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In re Bilski Redefined?
By Briahna Gray – Edited by Anthony Kammer

In re Lewis Ferguson, Darryl Costin and Scott C. Harris
Federal Circuit, March 6, 2009, Serial No. 09/387,823

On March 6, 2009, the Federal Circuit Court of Appeals upheld a ruling by the Board of Patent Appeals and Interferences that a marketing paradigm for multiple independent software companies fashioned by Lewis Ferguson, Darryl Costin, and Scott C. Harris was not patentable under the U.S. Patent Act, 35 U.S.C. § 101.

Judge Gajarsa, writing for the majority, applied the test set forth in In re Bilski opinion from October 30, 2008, which rejected the “useful, concrete and tangible result” test the Federal Circuit had established ten years earlier in State Street v. Signature Financial Group. Judge Newman argued in her concurrence that the majority redefines Bilski and unduly undermines legitimate tests established by precedent, introducing ambiguity into the law.

The authors at Mass Law Blog gave a brief description of the case and applaud the outcome. PatentlyO.com explores the case with commentary. The Digest covered the In re Bilski decision back in October.

Following Bilski, Judge Gajarsa applied the machine-or-transformation test to determine whether the marketing method submitted by the applicants was “tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself.”

By the Bilski test, a process is patentable under the statute if it is either “tied to a particular machine or apparatus,” or “it transforms a particular article into a different state or thing.” The court stated that the marketing paradigm did not implicate a machine, and went on to hold that “organizing business or legal relationships in the structuring of a sales force” does not constitute a transformation as required by the statute. The court revisited State Street, noting that in Bilski the court found that the State Street test was not “valid” or “useful.”

Additionally, the court concluded that the Applicants’ “paradigm” did not fall within any of the categories of eligible subject matter required and defined by U.S.C. § 101. While the Applicants asserted that their company was tangible, and as such, was analogous to a machine, the court noted that their paradigm claims did not invoke a concrete thing as defined by precedent. As the Applicants conceded during oral argument, “you cannot touch the company.” The majority concluded that the Applicants “do no more than provide an abstract idea,” and thus did not meet the criteria required by the statute.

Judge Newman, in her concurrence, argued that the majority opinion goes “farther than is necessary or appropriate” by redefining Bilski, and that it “expound[s] dicta that transcend the facts” of the case. Specifically, Newman characterized the majority as inappropriately overturning not only State Street but also other precedent in which alternative tests were used. In doing so, Newman argued that the court “enlarg[ed] the taint” on the thousands of other patents which were granted on the basis of those tests. Newman noted that the State Street test, though not dispositive, is useful where applied to processes performed by a computer, and that when the machine test is clearly met, the “useful, concrete and tangible” test serves a different role.

The majority, in a footnote, countered that it does not overturn State Street, but merely notes that the “useful, concrete and tangible” test alone is insufficient to determine whether a claim is patent-eligible under the statute.

Finally, Newman stated that the majority mischaracterized the Applicants’ claim and dismissed it on the basis that it was an “abstract idea.” She described this as “circular,” in that it defines “abstract” as anything that does not meet the machine-or-transformation test. Newman described the marketing paradigm as “definite and concrete and limited,” if not patentable, and portrayed the majority’s dicta as irresponsible in light of the potential ramifications that that view might have on innovation from new information technologies.

Posted On Mar - 15 - 2009 Comments Off

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