
technological work
28. Monopolization of those tools through the grant of a petnet might tend
to impede innovation more than it would tend to promote it,” thereby
thwarting the primary object of the patent laws
29. At the same time, we tread carefully in construing this exclusionary principle
lest it swallow all of patent law
1. At some level, all inventions embody, use, reflect, rest upon, or
apply laws of nature, natural phenomena, or abstract ideas
2. Thus, an invention is not rendered ineligible for patent simply
because it involes an abstract concept
3. Applications of such concepts to a new and useful end, remain
eligible for patent protection
30. Accordingly, in applying Sec. 101 exception, we must distinguish between
patents that claim the building blocks of human ingenuity and those that
integrate the building blocks into something more, thereby transforming them
into patent-eligible invention
31. Mayo Collaborative Services v. Prometheus Laboratories Inc, sets forth a
frameowork for distinguishing patents that claim laws of nature, natural
phenomena, and abstract ideas from those that claim patent-eligible
applications of those concepts:
1. First, we determine whether the claims at issue are directed to
one of those patent-ineligible concepts
1. If so, we then ask, “what else is there in the claims
before us?
2. To answer that questions, we consider the elements of
each claim both individually and as an ordered
7
The case involved a claim of a method for measuring metabolites in the blood stream in order to calibrate
the appropriate dosage of thipurine drugs in the treatment of autoimmune diseases
combiniation to determine whether the additional
elements transform the nature of the claim into a
patent-eligible application
2. Second, search for an “inventive concept – i.e., an element or
combination of elements that is sufficient to ensure that the
patent in practice amounts to significantly more than a patent
upon the ineligible concept itself
The claims are drawn to the abstract idea of intermediated settlement
1. The abstract ideas category embodies the longstanding rule that an idea of
itself is not patentable
2. Bilski v. Kappos: Specifically, the claims described “the basic concept of
hedging, or protecting against risk”
1. The Court explained that “hedging is a fundamental economic
practice long prevalent in our system of commerce and taught in any
introductory finance class
2. The concept of hedging as recited by the claims in suit was therefore
a patent-ineligbile abstract idea, just like the algorithms at issue in
Benson and Flook
3. Thus, ALICE’s claims are directed to an abstract idea.
1. The claims involve a method of exchanging financial obligations
between two parties using a third-party intermediary to mitigate
settlement risk
2. The intermediary creats and updates “shadow” records to reflect the
value of each aprty’s actual accounts held at “exchange institutions,”
thereby permitting only those transactions for which the aprteis have
sufficient resources
3. At the end of the day, the intermediary issues irrevocable instruction
sto the exchange institutions to carry out the permitted transactions
4. Like the risk heding in Bilski, the concept of intermediated settlement
is a fundamental economic practice long prevalent in our system of
commerce
5. The use of a third-party intermediary (or clearing house) is also
a building block of the modern economy
6. Thus, intermediated settlement, like hedging, is an abstract idea
beyond the scope of Section 101
The use of generic computer implementation fail to transform that abstract idea into
a patent-eligible invention
1. At Mayo7 step two, we must examine the elements of the claim to determine
whether it contains an inventive concept sufficient to transform the claimed
abstract idea into a patent-eligible application
 2. A claim that recits an abstract idea must include “additional features”
to ensure that the claim is more than drafting effort designed to
monopolize the abstract idea
i. Simply appending conventional steps, specified at a high level of
generality, was not enough to supply an inventive step
3. The introduction of a computer into the claims does nto alter the analysis at
Mayo step two
i. In Benson, for example, we considered a patent that claimed an
algorithim implemented on a general purpose digital computer. But
the computer implementation did not supply the necessary
inventicve cocpet; the process could be carried out in existing
computers long in use
ii. In Flook, the prohibition against patenting abstract ideas cannot be
circumvented by attempting to limit the use of the idea to a particular
technological environment
iii. In Diehr, by contrast, we held that a computer-implemented process
for curing rubber was patent eligible, but not because it involved a
computer. The claim employed a well-known mathematical
equiation, but it used that equation in a process designed to solve a
technological problem in conventional industry practice
4. These cases demonstrate that the mere recitation of a generic computer
cannot transform a patent-ineligible abstract idea into a patent-eligible
invention
5. Given the ubiquity of computers, wholly generic computer implementation
is not generally the sort of additional feature that provides any practical
assurance that the process is more than a drafting effort designed to
monopolize the abstract idea itself
6. There is no dispute that a computer is a tangible system or that many
computer-implemented claims are formally addressed to patent-eligible
subject matter
i. But if that were the end of the Section 101 inquiry, an applicant
could claim any principle of the physical or social sciences by
reciting a computer system configured to implement the relevant
concept
ii. Such a result would make the determination of patent eligibility
depend simply on the drafts-man’s art, thereby eviscerating the rule
that “laws of nature, natural phenomena, and abstract ideas are not
patentable
The claims do not do more than simply instruct the practitioner to implement the
abstract idea of intermeiediate settlement on a generic computer
1. The representative method claim in this case recites the following steps:
i. “Creating” shadow records for each counterparty to a transaction;
ii. “Obtaining” start of day balances based on the parties’ real world
accounts at exchange institutions;
iii. “Adjusting” the shadow records as traansactions are entered,
allowing only those transactios for which the parties have sufficient
resources; and
iv. “Issuing” irrevocable end of day instructions to the exchange
institutions to carry out the permitted transactions
2. As stipulated, the claimed method requires the use of a computer to create
electronic records, track multiple transactions, and issue simultaneous
instricutions; in other words, the computer is itself the intermediary
3. Taking the claim elements separately, the function performed by the
computerat each step of the process is purely conventional
4. Using a omputer to create and maintain “shadow” accounts amounts to
electronic recordkeeping – one of the most basic functions of a computer
a. In short, each step does not more than require a generic computer to
perform generic computer functions
5. Considered as an ordered combination, the computer components of
ALICE’s method add nothing that is not already present when the steps
are considered separately
6. Instead the claims at issue amount to nothing significantly more than an
instruction to apply the abstract idea of intermediated settlement using some
specified, generic computer
7. Moreover, none of the hardware recited by the system claims “offers a
meaningful limitation beyond generally linking the use of the method to a
particular technological environment, that is implementation via computeres
8. Put another way, the system claims are no different from the method
claims in substance. The method claims recite the abstract idea
implemented on a generic computer; the system claims recite a handful
of generic computer components configured to implement the same idea
 007 STATE STREET BANK & TRUST CO. v. SIGNATURE
FINANCIAL GROUP (SAN PEDRO)
July 23, 1998| Circuit Judge Rich | Methods of Doing Business
PLAINTIFF-APPELLEE: State Street Bank & Trust Co.
DEFENDANT-APPELLANT: Signature Financial Group, Inc.
SUMMARY: Signature is the assignee of the ‘056 patent entitled “Data
Processing System for Hub and Spoke Financial Services Configuration.” a.
In essence, the system, identified by the proprietary name Hub and
Spoke®, facilitates a structure whereby mutual funds (Spokes) pool their assets
in an investment portfolio (Hub) organized as a partnership. In particular, this
system provides means for a daily allocation of assets for two or more Spokes
that are invested in the same Hub State Street negotiated with Signature for a
license to use its patented data processing system. When negotiations broke
down, State Street filed an action in Court to invalidate the patent. The District
Court ruled that the patent was invalid on the ground that the claimed subject
matter, as a mathematical algorithm and a business method, is not encompassed
by 35 U.S.C. § 10. The issue is WON mathematical algorithms or business
methods are patentable. On WON mathematical algorithms are patentable, the
Court held that it is patentable if it is useful. In the past, the Court has held that
mathematical algorithms are not patentable subject matter to the extent that they
are merely abstract ideas. Thus, if proven to be useful, they are patentable. In this
case, the subject patent is useful, to wit “the transformation of data, representing
discrete dollar amounts, by a machine through a series of mathematical
calculations into a final share price, constitutes a practical application of a
mathematical algorithm, because it produces “a useful, concrete and tangible
result”-a final share price momentarily fixed for recording and reporting purposes
and even accepted and relied upon by regulatory authorities and in subsequent
trades.” On WON business methods are patentable, the Court held that Claims
should not be categorized as methods of doing business. Instead such claims
should be treated like any other process claims.
DOCTRINE: A claimed invention is eligible for protection by a patent in the
United States if it involved some practical application and "it produces a
useful, concrete and tangible result."
FACTS:
1. Signature is the assignee of the '056 patent which is entitled “Data Processing
System for Hub and Spoke Financial Services Configuration.”
a. In essence, the system, identified by the proprietary name Hub and
Spoke®, facilitates a structure whereby mutual funds (Spokes) pool their
assets in an investment portfolio (Hub) organized as a partnership.
b. In particular, this system provides means for a daily allocation of assets
for two or more Spokes that are invested in the same Hub. The system
determines the percentage share that each Spoke maintains in the Hub,
while taking into consideration daily changes both in the value of the
Hub's investment securities and in the concomitant amount of each
Spoke's assets.
2. The '056 patent application was filed 11 March 1991. It initially contained
six “machine” claims, which incorporated means-plus-function clauses, and
six method claims.
a. According to Signature, during prosecution the examiner contemplated
a § 101 rejection for failure to claim statutory subject matter. However,
upon cancellation of the six method claims, the examiner issued a notice
of allowance for the remaining present six claims on appeal. Only claim
1 is an independent claim.
3. State Street and Signature are both in the business of acting as accounting
agents for partnership fund financial services. State Street negotiated with
Signature for a license to use its patented data processing system described
and claimed in the '056 patent. When negotiations broke down, State Street
brought a declaratory judgment action asserting invalidity, unenforceability,
and noninfringement in Massachusetts district court. The district court ruled
that the patent was invalid on the ground that the claimed subject matter is
not encompassed by 35 U.S.C. § 101 (1994).
4. Hence this appeal.
ISSUE/s:
1. WON mathematical algorithms, such as the aforementioned system, are
patentable (not the main issue in the syllabus but very relevant) – IT
DEPENDS IF IT IS USEFUL, SO IN THIS CASE YES
2. WON business methods, such as the aforementioned system, are patentable.
– IT DEPENDS AGAIN IF IT IS USEFUL,
RULING: The appealed decision is reversed and the case is remanded to the district
court for further proceedings consistent with this opinion..
RATIO:
On whether mathematical algorithms are patentable. “The Mathematical Algortihms
Exception”
1. The Supreme Court has identified three categories of subject matter that are
unpatentable, namely “laws of nature, natural phenomena, and abstract
ideas.”
2. In the past, the Court has held that mathematical algorithms are not patentable
subject matter to the extent that they are merely abstract ideas constituting
disembodied concepts or truths that are not “useful.”
3. From a practical standpoint, this means that to be patentable an
algorithm must be applied in a “useful” way.
a. In Alappat, we held that data, transformed by a machine through a series
of mathematical calculations to produce a smooth waveform display on
a rasterizer monitor, constituted a practical application of an abstract idea
 (a mathematical algorithm, formula, or calculation), because it produced b. Illustrative is the CCPA's analysis in In re Howard, wherein the court
“a useful, concrete and tangible result”-the smooth waveform. affirmed the Board of Appeals' rejection of the claims for lack of novelty
b. In Arrhythmia Research Technology Inc. v. Corazonix Corp, we held and found it unnecessary to reach the Board's section 101 ground that a
that the transformation of electrocardiograph signals from a patient's method of doing business is “inherently unpatentable
heartbeat by a machine through a series of mathematical calculations 9. The district court invalidated the patent because the claimed subject matter is
constituted a practical application of an abstract idea (a mathematical not encompassed by § 101;
algorithm, formula, or calculation), because it corresponded to a useful, a. The district court stated that If Signature's invention were patentable, any
concrete or tangible thing-the condition of a patient's heart. financial institution desirous of implementing a multi-tiered funding
4. Today, we hold that the transformation of data, representing discrete complex modelled (sic) on a Hub and Spoke configuration would be
dollar amounts, by a machine through a series of mathematical required to seek Signature's permission before embarking on such a
calculations into a final share price, constitutes a practical application of project. This is so because the '056 Patent is claimed [sic] sufficiently
a mathematical algorithm, formula, or calculation, because it produces broadly to foreclose virtually any computer-implemented accounting
“a useful, concrete and tangible result”-a final share price momentarily method necessary to manage this type of financial structure.
fixed for recording and reporting purposes and even accepted and relied 10. However, this Court believes that Whether the patent's claims are too broad
upon by regulatory authorities and in subsequent trades. to be patentable is not to be judged under § 101, but rather under §§ 102,
5. The district court erred by applying the Freeman-Walter-Abele test (process, 103 and 112. Assuming the above statement to be correct, it has nothing to
machine, manufacture, or composition of matter) to determine whether the do with whether what is claimed is statutory subject matter
claimed subject matter was an unpatentable abstract idea. 11. Office personnel have had difficulty in properly treating claims directed to
a. The question of whether a claim encompasses statutory subject matter methods of doing business. Claims should not be categorized as methods
should not focus on which of the four categories of subject matter a claim of doing business. Instead such claims should be treated like any other
is directed to 9 -process, machine, manufacture, or composition of process claims.
matter-but rather on the essential characteristics of the subject matter, in
particular, its practical utility. Section 101 specifies that statutory
subject matter must also satisfy the other “conditions and requirements”
of Title 35, including novelty, nonobviousness, and adequacy of
disclosure and notice. For purpose of our analysis, as noted above,
claim 1 is directed to a machine programmed with the Hub and Spoke
software and admittedly produces a “useful, concrete, and tangible
result.” . This renders it statutory subject matter, even if the useful
result is expressed in numbers, such as price, profit, percentage, cost, or
loss.
On whether business methods are patentable. “The Business Method Exception”
6. The District Court also invalidated the patent based on the judicially-created,
so-called “business method” exception to statutory subject matter.
7. We take this opportunity to lay this ill-conceived exception to rest.
8. Since its inception, the “business method” exception has merely represented
the application of some general, but no longer applicable legal principle,
perhaps arising out of the “requirement for invention”-which was eliminated
by § 103. Since the 1952 Patent Act, business methods have been, and
should have been, subject to the same legal requirements for
patentability as applied to any other process or method.
a. The business method exception has never been invoked by this court, or
the CCPA, to deem an invention unpatentable. Application of this
particular exception has always been preceded by a ruling based on some
clearer concept of Title 35 or, more commonly, application of the
abstract idea exception based on finding a mathematical algorithm
 001 PALLIN v. SINGER (VILLAVICENCIO)
May 1, 1995 | Billings, J. | Medical Procedure
PETITIONER: Samuel L. Pallin, M.D.
RESPONDENTS: Jack A. Singer, M.D. and the Hitchcock Clinic
SUMMARY: Pallin alleged that Singer and Hitchcock are infringing on a patented
surgical technique developed by Pallin for use during cataract surgery. Pallin
allegedly developed a method for making the surgical incision in the eye in a manner
that would allow the wound to be “substantially self-sealing,” i.e., requiring no
sutures to heal. Traditionally, upon completion of cataract surgery, surgeons used
sutures to close the incision. Sutures were necessary to prevent “wound separation”
due to pressure from both within and without the eye. Sutures, however, often cause
the patient to develop an astigmatism. The patented invention, as characterized by
Pallin, is an incision that: (a) substantially self-seals; (b) is located 1.5 to 3.0
millimeters from the limbus; and (c) diverges from the limbus from a central location
to form a shape resembling a chevron or frown. Singer and Hitchcock assert that
other surgeons performed the same cataract surgery procedure claimed in the '111
patent prior to the date on which Pallin first performed an operation using the
technique of a substantially self-sealing incision. WoN Palin has a valid patent claim
– YES, because US patent is presumed to valid. WoN Summary Judgment is valid –
NO, because there are issues as to the material facts of the case, which are the similar
practices of Drs. McFarland, Gills, and Singer.
DOCTRINE: Summary judgment is appropriate when the Court finds that there is
no genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law. Although the ultimate question of patent validity is one of law,
this determination is based on an assessment of the facts.
FACTS:
1. This is an action for patent infringement. Plaintiff Dr. Samuel Pallin (“Pallin”)
alleges that Defendants Dr. Jack Singer (“Singer”) and the Hitchcock Associates
of Randolph (“Hitchcock”) are infringing on a patented surgical technique
developed by Pallin for use during cataract surgery.
2. Pallin allegedly developed a method for making the surgical incision in the eye in
a manner that would allow the wound to be “substantially self-sealing,” i.e.,
requiring no sutures to heal. Plallin obtained patent number 5,080,111 (“the '111
patent”) for the technique.
3. Pallin’s complaint alleges that Singer and Hitchcock have carried out hundreds of
operations that infringe on the '111 patentand that Singer and Hitchcock have
further induced violation of the patent by teaching the technique to other ocular
surgeons.
4. Now pending before the Court is Singer and Hitchcock's Motion for Summary
Judgment of Patent Invalidity. Singer and Hitchcock argue that the patent's claims
are invalid
5. Singer and Hitchcock assert that other surgeons performed the same cataract
surgery procedure claimed in the '111 patent prior to the date on which Pallin first
performed an operation using the technique of a substantially self-sealing incision.
6. Pallin has filed opposition claiming that the prior work of others does not
invalidate his patent and that the subject matter of his patent is both novel and
nonobvious
7. Cataract surgery is necessary when the natural lens of the eye becomes cloudy
and can no longer effectively pass light through to the light and image sensing
portion of the eye. The surgery is accomplished by making an incision into the
eye and removing the cloudy natural lens through the incision. Once the natural
lens has been removed, a plastic replacement lens (an “IOL”) is commonly placed
into the space where the natural lens used to be to restore the patient's vision.
8. The incision is made into the area of the eye known as the “sclera,” or the white
of the eye. The location of the incision is generally measured from the limbus,
which is the “narrow annular region of tissue that defines the transition between
the cornea and the sclera.”
9. Traditionally, upon completion of cataract surgery, surgeons used sutures to close
the incision. Sutures were necessary to prevent “wound separation” due to
pressure from both within and without the eye. Sutures, however, often cause the
patient to develop an astigmatism.
10. The patented invention, as characterized by Pallin, is an incision that: (a)
substantially self-seals; (b) is located 1.5 to 3.0 millimeters from the limbus; and
(c) diverges from the limbus from a central location to form a shape resembling a
chevron or frown.
11. According to the patent, the configuration of the incision allows it to seal as the
eye is inflated following surgery, eliminating the need for sutures.
12. Pallin was not, however, the only ocular surgeon working towards the
development of a sutureless technique for use in cataract surgery in 1990. There
was Dr. McFarland, Dr. Gills, and Dr. Singer.
ISSUE/s:
5. WoN Palin has a valid patent claim – YES, because US patent is presumed to
valid.
6. WoN Summary Judgment is valid – NO, because there are issues as to the material
facts of the case, which are the similar practices of Drs. McFarland, Gills, and
Singer.
RULING: In light of the foregoing, we hereby DENY Defendants' Motion for
Summary Judgment of Patent Invalidity.
SO ORDERED.
RATIO:
32. Under 35 U.S.C. § 282, a United States patent is presumed valid. The party
asserting invalidity must overcome this presumption by clear and convincing
evidence establishing facts which support the conclusion of invalidity.
33. Summary judgment is appropriate when the Court finds that there is no genuine
issue as to any material fact and the moving party is entitled to judgment as a
matter of law.
34. Although the ultimate question of patent validity is one of law, this determination
is based on an assessment of the facts.
35. In the case before us, we find that complex factual disputes exist and we therefore
decline to grant summary judgment on the issue of patent invalidity.
36. Under § 102(g), a patent is invalid if it was previously made in this country by
another who had not abandoned, suppressed, or concealed it. The patentee need
not have knowledge of the prior art.
37. Our comparison of the surgical techniques practiced by Drs. McFarland, Gills and
Singer with the asserted claims of the '111 patent reveals that genuine issues of
material fact exist as to whether the works of any one of these doctors fully
anticipated Pallin's claims.
38. Issues: whether Dr. McFarland's straight line incision and vertical cuts fall within
the ambit of Pallin's claims; whether the distance from the limbus of the incisions
made by Dr. Gills during the March 1990 surgeries falls within the 1.5 to 3.0
millimeter range advocated by Pallin's patent; and whether the incision made by
Dr. Singer in his March 1990 surgery was capable of self-sealing.
39. Because we find that Singer and Hitchcock have failed to meet their burden of
demonstrating that no factual issues exist as to whether Pallin's patent was
previously made in this country by another, we need not address the issue of
abandonment, suppression or concealment.

40. In determining whether an invention would have been obvious at the time it was
made, section 103 requires a Court to: (1) determine the scope and content of the
prior art; (2) ascertain the differences between the prior art and the claims at issue;
and (3) resolve the level of ordinary skill in the pertinent art.
41. We conclude, therefore, that Singer and Hitchcock have failed to meet their
burden of proof under the summary judgment standard to establish that there is
no genuine issue of material fact as to obviousness.

 002 NOVARTIS v. UNION OF INDIA (GUECO)
April 1, 2013 | Aftab Alam, J. | Patentability of Gleevec in India, Evergreening,
Incremental Innovations
PETITIONER: Novartis
RESPONDENTS: Union of India
SUMMARY: Novartis applied for and was granted a patent for the drug imatinib
(used to treat chronic leukemia) in the United States. He then applied for another
patent, this time for the beta crystalline form of imatinib mesylate (basta a new
form of the imatinib that he had originally patented). This application was
likewise granted. He then started obtaining patent for the said drug in other
countries and offered it for sale as “Gleevec”.
When the Patent Law of India was amended to protect product patents, Novartis
took this opportunity to patent his drug. His application was, however, rejected,
on the ground that it was not novel under Section 3(d) of Indian Patent Act (see
footnote #2). Novartis sought to prove the novelty of his drug by arguing that: (1)
the beta crystalline form is a polymorph (one of the several forms) of imatinib
mesylate, and inventors have to research it further; (2) Gleevec had an enhanced
efficacy as compared to the normal imatinib, and; (3) Gleeve had more beneficial
flow properties, better thermodynamic stability, lower hygroscopicity and
increased bioavailability. ISSUE: WON the patent for the beta crystalline form
of imatinib mesylate should be granted—NO BECAUSE IT FAILED TO MEET
THE REQUIREMENTS OF AN INVENTION AS LAID DOWN IN THE
INDIAN PATENTS ACT. RULING: Section 3(d) of the Indian Patent Act does
not allow patent to be granted to inventions involving new forms of a known
substance unless it differs significantly in properties with regards to therapeutic
efficacy. Pursuant to this provision, the Court examined whether Novartis’s drug,
Gleevec, would satisfy the test of efficacy under Section 3(d). It failed in this case
because the claimed flow properties, thermodynamic stability and
hygroscopicity, etc. which Norvartis relied on to overcome the existence of prior
art, had nothing to do with therapeutic efficacy.
DOCTRINE: Evergreening is a term used to label practices that have developed
in certain jurisdictions wherein a trifling change is made to an existing product
and claimed as a new invention. The coverage/protection afforded by the alleged
new invention is then used to extend the patentee’s exclusive rights over the
product, preventing competition. What should be borne in mind is that there is a
difference between incremental innovations that confer real advantages and those
that offer no therapeutic improvements. It is important to differentiate between
8
Used to treat chronic myelogenous leukemia (CML).
9
Section 3(d) says that the mere discovery of a new form of a known substance which does not result in
the enhancement of the known efficacy of that substance or the mere discovery of any new property or new
the two and avoid patents being used as strategic instruments in competitive
practices.
FACTS:
1. Novartis filed and was granted a patent application in the US for a drug
containing imatinib.8
2. Subsequently, Novartis filed another patent application, this time for the
“beta crystalline” form of the imatinib mesylate salt. This application was
also granted.
3. Novartis marketed the drug as “Gleevec”, and he obtained several patents for
the beta crystalline form of imatinib mesylate in other countries.
4. At the time, India did not allow protection for product patents, and no patent
protection for imatinib was obtained in India.
5. However, when India’s patent laws changed, Novartis sought patent
protection for the beta crystalline form of imatinib mesylate.
6. The application was processed in 2005 (this was when Indian laws allowed
for product patents). The application, however, was rejected in 2006 on the
ground that it failed to satisfy novelty and non-obviousness requirements.
7. Novartis lodged appeals before the Madras High Court, which was then
transferred to the then newly formed Intellectual Property Appellate Board.
The Appellate Board stated that the patent application had to be rejected
because the invention was not a new substance, but an amended form of a
known compound and that Novartis was unable to show increase in efficacy
as laid down in section 3(d) of the Indian Patents Act. 9
8. Novartis then appealed directly to the Supreme Court through a Special
Leave Petition, due to urgency, as the patent if granted on appeal would
expire by 2018.
9. In arguing that his invention was novel, he claims that there is no prior art
since the beta crystalline form was a polymorph of imatinib mesylate and
inventors therefore had to research it further. Further, the beta crystalline
form had enhanced efficacy in comparison to imatinib and imatinib mesylate.
In terms of efficacy, he argues that the beta crystalline form had more
beneficial flow properties, better thermodynamic stability, lower
hygroscopicity and increased bioavailability.
ISSUE:
1. WON the patent for the beta crystalline form of imatinib mesylate should be
granted—NO BECAUSE IT FAILED TO MEET THE REQUIREMENTS
OF AN INVENTION AS LAID DOWN IN THE INDIAN PATENTS ACT.
use for a known substance or of the mere use of a known process, machine or apparatus unless such known
process results in a new product or employs at least one new reactant, is not patentable.
RATIO: new invention is then used to extend the patentee’s exclusive rights over the
product, preventing competition”.
1. On the basis of the documents presented, the Court concluded that the prior 9. Whilst incremental innovation has been disregarded as trivial by critics, most
patents and literature constitute as prior art against the beta crystalline form innovation is incremental by nature as progression of technology, especially
of imatinib mesylate, and it therefore did not meet the requirements of an in the pharmaceutical sector, occurs in steps. What should be borne in mind
“invention” as laid down in the Indian Patents Act. is that there is a difference between incremental innovations that confer real
2. Section 3(d) of the Indian Patents Act says that, “the mere discovery of a new advantages and those that offer no therapeutic improvements. It is important
form of a known substance which does not result in the enhancement of the to differentiate between the two and avoid patents being used as strategic
known efficacy of that substance or the mere discovery of any new property instruments in competitive practices.
or new use for a known substance or of the mere use of a known process, 10. The question to be asked is, “When does an incrementally improved
machine or apparatus unless such known process results in a new product or invention of a first patented invention become eligible for a separate patent?”
employs at least one new reactant, is not patentable.” In this regard, each invention will have to be examined on its merits based on
3. The above provision does not allow patent to be granted to inventions the usual patenting criteria of novelty and inventiveness and should be able
involving new forms of a known substance unless it differs significantly in to withstand the scrutiny thereafter. As was seen in the Novartis case, the
properties with regards to therapeutic efficacy. It restricts the grant of patent Supreme Court held that novelty was not proven on the facts, and the drug
for "incremental innovations" in many drugs unless it provides significant would have failed the patentability test on this basis alone. Some, as was seen
therapeutic advantages to existing molecules. with the Indian legislature’s intention, believe that additional criteria such as
4. Pursuant to this, the Court examined the efficacy of Gleevec to see if it would therapeutic efficacy should be used during this examination for patentability.
pass the test required by law. The Court held that “the test of efficacy would 11. The goal of any patent regime is to promote innovation by rewarding the
depend upon the function, utility or the purpose of the product under inventor for disclosing his invention to the public through the award of
consideration...in the case of a medicine that claims to cure a disease, the exclusive rights for a period of time, thereby disseminating knowledge and
test of efficacy can only be ‘therapeutic efficacy’...With regard to the genesis improving the welfare of society. Intellectual property protection is of greater
of section 3(d), and more particularly the circumstances in which section 3(d) importance to the pharmaceutical industry as the research and development
was amended to make it even more constrictive than before, we have no doubt process is both costly and time-consuming. The importance of striking a
that the ‘therapeutic efficacy’ of a medicine must be judged strictly and balance between research and development and access to healthcare for the
narrowly”. public is once again highlighted.
5. The Court then held that the claimed flow properties, thermodynamic
stability and hygroscopicity, which Norvartis relied on to overcome the
existence of prior art, had nothing to do with therapeutic efficacy.
6. Novartis claims that there is an increased bioavailability. However, the Court
found that the increase in bioavailability of the beta crystalline form was not
comparable to the known and previously marketed mesylate salt form of the
drug which was soluble; rather in comparison to the free base form which
was not marketed as it was not highly soluble. On the facts, increased
bioavailability was not proven, and the efficacy test was not met.
7. The Court therefore rejected the Novartis patent application. The Court held
that the purpose behind section 3(d) is specific i.e. “The amended portion of
Section 3(d) clearly sets up a second tier of qualifying standards for chemical
substances/pharmaceutical products in order to leave the door open for true
and genuine inventions but, at the same time, to check any attempt at
repetitive patenting or extension of the patent term on spurious grounds.”
8. Evergreening: It was stated that the primary purpose of section 3(d) as
evidenced from the legislative history, was to prevent “evergreening”.
“Evergreening is a term used to label practices that have developed in certain
jurisdictions wherein a trifling change is made to an existing product and
claimed as a new invention. The coverage/protection afforded by the alleged