How Bilski Impacts Your Patent Prosecution and Litigation Strategies. MIP Inaugural China-International IP Forum June 30, 2010, Beijing

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1 How Bilski Impacts Your Patent Prosecution and Litigation Strategies MIP Inaugural China-International IP Forum June 30, 2010, Beijing Presenters Esther H. Lim Managing Partner, Shanghai Office Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Richard B. Racine Managing Partner Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Michael Lin Senior Counsel, IP Division Procter & Gamble China 2

2 In re Bilski Patentable Subject Matter: Statutory Basis U.S.C. 101: A patent can be obtained for any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof - 35 U.S.C. 100(b): The term process means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material. 3 In re Bilski Patentable Subject Matter: Supreme Court - Anything under the sun that is made by man. Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). - NOT: abstract ideas (e.g., mathematical algorithms); natural phenomena; laws of nature. Gottschalk v. Benson, 409 U.S. 63, 67 (1972). 4

3 Bilski s Claim 1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of: 1. (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. 5 In re Bilski 545 F.3d 943 (Fed. Cir. 2008) (en banc) Patentable Subject Matter 6

4 In re Bilski, Federal Circuit The Bilski machine-or-transformation ( MOT ) test: A process is patentable under 101 only if: 1. (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing 7 In re Bilski, Supreme Court 1. Bilski at the U.S. Supreme Court 8

5 Oral Argument Chief Justice Roberts: I buy low and sell high. That s my patent for maximizing wealth. Justice Scalia: useful arts not somebody who writes a book on how to win friends and influence people Justice Ginsburg: estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable? Justice Breyer: every successful businessman... A new way to organize a new thing to say on the telephone anything that helps any businessman succeed is patentable? 9 Oral Argument Justice Breyer: I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake.... That you are going to say is patentable, too? Justice Sotomayor: So help us with a test that doesn t go to the extreme the Federal Circuit did. 10

6 Overview of Supreme Court Decision Opinion June 28, 2010 by Justice Kennedy Supreme Court rejected machine-or-transformation test as the sole test to be used to determine the patentability of a process under 101 Patentable process could include a business method Abstract ideas are not patentable Bilski s claims are not patentable because they attempt to patent an abstract idea 11 Machine-or-Transformation Test Proper interpretation of process in 101 and 100(b) does not require it to be limited to a machine or transformation. Federal Circuit incorrectly concluded that this Court has endorsed the machine-ortransformation test as the exclusive test. Machine-or-transformation test not the sole test But machine-or-transformation is a test 12

7 Machine-or-Transformation Test This Court s precedents establish that the machine-or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under 101. The machine-ortransformation test is not the sole test for deciding whether an invention is a patenteligible process. 13 Business Method Patents Section 101 similarly precludes the broad contention that the term process categorically excludes business methods. Patent eligible processes may include at least some methods of doing business. The Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under

8 Exceptions to Patent Eligible Process Court s precedent provides three specific exceptions to 101 s broad patent-eligibility principles: (1) laws of nature, (2) physical phenomena, and (3) abstract ideas. 15 Abstract Ideas Supreme Court s precedent prohibits patenting abstract ideas. Patenting the use of an abstract idea would effectively grant a monopoly over an abstract idea. Bilski s claims do not define a patentable process because they seek to patent an abstract idea. 16

9 Future Guidance? Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable process beyond pointing to the definition of that term provided in 100(b) and looking to the guideposts in Benson, Flook, and Diehr. 17 Future Guidance? In disapproving an exclusive machine-or-transformation test, we by no means 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. 18

10 Justice Stevens Concurring Opinion The Court is quite wrong, in my view, to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a process within the meaning of 101. The wiser course would have been to hold that petitioner s method is not a process because it describes only a general method of engaging in business transactions and business methods are not patentable. 19 Justice Stevens Although a process is not patent-ineligible simply because it is useful for conducting business, a claim that merely describes a method of doing business does not qualify as a process under 101. The Court, in sum, never provides a satisfying account of what constitutes an unpatentable abstract idea. 20

11 Implications of Bilski Corporate patent strategy in view of Bilski Impacts on patent prosecution Impacts on patent litigation 21 Post-Bilski Updates USPTO s post-bilski guidelines, June 28, 2010 The Supreme Court also confirmed that, although the text of section 101 is broad, it is not without limit in that its precedents provide three specific exceptions to 101 s broad patent-eligibility principles, laws of nature, physical phenomena, and abstract ideas. The Supreme Court indicated that the machine-or-transformation test is not the sole test for patent-eligibility of processes under 35 U.S.C Significantly, the Supreme Court also indicated that a business method is, at least in some circumstances, eligible for patenting under section

12 Post-Bilski Updates Supreme Court, June 29, 2010 Mayo Collaborative Services v. Prometheus Laboratories granted certiorari, vacated judgment of Federal Circuit, and remanded for further consideration in light of Bilski v. Kappos Ferguson v. USPTO denied the certiorari petition Classen Immunotherapies v. Biogen granted certiorari, vacated judgment of Federal Circuit, and remanded for further consideration in light of Bilski v. Kappos 23 Thank You! Richard B. Racine (Managing Partner) Finnegan, Henderson, Farabow, Garrett & Dunner, LLP 901 New York Avenue, NW Washington, DC U.S.A Esther H. Lim (Managing Partner, Shanghai Office) Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Mirae Asset Tower, 28/F, Unit A-B, No.166 Lujiazui Ring Road Pudong, Shanghai PRC