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Talk:Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)

2010-04-12T20:37:47Z

Cep503: /* Courtney */

==Courtney==

The key issue tried was the presence or absence of sufficient proof of a motivation to combine the four prior art references. The Board had found that one skilled in the art (1) “would have considered Johnson's dead-bolt-type locking device to be disadvantageous compared to the Moore and WuROC devices to the extent that Johnson requires a key for setting in position and adjusting the device,” and (2) “would have been motivated to make Johnson easier to use, albeit less secure, by replacing the dead-bolt mechanism” of Johnson with a suitable self-locking ratcheting mechanism. The district court found that these factual findings were “clearly erroneous” and found that adequate motivation to combine the references was not shown. See Winner, 11 F.Supp.2d at 23-24, 48 USPQ2d at 1143-44. The district court also found that Winner established commercial success resulting from the improvement claimed in the '047 patent, even though it held such a finding immaterial in light of Wang's failure to establish a prima facie case of obviousness. See id. Accordingly, the district court held that on this record the inventions of claims 2 and 4 of the '047 patent would not have been obvious and overturned the Board's decision as to those claims. See id. at 25, 48 USPQ2d at 1145.

The issue before us is whether the scope of the evidence admitted by the district court was sufficient to require a complete trial de novo, or whether the district court was instead required to give deference to some or all of the Board's findings of fact. Although our precedent makes clear that a de novo trial is appropriate in some circumstances in actions under both section 146 and the parallel provisions in 35 U.S.C. § 145, it does not make clear exactly what those circumstances are. The statutory provisions themselves offer little guidance-section 146 only refers to “further testimony” which may be offered in the district court, while section 145 is completely silent about evidence. See 35 U.S.C. § 146; 35 U.S.C. § 145. In Zurko, the Supreme Court, in passing, noted the settled law that in a section 145 action a disappointed applicant may present evidence*1346 that it did not present to the Board, and that the “presence of such new or different evidence makes a factfinder of the district judge.” 119 S.Ct. at 1824 (emphasis added). Interpreting both sections, we have referred to the ability to present “new testimony” or “proffered testimony” or “additional evidence.” Conservolite, 21 F.3d at 1102, 30 USPQ2d at 1629 (“new testimony”); Case, 730 F.2d at 752, 221 USPQ at 202 (finding that section 146 “authorizes the district court to accept all proffered testimony on issues raised by the parties during the proceedings below or by the board's decision.”); Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[A]dditional evidence is permitted in a civil action under section 145, allowing the district court to make de novo fact findings.”); Fregeau v. Mossinghoff, 776 F.2d 1034, 1038, 227 USPQ 848, 851 (Fed.Cir.1985) (using “additional evidence” and “new evidence” interchangeably); cf. Newman v. Quigg, 877 F.2d 1575, 1579, 11 USPQ2d 1340, 1343 (Fed.Cir.1989) (“A district court action under 35 U.S.C. § 145 is a de novo determination of patentability. It is not limited to the record before the PTO.”). It is not clear from these cases, however, when evidence is “new or different” or “additional” so that trial de novo is required.

The dispute here focuses on the combinability of the prior art. When an obviousness determination is based on multiple prior art references, there must be a showing of some “teaching, suggestion, or reason” to combine the references. Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579, 42 USPQ2d 1378, 1383 (Fed.Cir.1997) (also noting that the “absence of such a suggestion to combine is dispositive in an obviousness determination”). Whether motivation to combine the references was shown we hold a question of fact. See In re Dembiczak, 175 F.3d 994, 1000, 50 USPQ2d 1614, 1617 (Fed.Cir.1999) (“[P]articular factual findings regarding the suggestion, teaching, or motivation to combine serve a number of important purposes ....”) (emphasis added); Monarch Knitting, 139 F.3d at 881-83, 886, 45 USPQ2d at 1982, 1985 (treating motivation to combine issue as part of the scope and content of the prior art and holding that genuine issues of fact existed as to whether one of ordinary skill in the art would have been motivated to combine the references in question).

The district court did not clearly err in its findings of fact with respect to its obviousness analysis and did not err in concluding that the invention of the '047 patent would not have been obvious. In addition, the district court did not abuse its discretion in admitting testimony and documents or in refusing to transfer the *1353 case. Accordingly, the judgment of the district court is AFFIRMED.

Talk:Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)

2010-04-12T20:32:53Z

Cep503: Created page with '==Courtney== Ching-Rong Wang (“Wang”) appeals from the judgment of the United States District Court for the District of Columbia, overturning the decision of the United Stat…'

==Courtney==

Ching-Rong Wang (“Wang”) appeals from the judgment of the United States District Court for the District of Columbia, overturning the decision of the United States Patent and Trademark Office Board of Patent Appeals and Interferences (the “Board”) in an interference, and holding that the inventions of claims 2 and 4 of U.S. Patent No. 4,935,047 (“the '047 patent”) and claims 9-11 of U.S. Patent App. No. 07/478,411 (“the '411 application”) would not have been obvious in light of the cited prior art. See Winner Int'l Royalty Corp. v. Wang, 11 F.Supp.2d 18, 48 USPQ2d 1139 (D.D.C. June 12, 1998). The '047 patent, issued to Jinn Wu (“Wu”), and the '411 application are owned by Winner International Royalty Corp. (“Winner”). The district court had jurisdiction pursuant to 35 U.S.C. § 146 (1994) because Wu filed suit there after an adverse ruling by the Board in an interference between himself and Wang. Winner, as owner of Wu's patent, superseded Wu as plaintiff. The Board held the Wu patent and application claims invalid as obvious. See 35 U.S.C. § 103 (1994). Other litigation (including suit against Wang), in which Winner alleges infringement of its '047 patent and asserts several related claims, has been stayed in the Central District of California pending the outcome of this appeal. The district court first denied Wang's motion to transfer this action to the District Court for the Central District of California. See Winner Int'l Royalty Corp. v. Wang, 45 USPQ2d 1864, 1998 WL 268279 (D.D.C. Jan.20, 1998). Then it conducted a 7 day bench trial. On appeal, Wang challenges (1) the denial of the transfer; (2) rulings as to the admission of evidence despite its similarity to that before the Board; and (3) the holding of non-obviousness that revived the '047 patent. This case was submitted for our decision following oral argument on August 2, 1999. Because the district court did not clearly err in any of its factual findings relating to obviousness, did not err in its ultimate determination of non-obviousness, and did not abuse its discretion either in admitting the challenged documentary evidence and testimony or in refusing to transfer the case, we affirm.

BACKGROUND In addition to the '047 patent, Winner also owns U.S. Patent No. 4,738,127 (“Johnson”), the commercial embodiment of which is the original steering wheel anti-theft device known as “The Club.” Wu, the principal in the Taiwanese manufacturer of the original Club, is named as the inventor in the '047 patent, commercial embodiments of which are known as “The Super Club,” “The Ultra Club,” and “The Club GL.” The '047 patent discloses an automobile*1343 anti-theft device that is mounted across the steering wheel and is locked in place by use of a self-locking ratcheting mechanism. Like all versions of the Club, when locked in place, the commercial embodiments of the '047 patent prevent theft by blocking the steering wheel from turning. The ratcheting mechanism is different from the dead-bolt used in Johnson and so the '047 patent may be thought of as an improvement over Johnson. While Johnson's dead-bolt system is more secure, it is not as convenient as the ratcheting mechanism claimed in the '047 patent because a key is required to lock the Johnson device in place while the '047 patent discloses a device that locks itself without use of a key.FN1

FN1. In both devices a key is needed to unlock the device.

Wang also manufactures similar anti-theft devices in Taiwan and exports them to the U.S. where he sells them through his United States distributor. Wang's device is known commercially as “The Gorilla Grip.” Wang filed a patent application directed to his Gorilla Grip device and was issued U.S. Patent No. 4,887,443 (“the '443 patent”).

In 1990, Wu discovered that the device disclosed in Wang's '443 patent was very similar to the subject matter of his then-pending application, which later issued as the '047 patent, and decided to provoke an interference by filing a divisional application and submitting a claim identical to the broadest claim in the '443 patent. On August 8, 1991, an interference was declared, and a proceeding began to determine which party, Wu or Wang, had priority of invention. The claims of the '047 patent and an additional Wu application, the '411 application, were eventually added to the count in the interference.

During the interference proceeding, Wang filed a preliminary motion alleging that the interference count, and hence both parties' claims, was unpatentable as obvious in light of certain prior art under 35 U.S.C. § 103 (1994). Wang, apparently acknowledging that his claim to priority over Wu's '047 patent was questionable, ultimately conceded that his '443 patent was invalid and sought to prove that Wu's '047 patent was also invalid.

After a final hearing, the Board, in a split decision, held all affected claims invalid except for claims 1 and 3 of the '047 patent. Wu then filed both an appeal to this court pursuant to 35 U.S.C. § 141 (1994) and an action in the District Court for the District of Columbia pursuant to 35 U.S.C. § 146, while Wang filed a section 146 action in the District Court for the Central District of California. In Wu's section 141 appeal from the decision of the Board, this court determined that the section 146 suit would proceed pursuant to Wu's complaint in the District Court for the District of Columbia. See Wu v. Wang, 129 F.3d 1237, 44 USPQ2d 1641 (Fed.Cir.1997). Because Wu filed his appeal first, and responded in timely fashion to Wang's notice of election by filing a section 146 action in the District Court for the District of Columbia, Wu's choice of forum governed. See id. at 1242-43, 44 USPQ2d at 1645-46. We then dismissed the section 141 appeal as superseded by the section 146 action. See id. at 1238, 44 USPQ2d at 1642.

After the first appeal to this court, Wang filed a motion in the district court to transfer the action to the Central District of California. The district court denied the motion. See Winner, 45 USPQ2d 1864. After a seven-day bench trial, the district court held that the inventions of claims 2 and 4 of the '047 patent would not have been obvious in light of the cited prior art. See Winner, 11 F.Supp.2d 18, 48 USPQ2d 1139.FN2 At trial, Winner presented testimony on each of the four principal factual issues underlying an obviousness*1344 determination, as well as affidavits. Wang presented one expert witness to testify as to his opinion regarding obviousness and the underlying factual determinations. The record before the Board was also admitted into evidence before the district court.

FN2. The related claims in the '411 application were also found not unpatentable, but were not separately addressed by the district court and are not separately argued on appeal. Therefore, we do not address them separately either.

The focus of the trial was on four prior art references that Wang alleged, before the court as he had before the Board, rendered the invention of the '047 patent obvious. These references were Johnson (mentioned above), U.S. Patent No. 3,462,982 (“Moore”), Taiwan Patent App. No. 74,210,699 (“WuROC”), and French Patent App. No. 2,566,398 (“Grimaldi”). Winner also introduced evidence of the commercial success of its Super Club line of products. This evidence had not been presented to the Board.

Like the device disclosed in the '047 patent, the mechanism of Johnson immobilizes the steering wheel by the user inserting it within the steering wheel, telescoping its arms outward so that hooks on the end of the arms engage the steering wheel, and then locking the arms in place. As stated earlier, unlike the '047 patent, which discloses a self-locking ratcheting mechanism, Johnson uses a dead-bolt to lock the device in place, which requires the user to turn a key after putting the device on the wheel. Moore discloses a steering wheel lock that unfolds into a “Y” shape and utilizes a self-locking ratcheting mechanism, which does not require a key. WuROC discloses a wheel and brake pedal locking device with a versatile locking core that can accommodate either a dead-bolt or a self-locking ratcheting mechanism, but it does not disclose either of these locking mechanisms. Grimaldi discloses a two-piece mechanism for locking a clutch or brake pedal to the floorboard or firewall of a car and its figures appear to show a rod and pawl mechanism that locks it into place.

The key issue tried was the presence or absence of sufficient proof of a motivation to combine the four prior art references. The Board had found that one skilled in the art (1) “would have considered Johnson's dead-bolt-type locking device to be disadvantageous compared to the Moore and WuROC devices to the extent that Johnson requires a key for setting in position and adjusting the device,” and (2) “would have been motivated to make Johnson easier to use, albeit less secure, by replacing the dead-bolt mechanism” of Johnson with a suitable self-locking ratcheting mechanism. The district court found that these factual findings were “clearly erroneous” and found that adequate motivation to combine the references was not shown. See Winner, 11 F.Supp.2d at 23-24, 48 USPQ2d at 1143-44. The district court also found that Winner established commercial success resulting from the improvement claimed in the '047 patent, even though it held such a finding immaterial in light of Wang's failure to establish a prima facie case of obviousness. See id. Accordingly, the district court held that on this record the inventions of claims 2 and 4 of the '047 patent would not have been obvious and overturned the Board's decision as to those claims. See id. at 25, 48 USPQ2d at 1145.

Wang appeals, contending that the district court should have applied a substantial evidence standard of review on factual issues rather than, as it said it was doing, review for clear error. Wang asserts that the district court incorrectly concluded that the invention of the claims would not have been obvious, and abused its discretion in admitting the challenged documentary evidence and testimony as duplicative of evidence in the Board record and in denying Wang's motion to transfer the case to the Central District of California. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3)(C) (1994).

DISCUSSION I.

STANDARD OF REVIEW

[1] Headnote Citing References[2] Headnote Citing References We review the district court's factual findings for clear error and its *1345 conclusions of law de novo, as with any bench trial. See Gould v. Quigg, 822 F.2d 1074, 1077, 3 USPQ2d 1302, 1303-04 (Fed.Cir.1987) (affirming district court's reversal of Board decision with respect to enablement). It is not as clear, however, what degree of deference inheres in the standard of review the district court was required to apply to the Board's decision. The parties agree that the district court was to reassess the Board's ultimate conclusion as to obviousness de novo, but they disagree over the degree of deference, if any, the district court was required to give to the Board's factual findings. Wang argues that under the Supreme Court's decision in Dickinson v. Zurko, 527 U.S. 150, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999), the district court was required to review the Board's factual findings only for substantial evidentiary support. In its decision, which issued before Zurko was decided, the district court applied the traditional clearly erroneous standard of review to the Board's findings of fact.FN3 Winner argues first that the district court was entitled to conduct an entire trial de novo, and second, even if deference were required, that the district court properly reviewed the Board's factual findings for clear error because Zurko and the Administrative Procedure Act (“APA”) standards of review do not apply as the Board proceeding is “subject to” a trial de novo in a district court.

FN3. That standard of review was correct under our case law at the time.

Wu brought this action pursuant to 35 U.S.C. § 146, which allows a party to an interference dissatisfied with an adverse decision of the Board to file a complaint in a district court. Unlike a direct appeal to this court pursuant to 35 U.S.C. § 141, the parties before the district court are not limited to the evidentiary record before the Board:

In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party ... without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken and produced in the suit.

35 U.S.C. § 146 (emphasis added). Because the record before the district court may include the evidence before the Board as well as evidence that was not before the Board, we have often described the district court proceeding as “a hybrid of an appeal and a trial de novo.” Estee Lauder Inc. v. L'Oreal, S.A., 129 F.3d 588, 592, 44 USPQ2d 1610, 1612 (Fed.Cir.1997); see also General Instrument Corp. v. Scientific-Atlanta, Inc., 995 F.2d 209, 212, 27 USPQ2d 1145, 1147 (Fed.Cir.1993) (“[A] party may proceed to a district court for a hybrid appeal/trial de novo proceeding in which the PTO record is admitted on motion of either party, but it may be supplemented by further testimony. 35 U.S.C. § 146.”); Case v. CPC Int'l, Inc., 730 F.2d 745, 752, 221 USPQ 196, 202 (Fed.Cir.1984) (“[A]n action under 35 U.S.C. § 146 has the hybrid nature of an appeal and a trial de novo.”). We have so stated even though section 146 uses neither the term “ de novo,” nor “appeal.” See Conservolite, Inc. v. Widmayer, 21 F.3d 1098, 1102, 30 USPQ2d 1626, 1629 (Fed.Cir.1994).

The issue before us is whether the scope of the evidence admitted by the district court was sufficient to require a complete trial de novo, or whether the district court was instead required to give deference to some or all of the Board's findings of fact. Although our precedent makes clear that a de novo trial is appropriate in some circumstances in actions under both section 146 and the parallel provisions in 35 U.S.C. § 145, it does not make clear exactly what those circumstances are. The statutory provisions themselves offer little guidance-section 146 only refers to “further testimony” which may be offered in the district court, while section 145 is completely silent about evidence. See 35 U.S.C. § 146; 35 U.S.C. § 145. In Zurko, the Supreme Court, in passing, noted the settled law that in a section 145 action a disappointed applicant may present evidence*1346 that it did not present to the Board, and that the “presence of such new or different evidence makes a factfinder of the district judge.” 119 S.Ct. at 1824 (emphasis added). Interpreting both sections, we have referred to the ability to present “new testimony” or “proffered testimony” or “additional evidence.” Conservolite, 21 F.3d at 1102, 30 USPQ2d at 1629 (“new testimony”); Case, 730 F.2d at 752, 221 USPQ at 202 (finding that section 146 “authorizes the district court to accept all proffered testimony on issues raised by the parties during the proceedings below or by the board's decision.”); Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[A]dditional evidence is permitted in a civil action under section 145, allowing the district court to make de novo fact findings.”); Fregeau v. Mossinghoff, 776 F.2d 1034, 1038, 227 USPQ 848, 851 (Fed.Cir.1985) (using “additional evidence” and “new evidence” interchangeably); cf. Newman v. Quigg, 877 F.2d 1575, 1579, 11 USPQ2d 1340, 1343 (Fed.Cir.1989) (“A district court action under 35 U.S.C. § 145 is a de novo determination of patentability. It is not limited to the record before the PTO.”). It is not clear from these cases, however, when evidence is “new or different” or “additional” so that trial de novo is required.

Here, Winner introduced evidence on the issue of commercial success that was not before the Board, specifically a survey and a witness. Such documentary evidence and testimony are certainly “further testimony,” as the Board had neither before it in any form. However, Winner also presented live testimony in the district court on each factual issue before the Board, namely the other three sets of underlying factual determinations typically at issue in an obviousness determination. See Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Wang argues that this latter testimony was not adequate to trigger a de novo trial because it is the same or similar to testimony given by the same witnesses before the Board. We reject this argument.

In the context of a section 145 action, in which the Board has conducted an ex parte proceeding, we have noted that the admission of live testimony at trial requires the factfinder to make its own findings. See Burlington Indus., Inc. v. Quigg, 822 F.2d 1581, 1584, 3 USPQ2d 1436, 1439 (Fed.Cir.1987). The rationale is that the applicant was at least partly unable to present the live testimony in the ex parte proceeding before the Board. See id. In Burlington Industries, the Commissioner argued that “the district court cannot reach a different conclusion on the same evidence that was before the PTO.” Id. (emphasis added). We rejected the Commissioner's argument. Although the import of the evidence before the Board and the district court might be the same in many or all ways, the form in which it is presented is fundamentally different. As we noted in Burlington Industries:

In its evaluation of the evidence on which this conclusion was based, the district court had a powerful advantage over the patent examiner and the Board, an advantage characteristic of section 145 appeals, in that the court heard and saw witnesses, testifying under examination and cross-examination, and had the benefit of extensive discussion and argument.

Id. at 1582, 3 USPQ2d at 1437-38 (emphasis added). The fact that the district court heard live testimony, gave more weight to some witnesses than to others, and came to a different conclusion than that reached by the Board, was not improper:

This trial before the district court partook of the quality that is available only with the examination and cross-examination of live witnesses. ... If the evidence adduced before the district court led to a decision different from that reached by the PTO, that is not contrary to the legislative purpose of section 145 de novo review. Indeed, it is in fulfillment of that purpose.

Id. at 1584, 3 USPQ2d at 1439 (emphasis added). Thus, after a “full trial of the issues” the district court was free to come *1347 to its own “independent conclusion,” contrary to the argument by the Commissioner. Id.; see also Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[O]nce a full trial on the issue occurred ... the district court reached a distinct and more informed conclusion....”).

In the context of a section 146 action such as the instant case, in which the Board has conducted an inter partes interference proceeding, the matter is less clear because more evidentiary opportunities are available to parties in an interference than to an applicant in an ex parte examination and appeal to the Board. See In re Epstein, 32 F.3d 1559, 1565-66, 31 USPQ2d 1817, 1821 (Fed.Cir.1994) (noting lack of rules of evidence and inability to cross-examine witnesses in an ex parte proceeding). In an interference, unlike an ex parte proceeding, the Federal Rules of Evidence apply. See 37 C.F.R. § 1.671(b) (1998). In addition, both sides can submit testimony, initially in the form of affidavits, unless the testimony must be compelled. See 37 C.F.R. § 1.672. A party may “cross-examine” an affiant through oral deposition. See 37 C.F.R. § 1.672(d). Discovery, at least against the party opponent, is also available. See 37 C.F.R. § 1.687. However, although the parties “will be given an opportunity to appear before the Board to present oral argument at a final hearing,” 37 C.F.R. § 1.654, at no point in the interference proceeding is a party allowed to present live testimony before the Board. The Board reviews testimony only in the form of affidavits and transcripts of depositions, and other facts in the form of responses to interrogatories and requests for admissions. See 37 C.F.R. §§ 1.653(a), 1.677(a). Thus, although the proceeding before the Board in an interference differs from that following an ex parte examination, the two proceedings are the same in at least one important respect-in no case is live testimony given before the Board, which would allow the Board to observe demeanor, to hear the witnesses rebut one another's testimony in response to questioning from the parties and the judges, and thus to determine credibility. As we have stated before, because the district court may observe witnesses under examination and cross-examination it can have a “powerful advantage” over the Board which can never receive testimony in such a manner. Burlington Indus., 822 F.2d at 1582, 3 USPQ2d at 1437.

[3] Headnote Citing References We hold that the admission of live testimony on all matters before the Board in a section 146 action, as in this case, makes a factfinder of the district court and requires a de novo trial.FN4 Thus, although the live testimony before the district court might be the same or similar to testimony before the Board in the form of affidavits and deposition transcripts, a district court should still make de novo factual findings, while treating the record before the Board when offered by a party “as if [it was] originally taken and produced” in the district court. 35 U.S.C. § 146. Accordingly, because Winner submitted live testimony on all matters before the Board, the entire district court proceeding should have been a trial de novo, based both on the Board record and the district court evidence.FN5

FN4. As this case involved further testimony relating to everything in issue before the Board, we express no opinion on whether testimony relating solely to some facts or issues results in other facts or issues being reviewed deferentially based solely on the fact findings of the Board. Indeed, we do not decide whether a given dispute could be parsed into discrete “issues” or facts so that such a determination could be made, or if it could, how a court would draw the line between such facts or issues.

FN5. The trial court's failure to apply the de novo standard, if error, was harmless error, for surely the result would have been the same under non-deferential review.

Our holding comports with the notion that “[t]he credibility of the witnesses and the weight to be given to their testimony and the other evidence in the record ... is a matter for the trier of facts.” Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 552, 222 USPQ 4, 6 (Fed.Cir.1984). Further, our holding also establishes*1348 a clear rule that live testimony admitted on all matters that were before the Board triggers a de novo trial. If our holding were otherwise it might be difficult to administer. For example, if the test for determining whether de novo adjudication is appropriate were based on exactly what the witness said in the district court and whether it was truly “new or different” than what was disclosed in affidavits and deposition transcripts of the same or other witnesses before the Board, then the district court, and this court on appeal, would be required to search nearly line-by-line through the respective records as to each witness and issue to determine which standard applied. Aside from being difficult, such a test would provide scant guidance for a prospective litigant attempting to discern which standard would apply should it file a section 146 action.

II. OBVIOUSNESS

A.

[4] Headnote Citing References[5] Headnote Citing References Obviousness is a question of law based on underlying factual inquiries including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) extent of any objective indicia of non-obviousness. See Monarch Knitting Mach. Corp. v. Sulzer Morat Gmbh, 139 F.3d 877, 881, 45 USPQ2d 1977, 1981 (Fed.Cir.1998). The ultimate determination of obviousness by a district court is reviewed by this court de novo while the underlying factual inquiries are reviewed for clear error. See Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326, 1331, 49 USPQ2d 1001, 1006 (Fed.Cir.1998). We hold that this is so as much in a section 146 action as on review of the judgment in an infringement suit.

[6] Headnote Citing References[7] Headnote Citing References The dispute here focuses on the combinability of the prior art. When an obviousness determination is based on multiple prior art references, there must be a showing of some “teaching, suggestion, or reason” to combine the references. Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579, 42 USPQ2d 1378, 1383 (Fed.Cir.1997) (also noting that the “absence of such a suggestion to combine is dispositive in an obviousness determination”). Whether motivation to combine the references was shown we hold a question of fact. See In re Dembiczak, 175 F.3d 994, 1000, 50 USPQ2d 1614, 1617 (Fed.Cir.1999) (“[P]articular factual findings regarding the suggestion, teaching, or motivation to combine serve a number of important purposes ....”) (emphasis added); Monarch Knitting, 139 F.3d at 881-83, 886, 45 USPQ2d at 1982, 1985 (treating motivation to combine issue as part of the scope and content of the prior art and holding that genuine issues of fact existed as to whether one of ordinary skill in the art would have been motivated to combine the references in question).

[8] Headnote Citing References[9] Headnote Citing References Evidence of a suggestion, teaching, or motivation to combine prior art references may flow, inter alia, from the references themselves, the knowledge of one of ordinary skill in the art, or from the nature of the problem to be solved. See Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617. Although a reference need not expressly teach that the disclosure contained therein should be combined with another, see Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d 1461, 1472, 43 USPQ2d 1481, 1489 (Fed.Cir.1997),FN6 the showing of *1349 combinability, in whatever form, must nevertheless be “clear and particular.” Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617.

FN6. Wang correctly points out that the district court misstated our case law on the test for the “motivation to combine” issue when it stated that “there must have been some explicit teaching or suggestion in the art to motivate one of even ordinary skill to combine such elements so as to create the same invention.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144 (emphasis added). However, this misstatement could not have affected its analysis because its finding of a lack of a motivation to combine was based on “teaching away” and the nature of the problem confronting one of ordinary skill in the art, not what a reference failed to explicitly disclose. The district court also stated the law on this issue correctly in other portions of the opinion, so this one isolated misstatement hardly shows that the district court misunderstood the law.

B. [10] Headnote Citing References Like the district court's opinion, the arguments of both parties on appeal focus on whether one of ordinary skill would have been motivated to combine the four references. The key references at issue were Johnson, which discloses virtually all aspects of the invention claimed in the '047 patent except ratcheting, and Moore, which did disclose a self-locking ratcheting mechanism.FN7 If there was no motivation or suggestion to combine Johnson with the ratcheting mechanism of Moore, one of ordinary skill in the art would not have viewed the invention of the '047 patent as obvious. See In re Dance, 160 F.3d 1339, 1343, 48 USPQ2d 1635, 1637 (Fed.Cir.1998); Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383 (“The absence of such a suggestion to combine is dispositive in an obviousness determination.”).

FN7. WuROC, which disclosed a chamber capable of accepting either a dead-bolt or a ratcheting mechanism, may have informed one of ordinary skill in the art that both mechanisms would work, but it did not specifically disclose any such mechanisms and did not suggest that one should be replaced with the other. Grimaldi disclosed a rod and pawl design that was an anti-theft device attached to the clutch rather than a steering wheel. The district court did not clearly err in finding that “WuROC and Grimaldi in and of themselves would certainly not provide much guidance as to how to construct the Wu '047 device” and that if Johnson was not combined “with some form of a ratchet mechanism, then the fact that Wu '047 may have borrowed some elements from WuROC and Grimaldi becomes irrelevant.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144.

Wang argues that the prior art should be combinable merely because the Board properly found that the relevant field was very broad and included lock design art in general, and all of the prior art here was clearly within that field. Wang further argues that Moore is combinable with Johnson because they both deal with locking steering wheels, even though Moore's ratcheting mechanism is possibly not as strong or as tamper resistant as the dead-bolt mechanism of Johnson, partly because the grooves of the ratcheting mechanism are at least somewhat exposed.

[11] Headnote Citing References The district court found that there was no motivation to combine Johnson with the ratcheting mechanism of Moore because (1) there was no apparent disadvantage to the dead-bolt mechanism of Johnson, and therefore the motivation to combine would not stem from the “nature of the problem” facing one of ordinary skill in the art, because no “problem” was perceived; and (2) Johnson's written description taught away from the use of Moore. See Winner, 11 F.Supp.2d at 23, 48 USPQ2d at 1143-44. “What a reference teaches and whether it teaches toward or away from the claimed invention are questions of fact.” In re Bell, 991 F.2d at 784, 26 USPQ2d at 1531.

First, although there was conflicting evidence before the district court on whether one would see the trade-off between using a dead-bolt and using a ratcheting mechanism and conclude that the more secure dead-bolt should be replaced with the more convenient ratcheting mechanism, the district court did not clearly err in finding that one of ordinary skill in the art would not have reasonably elected trading the benefit of security for that of convenience. Trade-offs often concern what is feasible, not what is, on balance, desirable. Motivation to combine requires the latter.FN8

FN8. The fact that the motivating benefit comes at the expense of another benefit, however, should not nullify its use as a basis to modify the disclosure of one reference with the teachings of another. Instead, the benefits, both lost and gained, should be weighed against one another.

[12] Headnote Citing References Second, if Johnson did in fact teach away from Moore, then that finding *1350 alone can defeat Wang's obviousness claim. See Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383. A “reference will teach away if it suggests that the line of development flowing from the reference's disclosure is unlikely to be productive of the result sought by the applicant.” In re Gurley, 27 F.3d 551, 553, 31 USPQ2d 1130, 1131 (Fed.Cir.1994).

The passage of Johnson relied on by the district court and Winner includes the following:

Another problem with such devices is that they appear susceptible to being overcome by physical force or manipulation. The locking mechanisms of [Moore] and Mitchell et al U.S. Pat. No. 4,103,524 are exposed, and include pry points thereabout in which a crowbar may be inserted in an attempt to overcome such mechanism. Irrespective of whether such device can be overcome by physical manipulation, they present prospective thieves with the appearance of being breakable.

Johnson, col. 1, lines 38-48. Because the Mitchell reference cited in the quote above actually does not utilize a ratcheting mechanism, Wang argues that Johnson does not teach away from using ratcheting mechanisms; rather, it was merely distinguishing prior art devices on the basis that unlike Johnson they had exposed mechanisms. However, that fact does not undermine the district court's finding that Johnson did teach away from the ratcheting mechanism of Moore which does have exposed grooves. While we regard this as a close factual issue, we hold that the district court did not clearly err in finding that Johnson taught away from Moore, and therefore was not shown to be combinable with Moore. Because the district court did not clearly err in finding that one of ordinary skill would not be motivated to combine Johnson and Moore, the district court correctly concluded that Wang did not establish a prima facie case of obviousness by clear and convincing evidence. See In re Dance, 160 F.3d at 1343, 48 USPQ2d at 1637.

[13] Headnote Citing References If Wang had succeeded in establishing a prima facie case of obviousness based on the first three obviousness factors, the burden of production would have shifted to Winner. See In re Huang, 100 F.3d 135, 139, 40 USPQ2d 1685, 1689 (Fed.Cir.1996); Burlington Indus., 822 F.2d at 1582-83, 3 USPQ2d at 1437-38 (reviewing a section 145 decision and holding that district court correctly concluded that applicant had successfully rebutted Commissioner's prima facie case of obviousness). Relevant to that inquiry would have been such objective indicia of non-obviousness as the evidence of commercial success submitted by Winner. See id. Because Wang failed to establish a prima facie case of obviousness, however, Winner was not required to establish commercial success. Thus, we need not review the district court's finding that commercial success was established.

[14] Headnote Citing References Assuming, arguendo, prima facie proof of obviousness, we do not believe the district court clearly erred in finding commercial success or that it erred in concluding that it overcame the other Graham factors. It is presumed that Winner established a nexus between its commercial sales of the Super Club, the Club GL and Ultra Club and the patented features because they embody the disclosure of the '047 improvement patent. J.T. Eaton & Co. v. Atlantic Paste & Glue Co., 106 F.3d 1563, 1571, 41 USPQ2d 1641, 1647 (Fed.Cir.1997) (“When a patentee can demonstrate commercial success, usually shown by significant sales in a relevant market, and that the successful product is the invention disclosed and claimed in the patent, it is presumed that the commercial success is due to the patented invention.”). Moreover, the survey introduced at the district court by Winner established that a statistically significant percentage of customers viewed the self-locking ratcheting mechanism of the '047 patent as being of more value to them, and reported that the self-locking ratchet was the very reason they purchased the device, as opposed to *1351 those requiring key-locking, and was the reason they were willing to pay more for such a lock than for one without it, such as the original Club. When such evidence was introduced, it became Wang's burden to show that it should not be given weight. See id. (“If a patentee makes the requisite showing of nexus between commercial success and the patented invention, the burden shifts to the challenger to prove that the commercial success is instead due to other factors extraneous to the patented invention, such as advertising or superior workmanship.”); Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1394, 7 USPQ2d 1222, 1227 (Fed.Cir.1988) (“A patentee is not required to prove as part of its prima facie case that the commercial success of the patented invention is not due to factors other than the patented invention.”). Given the evidence before the district court, it did not clearly err in finding that the survey showed the nexus between the patented features, especially the keyless self-locking ratcheting mechanism, of the Super Club line of products and the reasons the consumers bought the products. Nor did Wang's evidence overcome the proof of nexus.

III. EVIDENTIARY ISSUES [15] Headnote Citing References A district court's decision to admit or exclude evidence at trial is reviewed for abuse of discretion. See Conservolite, 21 F.3d at 1103, 30 USPQ2d at 1630 (Fed.Cir.1994). Wang argues that the district court abused its discretion by allowing Winner to present (1) late-disclosed witnesses and (2) documents and testimony pertaining to the nexus required to show commercial success, namely a survey and foundational witnesses for the survey. Wang admits that the commercial success issue was raised before the Board but argues that the subsidiary nexus issue was not, and therefore Winner could not raise the issue before the district court, as it must be deemed waived.

Winner points out that Wang never even identifies which witnesses should not have been allowed to testify as “late-disclosed.” With respect to the evidence of commercial success, Winner argues that the nexus evidence was clearly admissible because commercial success was at issue before the Board and, therefore by implication, the nexus issue was as well.

[16] Headnote Citing References We agree with Winner that the district court did not abuse its discretion in allowing allegedly late-disclosed witnesses to testify. Such witnesses were never even identified by Wang in his opening brief, and, after Winner pointed this out in its response brief, Wang still failed to identify the witnesses in his reply brief. Under such circumstances, we will not search the record on the chance of discovering which witnesses Wang was complaining of and then determine whether the district court abused its discretion. Thus, whichever witnesses Wang was alluding to, admission of their testimony cannot be said to be an abuse of discretion based on the vague arguments made by Wang on appeal.

[17] Headnote Citing References We also agree with Winner that the district court did not abuse its discretion in admitting the new testimony and survey report regarding the nexus between commercial success and the patentably distinct feature of the claimed invention. Wang's argument, based on a distinction between the issues of commercial success and nexus, is flawed. The evidence showing a nexus between large sales and the patentable features of the invention of the '047 improvement patent is at least relevant to the issue of commercial success before the Board. See Estee Lauder, 129 F.3d at 592, 44 USPQ2d at 1613 (“[D]istrict court did not abuse its discretion in allowing Estee Lauder to introduce evidence of the [tests not before the Board] insofar as this evidence was relevant to its reduction to practice.” (emphasis added)). Indeed, establishing such a nexus is required in order to establish commercial success. See Gambro Lundia, 110 F.3d at 1579, 42 USPQ2d at 1384 (“Of course, *1352 the record must show a sufficient nexus between this commercial success and the patented invention”). Thus, here raising the commercial success issue necessarily raised the nexus issue as well. Accordingly, the district court did not abuse its discretion by admitting the testimony and documents relating to the nexus required to show commercial success.

IV. MOTION TO TRANSFER [18] Headnote Citing References A district court may transfer an action to another district court for the “convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a) (1994). Our review of the district court's denial of Wang's motion to transfer, as a procedural matter, is governed by the law of the regional circuit in which it sits, here the United States Court of Appeals for the District of Columbia Circuit. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (classifying section 1404(a) as a procedural rule); Regents of the Univ. of Cal. v. Eli Lilly and Co., 119 F.3d 1559, 1565, 43 USPQ2d 1398, 1403 (Fed.Cir.1997) (applying regional circuit law). In that circuit, the burden of persuasion on the transfer issue was on Wang, and the district court's denial of Wang's motion is reviewed for an abuse of discretion. See Securities and Exchange Comm'n v. Savoy Indus., Inc., 587 F.2d 1149, 1154 (D.C.Cir.1978).

[19] Headnote Citing References Wang argues that the district court should have granted his motion to transfer this action to the District Court for the Central District of California, where several other cases have been stayed pending the outcome of the interference and this action because to do so would be convenient to the parties and in the interests of justice. Winner argues, however, that it was just as convenient for the parties to litigate in Washington, D.C. as in California, and that the interests of justice actually favored litigation in Washington, D.C. because this aspect of the litigation will be resolved years before it would have been if the motion to transfer were granted.

We discern no abuse of discretion in the district court's denial of Wang's motion to transfer. Even though there are several related pending cases in the Central District of California, it is not clear that it would be a more convenient location for the parties to litigate. Persons scheduled to testify at trial for the parties lived in Pennsylvania; the experts lived in Connecticut, Virginia, and California; and the attorneys were from Virginia and New York. With parties, witnesses, and attorneys coming from such varied locations, several of which are closer to Washington, D.C. than California, it could not easily be said that it would be more convenient to try the case in the Central District of California. In addition, the interests of judicial economy were well served because the section 146 action was tried and result obtained in just six months after the motion to transfer was denied-presumably much more quickly than would have been the case if this action were transferred to the Central District of California where several other cases were pending. See Savoy Indus., 587 F.2d at 1156 (considering the delay that would have been encountered if the motion to transfer were granted as a factor weighing in favor of denying the motion). Under such circumstances, the district court did not abuse its discretion in denying Wang's motion to transfer.

V. CONCLUSION The district court did not clearly err in its findings of fact with respect to its obviousness analysis and did not err in concluding that the invention of the '047 patent would not have been obvious. In addition, the district court did not abuse its discretion in admitting testimony and documents or in refusing to transfer the *1353 case. Accordingly, the judgment of the district court is

AFFIRMED.

Talk:Alza Corp. v. Mylan Laboratories, 464 F.3d 1286, (2006)

2010-04-12T20:31:52Z

Cep503: Created page with '==Courtney== The motivation-suggestion-teaching test picks up where the analogous art test leaves off and informs the Graham analysis. To reach a non-hindsight driven conclusion…'

==Courtney==

The motivation-suggestion-teaching test picks up where the analogous art test leaves off and informs the Graham analysis. To reach a non-hindsight driven conclusion as to whether a person having ordinary skill in the art at the time of the invention would have viewed the subject matter as a whole to have been obvious in view of multiple references, the Board must provide some rationale, articulation, or reasoned basis to explain why the conclusion of obviousness is correct. The requirement of such an explanation is consistent with governing obviousness law ....

A suggestion, teaching, or motivation to combine the relevant prior art teachings does not have to be found explicitly in the prior art, as “the teaching, motivation, or suggestion may be implicit from the prior art as a whole, rather than expressly stated in the references.... The test for an implicit showing is what the combined teachings, knowledge of one of ordinary skill in the art, and the nature of the problem to be *1291 solved as a whole would have suggested to those of ordinary skill in the art.” However, rejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness. This requirement is as much rooted in the Administrative Procedure Act [for our review of Board determinations], which ensures due process and non-arbitrary decisionmaking, as it is in § 103.

Likewise, we find no error in the district court's consideration of secondary indicia of obviousness. We therefore affirm its legal conclusion of obviousness, finding the district court to have correctly held that Mylan met its burden of overcoming the presumption of validity that attaches to an issued patent.

We therefore affirm the district court's finding of noninfringement. In so doing we explicitly reject Alza's suggestion that the district court erred in failing to specifically state that not only did it find Alza's plasma concentration data and its “ in vitro ” data to be inadequate in isolation, but that it had also found the data to be inadequate in combination. Even if we were to entertain the suggestion that the district court was in fact unfamiliar with the basic precept that it is the totality of the evidence that it must consider in making factual determinations, we would merely conclude that where as here, if each of two pieces of evidence, assessed separately, is severely inadequate to support a proposition, when their probative values are tallied, they still fall short. While it is possible to envision cases in which two pieces of evidence may create great probative value synergistically, this is not one of those cases.

In conclusion, we affirm the judgment of the district court that the asserted claims of the '355 patent were invalid, and that notwithstanding, the patent was not infringed.

Alza Corp. v. Mylan Laboratories, 464 F.3d 1286, (2006)

2010-04-12T17:21:56Z

Cep503: Created page with 'United States Court of Appeals, Federal Circuit. ALZA CORPORATION Plaintiff-Appellant, v. MYLAN LABORATORIES, INC. and MYLAN PHARMCEUTICALS, INC. Defendants-Appellees. No. 06-10…'

United States Court of Appeals,
Federal Circuit.
ALZA CORPORATION Plaintiff-Appellant,
v.
MYLAN LABORATORIES, INC. and MYLAN PHARMCEUTICALS, INC. Defendants-Appellees.

No. 06-1019.
Sept. 6, 2006.

Holdings: The Court of Appeals, Gajarsa, Circuit Judge, held that:
(1) the patent was invalid as obvious, and
(2) it was not infringed.

Affirmed.
6,124,355. Invalid and Not Infringed.

*1288 Gregory L. Diskant, Patterson, Belknap, Webb & Tyler LLP, of New York, New York, argued for plantiff-appellant. With him on the brief were Jeffrey I.D. Lewis, and Richard J. McCormick.

John B. Wyss, Wiley, Rein, & Fielding LLP, of Washington, DC, argued for defendants-appellees. With him on the brief were James H. Wallace, Jr., Kevin P. Anderson, and Robert J. Scheffel.

Before GAJARSA, Circuit Judge, CLEVENGER, Senior Circuit Judge, and PROST, Circuit Judge.

GAJARSA, Circuit Judge.

Alza Corp. (“Alza”) appeals from the district court's judgment, after a bench trial, of noninfringement and invalidity of claims 1-3, 11, 13 and 14 of U.S. Patent No. 6,124,355 FN1 (“the '355 patent”) in favor of Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (collectively, “Mylan”). Alza Corp. v. Mylan Labs., Inc., 388 F.Supp.2d 717 (N.D.W.Va.2005) (“ Alza II ”). The infringement arose from Mylan's filing of two Abbreviated New Drug Applications (“ANDAs”) for a generic version of the once-a-day extended release formulation of the anti-incontinence drug oxybutynin, id. at 720, which Alza has been marketing as Ditropan XL®. Id. at 738. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). For the reasons stated below, we affirm the district court's judgment of noninfringement and invalidity.

FN1. The '355 patent issued to Guittard et al. and was assigned to Alza.

I. BACKGROUND
This litigation arose from Mylan's and Impax's filings of ANDAs for once-daily, controlled-release oxybutynin formulations. Oxybutynin is a drug used to treat urinary incontinence. Once-a-day dosing provides the usual benefits of convenience, steady-dosing, and in addition, possibly reduced absorption of a metabolite that leads to side-effects. Claim 2 of the '355 patent is representative.

2. A sustained-release oxybutynin formulation for oral administration to a patient in need of treatment for urge incontinence comprising a therapeutic dose of an oxybutynin selected from the group consisting of oxybutynin and its pharmaceutically acceptable salt that delivers from 0 to 1 mg in 0 to 4 hours, from 1 mg to 2.5 mg in 0 to 8 hours, from 2.75 to 4.25 mg in 0 to 14 hours, and 3.75 mg to 5 mg in 0 to 24 hours for *1289 treating urge incontinence in the patient.

col. 17, ll. 31-38 (emphasis added).

The district court construed the '355 patent claims in its Markman Order, reported at Alza Corp. v. Mylan Labs., Inc., 349 F.Supp.2d 1002 (N.D.W.Va.2004) (“ Alza I ”). The court construed the word “deliver” to refer to the rate of in vivo release in the gastrointestinal (“GI”) tract. See id. at 1019.

Alza did not present direct evidence that Mylan's ANDA formulation released drug in the GI tract at the rates claimed by the '355 patent. However, it did offer two other types of evidence: 1) the rate at which the generic product released oxybutynin in an in vitro dissolution apparatus, and 2) the rate at which the ANDA product resulted in the accumulation of oxybutynin in the bloodstream.

The district court found that Alza had failed to meet its burden of proof on infringement. The district court also found the asserted claims of the '355 patent to be invalid as both anticipated and obvious in light of the prior art. For the reasons stated below, we affirm the invalidity holding on obviousness grounds, and consequently, we do not need to reach Alza's arguments regarding anticipation. We also affirm the holding of noninfringement.

II. DISCUSSION
A. Standard of review
[1] Headnote Citing References[2] Headnote Citing References Infringement is a question of fact that, after a bench trial, we review for clear error. See, e.g., Ferguson Beauregard/Logic Controls, Div. of Dover Res., Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1338 (Fed.Cir.2003). Under the clear error standard, a reversal is permitted only when this court is left with a definite and firm conviction that the district court was in error. Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1164 (Fed.Cir.2006).

[3] Headnote Citing References[4] Headnote Citing References[5] Headnote Citing References[6] Headnote Citing References[7] Headnote Citing References As for obviousness, a claimed invention is unpatentable if the differences between it and the prior art are “such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.” 35 U.S.C. § 103(a) (2000); In re Kahn, 441 F.3d 977, 985 (Fed.Cir.2006) (citing Graham v. John Deere Co., 383 U.S. 1, 13-14, 86 S.Ct. 684, 15 L.Ed.2d 545, (1966)). Obviousness is a question of law, reviewed de novo, based upon underlying factual questions which are reviewed for clear error following a bench trial. Ruiz v. A.B. Chance Co., 357 F.3d 1270, 1275 (Fed.Cir.2004). These “underlying factual inquiries includ[e]: (1) the scope and content of the prior art; (2) the level of ordinary skill in the prior art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness.” In re Dembiczak, 175 F.3d 994, 998 (Fed.Cir.1999). Similarly, “[t]he presence or absence of a motivation to combine references in an obviousness determination is a pure question of fact,” In re Gartside, 203 F.3d 1305, 1316 (Fed.Cir.2000); accord Winner Int'l Royalty Corp. v. Wang, 202 F.3d 1340, 1348 (Fed.Cir.2000), as is the presence or absence of a “reasonable expectation of success” from making such a combination, Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1165 (Fed.Cir.2006). Because “a patent retains its statutory presumption of validity, see 35 U.S.C. § 282, ... the movant retains the burden to show the invalidity of the claims by clear and convincing evidence as to underlying facts.” McGinley v. Franklin Sports, Inc., 262 F.3d 1339, 1349 (Fed.Cir.2001) (internal quotations omitted).

In Graham, the Court held that that the obviousness analysis begins with several basic factual inquiries: “[ (1) ] the scope *1290 and content of the prior art are to be determined; [ (2) ] differences between the prior art and the claims at issue are to be ascertained; and [ (3) ] the level of ordinary skill in the pertinent art resolved.” 383 U.S. at 17, 86 S.Ct. 684. After ascertaining these facts, the Court held that the obviousness vel non of the invention is then determined “against th[e] background ” of the Graham factors. Id. at 17-18, 86 S.Ct. 684 (emphasis added). Clearly, the Court recognized the importance of guarding against hindsight, as is evident in its discussion of the role of secondary considerations as “serv[ing] to guard against slipping into use of hindsight and to resist the temptation to read into the prior art the teachings of the invention in issue.” Id. at 36, 86 S.Ct. 684.

[8] Headnote Citing References The Court of Appeals for the Federal Circuit's and its predecessor's “motivation to combine” requirement likewise prevents statutorily proscribed hindsight reasoning when determining the obviousness of an invention. Kahn, 441 F.3d at 986 (“[T]he ‘motivation-suggesting-teaching’ requirement protects against the entry of hindsight into the obviousness analysis.”); In re Fridolph, 30 C.C.P.A. 939, 942, 134 F.2d 414 (1943) ( “[I]n considering more than one reference, the question always is: does such art suggest doing the thing the [inventor] did.”). According to the “motivation-suggesting-teaching” test, a court must ask “whether a person of ordinary skill in the art, possessed with the understandings and knowledge reflected in the prior art, and motivated by the general problem facing the inventor, would have been led to make the combination recited in the claims.” Kahn, 441 F.3d at 988 (citing Cross Med. Prods., Inc., v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1321-24 (Fed.Cir.2005)).

This requirement has been developed consistent with the Supreme Court's obviousness jurisprudence as expressed in Graham and the text of the obviousness statute that directs us to conduct the obviousness inquiry “at the time the invention was made” 35 U.S.C. § 103. As we explained in Kahn,

The motivation-suggestion-teaching test picks up where the analogous art test leaves off and informs the Graham analysis. To reach a non-hindsight driven conclusion as to whether a person having ordinary skill in the art at the time of the invention would have viewed the subject matter as a whole to have been obvious in view of multiple references, the Board must provide some rationale, articulation, or reasoned basis to explain why the conclusion of obviousness is correct. The requirement of such an explanation is consistent with governing obviousness law ....

441 F.3d at 987. We further explained that the “motivation to combine” requirement “[e]ntails consideration of both the ‘scope and content of the prior art’ and ‘level of ordinary skill in the pertinent art’ aspects of the Graham test.” Id. at 986.

[9] Headnote Citing References At its core, our anti-hindsight jurisprudence is a test that rests on the unremarkable premise that legal determinations of obviousness, as with such determinations generally, should be based on evidence rather than on mere speculation or conjecture. Our court's analysis in Kahn bears repeating:

A suggestion, teaching, or motivation to combine the relevant prior art teachings does not have to be found explicitly in the prior art, as “the teaching, motivation, or suggestion may be implicit from the prior art as a whole, rather than expressly stated in the references.... The test for an implicit showing is what the combined teachings, knowledge of one of ordinary skill in the art, and the nature of the problem to be *1291 solved as a whole would have suggested to those of ordinary skill in the art.” However, rejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness. This requirement is as much rooted in the Administrative Procedure Act [for our review of Board determinations], which ensures due process and non-arbitrary decisionmaking, as it is in § 103.

441 F.3d at 987-88 (quoting In re Kotzab, 217 F.3d 1365, 1370 (Fed.Cir.2000)) (citations omitted) (emphases added)). There is flexibility in our obviousness jurisprudence because a motivation may be found implicitly in the prior art. We do not have a rigid test that requires an actual teaching to combine before concluding that one of ordinary skill in the art would know to combine references. This approach, moreover, does not exist merely in theory but in practice, as well. Our recent decisions in Kahn and in Cross Medical Products amply illustrate the current state of this court's views. See Kahn, 441 F.3d at 988 (affirming the PTO's obviousness finding, explaining that a motivation to combine may be found in implicit factors, such as the “knowledge of one of ordinary skill in the art, and [what] the nature of the problem to be solved as a whole would have suggested to those of ordinary skill in the art”); Cross Med. Prods., 424 F.3d at 1322 (reversing a district court ruling of nonobviousness and explaining that “the motivation to combine need not be found in prior art references, but equally can be found in the knowledge generally available to one of ordinary skill in the art” such as knowledge of a problem to be solved).

In conclusion, our approach has permitted us to continue to address an issue of law not readily amenable to bright-line rules, as we recall and are guided by the wisdom of the Supreme Court in striving for a “practical test of patentability.” Graham, 383 U.S. at 17, 86 S.Ct. 684.

B. Description of the technology
The patent at issue is directed generally to an extended release form of oxybutynin. Because the subject matter of the patent falls roughly under the rubric of pharmacology, we give a brief orientation to the field, based upon the record. In general, when a drug is swallowed, it is (1) dissolved in the gastrointestinal (“GI”) tract; (2) absorbed from the GI tract into the bloodstream; (3) distributed from the blood into body tissues; and (4) metabolized and eliminated from the bloodstream. The GI tract includes the stomach, small intestine and the colon, and orally administered drugs pass through these portions of the GI tract in turn. Drugs may be administered in different dosage forms,FN2 which may include not only the drug itself but also ingredients intended to modulate the rate of release of the drug from the dosage form.

FN2. Here we are discussing oral dosage forms, specifically.

Dosage forms may be described as immediate-release, e.g., such as where the drug is quickly released in the stomach, or as sustained/extended-release, where the drug is slowly released as the formulation traverses the GI tract. The rate of absorption of a drug from the GI tract into the bloodstream may change as it passes through the GI tract. The rate of absorption for a dissolved drug in a given portion of the GI tract also varies from drug to drug.

After roughly 8-12 hours a typical dosage form will reach the colon. If, hypothetically, a particular drug is simply not absorbed from the colon into the bloodstream,*1292 then it may make little sense to develop an extended-release dosage form that is capable of “withholding” the release of some fraction of that drug until it reaches the colon. In other words, under these hypothetical conditions, there may be little motivation to design an oral dosage form capable of releasing drug more slowly than over an approximately 8-12 hour time course, because such drug would be released in the colon, where it is (hypothetically) not absorbed.

The '355 patent claims an extended release oxybutynin formulation. Alza argues that one of ordinary skill in the art would not have believed that oxybutynin could be absorbed in the colon. Absent such absorption, Alza contends that one of ordinary skill in the art lacked the motivation to make the claimed extended release formulation, and that the district court therefore erred in holding that the asserted claims are invalid as obvious over the prior art. For the reasons set forth below, Alza's arguments fail.

C. Invalidity
The district court based its invalidity holding both on anticipation and obviousness grounds. Because we affirm its holding based on obviousness, we do not need to address the parties' anticipation arguments.

In finding the asserted claims of the '355 patent to be obvious, the district court considered, inter alia, the following prior art: U.S Patent Nos. 5,399,359 (“the Baichwal patent”); 5,082,688 (“the Wong patent”); and 5,330,766 (“the Morella patent”).

The Morella patent discloses a “sustained-release pharmaceutical composition including an active ingredient of high solubility in water ....” According to the specification, highly soluble drugs had posed special challenges for the development of sustained release forms, which the inventors had set out to solve. “Sustained-release” is defined as release of the active ingredient at a rate that maintains therapeutic, non-toxic blood levels “over an extended period of time e.g. 10 to 24 hours or greater.” Highly water soluble drugs were considered to be those having an aqueous solubility of at least roughly 1 part in 30. The commercially available hydrochloride salt of oxybutynin is freely soluble at neutral pH. The patent uses morphine as an example of an active ingredient that can be used in its compositions. Figure 5 demonstrates that one such composition is capable of dispensing morphine at what appears to be an approximately steady rate over the course of 24 hours. Claim 2 of the patent claims “genitourinary smooth muscle relaxants” as one of several types of active ingredients to use in the dosage form identified in claim 1. The specification also identifies oxybutynin as a highly water soluble genitourinary smooth muscle relaxant. Morella also teaches that “the dissolution rate of the soluble drug at various pH's can be modified at will.”

The Baichwal patent teaches a 24 hour extended release oxybutynin formulation. These formulations use an enteric-coated polymer matrix similar to Mylan's accused product. It also teaches methods of modifying the dosage forms to slow the release rates. During prosecution of the '355 patent, the inventor overcame an anticipation rejection by arguing that his invention had a release rate slower than those of the dissolution data presented in Baichwal. FN3 The examiner agreed and withdrew his rejection.

FN3. Tables 15 and 18 of Baichwal, for example, disclose in vitro dissolution rates in which roughly half of the drug is dissolved by four hours.

*1293 The Wong patent teaches a bilayer osmotic pump dosage form (“the OROS system”) used in the preferred embodiment of the '355 patent. Wong teaches that this system can be used to deliver any drug over a 24 hour period, and Figure 11 of the patent discloses release rates falling within the claimed release rates of the '355 patent. The Wong patent does not specifically teach using oxybutynin with the claimed release technology, but it does teach using several categories of drugs of which oxybutynin is a member, such as anti-cholinergics, analgesis, muscle relaxants and urinary tract drugs.

[10] Headnote Citing References In analyzing the obviousness issue, the district court first identified the level of ordinary skill in the art, finding the person of ordinary skill to have either an advanced degree in pharmacy, biology, chemistry or chemical engineering and at least two years of experience with controlled-release technology; or a bachelor's degree in one (or more) of those fields plus five years of experience with such technology. Second, the court examined whether there was a motivation “in the prior art or elsewhere that would have led one of the ordinary skill in the art to combine references,” Alza II, 388 F.Supp.2d at 737 (citing Ruiz, 234 F.3d at 664 (internal quotations omitted)), and with a “reasonable expectation of success,” id. (citing In re O'Farrell, 853 F.2d 894, 904 (Fed.Cir.1988)). Third, the district court examined secondary considerations of nonobviousness. After making these factual determinations, it concluded that Mylan had established a strong prima facie case of obviousness, which Alza had failed to rebut through secondary considerations. The court concluded that Mylan had demonstrated Alza's patent to be invalid for obviousness by clear and convincing evidence.FN4 We agree.

FN4. Having reviewed Alza's sundry contentions that the district court made findings inconsistent with the appropriate burdens of proof for infringement and invalidity, we find them to be without merit.

While we have carefully considered all of the parties' arguments, we discuss principally the dispute over satisfaction of one predicate to a finding of obviousness: that a person of ordinary skill in the art would have had a “motivation to combine” the prior art to achieve the claimed invention and that she would have had a “reasonable expectation of success” in doing so. As an initial matter, we agree with the district court that “on a purely mechanical level, a person of ordinary skill in the art would have a reasonable expectation of success of manufacturing a 24 hour controlled-release oxybutynin formulation .... once motivated to use oxybutynin.” Id. at 739. For example, Wong teaches a rate adjustable extended release dosing technology and release rates falling within the claimed parameters. Baichwal and Wong likewise teach ways of achieving slow rates of release, with Baichwal actually teaching extended-release oxybutynin, although arguably not as slowly as is claimed in the '355 patent.FN5

FN5. The patent examiner initially rejected the '355 patent as anticipated by Baichwal, but subsequently allowed its issuance.

Indeed, Alza's principal argument is that no one of ordinary skill in the art would have been motivated to adapt the Morella, Baichwal and Wong technology to oxybutynin in the first place, because a person of ordinary skill in the art would have had no reason to expect that such an extended release oxybutynin formulation would have therapeutic value. The issues, as explained above, reduce essentially to whether one of ordinary skill in the art in 1995 would have had a reasonable expectation *1294 that oxybutynin would be colonically absorbed and therefore would have been motivated to produce the claimed extended release formulation.

The district court concluded that “the weight of the evidence clearly and convincingly establishes that a person of ordinary skill in the art in 1995 would reasonably expect oxybutynin to absorb in the colon ... [and] have a reasonable expectation of success of producing a 24 hour oxybuytnin formulation meeting the claims of the '355 patent.” FN6 Alza II, 388 F.Supp.2d at 740. Alza argues, however, that the district court erred because “ [t]here was no prior art evidence supporting this finding.” According to Alza, “[t]here was no contemporaneous documentation supporting the view that any one factor-lipophilicity or anything else-existed to identify successful candidates for once-a-day delivery.” It also argues that two prior art references “decisively undercut” the opinion of Mylan's expert, Dr. Amidon, which the district court cited in support of its conclusion. See Alza II, 388 F.Supp.2d at 739-740.

FN6. The '355 patent issued on September 26, 2000 and claimed priority as far back as 1995. See '355 patent, col. 1, ll. 5-12. The district court treated 1995 as the relevant date for the obviousness inquiry, see Alza II, 388 F.Supp.2d at 740, as do both parties in their obviousness arguments before this court. See, e.g., Alza Reply Br. at 13 (stating that “[t]he dispositive obviousness issue was whether colonic absorption of oxybutynin was reasonably expected in 1995 ”) (emphasis added); Mylan Br. at 6 & n. 2 (referring to evidence establishing “the clear expectation of one skilled in the art in 1995 ” and noting in a footnote that 1995 is “[t]he earliest possible date to which Alza asserts priority.”) (emphasis added).

[11] Headnote Citing References As an initial matter, it is essential to recognize that, as we have explained above, under our non-rigid “motivation-suggesting-teaching” test, a suggestion to combine need not be found in the prior art. See Cross Med. Prods., 424 F.3d at 1322 (“[T]he motivation to combine need not be found in prior art references, but equally can be found in the knowledge generally available to one of ordinary skill in the art ....”). Accordingly, where the testimony of an expert witness is relevant to determining the knowledge that a person of ordinary skill in the art would have possessed at a given time, this is one kind of evidence that is pertinent to our evaluation of a prima facie case of obviousness. We now turn to consider whether the relevant evidence, including the expert testimony and the prior art, when viewed as a whole supports the findings of the district court. We conclude that the findings of the district court were not clearly erroneous.

Mylan's expert, Dr. Amidon, testified that based on its lipophilicity, he would “expect oxybutynin to be a highly permeable” compound that is “rapidly absorbed” along the length of the GI tract, including the colon. Later, when challenged about the predictive value of lipophilicity, Dr. Amidon explained, “I would say there were some unknowns, but again lipophilic drugs would be well absorbed. That would be-that was the general understanding at the time.”

Although Alza argues that two prior art references “decisively undercut Dr. Amidon's hindsight opinion,” these references are in fact not inconsistent with the general principle that the extent of a drug's colonic absorption correlates with its lipophilicity. Indeed, the first reference, a 1990 publication in the Journal of Pharmaceutical Sciences, states that “[i]n general, the more lipophilic drugs were transported rapidly.” P. Artursson, Epithelial Transport of Drugs in Cell Culture. I: A Model for Studying the Passive Diffusion of Drugs over Intestinal Absorptive (Caco-2) Cells. 79 J. Pharm. Sci. 476, 481 (1990). *1295 Alza, however, cites this reference narrowly for its observation that a highly lipophilic analog of a particular drug did not follow the general rule that lipophilic drugs were transported more quickly. Id. Granted, the authors admit that “[t]he reason for this [deviation] is currently unknown,” and they postulate that it may be related to a physicochemical factor other than lipophilicity, namely steric hindrance.FN7 Id. But the mere fact that the colonic absorption rate of a drug may be predicted most precisely by using “many factors,” rather than “lipophilicity” alone, does not negate the general predictive utility of lipophilicity in estimating the extent of colonic absorption.

FN7. Dr. Chancellor, Alza's expert, likewise characterized colonic absorption as having been understood as being dependent on several physicochemical and physiological variables, of which lipophilicity was one.

The second prior art reference cited by Alza, Absorption of Polar Drugs Following Caecal Instillation in Healthy Volunteers, is similarly unavailing to it. Riley, et al., 6 Aliment. Pharmacol. Ther. 701, 705 (1992). Again, this reference teaches that while the correlation is not perfect, lipophilicity tended to suggest colonic absorption, stating that “[t]he relationship between the physical characteristics of a drug and its colonic absorption is not yet clear but studies in the rat suggest that lipophilic drugs are well absorbed along the length of the gastrointestinal tract, whereas hydrophobic polar drugs are absorbed much less from the colon than from the small intestine.” Id. (emphasis added).

Far from teaching away or detracting from the weight of Dr. Amidon's testimony, these prior art references, taken as a whole, are entirely consistent with the finding that in 1995 a person of ordinary skill in the art would have expected a general, albeit imperfect, correlation between a drug's lipophilicity and its colonic absorptivity. Accordingly, we cannot perceive clear error in the district court's factual findings that while colonic absorption was not guaranteed, the evidence, viewed as a whole, is clear and convincing that a person of ordinary skill in the art would nonetheless have perceived a reasonable likelihood of success and that she would have been motivated to combine prior art references to make the claimed invention.

Likewise, we find no error in the district court's consideration of secondary indicia of obviousness. We therefore affirm its legal conclusion of obviousness, finding the district court to have correctly held that Mylan met its burden of overcoming the presumption of validity that attaches to an issued patent.

D. Infringement
[12] Headnote Citing References The '355 patent specifically describes the rate of oxybutynin release from its “extended release” formulations, requiring that the time-course of in vivo oxybutynin release falls within certain boundaries. That is, at certain times, the cumulative amount of dissolved (released) drug must fall within certain ranges. To prove infringement, Alza bore the burden of proving, inter alia, that Mylan's accused generic formulation exhibited an in vivo release profile falling within the claimed ranges at the relevant times.

At trial, Alza presented no direct evidence of how quickly the accused product dissolved in vivo. Alza II, at 722. However, it did offer two kinds of indirect evidence as measures of the rate of in vivo release. Id. First, it presented evidence of the blood plasma concentration versus time profiles for both the accused ANDA formulation and Ditropan, an embodiment *1296 of the '355 patent. Second, it presented evidence of the rate of release not in the GI tract but in pieces of laboratory apparatus under certain experimental conditions, so-called in vitro dissolution. The critical deficiency in the evidence presented by Alza was not that it was “indirect” rather than “direct,” but rather that it failed to credibly link these pieces of evidence with the relevant pharmacokinetic parameter-the rate of in vivo dissolution in the GI tract.

Thus, the district court explained that Alza had failed to demonstrate how evidence of the rate of dissolution of drug in the GI tract could be extracted from plots of plasma concentration versus time. The district court accepted Alza's simplifying assumption about oxybutynin rapidly being absorbed following dissolution such that the rates of in vivo dissolution parallel the rate of drug uptake into the blood. However, it found that only one expert, Dr. Amidon, had “endorsed Alza's subjective comparison of blood plasma levels with in vivo release rates.” As for that one expert, moreover, he “rejected the very conclusion that Alza attributed to him.”

Alza criticizes the district court for “fail[ing] to come to grips with the significance of the testimony” that Dr. Amidon “recanted ... immediately after he made it.” Specifically, Alza urges that notwithstanding the expert's recantation, we should nonetheless draw our independent conclusions from the “point of his testimony” that release rates in blood and the appearance in the GI tract are essentially the same. We have considered Alza's arguments and find them to lack legal and factual coherency. Even if we were to presume to be experts and to apply the simplifying assumption that the drug is rapidly taken up into the bloodstream upon dissolution, it is not clear to us how to abstract from each plasma concentration versus time curve the rate of uptake into the bloodstream. This would require factoring out of the curve the effects, inter alia, of the elimination of drug from the bloodstream over the relevant 24 hour period. But this is not our province. Such evidence, if it exists, must have been presented at trial, or in its stead other evidence sufficient to persuade the trial court.

From what can be discerned, Dr. Amidon's immediately recanted statement appears to have been based on his comparison of the relative areas under the curves of plasma concentration versus time plots of both the accused ANDA formulation and Ditropan XL. Indeed, Alza reproduces in its appellate brief Dr. Amidon's testimony that the accused product has only 92 to 93 percent of the area under the curve of Ditropan XL. This appears to have resulted in the drawing of a line (referred to by the parties as “line A”) on a plot of in vitro dissolution of both Ditropan XL and the accused ANDA formulation, wherein the rate of in vitro dissolution of Mylan's ANDA formulation has been adjusted according to that percentage. The basis for, and significance of, line A is simply not apparent from the record, and Alza fails to provide us with any persuasive line of argument as to how we should imbue line A with any relevant meaning. In short, we agree with Mylan that the plasma concentration versus time data fail to establish in vivo release rates for either Ditropan XL or the accused ANDA product.

[13] Headnote Citing References The district court similarly found unpersuasive Alza's evidence that Ditropan XL and the accused ANDA product sometimes exhibited in vitro dissolution rates falling within the claims. The court cited testimony by Dr. Amidon explaining that these in vitro procedures are “not designed to reflect the in vivo dissolution process.” This accords with the common sense notion that one cannot simply proclaim without proof that he has constructed an apparatus capable of mimicking pertinent*1297 environmental variables of the GI tract (along the length of the tract, nonetheless). Indeed, the obtained in vitro dissolution rates vary widely with the choice of experimental parameters. We agree with the district court that Alza's evidence of in vitro dissolution rates is irrelevant absent evidence demonstrating that the in vitro system is a good model of actual in vivo behavior. On that point, Alza's evidence is severely lacking.

We therefore affirm the district court's finding of noninfringement. In so doing we explicitly reject Alza's suggestion that the district court erred in failing to specifically state that not only did it find Alza's plasma concentration data and its “ in vitro ” data to be inadequate in isolation, but that it had also found the data to be inadequate in combination. Even if we were to entertain the suggestion that the district court was in fact unfamiliar with the basic precept that it is the totality of the evidence that it must consider in making factual determinations, we would merely conclude that where as here, if each of two pieces of evidence, assessed separately, is severely inadequate to support a proposition, when their probative values are tallied, they still fall short. While it is possible to envision cases in which two pieces of evidence may create great probative value synergistically, this is not one of those cases.

* * * * * *

In conclusion, we affirm the judgment of the district court that the asserted claims of the '355 patent were invalid, and that notwithstanding, the patent was not infringed.

AFFIRMED.
Costs to Mylan.

Main Page

2010-04-12T17:19:37Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Alza Corp. v. Mylan Laboratories, 464 F.3d 1286, (2006)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Egbert v. Lippmann, 104 U.S. 333 (1881))]]
*[[Elizabeth v. American Nicholson Pavement Company, 97 U.S. 126 (1877)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Metallizing Engineering Co., Inc. v. Kenyon Bearing & Auto Parts Co., Inc., 153 F.2d 516 (1946)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Quanta Computers Inc v. LG Electronics (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]
*[[Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)

2010-04-12T17:17:06Z

Cep503:

United States Court of Appeals,
Federal Circuit.
WINNER INTERNATIONAL ROYALTY CORPORATION, Plaintiff-Appellee,
v.
Ching-Rong WANG, Defendant-Appellant.

No. 98-1553.
Jan. 27, 2000.
Rehearing and Rehearing En Banc Denied March 6, 2000.
4,935,047. Valid.

*1342 Kenneth A. Lapatine, Camhy Karlinsky & Stein, of New York, New York, argued for plaintiff-appellee. Of counsel on the brief was Charles L. Gholz, Oblon, Spivak, McClelland, Maier & Neustadt, P.C.

Joseph A. Yanny, Yanny, Grieco & Osher, of Los Angeles, California, argued for defendant-appellant. With him on the brief were Mary L. Grieco, and Michael A. DiNardo. Of counsel on the brief were Charles R. Wolfe, Jr., and Richard E. Fitcher, Bacon & Thomas, of Alexandria, Virginia.

Before MICHEL, RADER, and GAJARSA, Circuit Judges.

MICHEL, Circuit Judge.

Ching-Rong Wang (“Wang”) appeals from the judgment of the United States District Court for the District of Columbia, overturning the decision of the United States Patent and Trademark Office Board of Patent Appeals and Interferences (the “Board”) in an interference, and holding that the inventions of claims 2 and 4 of U.S. Patent No. 4,935,047 (“the '047 patent”) and claims 9-11 of U.S. Patent App. No. 07/478,411 (“the '411 application”) would not have been obvious in light of the cited prior art. See Winner Int'l Royalty Corp. v. Wang, 11 F.Supp.2d 18, 48 USPQ2d 1139 (D.D.C. June 12, 1998). The '047 patent, issued to Jinn Wu (“Wu”), and the '411 application are owned by Winner International Royalty Corp. (“Winner”). The district court had jurisdiction pursuant to 35 U.S.C. § 146 (1994) because Wu filed suit there after an adverse ruling by the Board in an interference between himself and Wang. Winner, as owner of Wu's patent, superseded Wu as plaintiff. The Board held the Wu patent and application claims invalid as obvious. See 35 U.S.C. § 103 (1994). Other litigation (including suit against Wang), in which Winner alleges infringement of its '047 patent and asserts several related claims, has been stayed in the Central District of California pending the outcome of this appeal. The district court first denied Wang's motion to transfer this action to the District Court for the Central District of California. See Winner Int'l Royalty Corp. v. Wang, 45 USPQ2d 1864, 1998 WL 268279 (D.D.C. Jan.20, 1998). Then it conducted a 7 day bench trial. On appeal, Wang challenges (1) the denial of the transfer; (2) rulings as to the admission of evidence despite its similarity to that before the Board; and (3) the holding of non-obviousness that revived the '047 patent. This case was submitted for our decision following oral argument on August 2, 1999. Because the district court did not clearly err in any of its factual findings relating to obviousness, did not err in its ultimate determination of non-obviousness, and did not abuse its discretion either in admitting the challenged documentary evidence and testimony or in refusing to transfer the case, we affirm.

BACKGROUND
In addition to the '047 patent, Winner also owns U.S. Patent No. 4,738,127 (“Johnson”), the commercial embodiment of which is the original steering wheel anti-theft device known as “The Club.” Wu, the principal in the Taiwanese manufacturer of the original Club, is named as the inventor in the '047 patent, commercial embodiments of which are known as “The Super Club,” “The Ultra Club,” and “The Club GL.” The '047 patent discloses an automobile*1343 anti-theft device that is mounted across the steering wheel and is locked in place by use of a self-locking ratcheting mechanism. Like all versions of the Club, when locked in place, the commercial embodiments of the '047 patent prevent theft by blocking the steering wheel from turning. The ratcheting mechanism is different from the dead-bolt used in Johnson and so the '047 patent may be thought of as an improvement over Johnson. While Johnson's dead-bolt system is more secure, it is not as convenient as the ratcheting mechanism claimed in the '047 patent because a key is required to lock the Johnson device in place while the '047 patent discloses a device that locks itself without use of a key.FN1

FN1. In both devices a key is needed to unlock the device.

Wang also manufactures similar anti-theft devices in Taiwan and exports them to the U.S. where he sells them through his United States distributor. Wang's device is known commercially as “The Gorilla Grip.” Wang filed a patent application directed to his Gorilla Grip device and was issued U.S. Patent No. 4,887,443 (“the '443 patent”).

In 1990, Wu discovered that the device disclosed in Wang's '443 patent was very similar to the subject matter of his then-pending application, which later issued as the '047 patent, and decided to provoke an interference by filing a divisional application and submitting a claim identical to the broadest claim in the '443 patent. On August 8, 1991, an interference was declared, and a proceeding began to determine which party, Wu or Wang, had priority of invention. The claims of the '047 patent and an additional Wu application, the '411 application, were eventually added to the count in the interference.

During the interference proceeding, Wang filed a preliminary motion alleging that the interference count, and hence both parties' claims, was unpatentable as obvious in light of certain prior art under 35 U.S.C. § 103 (1994). Wang, apparently acknowledging that his claim to priority over Wu's '047 patent was questionable, ultimately conceded that his '443 patent was invalid and sought to prove that Wu's '047 patent was also invalid.

After a final hearing, the Board, in a split decision, held all affected claims invalid except for claims 1 and 3 of the '047 patent. Wu then filed both an appeal to this court pursuant to 35 U.S.C. § 141 (1994) and an action in the District Court for the District of Columbia pursuant to 35 U.S.C. § 146, while Wang filed a section 146 action in the District Court for the Central District of California. In Wu's section 141 appeal from the decision of the Board, this court determined that the section 146 suit would proceed pursuant to Wu's complaint in the District Court for the District of Columbia. See Wu v. Wang, 129 F.3d 1237, 44 USPQ2d 1641 (Fed.Cir.1997). Because Wu filed his appeal first, and responded in timely fashion to Wang's notice of election by filing a section 146 action in the District Court for the District of Columbia, Wu's choice of forum governed. See id. at 1242-43, 44 USPQ2d at 1645-46. We then dismissed the section 141 appeal as superseded by the section 146 action. See id. at 1238, 44 USPQ2d at 1642.

After the first appeal to this court, Wang filed a motion in the district court to transfer the action to the Central District of California. The district court denied the motion. See Winner, 45 USPQ2d 1864. After a seven-day bench trial, the district court held that the inventions of claims 2 and 4 of the '047 patent would not have been obvious in light of the cited prior art. See Winner, 11 F.Supp.2d 18, 48 USPQ2d 1139.FN2 At trial, Winner presented testimony on each of the four principal factual issues underlying an obviousness*1344 determination, as well as affidavits. Wang presented one expert witness to testify as to his opinion regarding obviousness and the underlying factual determinations. The record before the Board was also admitted into evidence before the district court.

FN2. The related claims in the '411 application were also found not unpatentable, but were not separately addressed by the district court and are not separately argued on appeal. Therefore, we do not address them separately either.

The focus of the trial was on four prior art references that Wang alleged, before the court as he had before the Board, rendered the invention of the '047 patent obvious. These references were Johnson (mentioned above), U.S. Patent No. 3,462,982 (“Moore”), Taiwan Patent App. No. 74,210,699 (“WuROC”), and French Patent App. No. 2,566,398 (“Grimaldi”). Winner also introduced evidence of the commercial success of its Super Club line of products. This evidence had not been presented to the Board.

Like the device disclosed in the '047 patent, the mechanism of Johnson immobilizes the steering wheel by the user inserting it within the steering wheel, telescoping its arms outward so that hooks on the end of the arms engage the steering wheel, and then locking the arms in place. As stated earlier, unlike the '047 patent, which discloses a self-locking ratcheting mechanism, Johnson uses a dead-bolt to lock the device in place, which requires the user to turn a key after putting the device on the wheel. Moore discloses a steering wheel lock that unfolds into a “Y” shape and utilizes a self-locking ratcheting mechanism, which does not require a key. WuROC discloses a wheel and brake pedal locking device with a versatile locking core that can accommodate either a dead-bolt or a self-locking ratcheting mechanism, but it does not disclose either of these locking mechanisms. Grimaldi discloses a two-piece mechanism for locking a clutch or brake pedal to the floorboard or firewall of a car and its figures appear to show a rod and pawl mechanism that locks it into place.

The key issue tried was the presence or absence of sufficient proof of a motivation to combine the four prior art references. The Board had found that one skilled in the art (1) “would have considered Johnson's dead-bolt-type locking device to be disadvantageous compared to the Moore and WuROC devices to the extent that Johnson requires a key for setting in position and adjusting the device,” and (2) “would have been motivated to make Johnson easier to use, albeit less secure, by replacing the dead-bolt mechanism” of Johnson with a suitable self-locking ratcheting mechanism. The district court found that these factual findings were “clearly erroneous” and found that adequate motivation to combine the references was not shown. See Winner, 11 F.Supp.2d at 23-24, 48 USPQ2d at 1143-44. The district court also found that Winner established commercial success resulting from the improvement claimed in the '047 patent, even though it held such a finding immaterial in light of Wang's failure to establish a prima facie case of obviousness. See id. Accordingly, the district court held that on this record the inventions of claims 2 and 4 of the '047 patent would not have been obvious and overturned the Board's decision as to those claims. See id. at 25, 48 USPQ2d at 1145.

Wang appeals, contending that the district court should have applied a substantial evidence standard of review on factual issues rather than, as it said it was doing, review for clear error. Wang asserts that the district court incorrectly concluded that the invention of the claims would not have been obvious, and abused its discretion in admitting the challenged documentary evidence and testimony as duplicative of evidence in the Board record and in denying Wang's motion to transfer the case to the Central District of California. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3)(C) (1994).

DISCUSSION
I.

STANDARD OF REVIEW

[1] Headnote Citing References[2] Headnote Citing References We review the district court's factual findings for clear error and its *1345 conclusions of law de novo, as with any bench trial. See Gould v. Quigg, 822 F.2d 1074, 1077, 3 USPQ2d 1302, 1303-04 (Fed.Cir.1987) (affirming district court's reversal of Board decision with respect to enablement). It is not as clear, however, what degree of deference inheres in the standard of review the district court was required to apply to the Board's decision. The parties agree that the district court was to reassess the Board's ultimate conclusion as to obviousness de novo, but they disagree over the degree of deference, if any, the district court was required to give to the Board's factual findings. Wang argues that under the Supreme Court's decision in Dickinson v. Zurko, 527 U.S. 150, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999), the district court was required to review the Board's factual findings only for substantial evidentiary support. In its decision, which issued before Zurko was decided, the district court applied the traditional clearly erroneous standard of review to the Board's findings of fact.FN3 Winner argues first that the district court was entitled to conduct an entire trial de novo, and second, even if deference were required, that the district court properly reviewed the Board's factual findings for clear error because Zurko and the Administrative Procedure Act (“APA”) standards of review do not apply as the Board proceeding is “subject to” a trial de novo in a district court.

FN3. That standard of review was correct under our case law at the time.

Wu brought this action pursuant to 35 U.S.C. § 146, which allows a party to an interference dissatisfied with an adverse decision of the Board to file a complaint in a district court. Unlike a direct appeal to this court pursuant to 35 U.S.C. § 141, the parties before the district court are not limited to the evidentiary record before the Board:

In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party ... without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken and produced in the suit.

35 U.S.C. § 146 (emphasis added). Because the record before the district court may include the evidence before the Board as well as evidence that was not before the Board, we have often described the district court proceeding as “a hybrid of an appeal and a trial de novo.” Estee Lauder Inc. v. L'Oreal, S.A., 129 F.3d 588, 592, 44 USPQ2d 1610, 1612 (Fed.Cir.1997); see also General Instrument Corp. v. Scientific-Atlanta, Inc., 995 F.2d 209, 212, 27 USPQ2d 1145, 1147 (Fed.Cir.1993) (“[A] party may proceed to a district court for a hybrid appeal/trial de novo proceeding in which the PTO record is admitted on motion of either party, but it may be supplemented by further testimony. 35 U.S.C. § 146.”); Case v. CPC Int'l, Inc., 730 F.2d 745, 752, 221 USPQ 196, 202 (Fed.Cir.1984) (“[A]n action under 35 U.S.C. § 146 has the hybrid nature of an appeal and a trial de novo.”). We have so stated even though section 146 uses neither the term “ de novo,” nor “appeal.” See Conservolite, Inc. v. Widmayer, 21 F.3d 1098, 1102, 30 USPQ2d 1626, 1629 (Fed.Cir.1994).

The issue before us is whether the scope of the evidence admitted by the district court was sufficient to require a complete trial de novo, or whether the district court was instead required to give deference to some or all of the Board's findings of fact. Although our precedent makes clear that a de novo trial is appropriate in some circumstances in actions under both section 146 and the parallel provisions in 35 U.S.C. § 145, it does not make clear exactly what those circumstances are. The statutory provisions themselves offer little guidance-section 146 only refers to “further testimony” which may be offered in the district court, while section 145 is completely silent about evidence. See 35 U.S.C. § 146; 35 U.S.C. § 145. In Zurko, the Supreme Court, in passing, noted the settled law that in a section 145 action a disappointed applicant may present evidence*1346 that it did not present to the Board, and that the “presence of such new or different evidence makes a factfinder of the district judge.” 119 S.Ct. at 1824 (emphasis added). Interpreting both sections, we have referred to the ability to present “new testimony” or “proffered testimony” or “additional evidence.” Conservolite, 21 F.3d at 1102, 30 USPQ2d at 1629 (“new testimony”); Case, 730 F.2d at 752, 221 USPQ at 202 (finding that section 146 “authorizes the district court to accept all proffered testimony on issues raised by the parties during the proceedings below or by the board's decision.”); Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[A]dditional evidence is permitted in a civil action under section 145, allowing the district court to make de novo fact findings.”); Fregeau v. Mossinghoff, 776 F.2d 1034, 1038, 227 USPQ 848, 851 (Fed.Cir.1985) (using “additional evidence” and “new evidence” interchangeably); cf. Newman v. Quigg, 877 F.2d 1575, 1579, 11 USPQ2d 1340, 1343 (Fed.Cir.1989) (“A district court action under 35 U.S.C. § 145 is a de novo determination of patentability. It is not limited to the record before the PTO.”). It is not clear from these cases, however, when evidence is “new or different” or “additional” so that trial de novo is required.

Here, Winner introduced evidence on the issue of commercial success that was not before the Board, specifically a survey and a witness. Such documentary evidence and testimony are certainly “further testimony,” as the Board had neither before it in any form. However, Winner also presented live testimony in the district court on each factual issue before the Board, namely the other three sets of underlying factual determinations typically at issue in an obviousness determination. See Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Wang argues that this latter testimony was not adequate to trigger a de novo trial because it is the same or similar to testimony given by the same witnesses before the Board. We reject this argument.

In the context of a section 145 action, in which the Board has conducted an ex parte proceeding, we have noted that the admission of live testimony at trial requires the factfinder to make its own findings. See Burlington Indus., Inc. v. Quigg, 822 F.2d 1581, 1584, 3 USPQ2d 1436, 1439 (Fed.Cir.1987). The rationale is that the applicant was at least partly unable to present the live testimony in the ex parte proceeding before the Board. See id. In Burlington Industries, the Commissioner argued that “the district court cannot reach a different conclusion on the same evidence that was before the PTO.” Id. (emphasis added). We rejected the Commissioner's argument. Although the import of the evidence before the Board and the district court might be the same in many or all ways, the form in which it is presented is fundamentally different. As we noted in Burlington Industries:

In its evaluation of the evidence on which this conclusion was based, the district court had a powerful advantage over the patent examiner and the Board, an advantage characteristic of section 145 appeals, in that the court heard and saw witnesses, testifying under examination and cross-examination, and had the benefit of extensive discussion and argument.

Id. at 1582, 3 USPQ2d at 1437-38 (emphasis added). The fact that the district court heard live testimony, gave more weight to some witnesses than to others, and came to a different conclusion than that reached by the Board, was not improper:

This trial before the district court partook of the quality that is available only with the examination and cross-examination of live witnesses. ... If the evidence adduced before the district court led to a decision different from that reached by the PTO, that is not contrary to the legislative purpose of section 145 de novo review. Indeed, it is in fulfillment of that purpose.

Id. at 1584, 3 USPQ2d at 1439 (emphasis added). Thus, after a “full trial of the issues” the district court was free to come *1347 to its own “independent conclusion,” contrary to the argument by the Commissioner. Id.; see also Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[O]nce a full trial on the issue occurred ... the district court reached a distinct and more informed conclusion....”).

In the context of a section 146 action such as the instant case, in which the Board has conducted an inter partes interference proceeding, the matter is less clear because more evidentiary opportunities are available to parties in an interference than to an applicant in an ex parte examination and appeal to the Board. See In re Epstein, 32 F.3d 1559, 1565-66, 31 USPQ2d 1817, 1821 (Fed.Cir.1994) (noting lack of rules of evidence and inability to cross-examine witnesses in an ex parte proceeding). In an interference, unlike an ex parte proceeding, the Federal Rules of Evidence apply. See 37 C.F.R. § 1.671(b) (1998). In addition, both sides can submit testimony, initially in the form of affidavits, unless the testimony must be compelled. See 37 C.F.R. § 1.672. A party may “cross-examine” an affiant through oral deposition. See 37 C.F.R. § 1.672(d). Discovery, at least against the party opponent, is also available. See 37 C.F.R. § 1.687. However, although the parties “will be given an opportunity to appear before the Board to present oral argument at a final hearing,” 37 C.F.R. § 1.654, at no point in the interference proceeding is a party allowed to present live testimony before the Board. The Board reviews testimony only in the form of affidavits and transcripts of depositions, and other facts in the form of responses to interrogatories and requests for admissions. See 37 C.F.R. §§ 1.653(a), 1.677(a). Thus, although the proceeding before the Board in an interference differs from that following an ex parte examination, the two proceedings are the same in at least one important respect-in no case is live testimony given before the Board, which would allow the Board to observe demeanor, to hear the witnesses rebut one another's testimony in response to questioning from the parties and the judges, and thus to determine credibility. As we have stated before, because the district court may observe witnesses under examination and cross-examination it can have a “powerful advantage” over the Board which can never receive testimony in such a manner. Burlington Indus., 822 F.2d at 1582, 3 USPQ2d at 1437.

[3] Headnote Citing References We hold that the admission of live testimony on all matters before the Board in a section 146 action, as in this case, makes a factfinder of the district court and requires a de novo trial.FN4 Thus, although the live testimony before the district court might be the same or similar to testimony before the Board in the form of affidavits and deposition transcripts, a district court should still make de novo factual findings, while treating the record before the Board when offered by a party “as if [it was] originally taken and produced” in the district court. 35 U.S.C. § 146. Accordingly, because Winner submitted live testimony on all matters before the Board, the entire district court proceeding should have been a trial de novo, based both on the Board record and the district court evidence.FN5

FN4. As this case involved further testimony relating to everything in issue before the Board, we express no opinion on whether testimony relating solely to some facts or issues results in other facts or issues being reviewed deferentially based solely on the fact findings of the Board. Indeed, we do not decide whether a given dispute could be parsed into discrete “issues” or facts so that such a determination could be made, or if it could, how a court would draw the line between such facts or issues.

FN5. The trial court's failure to apply the de novo standard, if error, was harmless error, for surely the result would have been the same under non-deferential review.

Our holding comports with the notion that “[t]he credibility of the witnesses and the weight to be given to their testimony and the other evidence in the record ... is a matter for the trier of facts.” Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 552, 222 USPQ 4, 6 (Fed.Cir.1984). Further, our holding also establishes*1348 a clear rule that live testimony admitted on all matters that were before the Board triggers a de novo trial. If our holding were otherwise it might be difficult to administer. For example, if the test for determining whether de novo adjudication is appropriate were based on exactly what the witness said in the district court and whether it was truly “new or different” than what was disclosed in affidavits and deposition transcripts of the same or other witnesses before the Board, then the district court, and this court on appeal, would be required to search nearly line-by-line through the respective records as to each witness and issue to determine which standard applied. Aside from being difficult, such a test would provide scant guidance for a prospective litigant attempting to discern which standard would apply should it file a section 146 action.

II.
OBVIOUSNESS

A.

[4] Headnote Citing References[5] Headnote Citing References Obviousness is a question of law based on underlying factual inquiries including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) extent of any objective indicia of non-obviousness. See Monarch Knitting Mach. Corp. v. Sulzer Morat Gmbh, 139 F.3d 877, 881, 45 USPQ2d 1977, 1981 (Fed.Cir.1998). The ultimate determination of obviousness by a district court is reviewed by this court de novo while the underlying factual inquiries are reviewed for clear error. See Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326, 1331, 49 USPQ2d 1001, 1006 (Fed.Cir.1998). We hold that this is so as much in a section 146 action as on review of the judgment in an infringement suit.

[6] Headnote Citing References[7] Headnote Citing References The dispute here focuses on the combinability of the prior art. When an obviousness determination is based on multiple prior art references, there must be a showing of some “teaching, suggestion, or reason” to combine the references. Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579, 42 USPQ2d 1378, 1383 (Fed.Cir.1997) (also noting that the “absence of such a suggestion to combine is dispositive in an obviousness determination”). Whether motivation to combine the references was shown we hold a question of fact. See In re Dembiczak, 175 F.3d 994, 1000, 50 USPQ2d 1614, 1617 (Fed.Cir.1999) (“[P]articular factual findings regarding the suggestion, teaching, or motivation to combine serve a number of important purposes ....”) (emphasis added); Monarch Knitting, 139 F.3d at 881-83, 886, 45 USPQ2d at 1982, 1985 (treating motivation to combine issue as part of the scope and content of the prior art and holding that genuine issues of fact existed as to whether one of ordinary skill in the art would have been motivated to combine the references in question).

[8] Headnote Citing References[9] Headnote Citing References Evidence of a suggestion, teaching, or motivation to combine prior art references may flow, inter alia, from the references themselves, the knowledge of one of ordinary skill in the art, or from the nature of the problem to be solved. See Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617. Although a reference need not expressly teach that the disclosure contained therein should be combined with another, see Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d 1461, 1472, 43 USPQ2d 1481, 1489 (Fed.Cir.1997),FN6 the showing of *1349 combinability, in whatever form, must nevertheless be “clear and particular.” Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617.

FN6. Wang correctly points out that the district court misstated our case law on the test for the “motivation to combine” issue when it stated that “there must have been some explicit teaching or suggestion in the art to motivate one of even ordinary skill to combine such elements so as to create the same invention.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144 (emphasis added). However, this misstatement could not have affected its analysis because its finding of a lack of a motivation to combine was based on “teaching away” and the nature of the problem confronting one of ordinary skill in the art, not what a reference failed to explicitly disclose. The district court also stated the law on this issue correctly in other portions of the opinion, so this one isolated misstatement hardly shows that the district court misunderstood the law.

B.
[10] Headnote Citing References Like the district court's opinion, the arguments of both parties on appeal focus on whether one of ordinary skill would have been motivated to combine the four references. The key references at issue were Johnson, which discloses virtually all aspects of the invention claimed in the '047 patent except ratcheting, and Moore, which did disclose a self-locking ratcheting mechanism.FN7 If there was no motivation or suggestion to combine Johnson with the ratcheting mechanism of Moore, one of ordinary skill in the art would not have viewed the invention of the '047 patent as obvious. See In re Dance, 160 F.3d 1339, 1343, 48 USPQ2d 1635, 1637 (Fed.Cir.1998); Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383 (“The absence of such a suggestion to combine is dispositive in an obviousness determination.”).

FN7. WuROC, which disclosed a chamber capable of accepting either a dead-bolt or a ratcheting mechanism, may have informed one of ordinary skill in the art that both mechanisms would work, but it did not specifically disclose any such mechanisms and did not suggest that one should be replaced with the other. Grimaldi disclosed a rod and pawl design that was an anti-theft device attached to the clutch rather than a steering wheel. The district court did not clearly err in finding that “WuROC and Grimaldi in and of themselves would certainly not provide much guidance as to how to construct the Wu '047 device” and that if Johnson was not combined “with some form of a ratchet mechanism, then the fact that Wu '047 may have borrowed some elements from WuROC and Grimaldi becomes irrelevant.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144.

Wang argues that the prior art should be combinable merely because the Board properly found that the relevant field was very broad and included lock design art in general, and all of the prior art here was clearly within that field. Wang further argues that Moore is combinable with Johnson because they both deal with locking steering wheels, even though Moore's ratcheting mechanism is possibly not as strong or as tamper resistant as the dead-bolt mechanism of Johnson, partly because the grooves of the ratcheting mechanism are at least somewhat exposed.

[11] Headnote Citing References The district court found that there was no motivation to combine Johnson with the ratcheting mechanism of Moore because (1) there was no apparent disadvantage to the dead-bolt mechanism of Johnson, and therefore the motivation to combine would not stem from the “nature of the problem” facing one of ordinary skill in the art, because no “problem” was perceived; and (2) Johnson's written description taught away from the use of Moore. See Winner, 11 F.Supp.2d at 23, 48 USPQ2d at 1143-44. “What a reference teaches and whether it teaches toward or away from the claimed invention are questions of fact.” In re Bell, 991 F.2d at 784, 26 USPQ2d at 1531.

First, although there was conflicting evidence before the district court on whether one would see the trade-off between using a dead-bolt and using a ratcheting mechanism and conclude that the more secure dead-bolt should be replaced with the more convenient ratcheting mechanism, the district court did not clearly err in finding that one of ordinary skill in the art would not have reasonably elected trading the benefit of security for that of convenience. Trade-offs often concern what is feasible, not what is, on balance, desirable. Motivation to combine requires the latter.FN8

FN8. The fact that the motivating benefit comes at the expense of another benefit, however, should not nullify its use as a basis to modify the disclosure of one reference with the teachings of another. Instead, the benefits, both lost and gained, should be weighed against one another.

[12] Headnote Citing References Second, if Johnson did in fact teach away from Moore, then that finding *1350 alone can defeat Wang's obviousness claim. See Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383. A “reference will teach away if it suggests that the line of development flowing from the reference's disclosure is unlikely to be productive of the result sought by the applicant.” In re Gurley, 27 F.3d 551, 553, 31 USPQ2d 1130, 1131 (Fed.Cir.1994).

The passage of Johnson relied on by the district court and Winner includes the following:

Another problem with such devices is that they appear susceptible to being overcome by physical force or manipulation. The locking mechanisms of [Moore] and Mitchell et al U.S. Pat. No. 4,103,524 are exposed, and include pry points thereabout in which a crowbar may be inserted in an attempt to overcome such mechanism. Irrespective of whether such device can be overcome by physical manipulation, they present prospective thieves with the appearance of being breakable.

Johnson, col. 1, lines 38-48. Because the Mitchell reference cited in the quote above actually does not utilize a ratcheting mechanism, Wang argues that Johnson does not teach away from using ratcheting mechanisms; rather, it was merely distinguishing prior art devices on the basis that unlike Johnson they had exposed mechanisms. However, that fact does not undermine the district court's finding that Johnson did teach away from the ratcheting mechanism of Moore which does have exposed grooves. While we regard this as a close factual issue, we hold that the district court did not clearly err in finding that Johnson taught away from Moore, and therefore was not shown to be combinable with Moore. Because the district court did not clearly err in finding that one of ordinary skill would not be motivated to combine Johnson and Moore, the district court correctly concluded that Wang did not establish a prima facie case of obviousness by clear and convincing evidence. See In re Dance, 160 F.3d at 1343, 48 USPQ2d at 1637.

[13] Headnote Citing References If Wang had succeeded in establishing a prima facie case of obviousness based on the first three obviousness factors, the burden of production would have shifted to Winner. See In re Huang, 100 F.3d 135, 139, 40 USPQ2d 1685, 1689 (Fed.Cir.1996); Burlington Indus., 822 F.2d at 1582-83, 3 USPQ2d at 1437-38 (reviewing a section 145 decision and holding that district court correctly concluded that applicant had successfully rebutted Commissioner's prima facie case of obviousness). Relevant to that inquiry would have been such objective indicia of non-obviousness as the evidence of commercial success submitted by Winner. See id. Because Wang failed to establish a prima facie case of obviousness, however, Winner was not required to establish commercial success. Thus, we need not review the district court's finding that commercial success was established.

[14] Headnote Citing References Assuming, arguendo, prima facie proof of obviousness, we do not believe the district court clearly erred in finding commercial success or that it erred in concluding that it overcame the other Graham factors. It is presumed that Winner established a nexus between its commercial sales of the Super Club, the Club GL and Ultra Club and the patented features because they embody the disclosure of the '047 improvement patent. J.T. Eaton & Co. v. Atlantic Paste & Glue Co., 106 F.3d 1563, 1571, 41 USPQ2d 1641, 1647 (Fed.Cir.1997) (“When a patentee can demonstrate commercial success, usually shown by significant sales in a relevant market, and that the successful product is the invention disclosed and claimed in the patent, it is presumed that the commercial success is due to the patented invention.”). Moreover, the survey introduced at the district court by Winner established that a statistically significant percentage of customers viewed the self-locking ratcheting mechanism of the '047 patent as being of more value to them, and reported that the self-locking ratchet was the very reason they purchased the device, as opposed to *1351 those requiring key-locking, and was the reason they were willing to pay more for such a lock than for one without it, such as the original Club. When such evidence was introduced, it became Wang's burden to show that it should not be given weight. See id. (“If a patentee makes the requisite showing of nexus between commercial success and the patented invention, the burden shifts to the challenger to prove that the commercial success is instead due to other factors extraneous to the patented invention, such as advertising or superior workmanship.”); Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1394, 7 USPQ2d 1222, 1227 (Fed.Cir.1988) (“A patentee is not required to prove as part of its prima facie case that the commercial success of the patented invention is not due to factors other than the patented invention.”). Given the evidence before the district court, it did not clearly err in finding that the survey showed the nexus between the patented features, especially the keyless self-locking ratcheting mechanism, of the Super Club line of products and the reasons the consumers bought the products. Nor did Wang's evidence overcome the proof of nexus.

III.
EVIDENTIARY ISSUES
[15] Headnote Citing References A district court's decision to admit or exclude evidence at trial is reviewed for abuse of discretion. See Conservolite, 21 F.3d at 1103, 30 USPQ2d at 1630 (Fed.Cir.1994). Wang argues that the district court abused its discretion by allowing Winner to present (1) late-disclosed witnesses and (2) documents and testimony pertaining to the nexus required to show commercial success, namely a survey and foundational witnesses for the survey. Wang admits that the commercial success issue was raised before the Board but argues that the subsidiary nexus issue was not, and therefore Winner could not raise the issue before the district court, as it must be deemed waived.

Winner points out that Wang never even identifies which witnesses should not have been allowed to testify as “late-disclosed.” With respect to the evidence of commercial success, Winner argues that the nexus evidence was clearly admissible because commercial success was at issue before the Board and, therefore by implication, the nexus issue was as well.

[16] Headnote Citing References We agree with Winner that the district court did not abuse its discretion in allowing allegedly late-disclosed witnesses to testify. Such witnesses were never even identified by Wang in his opening brief, and, after Winner pointed this out in its response brief, Wang still failed to identify the witnesses in his reply brief. Under such circumstances, we will not search the record on the chance of discovering which witnesses Wang was complaining of and then determine whether the district court abused its discretion. Thus, whichever witnesses Wang was alluding to, admission of their testimony cannot be said to be an abuse of discretion based on the vague arguments made by Wang on appeal.

[17] Headnote Citing References We also agree with Winner that the district court did not abuse its discretion in admitting the new testimony and survey report regarding the nexus between commercial success and the patentably distinct feature of the claimed invention. Wang's argument, based on a distinction between the issues of commercial success and nexus, is flawed. The evidence showing a nexus between large sales and the patentable features of the invention of the '047 improvement patent is at least relevant to the issue of commercial success before the Board. See Estee Lauder, 129 F.3d at 592, 44 USPQ2d at 1613 (“[D]istrict court did not abuse its discretion in allowing Estee Lauder to introduce evidence of the [tests not before the Board] insofar as this evidence was relevant to its reduction to practice.” (emphasis added)). Indeed, establishing such a nexus is required in order to establish commercial success. See Gambro Lundia, 110 F.3d at 1579, 42 USPQ2d at 1384 (“Of course, *1352 the record must show a sufficient nexus between this commercial success and the patented invention”). Thus, here raising the commercial success issue necessarily raised the nexus issue as well. Accordingly, the district court did not abuse its discretion by admitting the testimony and documents relating to the nexus required to show commercial success.

IV.
MOTION TO TRANSFER
[18] Headnote Citing References A district court may transfer an action to another district court for the “convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a) (1994). Our review of the district court's denial of Wang's motion to transfer, as a procedural matter, is governed by the law of the regional circuit in which it sits, here the United States Court of Appeals for the District of Columbia Circuit. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (classifying section 1404(a) as a procedural rule); Regents of the Univ. of Cal. v. Eli Lilly and Co., 119 F.3d 1559, 1565, 43 USPQ2d 1398, 1403 (Fed.Cir.1997) (applying regional circuit law). In that circuit, the burden of persuasion on the transfer issue was on Wang, and the district court's denial of Wang's motion is reviewed for an abuse of discretion. See Securities and Exchange Comm'n v. Savoy Indus., Inc., 587 F.2d 1149, 1154 (D.C.Cir.1978).

[19] Headnote Citing References Wang argues that the district court should have granted his motion to transfer this action to the District Court for the Central District of California, where several other cases have been stayed pending the outcome of the interference and this action because to do so would be convenient to the parties and in the interests of justice. Winner argues, however, that it was just as convenient for the parties to litigate in Washington, D.C. as in California, and that the interests of justice actually favored litigation in Washington, D.C. because this aspect of the litigation will be resolved years before it would have been if the motion to transfer were granted.

We discern no abuse of discretion in the district court's denial of Wang's motion to transfer. Even though there are several related pending cases in the Central District of California, it is not clear that it would be a more convenient location for the parties to litigate. Persons scheduled to testify at trial for the parties lived in Pennsylvania; the experts lived in Connecticut, Virginia, and California; and the attorneys were from Virginia and New York. With parties, witnesses, and attorneys coming from such varied locations, several of which are closer to Washington, D.C. than California, it could not easily be said that it would be more convenient to try the case in the Central District of California. In addition, the interests of judicial economy were well served because the section 146 action was tried and result obtained in just six months after the motion to transfer was denied-presumably much more quickly than would have been the case if this action were transferred to the Central District of California where several other cases were pending. See Savoy Indus., 587 F.2d at 1156 (considering the delay that would have been encountered if the motion to transfer were granted as a factor weighing in favor of denying the motion). Under such circumstances, the district court did not abuse its discretion in denying Wang's motion to transfer.

V.
CONCLUSION
The district court did not clearly err in its findings of fact with respect to its obviousness analysis and did not err in concluding that the invention of the '047 patent would not have been obvious. In addition, the district court did not abuse its discretion in admitting testimony and documents or in refusing to transfer the *1353 case. Accordingly, the judgment of the district court is

AFFIRMED.

C.A.Fed. (Dist.Col.),2000.
Winner Intern. Royalty Corp. v. Wang
202 F.3d 1340, 53 U.S.P.Q.2d 1580

Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)

2010-04-12T17:16:31Z

Cep503: Created page with 'United States Court of Appeals, Federal Circuit. WINNER INTERNATIONAL ROYALTY CORPORATION, Plaintiff-Appellee, v. Ching-Rong WANG, Defendant-Appellant. No. 98-1553. Jan. 27, 200…'

United States Court of Appeals,
Federal Circuit.
WINNER INTERNATIONAL ROYALTY CORPORATION, Plaintiff-Appellee,
v.
Ching-Rong WANG, Defendant-Appellant.

No. 98-1553.
Jan. 27, 2000.
Rehearing and Rehearing En Banc Denied March 6, 2000.

Owner of patent and patent application claiming automobile anti-theft device brought action challenging decision of the Board of Patent Appeals and Interferences, in interference proceeding, declaring patent and application claims invalid as obvious. Competitor's motion to transfer action to California was denied, 1998 WL 268279. Following bench trial, the United States District Court for the District of Columbia, Stanley Sporkin, J., 11 F.Supp.2d 18, overturned Board's decision, and competitor appealed. The Court of Appeals, Michel, Circuit Judge, held that: (1) owner's submission to district court of live testimony on all matters before the Board required court to conduct trial de novo; (2) patent was not invalid as obvious; (3) allowing allegedly late-disclosed witnesses to testify was not abuse of discretion; (4) evidence regarding nexus between commercial success of claimed invention and patentably distinct feature of invention was admissible; and (5) competitor was not entitled to transfer.

Affirmed.

West Headnotes

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On appeal following a bench trial, Court of Appeals reviews the district court's factual findings for clear error and its conclusions of law de novo.

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The admission of live testimony on all matters before the Board of Patent Appeals and Interferences, in a district court action for review of a decision in an interference proceeding, makes a factfinder of the district court and requires a de novo trial; thus, although the live testimony before the district court might be the same or similar to testimony before the Board in the form of affidavits and deposition transcripts, a district court should still make de novo factual findings, while treating the record before the Board when offered by a party as if it was originally taken and produced in the district court. 35 U.S.C.A. § 146.

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Obviousness of a patent claim is a question of law based on underlying factual inquiries including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) extent of any objective indicia of non-obviousness. 35 U.S.C.A. § 103.

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The ultimate determination of obviousness of a patent claim by a district court is reviewed by the Court of Appeals de novo while the underlying factual inquiries are reviewed for clear error, regardless of whether Court is reviewing judgment in an infringement suit or judgment in an action for review of an interference proceeding. 35 U.S.C.A. § 103.

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When determination of patent's obviousness is based on multiple prior art references, there must be a showing of some teaching, suggestion, or reason to combine the references. 35 U.S.C.A. § 103.

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Whether motivation to combine prior art references was shown by party asserting that patent was obvious is a question of fact. 35 U.S.C.A. § 103.

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Evidence of a suggestion, teaching, or motivation to combine prior art references in manner rendering patent obvious may flow, inter alia, from the references themselves, the knowledge of one of ordinary skill in the art, or from the nature of the problem to be solved. 35 U.S.C.A. § 103.

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Although a prior art reference need not expressly teach that the disclosure contained therein should be combined with another, to render a patent invalid as obvious, the showing of combinability, in whatever form, must nevertheless be clear and particular. 35 U.S.C.A. § 103.

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Competitor failed to show motivation or suggestion to combine prior art references disclosing claimed automobile anti-theft device and its feature of self-locking ratcheting mechanism, as required to show prima facie case of obviousness, since one of ordinary skill in the art would not have reasonably elected trading benefit of security for that of convenience, which would result from use of ratcheting mechanism, and reference disclosing invention's other features taught away from the ratcheting mechanism. 35 U.S.C.A. § 103.

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What a prior art reference teaches and whether it teaches toward or away from a claimed invention are questions of fact.

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A prior art reference will “teach away” if it suggests that the line of development flowing from the reference's disclosure is unlikely to be productive of the result sought by the patent applicant.

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Where party challenging patent as obvious failed to establish a prima facie case of obviousness, patentee was not required to establish objective indicia of non-obviousness, such as commercial success. 35 U.S.C.A. § 103.

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Even if competitor established prima facie proof that patent for automobile anti-theft device was obvious, commercial success of invention overcame other obviousness factors and patent was thus not invalid. 35 U.S.C.A. § 103.

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District court could not be deemed to have abused its discretion in allowing allegedly late-disclosed witnesses to testify, absent identification of which witnesses should not have been permitted to testify.

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District court's denial of motion to transfer action for the convenience of parties and witnesses, in the interest of justice, was procedural matter, so review of that issue by Court of Appeals for the Federal Circuit was governed by law of the district court's regional circuit. 28 U.S.C.A. § 1404(a).

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Competitor was not entitled, in the interest of justice, to transfer of patent owner's action for review of administrative interference decision to district in which related actions had been stayed pending outcome of interference and instant action, as it was unclear that other forum would be more convenient, and action could likely be resolved more quickly if it was not transferred. 28 U.S.C.A. § 1404(a).

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3,462,982, 4,738,127. Cited as prior art.

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4,887,443. Cited.

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4,935,047. Valid.

*1342 Kenneth A. Lapatine, Camhy Karlinsky & Stein, of New York, New York, argued for plaintiff-appellee. Of counsel on the brief was Charles L. Gholz, Oblon, Spivak, McClelland, Maier & Neustadt, P.C.

Joseph A. Yanny, Yanny, Grieco & Osher, of Los Angeles, California, argued for defendant-appellant. With him on the brief were Mary L. Grieco, and Michael A. DiNardo. Of counsel on the brief were Charles R. Wolfe, Jr., and Richard E. Fitcher, Bacon & Thomas, of Alexandria, Virginia.

Before MICHEL, RADER, and GAJARSA, Circuit Judges.

MICHEL, Circuit Judge.

Ching-Rong Wang (“Wang”) appeals from the judgment of the United States District Court for the District of Columbia, overturning the decision of the United States Patent and Trademark Office Board of Patent Appeals and Interferences (the “Board”) in an interference, and holding that the inventions of claims 2 and 4 of U.S. Patent No. 4,935,047 (“the '047 patent”) and claims 9-11 of U.S. Patent App. No. 07/478,411 (“the '411 application”) would not have been obvious in light of the cited prior art. See Winner Int'l Royalty Corp. v. Wang, 11 F.Supp.2d 18, 48 USPQ2d 1139 (D.D.C. June 12, 1998). The '047 patent, issued to Jinn Wu (“Wu”), and the '411 application are owned by Winner International Royalty Corp. (“Winner”). The district court had jurisdiction pursuant to 35 U.S.C. § 146 (1994) because Wu filed suit there after an adverse ruling by the Board in an interference between himself and Wang. Winner, as owner of Wu's patent, superseded Wu as plaintiff. The Board held the Wu patent and application claims invalid as obvious. See 35 U.S.C. § 103 (1994). Other litigation (including suit against Wang), in which Winner alleges infringement of its '047 patent and asserts several related claims, has been stayed in the Central District of California pending the outcome of this appeal. The district court first denied Wang's motion to transfer this action to the District Court for the Central District of California. See Winner Int'l Royalty Corp. v. Wang, 45 USPQ2d 1864, 1998 WL 268279 (D.D.C. Jan.20, 1998). Then it conducted a 7 day bench trial. On appeal, Wang challenges (1) the denial of the transfer; (2) rulings as to the admission of evidence despite its similarity to that before the Board; and (3) the holding of non-obviousness that revived the '047 patent. This case was submitted for our decision following oral argument on August 2, 1999. Because the district court did not clearly err in any of its factual findings relating to obviousness, did not err in its ultimate determination of non-obviousness, and did not abuse its discretion either in admitting the challenged documentary evidence and testimony or in refusing to transfer the case, we affirm.

BACKGROUND
In addition to the '047 patent, Winner also owns U.S. Patent No. 4,738,127 (“Johnson”), the commercial embodiment of which is the original steering wheel anti-theft device known as “The Club.” Wu, the principal in the Taiwanese manufacturer of the original Club, is named as the inventor in the '047 patent, commercial embodiments of which are known as “The Super Club,” “The Ultra Club,” and “The Club GL.” The '047 patent discloses an automobile*1343 anti-theft device that is mounted across the steering wheel and is locked in place by use of a self-locking ratcheting mechanism. Like all versions of the Club, when locked in place, the commercial embodiments of the '047 patent prevent theft by blocking the steering wheel from turning. The ratcheting mechanism is different from the dead-bolt used in Johnson and so the '047 patent may be thought of as an improvement over Johnson. While Johnson's dead-bolt system is more secure, it is not as convenient as the ratcheting mechanism claimed in the '047 patent because a key is required to lock the Johnson device in place while the '047 patent discloses a device that locks itself without use of a key.FN1

FN1. In both devices a key is needed to unlock the device.

Wang also manufactures similar anti-theft devices in Taiwan and exports them to the U.S. where he sells them through his United States distributor. Wang's device is known commercially as “The Gorilla Grip.” Wang filed a patent application directed to his Gorilla Grip device and was issued U.S. Patent No. 4,887,443 (“the '443 patent”).

In 1990, Wu discovered that the device disclosed in Wang's '443 patent was very similar to the subject matter of his then-pending application, which later issued as the '047 patent, and decided to provoke an interference by filing a divisional application and submitting a claim identical to the broadest claim in the '443 patent. On August 8, 1991, an interference was declared, and a proceeding began to determine which party, Wu or Wang, had priority of invention. The claims of the '047 patent and an additional Wu application, the '411 application, were eventually added to the count in the interference.

During the interference proceeding, Wang filed a preliminary motion alleging that the interference count, and hence both parties' claims, was unpatentable as obvious in light of certain prior art under 35 U.S.C. § 103 (1994). Wang, apparently acknowledging that his claim to priority over Wu's '047 patent was questionable, ultimately conceded that his '443 patent was invalid and sought to prove that Wu's '047 patent was also invalid.

After a final hearing, the Board, in a split decision, held all affected claims invalid except for claims 1 and 3 of the '047 patent. Wu then filed both an appeal to this court pursuant to 35 U.S.C. § 141 (1994) and an action in the District Court for the District of Columbia pursuant to 35 U.S.C. § 146, while Wang filed a section 146 action in the District Court for the Central District of California. In Wu's section 141 appeal from the decision of the Board, this court determined that the section 146 suit would proceed pursuant to Wu's complaint in the District Court for the District of Columbia. See Wu v. Wang, 129 F.3d 1237, 44 USPQ2d 1641 (Fed.Cir.1997). Because Wu filed his appeal first, and responded in timely fashion to Wang's notice of election by filing a section 146 action in the District Court for the District of Columbia, Wu's choice of forum governed. See id. at 1242-43, 44 USPQ2d at 1645-46. We then dismissed the section 141 appeal as superseded by the section 146 action. See id. at 1238, 44 USPQ2d at 1642.

After the first appeal to this court, Wang filed a motion in the district court to transfer the action to the Central District of California. The district court denied the motion. See Winner, 45 USPQ2d 1864. After a seven-day bench trial, the district court held that the inventions of claims 2 and 4 of the '047 patent would not have been obvious in light of the cited prior art. See Winner, 11 F.Supp.2d 18, 48 USPQ2d 1139.FN2 At trial, Winner presented testimony on each of the four principal factual issues underlying an obviousness*1344 determination, as well as affidavits. Wang presented one expert witness to testify as to his opinion regarding obviousness and the underlying factual determinations. The record before the Board was also admitted into evidence before the district court.

FN2. The related claims in the '411 application were also found not unpatentable, but were not separately addressed by the district court and are not separately argued on appeal. Therefore, we do not address them separately either.

The focus of the trial was on four prior art references that Wang alleged, before the court as he had before the Board, rendered the invention of the '047 patent obvious. These references were Johnson (mentioned above), U.S. Patent No. 3,462,982 (“Moore”), Taiwan Patent App. No. 74,210,699 (“WuROC”), and French Patent App. No. 2,566,398 (“Grimaldi”). Winner also introduced evidence of the commercial success of its Super Club line of products. This evidence had not been presented to the Board.

Like the device disclosed in the '047 patent, the mechanism of Johnson immobilizes the steering wheel by the user inserting it within the steering wheel, telescoping its arms outward so that hooks on the end of the arms engage the steering wheel, and then locking the arms in place. As stated earlier, unlike the '047 patent, which discloses a self-locking ratcheting mechanism, Johnson uses a dead-bolt to lock the device in place, which requires the user to turn a key after putting the device on the wheel. Moore discloses a steering wheel lock that unfolds into a “Y” shape and utilizes a self-locking ratcheting mechanism, which does not require a key. WuROC discloses a wheel and brake pedal locking device with a versatile locking core that can accommodate either a dead-bolt or a self-locking ratcheting mechanism, but it does not disclose either of these locking mechanisms. Grimaldi discloses a two-piece mechanism for locking a clutch or brake pedal to the floorboard or firewall of a car and its figures appear to show a rod and pawl mechanism that locks it into place.

The key issue tried was the presence or absence of sufficient proof of a motivation to combine the four prior art references. The Board had found that one skilled in the art (1) “would have considered Johnson's dead-bolt-type locking device to be disadvantageous compared to the Moore and WuROC devices to the extent that Johnson requires a key for setting in position and adjusting the device,” and (2) “would have been motivated to make Johnson easier to use, albeit less secure, by replacing the dead-bolt mechanism” of Johnson with a suitable self-locking ratcheting mechanism. The district court found that these factual findings were “clearly erroneous” and found that adequate motivation to combine the references was not shown. See Winner, 11 F.Supp.2d at 23-24, 48 USPQ2d at 1143-44. The district court also found that Winner established commercial success resulting from the improvement claimed in the '047 patent, even though it held such a finding immaterial in light of Wang's failure to establish a prima facie case of obviousness. See id. Accordingly, the district court held that on this record the inventions of claims 2 and 4 of the '047 patent would not have been obvious and overturned the Board's decision as to those claims. See id. at 25, 48 USPQ2d at 1145.

Wang appeals, contending that the district court should have applied a substantial evidence standard of review on factual issues rather than, as it said it was doing, review for clear error. Wang asserts that the district court incorrectly concluded that the invention of the claims would not have been obvious, and abused its discretion in admitting the challenged documentary evidence and testimony as duplicative of evidence in the Board record and in denying Wang's motion to transfer the case to the Central District of California. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3)(C) (1994).

DISCUSSION
I.

STANDARD OF REVIEW

[1] Headnote Citing References[2] Headnote Citing References We review the district court's factual findings for clear error and its *1345 conclusions of law de novo, as with any bench trial. See Gould v. Quigg, 822 F.2d 1074, 1077, 3 USPQ2d 1302, 1303-04 (Fed.Cir.1987) (affirming district court's reversal of Board decision with respect to enablement). It is not as clear, however, what degree of deference inheres in the standard of review the district court was required to apply to the Board's decision. The parties agree that the district court was to reassess the Board's ultimate conclusion as to obviousness de novo, but they disagree over the degree of deference, if any, the district court was required to give to the Board's factual findings. Wang argues that under the Supreme Court's decision in Dickinson v. Zurko, 527 U.S. 150, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999), the district court was required to review the Board's factual findings only for substantial evidentiary support. In its decision, which issued before Zurko was decided, the district court applied the traditional clearly erroneous standard of review to the Board's findings of fact.FN3 Winner argues first that the district court was entitled to conduct an entire trial de novo, and second, even if deference were required, that the district court properly reviewed the Board's factual findings for clear error because Zurko and the Administrative Procedure Act (“APA”) standards of review do not apply as the Board proceeding is “subject to” a trial de novo in a district court.

FN3. That standard of review was correct under our case law at the time.

Wu brought this action pursuant to 35 U.S.C. § 146, which allows a party to an interference dissatisfied with an adverse decision of the Board to file a complaint in a district court. Unlike a direct appeal to this court pursuant to 35 U.S.C. § 141, the parties before the district court are not limited to the evidentiary record before the Board:

In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party ... without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken and produced in the suit.

35 U.S.C. § 146 (emphasis added). Because the record before the district court may include the evidence before the Board as well as evidence that was not before the Board, we have often described the district court proceeding as “a hybrid of an appeal and a trial de novo.” Estee Lauder Inc. v. L'Oreal, S.A., 129 F.3d 588, 592, 44 USPQ2d 1610, 1612 (Fed.Cir.1997); see also General Instrument Corp. v. Scientific-Atlanta, Inc., 995 F.2d 209, 212, 27 USPQ2d 1145, 1147 (Fed.Cir.1993) (“[A] party may proceed to a district court for a hybrid appeal/trial de novo proceeding in which the PTO record is admitted on motion of either party, but it may be supplemented by further testimony. 35 U.S.C. § 146.”); Case v. CPC Int'l, Inc., 730 F.2d 745, 752, 221 USPQ 196, 202 (Fed.Cir.1984) (“[A]n action under 35 U.S.C. § 146 has the hybrid nature of an appeal and a trial de novo.”). We have so stated even though section 146 uses neither the term “ de novo,” nor “appeal.” See Conservolite, Inc. v. Widmayer, 21 F.3d 1098, 1102, 30 USPQ2d 1626, 1629 (Fed.Cir.1994).

The issue before us is whether the scope of the evidence admitted by the district court was sufficient to require a complete trial de novo, or whether the district court was instead required to give deference to some or all of the Board's findings of fact. Although our precedent makes clear that a de novo trial is appropriate in some circumstances in actions under both section 146 and the parallel provisions in 35 U.S.C. § 145, it does not make clear exactly what those circumstances are. The statutory provisions themselves offer little guidance-section 146 only refers to “further testimony” which may be offered in the district court, while section 145 is completely silent about evidence. See 35 U.S.C. § 146; 35 U.S.C. § 145. In Zurko, the Supreme Court, in passing, noted the settled law that in a section 145 action a disappointed applicant may present evidence*1346 that it did not present to the Board, and that the “presence of such new or different evidence makes a factfinder of the district judge.” 119 S.Ct. at 1824 (emphasis added). Interpreting both sections, we have referred to the ability to present “new testimony” or “proffered testimony” or “additional evidence.” Conservolite, 21 F.3d at 1102, 30 USPQ2d at 1629 (“new testimony”); Case, 730 F.2d at 752, 221 USPQ at 202 (finding that section 146 “authorizes the district court to accept all proffered testimony on issues raised by the parties during the proceedings below or by the board's decision.”); Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[A]dditional evidence is permitted in a civil action under section 145, allowing the district court to make de novo fact findings.”); Fregeau v. Mossinghoff, 776 F.2d 1034, 1038, 227 USPQ 848, 851 (Fed.Cir.1985) (using “additional evidence” and “new evidence” interchangeably); cf. Newman v. Quigg, 877 F.2d 1575, 1579, 11 USPQ2d 1340, 1343 (Fed.Cir.1989) (“A district court action under 35 U.S.C. § 145 is a de novo determination of patentability. It is not limited to the record before the PTO.”). It is not clear from these cases, however, when evidence is “new or different” or “additional” so that trial de novo is required.

Here, Winner introduced evidence on the issue of commercial success that was not before the Board, specifically a survey and a witness. Such documentary evidence and testimony are certainly “further testimony,” as the Board had neither before it in any form. However, Winner also presented live testimony in the district court on each factual issue before the Board, namely the other three sets of underlying factual determinations typically at issue in an obviousness determination. See Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Wang argues that this latter testimony was not adequate to trigger a de novo trial because it is the same or similar to testimony given by the same witnesses before the Board. We reject this argument.

In the context of a section 145 action, in which the Board has conducted an ex parte proceeding, we have noted that the admission of live testimony at trial requires the factfinder to make its own findings. See Burlington Indus., Inc. v. Quigg, 822 F.2d 1581, 1584, 3 USPQ2d 1436, 1439 (Fed.Cir.1987). The rationale is that the applicant was at least partly unable to present the live testimony in the ex parte proceeding before the Board. See id. In Burlington Industries, the Commissioner argued that “the district court cannot reach a different conclusion on the same evidence that was before the PTO.” Id. (emphasis added). We rejected the Commissioner's argument. Although the import of the evidence before the Board and the district court might be the same in many or all ways, the form in which it is presented is fundamentally different. As we noted in Burlington Industries:

In its evaluation of the evidence on which this conclusion was based, the district court had a powerful advantage over the patent examiner and the Board, an advantage characteristic of section 145 appeals, in that the court heard and saw witnesses, testifying under examination and cross-examination, and had the benefit of extensive discussion and argument.

Id. at 1582, 3 USPQ2d at 1437-38 (emphasis added). The fact that the district court heard live testimony, gave more weight to some witnesses than to others, and came to a different conclusion than that reached by the Board, was not improper:

This trial before the district court partook of the quality that is available only with the examination and cross-examination of live witnesses. ... If the evidence adduced before the district court led to a decision different from that reached by the PTO, that is not contrary to the legislative purpose of section 145 de novo review. Indeed, it is in fulfillment of that purpose.

Id. at 1584, 3 USPQ2d at 1439 (emphasis added). Thus, after a “full trial of the issues” the district court was free to come *1347 to its own “independent conclusion,” contrary to the argument by the Commissioner. Id.; see also Gould, 822 F.2d at 1079, 3 USPQ2d at 1305 (“[O]nce a full trial on the issue occurred ... the district court reached a distinct and more informed conclusion....”).

In the context of a section 146 action such as the instant case, in which the Board has conducted an inter partes interference proceeding, the matter is less clear because more evidentiary opportunities are available to parties in an interference than to an applicant in an ex parte examination and appeal to the Board. See In re Epstein, 32 F.3d 1559, 1565-66, 31 USPQ2d 1817, 1821 (Fed.Cir.1994) (noting lack of rules of evidence and inability to cross-examine witnesses in an ex parte proceeding). In an interference, unlike an ex parte proceeding, the Federal Rules of Evidence apply. See 37 C.F.R. § 1.671(b) (1998). In addition, both sides can submit testimony, initially in the form of affidavits, unless the testimony must be compelled. See 37 C.F.R. § 1.672. A party may “cross-examine” an affiant through oral deposition. See 37 C.F.R. § 1.672(d). Discovery, at least against the party opponent, is also available. See 37 C.F.R. § 1.687. However, although the parties “will be given an opportunity to appear before the Board to present oral argument at a final hearing,” 37 C.F.R. § 1.654, at no point in the interference proceeding is a party allowed to present live testimony before the Board. The Board reviews testimony only in the form of affidavits and transcripts of depositions, and other facts in the form of responses to interrogatories and requests for admissions. See 37 C.F.R. §§ 1.653(a), 1.677(a). Thus, although the proceeding before the Board in an interference differs from that following an ex parte examination, the two proceedings are the same in at least one important respect-in no case is live testimony given before the Board, which would allow the Board to observe demeanor, to hear the witnesses rebut one another's testimony in response to questioning from the parties and the judges, and thus to determine credibility. As we have stated before, because the district court may observe witnesses under examination and cross-examination it can have a “powerful advantage” over the Board which can never receive testimony in such a manner. Burlington Indus., 822 F.2d at 1582, 3 USPQ2d at 1437.

[3] Headnote Citing References We hold that the admission of live testimony on all matters before the Board in a section 146 action, as in this case, makes a factfinder of the district court and requires a de novo trial.FN4 Thus, although the live testimony before the district court might be the same or similar to testimony before the Board in the form of affidavits and deposition transcripts, a district court should still make de novo factual findings, while treating the record before the Board when offered by a party “as if [it was] originally taken and produced” in the district court. 35 U.S.C. § 146. Accordingly, because Winner submitted live testimony on all matters before the Board, the entire district court proceeding should have been a trial de novo, based both on the Board record and the district court evidence.FN5

FN4. As this case involved further testimony relating to everything in issue before the Board, we express no opinion on whether testimony relating solely to some facts or issues results in other facts or issues being reviewed deferentially based solely on the fact findings of the Board. Indeed, we do not decide whether a given dispute could be parsed into discrete “issues” or facts so that such a determination could be made, or if it could, how a court would draw the line between such facts or issues.

FN5. The trial court's failure to apply the de novo standard, if error, was harmless error, for surely the result would have been the same under non-deferential review.

Our holding comports with the notion that “[t]he credibility of the witnesses and the weight to be given to their testimony and the other evidence in the record ... is a matter for the trier of facts.” Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 552, 222 USPQ 4, 6 (Fed.Cir.1984). Further, our holding also establishes*1348 a clear rule that live testimony admitted on all matters that were before the Board triggers a de novo trial. If our holding were otherwise it might be difficult to administer. For example, if the test for determining whether de novo adjudication is appropriate were based on exactly what the witness said in the district court and whether it was truly “new or different” than what was disclosed in affidavits and deposition transcripts of the same or other witnesses before the Board, then the district court, and this court on appeal, would be required to search nearly line-by-line through the respective records as to each witness and issue to determine which standard applied. Aside from being difficult, such a test would provide scant guidance for a prospective litigant attempting to discern which standard would apply should it file a section 146 action.

II.
OBVIOUSNESS

A.

[4] Headnote Citing References[5] Headnote Citing References Obviousness is a question of law based on underlying factual inquiries including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) extent of any objective indicia of non-obviousness. See Monarch Knitting Mach. Corp. v. Sulzer Morat Gmbh, 139 F.3d 877, 881, 45 USPQ2d 1977, 1981 (Fed.Cir.1998). The ultimate determination of obviousness by a district court is reviewed by this court de novo while the underlying factual inquiries are reviewed for clear error. See Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326, 1331, 49 USPQ2d 1001, 1006 (Fed.Cir.1998). We hold that this is so as much in a section 146 action as on review of the judgment in an infringement suit.

[6] Headnote Citing References[7] Headnote Citing References The dispute here focuses on the combinability of the prior art. When an obviousness determination is based on multiple prior art references, there must be a showing of some “teaching, suggestion, or reason” to combine the references. Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579, 42 USPQ2d 1378, 1383 (Fed.Cir.1997) (also noting that the “absence of such a suggestion to combine is dispositive in an obviousness determination”). Whether motivation to combine the references was shown we hold a question of fact. See In re Dembiczak, 175 F.3d 994, 1000, 50 USPQ2d 1614, 1617 (Fed.Cir.1999) (“[P]articular factual findings regarding the suggestion, teaching, or motivation to combine serve a number of important purposes ....”) (emphasis added); Monarch Knitting, 139 F.3d at 881-83, 886, 45 USPQ2d at 1982, 1985 (treating motivation to combine issue as part of the scope and content of the prior art and holding that genuine issues of fact existed as to whether one of ordinary skill in the art would have been motivated to combine the references in question).

[8] Headnote Citing References[9] Headnote Citing References Evidence of a suggestion, teaching, or motivation to combine prior art references may flow, inter alia, from the references themselves, the knowledge of one of ordinary skill in the art, or from the nature of the problem to be solved. See Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617. Although a reference need not expressly teach that the disclosure contained therein should be combined with another, see Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d 1461, 1472, 43 USPQ2d 1481, 1489 (Fed.Cir.1997),FN6 the showing of *1349 combinability, in whatever form, must nevertheless be “clear and particular.” Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617.

FN6. Wang correctly points out that the district court misstated our case law on the test for the “motivation to combine” issue when it stated that “there must have been some explicit teaching or suggestion in the art to motivate one of even ordinary skill to combine such elements so as to create the same invention.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144 (emphasis added). However, this misstatement could not have affected its analysis because its finding of a lack of a motivation to combine was based on “teaching away” and the nature of the problem confronting one of ordinary skill in the art, not what a reference failed to explicitly disclose. The district court also stated the law on this issue correctly in other portions of the opinion, so this one isolated misstatement hardly shows that the district court misunderstood the law.

B.
[10] Headnote Citing References Like the district court's opinion, the arguments of both parties on appeal focus on whether one of ordinary skill would have been motivated to combine the four references. The key references at issue were Johnson, which discloses virtually all aspects of the invention claimed in the '047 patent except ratcheting, and Moore, which did disclose a self-locking ratcheting mechanism.FN7 If there was no motivation or suggestion to combine Johnson with the ratcheting mechanism of Moore, one of ordinary skill in the art would not have viewed the invention of the '047 patent as obvious. See In re Dance, 160 F.3d 1339, 1343, 48 USPQ2d 1635, 1637 (Fed.Cir.1998); Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383 (“The absence of such a suggestion to combine is dispositive in an obviousness determination.”).

FN7. WuROC, which disclosed a chamber capable of accepting either a dead-bolt or a ratcheting mechanism, may have informed one of ordinary skill in the art that both mechanisms would work, but it did not specifically disclose any such mechanisms and did not suggest that one should be replaced with the other. Grimaldi disclosed a rod and pawl design that was an anti-theft device attached to the clutch rather than a steering wheel. The district court did not clearly err in finding that “WuROC and Grimaldi in and of themselves would certainly not provide much guidance as to how to construct the Wu '047 device” and that if Johnson was not combined “with some form of a ratchet mechanism, then the fact that Wu '047 may have borrowed some elements from WuROC and Grimaldi becomes irrelevant.” Winner, 11 F.Supp.2d at 24, 48 USPQ2d at 1144.

Wang argues that the prior art should be combinable merely because the Board properly found that the relevant field was very broad and included lock design art in general, and all of the prior art here was clearly within that field. Wang further argues that Moore is combinable with Johnson because they both deal with locking steering wheels, even though Moore's ratcheting mechanism is possibly not as strong or as tamper resistant as the dead-bolt mechanism of Johnson, partly because the grooves of the ratcheting mechanism are at least somewhat exposed.

[11] Headnote Citing References The district court found that there was no motivation to combine Johnson with the ratcheting mechanism of Moore because (1) there was no apparent disadvantage to the dead-bolt mechanism of Johnson, and therefore the motivation to combine would not stem from the “nature of the problem” facing one of ordinary skill in the art, because no “problem” was perceived; and (2) Johnson's written description taught away from the use of Moore. See Winner, 11 F.Supp.2d at 23, 48 USPQ2d at 1143-44. “What a reference teaches and whether it teaches toward or away from the claimed invention are questions of fact.” In re Bell, 991 F.2d at 784, 26 USPQ2d at 1531.

First, although there was conflicting evidence before the district court on whether one would see the trade-off between using a dead-bolt and using a ratcheting mechanism and conclude that the more secure dead-bolt should be replaced with the more convenient ratcheting mechanism, the district court did not clearly err in finding that one of ordinary skill in the art would not have reasonably elected trading the benefit of security for that of convenience. Trade-offs often concern what is feasible, not what is, on balance, desirable. Motivation to combine requires the latter.FN8

FN8. The fact that the motivating benefit comes at the expense of another benefit, however, should not nullify its use as a basis to modify the disclosure of one reference with the teachings of another. Instead, the benefits, both lost and gained, should be weighed against one another.

[12] Headnote Citing References Second, if Johnson did in fact teach away from Moore, then that finding *1350 alone can defeat Wang's obviousness claim. See Gambro Lundia AB, 110 F.3d at 1579, 42 USPQ2d at 1383. A “reference will teach away if it suggests that the line of development flowing from the reference's disclosure is unlikely to be productive of the result sought by the applicant.” In re Gurley, 27 F.3d 551, 553, 31 USPQ2d 1130, 1131 (Fed.Cir.1994).

The passage of Johnson relied on by the district court and Winner includes the following:

Another problem with such devices is that they appear susceptible to being overcome by physical force or manipulation. The locking mechanisms of [Moore] and Mitchell et al U.S. Pat. No. 4,103,524 are exposed, and include pry points thereabout in which a crowbar may be inserted in an attempt to overcome such mechanism. Irrespective of whether such device can be overcome by physical manipulation, they present prospective thieves with the appearance of being breakable.

Johnson, col. 1, lines 38-48. Because the Mitchell reference cited in the quote above actually does not utilize a ratcheting mechanism, Wang argues that Johnson does not teach away from using ratcheting mechanisms; rather, it was merely distinguishing prior art devices on the basis that unlike Johnson they had exposed mechanisms. However, that fact does not undermine the district court's finding that Johnson did teach away from the ratcheting mechanism of Moore which does have exposed grooves. While we regard this as a close factual issue, we hold that the district court did not clearly err in finding that Johnson taught away from Moore, and therefore was not shown to be combinable with Moore. Because the district court did not clearly err in finding that one of ordinary skill would not be motivated to combine Johnson and Moore, the district court correctly concluded that Wang did not establish a prima facie case of obviousness by clear and convincing evidence. See In re Dance, 160 F.3d at 1343, 48 USPQ2d at 1637.

[13] Headnote Citing References If Wang had succeeded in establishing a prima facie case of obviousness based on the first three obviousness factors, the burden of production would have shifted to Winner. See In re Huang, 100 F.3d 135, 139, 40 USPQ2d 1685, 1689 (Fed.Cir.1996); Burlington Indus., 822 F.2d at 1582-83, 3 USPQ2d at 1437-38 (reviewing a section 145 decision and holding that district court correctly concluded that applicant had successfully rebutted Commissioner's prima facie case of obviousness). Relevant to that inquiry would have been such objective indicia of non-obviousness as the evidence of commercial success submitted by Winner. See id. Because Wang failed to establish a prima facie case of obviousness, however, Winner was not required to establish commercial success. Thus, we need not review the district court's finding that commercial success was established.

[14] Headnote Citing References Assuming, arguendo, prima facie proof of obviousness, we do not believe the district court clearly erred in finding commercial success or that it erred in concluding that it overcame the other Graham factors. It is presumed that Winner established a nexus between its commercial sales of the Super Club, the Club GL and Ultra Club and the patented features because they embody the disclosure of the '047 improvement patent. J.T. Eaton & Co. v. Atlantic Paste & Glue Co., 106 F.3d 1563, 1571, 41 USPQ2d 1641, 1647 (Fed.Cir.1997) (“When a patentee can demonstrate commercial success, usually shown by significant sales in a relevant market, and that the successful product is the invention disclosed and claimed in the patent, it is presumed that the commercial success is due to the patented invention.”). Moreover, the survey introduced at the district court by Winner established that a statistically significant percentage of customers viewed the self-locking ratcheting mechanism of the '047 patent as being of more value to them, and reported that the self-locking ratchet was the very reason they purchased the device, as opposed to *1351 those requiring key-locking, and was the reason they were willing to pay more for such a lock than for one without it, such as the original Club. When such evidence was introduced, it became Wang's burden to show that it should not be given weight. See id. (“If a patentee makes the requisite showing of nexus between commercial success and the patented invention, the burden shifts to the challenger to prove that the commercial success is instead due to other factors extraneous to the patented invention, such as advertising or superior workmanship.”); Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1394, 7 USPQ2d 1222, 1227 (Fed.Cir.1988) (“A patentee is not required to prove as part of its prima facie case that the commercial success of the patented invention is not due to factors other than the patented invention.”). Given the evidence before the district court, it did not clearly err in finding that the survey showed the nexus between the patented features, especially the keyless self-locking ratcheting mechanism, of the Super Club line of products and the reasons the consumers bought the products. Nor did Wang's evidence overcome the proof of nexus.

III.
EVIDENTIARY ISSUES
[15] Headnote Citing References A district court's decision to admit or exclude evidence at trial is reviewed for abuse of discretion. See Conservolite, 21 F.3d at 1103, 30 USPQ2d at 1630 (Fed.Cir.1994). Wang argues that the district court abused its discretion by allowing Winner to present (1) late-disclosed witnesses and (2) documents and testimony pertaining to the nexus required to show commercial success, namely a survey and foundational witnesses for the survey. Wang admits that the commercial success issue was raised before the Board but argues that the subsidiary nexus issue was not, and therefore Winner could not raise the issue before the district court, as it must be deemed waived.

Winner points out that Wang never even identifies which witnesses should not have been allowed to testify as “late-disclosed.” With respect to the evidence of commercial success, Winner argues that the nexus evidence was clearly admissible because commercial success was at issue before the Board and, therefore by implication, the nexus issue was as well.

[16] Headnote Citing References We agree with Winner that the district court did not abuse its discretion in allowing allegedly late-disclosed witnesses to testify. Such witnesses were never even identified by Wang in his opening brief, and, after Winner pointed this out in its response brief, Wang still failed to identify the witnesses in his reply brief. Under such circumstances, we will not search the record on the chance of discovering which witnesses Wang was complaining of and then determine whether the district court abused its discretion. Thus, whichever witnesses Wang was alluding to, admission of their testimony cannot be said to be an abuse of discretion based on the vague arguments made by Wang on appeal.

[17] Headnote Citing References We also agree with Winner that the district court did not abuse its discretion in admitting the new testimony and survey report regarding the nexus between commercial success and the patentably distinct feature of the claimed invention. Wang's argument, based on a distinction between the issues of commercial success and nexus, is flawed. The evidence showing a nexus between large sales and the patentable features of the invention of the '047 improvement patent is at least relevant to the issue of commercial success before the Board. See Estee Lauder, 129 F.3d at 592, 44 USPQ2d at 1613 (“[D]istrict court did not abuse its discretion in allowing Estee Lauder to introduce evidence of the [tests not before the Board] insofar as this evidence was relevant to its reduction to practice.” (emphasis added)). Indeed, establishing such a nexus is required in order to establish commercial success. See Gambro Lundia, 110 F.3d at 1579, 42 USPQ2d at 1384 (“Of course, *1352 the record must show a sufficient nexus between this commercial success and the patented invention”). Thus, here raising the commercial success issue necessarily raised the nexus issue as well. Accordingly, the district court did not abuse its discretion by admitting the testimony and documents relating to the nexus required to show commercial success.

IV.
MOTION TO TRANSFER
[18] Headnote Citing References A district court may transfer an action to another district court for the “convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a) (1994). Our review of the district court's denial of Wang's motion to transfer, as a procedural matter, is governed by the law of the regional circuit in which it sits, here the United States Court of Appeals for the District of Columbia Circuit. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (classifying section 1404(a) as a procedural rule); Regents of the Univ. of Cal. v. Eli Lilly and Co., 119 F.3d 1559, 1565, 43 USPQ2d 1398, 1403 (Fed.Cir.1997) (applying regional circuit law). In that circuit, the burden of persuasion on the transfer issue was on Wang, and the district court's denial of Wang's motion is reviewed for an abuse of discretion. See Securities and Exchange Comm'n v. Savoy Indus., Inc., 587 F.2d 1149, 1154 (D.C.Cir.1978).

[19] Headnote Citing References Wang argues that the district court should have granted his motion to transfer this action to the District Court for the Central District of California, where several other cases have been stayed pending the outcome of the interference and this action because to do so would be convenient to the parties and in the interests of justice. Winner argues, however, that it was just as convenient for the parties to litigate in Washington, D.C. as in California, and that the interests of justice actually favored litigation in Washington, D.C. because this aspect of the litigation will be resolved years before it would have been if the motion to transfer were granted.

We discern no abuse of discretion in the district court's denial of Wang's motion to transfer. Even though there are several related pending cases in the Central District of California, it is not clear that it would be a more convenient location for the parties to litigate. Persons scheduled to testify at trial for the parties lived in Pennsylvania; the experts lived in Connecticut, Virginia, and California; and the attorneys were from Virginia and New York. With parties, witnesses, and attorneys coming from such varied locations, several of which are closer to Washington, D.C. than California, it could not easily be said that it would be more convenient to try the case in the Central District of California. In addition, the interests of judicial economy were well served because the section 146 action was tried and result obtained in just six months after the motion to transfer was denied-presumably much more quickly than would have been the case if this action were transferred to the Central District of California where several other cases were pending. See Savoy Indus., 587 F.2d at 1156 (considering the delay that would have been encountered if the motion to transfer were granted as a factor weighing in favor of denying the motion). Under such circumstances, the district court did not abuse its discretion in denying Wang's motion to transfer.

V.
CONCLUSION
The district court did not clearly err in its findings of fact with respect to its obviousness analysis and did not err in concluding that the invention of the '047 patent would not have been obvious. In addition, the district court did not abuse its discretion in admitting testimony and documents or in refusing to transfer the *1353 case. Accordingly, the judgment of the district court is

AFFIRMED.

C.A.Fed. (Dist.Col.),2000.
Winner Intern. Royalty Corp. v. Wang
202 F.3d 1340, 53 U.S.P.Q.2d 1580

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2010-04-12T17:16:15Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Egbert v. Lippmann, 104 U.S. 333 (1881))]]
*[[Elizabeth v. American Nicholson Pavement Company, 97 U.S. 126 (1877)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Metallizing Engineering Co., Inc. v. Kenyon Bearing & Auto Parts Co., Inc., 153 F.2d 516 (1946)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Quanta Computers Inc v. LG Electronics (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]
*[[Winner International Royalty Co. v. Wang, 202 F.3d 1340 (2000)]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)

2010-04-12T14:53:23Z

Cep503:

==Courtney==
Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that **1735 test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse.

The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for *413 vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.

The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the **1742 patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways *420 in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

Talk:KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)

2010-04-12T14:53:06Z

Cep503: Created page with 'Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the part…'

Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that **1735 test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse.

The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for *413 vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.

The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the **1742 patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways *420 in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)

2010-04-12T14:48:54Z

Cep503:

Supreme Court of the United States
KSR INTERNATIONAL CO., Petitioner,
v.
TELEFLEX INC. et al.

No. 04-1350.
Argued Nov. 28, 2006.
Decided April 30, 2007.

119 Fed.Appx. 282, reversed and remanded.

KENNEDY, J., delivered the opinion for a unanimous Court.

James W. Dabney, for petitioner.

Thomas G. Hungar, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Thomas C. Goldstein, for respondents.

John F. Duffy, Fried, Frank, Harris, Shriver & Jacobson LLP, Of Counsel, James W. Dabney, Counsel of Record, New York, New York, Stephen S. Rabinowitz, Henry C. Lebowitz, Mitchell E. Epner, Darcy M. Goddard, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York, Attorneys for Petitioner.

Kenneth C. Bass, III, Robert G. Sterne, Sterne, Kessler Goldstein & Fox P.L.L.C., Washington, DC, Rodger D. Young, Steven Susser, David Poirier, Young & Susser, P.C., Southfield, Thomas C. Goldstein, Counsel of Record, Michael A. O'Shea, Garreth A. Sarosi, Christopher R. Pudelski, Sarah C. Rispin, Akin Gump Strauss Hauer & Feld, LLP, Washington, DC, Samuel J. Haidle, David M. LaPrairie, Howard & Howard, Attorneys, P.C., Bloomfield Hills, MI, Tracy L. Casadio, **1734 Elizabeth H. Rader, Akin Gump Strauss Hauer & Feld, LLP, Los Angeles, CA, Brief for the Respondents.

Justice KENNEDY delivered the opinion of the Court.

*405 Teleflex Incorporated and its subsidiary Technology Holding Company-both referred to here as Teleflex-sued KSR International Company for patent infringement. The patent at issue, United States Patent No. 6,237,565 B1, is entitled*406 “Adjustable Pedal Assembly With Electronic Throttle Control.” Supplemental App. 1. The patentee is Steven J. Engelgau, and the patent is referred to as “the Engelgau patent.” Teleflex holds the exclusive license to the patent.

Claim 4 of the Engelgau patent describes a mechanism for combining an electronic sensor with an adjustable automobile pedal so the pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine. When Teleflex accused KSR of infringing the Engelgau patent by adding an electronic sensor to one of KSR's previously designed pedals, KSR countered that claim 4 was invalid under the Patent Act, 35 U.S.C. § 103, (2000 ed. and Supp. IV), because its subject matter was obvious.

Section 103 forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Court set out a framework for applying the statutory language of § 103, language itself based on the logic of the earlier decision in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683 (1851), and its progeny. See 383 U.S., at 15-17, 86 S.Ct. 684. The analysis is objective:

“Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” Id., at 17-18, 86 S.Ct. 684.

*407 While the sequence of these questions might be reordered in any particular case, the factors continue to define the inquiry that controls. If a court, or patent examiner, conducts this analysis and concludes the claimed subject matter was obvious, the claim is invalid under § 103.

Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that **1735 test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse.

I
A
In car engines without computer-controlled throttles, the accelerator pedal interacts with the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating around a pivot point. In a cable-actuated throttle control the rotation caused by pushing down the pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection unit. The wider the valves open, the more fuel and air are released, causing combustion to increase and the car to accelerate. When the driver takes his foot off the pedal, the opposite occurs as the cable is released and the valves slide closed.

In the 1990's it became more common to install computers in cars to control engine operation. Computer-controlled *408 throttles open and close valves in response to electronic signals, not through force transferred from the pedal by a mechanical link. Constant, delicate adjustments of air and fuel mixture are possible. The computer's rapid processing of factors beyond the pedal's position improves fuel efficiency and engine performance.

For a computer-controlled throttle to respond to a driver's operation of the car, the computer must know what is happening with the pedal. A cable or mechanical link does not suffice for this purpose; at some point, an electronic sensor is necessary to translate the mechanical operation into digital data the computer can understand.

Before discussing sensors further we turn to the mechanical design of the pedal itself. In the traditional design a pedal can be pushed down or released but cannot have its position in the footwell adjusted by sliding the pedal forward or back. As a result, a driver who wishes to be closer or farther from the pedal must either reposition himself in the driver's seat or move the seat in some way. In cars with deep footwells these are imperfect solutions for drivers of smaller stature. To solve the problem, inventors, beginning in the 1970's, designed pedals that could be adjusted to change their location in the footwell. Important for this case are two adjustable pedals disclosed in U.S. Patent Nos. 5,010,782 (filed July 28, 1989) (Asano) and 5,460,061 (filed Sept. 17, 1993) (Redding). The Asano patent reveals a support structure that houses the pedal so that even when the pedal location is adjusted relative to the driver, one of the pedal's pivot points stays fixed. The pedal is also designed so that the force necessary to push the pedal down is the same regardless of adjustments to its location. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.

We return to sensors. Well before Engelgau applied for his challenged patent, some inventors had obtained patents involving electronic pedal sensors for computer-controlled *409 throttles. These inventions, such as the device disclosed in U.S. Patent No. 5,241,936 (filed Sept. 9, 1991) ('936), taught that it was preferable to detect the pedal's position in the pedal assembly, not in the engine. The '936 patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. U.S. Patent No. 5,063,811 (filed July 9, 1990) (Smith) taught that to prevent the **1736 wires connecting the sensor to the computer from chafing and wearing out, and to avoid grime and damage from the driver's foot, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad.

In addition to patents for pedals with integrated sensors inventors obtained patents for self-contained modular sensors. A modular sensor is designed independently of a given pedal so that it can be taken off the shelf and attached to mechanical pedals of various sorts, enabling the pedals to be used in automobiles with computer-controlled throttles. One such sensor was disclosed in U.S. Patent No. 5,385,068 (filed Dec. 18, 1992) ('068). In 1994, Chevrolet manufactured a line of trucks using modular sensors “attached to the pedal assembly support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates in operation.” 298 F.Supp.2d 581, 589 (E.D.Mich.2003).

The prior art contained patents involving the placement of sensors on adjustable pedals as well. For example, U.S. Patent No. 5,819,593 (filed Aug. 17, 1995) (Rixon) discloses an adjustable pedal assembly with an electronic sensor for detecting the pedal's position. In the Rixon pedal the sensor is located in the pedal footpad. The Rixon pedal was known to suffer from wire chafing when the pedal was depressed and released.

This short account of pedal and sensor technology leads to the instant case.

B
KSR, a Canadian company, manufactures and supplies auto parts, including pedal systems. Ford Motor Company hired *410 KSR in 1998 to supply an adjustable pedal system for various lines of automobiles with cable-actuated throttle controls. KSR developed an adjustable mechanical pedal for Ford and obtained U.S. Patent No. 6,151,986 (filed July 16, 1999) ('986) for the design. In 2000, KSR was chosen by General Motors Corporation (GMC or GM) to supply adjustable pedal systems for Chevrolet and GMC light trucks that used engines with computer-controlled throttles. To make the '986 pedal compatible with the trucks, KSR merely took that design and added a modular sensor.

Teleflex is a rival to KSR in the design and manufacture of adjustable pedals. As noted, it is the exclusive licensee of the Engelgau patent. Engelgau filed the patent application on August 22, 2000 as a continuation of a previous application for U.S. Patent No. 6,109,241, which was filed on January 26, 1999. He has sworn he invented the patent's subject matter on February 14, 1998. The Engelgau patent discloses an adjustable electronic pedal described in the specification as a “simplified vehicle control pedal assembly that is less expensive, and which uses fewer parts and is easier to package within the vehicle.” Engelgau, col. 2, lines 2-5, Supplemental App. 6. Claim 4 of the patent, at issue here, describes:

“A vehicle control pedal apparatus comprising:

a support adapted to be mounted to a vehicle structure;

an adjustable pedal assembly having a pedal arm moveable in for[e] and aft directions with respect to said support;

a pivot for pivotally supporting said adjustable pedal assembly with respect to said support and defining a pivot axis; and

an electronic control attached to said support for controlling a vehicle system;

said apparatus characterized by said electronic control being responsive to said pivot for providing a signal that corresponds to pedal arm position as said pedal arm pivots*411 about said pivot **1737 axis between rest and applied positions wherein the position of said pivot remains constant while said pedal arm moves in fore and aft directions with respect to said pivot.” Id., col. 6, lines 17-36, Supplemental App. 8 (diagram numbers omitted).

We agree with the District Court that the claim discloses “a position-adjustable pedal assembly with an electronic pedal position sensor attached to the support member of the pedal assembly. Attaching the sensor to the support member allows the sensor to remain in a fixed position while the driver adjusts the pedal.” 298 F.Supp.2d, at 586-587.

Before issuing the Engelgau patent the U.S. Patent and Trademark Office (PTO) rejected one of the patent claims that was similar to, but broader than, the present claim 4. The claim did not include the requirement that the sensor be placed on a fixed pivot point. The PTO concluded the claim was an obvious combination of the prior art disclosed in Redding and Smith, explaining:

“ ‘Since the prior ar[t] references are from the field of endeavor, the purpose disclosed ... would have been recognized in the pertinent art of Redding. Therefore it would have been obvious ... to provide the device of Redding with the ... means attached to a support member as taught by Smith.’ ” Id., at 595.

In other words Redding provided an example of an adjustable pedal and Smith explained how to mount a sensor on a pedal's support structure, and the rejected patent claim merely put these two teachings together.

Although the broader claim was rejected, claim 4 was later allowed because it included the limitation of a fixed pivot point, which distinguished the design from Redding's. Ibid. Engelgau had not included Asano among the prior art references, and Asano was not mentioned in the patent's prosecution. Thus, the PTO did not have before it an adjustable *412 pedal with a fixed pivot point. The patent issued on May 29, 2001 and was assigned to Teleflex.

Upon learning of KSR's design for GM, Teleflex sent a warning letter informing KSR that its proposal would violate the Engelgau patent. “ ‘Teleflex believes that any supplier of a product that combines an adjustable pedal with an electronic throttle control necessarily employs technology covered by one or more’ ” of Teleflex's patents. Id., at 585. KSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for infringement, asserting KSR's pedal infringed the Engelgau patent and two other patents. Ibid. Teleflex later abandoned its claims regarding the other patents and dedicated the patents to the public. The remaining contention was that KSR's pedal system for GM infringed claim 4 of the Engelgau patent. Teleflex has not argued that the other three claims of the patent are infringed by KSR's pedal, nor has Teleflex argued that the mechanical adjustable pedal designed by KSR for Ford infringed any of its patents.

C
The District Court granted summary judgment in KSR's favor. After reviewing the pertinent history of pedal design, the scope of the Engelgau patent, and the relevant prior art, the court considered the validity of the contested claim. By direction of 35 U.S.C. § 282, an issued patent is presumed valid. The District Court applied Graham's framework to determine whether under summary-judgment standards KSR had overcome the presumption and demonstrated that claim 4 was obvious in light of the prior art in existence when **1738 the claimed subject matter was invented. See § 102(a).

The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for *413 vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.

Following Graham's direction, the court compared the teachings of the prior art to the claims of Engelgau. It found “little difference.” 298 F.Supp.2d, at 590. Asano taught everything contained in claim 4 except the use of a sensor to detect the pedal's position and transmit it to the computer controlling the throttle. That additional aspect was revealed in sources such as the '068 patent and the sensors used by Chevrolet.

Under the controlling cases from the Court of Appeals for the Federal Circuit, however, the District Court was not permitted to stop there. The court was required also to apply the TSM test. The District Court held KSR had satisfied the test. It reasoned (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to the wire chafing problems in Rixon, namely locating the sensor on the fixed structure of the pedal. This could lead to the combination of Asano, or a pedal like it, with a pedal position sensor.

The conclusion that the Engelgau design was obvious was supported, in the District Court's view, by the PTO's rejection of the broader version of claim 4. Had Engelgau included Asano in his patent application, it reasoned, the PTO would have found claim 4 to be an obvious combination of Asano and Smith, as it had found the broader version an obvious combination of Redding and Smith. As a final matter, the District Court held that the secondary factor of Teleflex's commercial success with pedals based on Engelgau's design did not alter its conclusion. The District Court granted summary judgment for KSR.

With principal reliance on the TSM test, the Court of Appeals reversed. It ruled the District Court had not been strict enough in applying the test, having failed to make *414 “ ‘finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention’ ... to attach an electronic control to the support bracket of the Asano assembly.” 119 Fed.Appx., at 288 (brackets in original) (quoting In re Kotzab, 217 F.3d 1365, 1371 (C.A.Fed.2000)). The Court of Appeals held that the District Court was incorrect that the nature of the problem to be solved satisfied this requirement because unless the “prior art references address[ed] the precise problem that the patentee was trying to solve,” the problem would not motivate an inventor to look at those references. 119 Fed.Appx., at 288.

Here, the Court of Appeals found, the Asano pedal was designed to solve the “ ‘constant ratio problem’ ”-that is, to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted-whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. Ibid. As for Rixon, the court explained, that pedal suffered from the problem of wire chafing but was not designed to solve it. In the court's view Rixon did not teach anything helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not “necessarily go to the issue of motivation **1739 to attach the electronic control on the support bracket of the pedal assembly.” Ibid. When the patents were interpreted in this way, the Court of Appeals held, they would not have led a person of ordinary skill to put a sensor on the sort of pedal described in Asano.

That it might have been obvious to try the combination of Asano and a sensor was likewise irrelevant, in the court's view, because “ ‘ “[o]bvious to try” has long been held not to constitute obviousness.’ ” Id., at 289 (quoting In re Deuel, 51 F.3d 1552, 1559 (C.A.Fed.1995)).

The Court of Appeals also faulted the District Court's consideration of the PTO's rejection of the broader version of claim 4. The District Court's role, the Court of Appeals explained, was not to speculate regarding what the PTO might *415 have done had the Engelgau patent mentioned Asano. Rather, the court held, the District Court was obliged first to presume that the issued patent was valid and then to render its own independent judgment of obviousness based on a review of the prior art. The fact that the PTO had rejected the broader version of claim 4, the Court of Appeals said, had no place in that analysis.

The Court of Appeals further held that genuine issues of material fact precluded summary judgment. Teleflex had proffered statements from one expert that claim 4 “ ‘was a simple, elegant, and novel combination of features,’ ” 119 Fed.Appx., at 290, compared to Rixon, and from another expert that claim 4 was nonobvious because, unlike in Rixon, the sensor was mounted on the support bracket rather than the pedal itself. This evidence, the court concluded, sufficed to require a trial.

II
A
We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here. To be sure, Graham recognized the need for “uniformity and definiteness.” 383 U.S., at 18, 86 S.Ct. 684. Yet the principles laid down in Graham reaffirmed the “functional approach” of Hotchkiss, 11 How. 248, 13 L.Ed. 683. See 383 U.S., at 12, 86 S.Ct. 684. To this end, Graham set forth a broad inquiry and invited courts, where appropriate, to look at any secondary considerations that would prove instructive. Id., at 17, 86 S.Ct. 684.

Neither the enactment of § 103 nor the analysis in Graham disturbed this Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art . For over a half century, the Court has held that a “patent for a combination *416 which only unites old elements with no change in their respective functions ... obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful men.” Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162 (1950). This is a principal reason for declining to allow patents for what is obvious. The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. Three cases decided after Graham illustrate the application of this doctrine.

In United States v. Adams, 383 U.S. 39, 40, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966), a companion case to Graham, the Court considered the obviousness of a “wet battery” that varied from prior designs in two ways: **1740 It contained water, rather than the acids conventionally employed in storage batteries; and its electrodes were magnesium and cuprous chloride, rather than zinc and silver chloride. The Court recognized that when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result. 383 U.S., at 50-51, 86 S.Ct. 708. It nevertheless rejected the Government's claim that Adams's battery was obvious. The Court relied upon the corollary principle that when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be nonobvious. Id., at 51-52, 86 S.Ct. 708. When Adams designed his battery, the prior art warned that risks were involved in using the types of electrodes he employed. The fact that the elements worked together in an unexpected and fruitful manner supported the conclusion that Adams's design was not obvious to those skilled in the art.

In Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969), the Court elaborated on this approach. The subject matter of the patent before the Court was a device combining two pre-existing elements: a radiant-heat *417 burner and a paving machine. The device, the Court concluded, did not create some new synergy: The radiant-heat burner functioned just as a burner was expected to function; and the paving machine did the same. The two in combination did no more than they would in separate, sequential operation. Id., at 60-62, 90 S.Ct. 305. In those circumstances, “while the combination of old elements performed a useful function, it added nothing to the nature and quality of the radiant-heat burner already patented,” and the patent failed under § 103. Id., at 62, 90 S.Ct. 305 (footnote omitted).

Finally, in Sakraida v. Ag Pro, Inc., 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976), the Court derived from the precedents the conclusion that when a patent “simply arranges old elements with each performing the same function it had been known to perform” and yields no more than one would expect from such an arrangement, the combination is obvious. Id., at 282, 96 S.Ct. 1532.

[1] Headnote Citing References The principles underlying these cases are instructive when the question is whether a patent claiming the combination of elements of prior art is obvious. When a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. Sakraida and Anderson's-Black Rock are illustrative-a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.

Following these principles may be more difficult in other cases than it is here because the claimed subject matter may involve more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. *418 Often, it will be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having **1741 ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue. To facilitate review, this analysis should be made explicit. See In re Kahn, 441 F.3d 977, 988 (C.A.Fed.2006) (“[R]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness”). As our precedents make clear, however, the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.

B
[2] Headnote Citing References When it first established the requirement of demonstrating a teaching, suggestion, or motivation to combine known elements in order to show that the combination is obvious, the Court of Customs and Patent Appeals captured a helpful insight. See Application of Bergel, 48 C.C.P.A. 1102, 292 F.2d 955, 956-957 (1961). As is clear from cases such as Adams, a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. Although common sense directs one to look with care at a patent application that claims as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does. This is so because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity *419 will be combinations of what, in some sense, is already known.

Helpful insights, however, need not become rigid and mandatory formulas; and when it is so applied, the TSM test is incompatible with our precedents. The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents. The diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility.

In the years since the Court of Customs and Patent Appeals set forth the essence of the TSM test, the Court of Appeals no doubt has applied the test in accord with these principles in many cases. There is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis. But when a court transforms the general principle into a rigid rule that limits the obviousness inquiry, as the Court of Appeals did here, it errs.

C
[3] Headnote Citing References[4] Headnote Citing References The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the **1742 patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways *420 in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims.

[5] Headnote Citing References The first error of the Court of Appeals in this case was to foreclose this reasoning by holding that courts and patent examiners should look only to the problem the patentee was trying to solve. 119 Fed.Appx., at 288. The Court of Appeals failed to recognize that the problem motivating the patentee may be only one of many addressed by the patent's subject matter. The question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art. Under the correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.

The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. Ibid. The primary purpose of Asano was solving the constant ratio problem; so, the court concluded, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. Ibid. Common sense teaches, however, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, the design provided an obvious example of an adjustable pedal with a fixed pivot point; and the prior art was replete with patents indicating that a fixed pivot point was an ideal mount for a sensor. The idea that a designer hoping to make an adjustable electronic pedal would ignore Asano because Asano was designed to solve the constant *421 ratio problem makes little sense. A person of ordinary skill is also a person of ordinary creativity, not an automaton.

[6] Headnote Citing References The same constricted analysis led the Court of Appeals to conclude, in error, that a patent claim cannot be proved obvious merely by showing that the combination of elements was “obvious to try.” Id., at 289 (internal quotation marks omitted). When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.

The Court of Appeals, finally, drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning. See Graham, 383 U.S., at 36, 86 S.Ct. 684 (warning against a “temptation to read into the prior art the teachings of the invention in issue” and instructing courts to “ ‘guard against slipping into the use of hindsight’ ” (quoting Monroe Auto Equipment Co. v. Heckethorn Mfg. & Supply Co., 332 F.2d 406, 412 (C.A.6 1964))). Rigid preventative rules that deny factfinders recourse to common sense, however, are **1743 neither necessary under our case law nor consistent with it.

We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter. See, e.g., DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356, 1367 (2006) (“Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense”); Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (2006) (“There is flexibility in our obviousness jurisprudence because a motivation*422 may be found implicitly in the prior art. We do not have a rigid test that requires an actual teaching to combine ...”). Those decisions, of course, are not now before us and do not correct the errors of law made by the Court of Appeals in this case. The extent to which they may describe an analysis more consistent with our earlier precedents and our decision here is a matter for the Court of Appeals to consider in its future cases. What we hold is that the fundamental misunderstandings identified above led the Court of Appeals in this case to apply a test inconsistent with our patent law decisions.

III
[7] Headnote Citing References When we apply the standards we have explained to the instant facts, claim 4 must be found obvious. We agree with and adopt the District Court's recitation of the relevant prior art and its determination of the level of ordinary skill in the field. As did the District Court, we see little difference between the teachings of Asano and Smith and the adjustable electronic pedal disclosed in claim 4 of the Engelgau patent. A person having ordinary skill in the art could have combined Asano with a pedal position sensor in a fashion encompassed by claim 4, and would have seen the benefits of doing so.

A
Teleflex argues in passing that the Asano pedal cannot be combined with a sensor in the manner described by claim 4 because of the design of Asano's pivot mechanisms. See Brief for Respondents 48-49, and n. 17. Therefore, Teleflex reasons, even if adding a sensor to Asano was obvious, that does not establish that claim 4 encompasses obvious subject matter. This argument was not, however, raised before the District Court. There Teleflex was content to assert only that the problem motivating the invention claimed by the Engelgau patent would not lead to the solution of combining of Asano with a sensor. See Teleflex's Response to KSR's Motion*423 for Summary Judgment of Invalidity in No. 02-74586 (ED Mich.), pp. 18-20, App. 144a-146a. It is also unclear whether the current argument was raised before the Court of Appeals, where Teleflex advanced the nonspecific, conclusory contention that combining Asano with a sensor would not satisfy the limitations of claim 4. See Brief for Plaintiffs-Appellants in No. 04-1152 (CA Fed.), pp. 42-44. Teleflex's own expert declarations, moreover, do not support the point Teleflex now raises. See Declaration of Clark J. Radcliffe, Ph.D., Supplemental App. 204-207; Declaration of Timothy L. Andresen, id., at 208-210. The only statement in either declaration that might bear on the argument is found in the Radcliffe declaration:

“Asano ... and Rixon ... are complex mechanical linkage-based devices that are expensive to produce and assemble and difficult to package. It is exactly these difficulties with prior art designs that [Engelgau] resolves. The use of an adjustable pedal with a single pivot reflecting pedal position combined with an electronic control mounted between the **1744 support and the adjustment assembly at that pivot was a simple, elegant, and novel combination of features in the Engelgau '565 patent.” Id., at 206, ¶ 16.

Read in the context of the declaration as a whole this is best interpreted to mean that Asano could not be used to solve “[t]he problem addressed by Engelgau '565[:] to provide a less expensive, more quickly assembled, and smaller package adjustable pedal assembly with electronic control.” Id., at 205, ¶ 10.

The District Court found that combining Asano with a pivot-mounted pedal position sensor fell within the scope of claim 4. 298 F.Supp.2d, at 592-593. Given the sigificance of that finding to the District Court's judgment, it is apparent that Teleflex would have made clearer challenges to it if it intended to preserve this claim. In light of Teleflex's failure*424 to raise the argument in a clear fashion, and the silence of the Court of Appeals on the issue, we take the District Court's conclusion on the point to be correct.

B
The District Court was correct to conclude that, as of the time Engelgau designed the subject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with a pivot-mounted pedal position sensor. There then existed a marketplace that created a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for achieving this advance. The Court of Appeals considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet truckline and disclosed in the '068 patent. The District Court employed this narrow inquiry as well, though it reached the correct result nevertheless. The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading Asano with a sensor.

In automotive design, as in many other fields, the interaction of multiple components means that changing one component often requires the others to be modified as well. Technological developments made it clear that engines using computer-controlled throttles would become standard. As a result, designers might have decided to design new pedals from scratch; but they also would have had reason to make pre-existing pedals work with the new engines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now accused of infringing the Engelgau patent.

For a designer starting with Asano, the question was where to attach the sensor. The consequent legal question, then, is whether a pedal designer of ordinary skill starting with Asano would have found it obvious to put the sensor on *425 a fixed pivot point. The prior art discussed above leads us to the conclusion that attaching the sensor where both KSR and Engelgau put it would have been obvious to a person of ordinary skill.

The '936 patent taught the utility of putting the sensor on the pedal device, not in the engine. Smith, in turn, explained to put the sensor not on the pedal's footpad but instead on its support structure. And from the known wire-chafing problems of Rixon, and Smith's teaching that “the pedal assemblies must not precipitate any motion in the connecting wires,” Smith, col. 1, lines 35-37, Supplemental App. 274, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious nonmoving point on the structure from which a sensor can **1745 easily detect the pedal's position is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor on a pivot, thereby designing an adjustable electronic pedal covered by claim 4.

Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Following similar steps to those just explained, a designer would learn from Smith to avoid sensor movement and would come, thereby, to Asano because Asano disclosed an adjustable pedal with a fixed pivot.

Teleflex indirectly argues that the prior art taught away from attaching a sensor to Asano because Asano in its view is bulky, complex, and expensive. The only evidence Teleflex marshals in support of this argument, however, is the Radcliffe declaration, which merely indicates that Asano would not have solved Engelgau's goal of making a small, simple, and inexpensive pedal. What the declaration does not indicate is that Asano was somehow so flawed that there was no reason to upgrade it, or pedals like it, to be compatible with modern engines. Indeed, Teleflex's own declarations*426 refute this conclusion. Dr. Radcliffe states that Rixon suffered from the same bulk and complexity as did Asano. See id., at 206. Teleflex's other expert, however, explained that Rixon was itself designed by adding a sensor to a pre-existing mechanical pedal. See id., at 209. If Rixon's base pedal was not too flawed to upgrade, then Dr. Radcliffe's declaration does not show Asano was either. Teleflex may have made a plausible argument that Asano is inefficient as compared to Engelgau's preferred embodiment, but to judge Asano against Engelgau would be to engage in the very hindsight bias Teleflex rightly urges must be avoided. Accordingly, Teleflex has not shown anything in the prior art that taught away from the use of Asano.

Like the District Court, finally, we conclude Teleflex has shown no secondary factors to dislodge the determination that claim 4 is obvious. Proper application of Graham and our other precedents to these facts therefore leads to the conclusion that claim 4 encompassed obvious subject matter. As a result, the claim fails to meet the requirement of § 103.

We need not reach the question whether the failure to disclose Asano during the prosecution of Engelgau voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption-that the PTO, in its expertise, has approved the claim-seems much diminished here.

IV
[8] Headnote Citing References A separate ground the Court of Appeals gave for reversing the order for summary judgment was the existence of a dispute over an issue of material fact. We disagree with the Court of Appeals on this point as well. To the extent the court understood the Graham approach to exclude the possibility of summary judgment when an expert provides a conclusory affidavit addressing the question of obviousness, it misunderstood the role expert testimony plays in the analysis.*427 In considering summary judgment on that question the district court can and should take into account expert testimony, which may resolve or keep open certain questions of fact. That is not the end of the issue, however. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the content of the prior art, the scope of the patent **1746 claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate. Nothing in the declarations proffered by Teleflex prevented the District Court from reaching the careful conclusions underlying its order for summary judgment in this case.

* * *
We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. See U.S. Const., Art. I, § 8, cl. 8. These premises led to the bar on patents claiming obvious subject matter established in Hotchkiss and codified in § 103. Application of the bar must not be confined within a test or formulation too constrained to serve its purpose.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2007.
KSR Intern. Co. v. Teleflex Inc.
550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705, 75 USLW 4289, 82 U.S.P.Q.2d 1385, 07 Cal. Daily Op. Serv. 4654, 20 Fla. L. Weekly Fed. S 248

KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)

2010-04-12T14:48:10Z

Cep503: Created page with 'Supreme Court of the United States KSR INTERNATIONAL CO., Petitioner, v. TELEFLEX INC. et al. No. 04-1350. Argued Nov. 28, 2006. Decided April 30, 2007. Background: Exclusive l…'

Supreme Court of the United States
KSR INTERNATIONAL CO., Petitioner,
v.
TELEFLEX INC. et al.

No. 04-1350.
Argued Nov. 28, 2006.
Decided April 30, 2007.

Background: Exclusive licensee of patent for position-adjustable vehicle pedal assembly sued competitor for infringement. The United States District Court for the Eastern District of Michigan, 298 F.Supp.2d 581, granted summary judgment for competitor on the ground of obviousness. Licensee appealed. The United States Court of Appeals for the Federal Circuit, 119 Fed.Appx. 282, reversed. Certiorari was granted.

Holding: The Supreme Court, Justice Kennedy, held that patent was invalid as obvious.

Reversed and remanded.

West Headnotes

[1] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol291 Patents
Key Number Symbol291II Patentability
Key Number Symbol291II(A) Invention; Obviousness
Key Number Symbol291k26 Combination
Key Number Symbol291k26(1.1) k. Use of old or well-known elements. Most Cited Cases

Patent claiming the combination of elements of prior art is obvious if the improvement is no more than the predictable use of prior art elements according to their established functions. 35 U.S.C.A. § 103.

[2] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol291 Patents
Key Number Symbol291II Patentability
Key Number Symbol291II(A) Invention; Obviousness
Key Number Symbol291k26 Combination
Key Number Symbol291k26(1.1) k. Use of old or well-known elements. Most Cited Cases

Patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. 35 U.S.C.A. § 103.

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Key Number Symbol291 Patents
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Key Number Symbol291II(A) Invention; Obviousness
Key Number Symbol291k16.5 State of Prior Art and Advancement Therein
Key Number Symbol291k16.5(1) k. In general. Most Cited Cases

In determining whether subject matter of patent claim is obvious, neither the particular motivation nor the avowed purpose of patentee controls; what matters is the objective reach of the claim. 35 U.S.C.A. § 103.

[4] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol291 Patents
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Key Number Symbol291II(A) Invention; Obviousness
Key Number Symbol291k16.5 State of Prior Art and Advancement Therein
Key Number Symbol291k16.5(4) k. Remedying defects or solving problems. Most Cited Cases

Patent's subject matter can be proved obvious by noting that there existed at time of invention a known problem for which there was an obvious solution encompassed by patent's claims. 35 U.S.C.A. § 103.

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Key Number Symbol291 Patents
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Key Number Symbol291k16.5(4) k. Remedying defects or solving problems. Most Cited Cases

In determining whether patent combining known elements is obvious, question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art; under correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide reason for combining the elements in the manner claimed. 35 U.S.C.A. § 103.

[6] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol291 Patents
Key Number Symbol291II Patentability
Key Number Symbol291II(A) Invention; Obviousness
Key Number Symbol291k16.5 State of Prior Art and Advancement Therein
Key Number Symbol291k16.5(4) k. Remedying defects or solving problems. Most Cited Cases

Key Number Symbol291 Patents Headnote Citing References KeyCite Citing References for this Headnote
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Key Number Symbol291k17 Nature and Degree of Skill Involved
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When there is design need or market pressure to solve a problem and there are finite number of identified, predictable solutions, person of ordinary skill has good reason to pursue the known options within his or her technical grasp, and if this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense; in that instance, the fact that a combination was obvious to try might show that patent for it was obvious. 35 U.S.C.A. § 103.

[7] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol291 Patents
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Key Number Symbol291k16.22 k. Automobiles and vehicles. Most Cited Cases

Patent claim disclosing position-adjustable pedal assembly with electronic pedal position sensor attached to support member of pedal assembly was invalid as obvious, in view of patent for adjustable pedal with a fixed pivot, and patent teaching a solution to wire chafing problems, namely locating the sensor on support structure; it was obvious to person of ordinary skill in the art to combine first patent with pivot-mounted pedal position sensor. 35 U.S.C.A. § 103.

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Key Number Symbol291 Patents
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Key Number Symbol291XII(C) Suits in Equity
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Where content of prior art, scope of patent claim, and level of ordinary skill in the art are not in material dispute, and obviousness of claim is apparent in light of these factors, summary judgment is appropriate. 35 U.S.C.A. § 103.

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Key Number Symbol291 Patents
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5,010,782, 5,063,811, 5,241,936, 5,385,068, 5,460,061, 5,819,593, 6,151,976. Cited as Prior Art.

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Key Number Symbol291 Patents
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6,109,241. Cited.

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6,237,565. Invalid.

**1728 *398 Syllabus FN*

FN* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

To control a conventional automobile's speed, the driver depresses or releases the gas pedal, which interacts with the throttle via a cable or other mechanical link. Because the pedal's position in the footwell normally cannot be adjusted, a driver wishing to be closer or farther from it must either reposition himself in the seat **1729 or move the seat, both of which can be imperfect solutions for smaller drivers in cars with deep footwells. This prompted inventors to design and patent pedals that could be adjusted to change their locations. The Asano patent reveals a support structure whereby, when the pedal location is adjusted, one of the pedal's pivot points stays fixed. Asano is also designed so that the force necessary to depress the pedal is the same regardless of location adjustments. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.

In newer cars, computer-controlled throttles do not operate through force transferred from the pedal by a mechanical link, but open and close valves in response to electronic signals. For the computer to know what is happening with the pedal, an electronic sensor must translate the mechanical operation into digital data. Inventors had obtained a number of patents for such sensors. The so-called '936 patent taught that it was preferable to detect the pedal's position in the pedal mechanism, not in the engine, so the patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. The Smith patent taught that to prevent the wires connecting the sensor to the computer from chafing and wearing out, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad. Inventors had also patented self-contained modular sensors, which can be taken off the shelf and attached to any mechanical pedal to allow it to function with a computer-controlled throttle. The '068 patent disclosed one such sensor. Chevrolet also manufactured trucks using modular sensors attached to the pedal support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates. Other patents disclose electronic sensors attached to adjustable pedal assemblies. For example, the Rixon patent locates the sensor in the pedal footpad, but is known for wire chafing.

*399 After petitioner KSR developed an adjustable pedal system for cars with cable-actuated throttles and obtained its '976 patent for the design, General Motors Corporation (GMC) chose KSR to supply adjustable pedal systems for trucks using computer-controlled throttles. To make the '976 pedal compatible with the trucks, KSR added a modular sensor to its design. Respondents (Teleflex) hold the exclusive license for the Engelgau patent, claim 4 of which discloses a position-adjustable pedal assembly with an electronic pedal position sensor attached a fixed pivot point. Despite having denied a similar, broader claim, the U.S. Patent and Trademark Office (PTO) had allowed claim 4 because it included the limitation of a fixed pivot position, which distinguished the design from Redding's. Asano was neither included among the Engelgau patent's prior art references nor mentioned in the patent's prosecution, and the PTO did not have before it an adjustable pedal with a fixed pivot point. After learning of KSR's design for GMC, Teleflex sued for infringement, asserting that KSR's pedal system infringed the Engelgau patent's claim 4. KSR countered that claim 4 was invalid under § 103 of the Patent Act, which forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.”

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545, set out an objective analysis for applying § 103: “[T]he scope and content of the prior art are ... determined; differences between the prior art and the **1730 claims at issue are ... ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” While the sequence of these questions might be reordered in any particular case, the factors define the controlling inquiry. However, seeking to resolve the obviousness question with more uniformity and consistency, the Federal Circuit has employed a “teaching, suggestion, or motivation” (TSM) test, under which a patent claim is only proved obvious if the prior art, the problem's nature, or the knowledge of a person having ordinary skill in the art reveals some motivation or suggestion to combine the prior art teachings.

The District Court granted KSR summary judgment. After reviewing pedal design history, the Engelgau patent's scope, and the relevant prior art, the court considered claim 4's validity, applying Graham's framework to determine whether under summary-judgment standards *400 KSR had demonstrated that claim 4 was obvious. The court found “little difference” between the prior art's teachings and claim 4: Asano taught everything contained in the claim except using a sensor to detect the pedal's position and transmit it to a computer controlling the throttle. That additional aspect was revealed in, e.g., the '068 patent and Chevrolet's sensors. The court then held that KSR satisfied the TSM test, reasoning (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to Rixon's chafing problems by positioning the sensor on the pedal's fixed structure, which could lead to the combination of a pedal like Asano with a pedal position sensor.

Reversing, the Federal Circuit ruled the District Court had not applied the TSM test strictly enough, having failed to make findings as to the specific understanding or principle within a skilled artisan's knowledge that would have motivated one with no knowledge of the invention to attach an electronic control to the Asano assembly's support bracket. The Court of Appeals held that the District Court's recourse to the nature of the problem to be solved was insufficient because, unless the prior art references addressed the precise problem that the patentee was trying to solve, the problem would not motivate an inventor to look at those references. The appeals court found that the Asano pedal was designed to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted, whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. The Rixon pedal, said the court, suffered from chafing but was not designed to solve that problem and taught nothing helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not necessarily go to the issue of motivation to attach the electronic control on the pedal assembly's support bracket. So interpreted, the court held, the patents would not have led a person of ordinary skill to put a sensor on an Asano-like pedal. That it might have been obvious to try that combination was likewise irrelevant. Finally, the court held that genuine issues of material fact precluded summary judgment.

Held: The Federal Circuit addressed the obviousness question in a narrow, rigid manner that is inconsistent with § 103 and this Court's precedents. KSR provided **1731 convincing evidence that mounting an available sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art and that the benefit of doing so would be obvious. Its arguments, and the record, demonstrate that the Engelgau patent's claim 4 is obvious. Pp. 1739 - 1746.

*401 1. Graham provided an expansive and flexible approach to the obviousness question that is inconsistent with the way the Federal Circuit applied its TSM test here. Neither § 103's enactment nor Graham's analysis disturbed the Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art. See Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162. Such a combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. See, e.g., United States v. Adams, 383 U.S. 39, 50-52, 86 S.Ct. 708, 15 L.Ed.2d 572. When a work is available in one field, design incentives and other market forces can prompt variations of it, either in the same field or in another. If a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, § 103 likely bars its patentability. Moreover, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond that person's skill. A court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions. Following these principles may be difficult if the claimed subject matter involves more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. To determine whether there was an apparent reason to combine the known elements in the way a patent claims, it will often be necessary to look to interrelated teachings of multiple patents; to the effects of demands known to the design community or present in the marketplace; and to the background knowledge possessed by a person having ordinary skill in the art. To facilitate review, this analysis should be made explicit. But it need not seek out precise teachings directed to the challenged claim's specific subject matter, for a court can consider the inferences and creative steps a person of ordinary skill in the art would employ. Pp. 1739 - 1741.

(a) The TSM test captures a helpful insight: A patent composed of several elements is not proved obvious merely by demonstrating that each element was, independently, known in the prior art. Although common sense directs caution as to a patent application claiming as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the art to combine the elements as the new invention does. Inventions usually rely upon building blocks long since uncovered, and claimed discoveries almost necessarily will be combinations of what, in some sense, is already known. Helpful insights,*402 however, need not become rigid and mandatory formulas. If it is so applied, the TSM test is incompatible with this Court's precedents. The diversity of inventive pursuits and of modern technology counsels against confining the obviousness analysis by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasizing the importance of published articles and the explicit **1732 content of issued patents. In many fields there may be little discussion of obvious techniques or combinations, and market demand, rather than scientific literature, may often drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, for patents combining previously known elements, deprive prior inventions of their value or utility. Since the TSM test was devised, the Federal Circuit doubtless has applied it in accord with these principles in many cases. There is no necessary inconsistency between the test and the Graham analysis. But a court errs where, as here, it transforms general principle into a rigid rule limiting the obviousness inquiry. Pp. 1740 - 1741.

(b) The flaws in the Federal Circuit's analysis relate mostly to its narrow conception of the obviousness inquiry consequent in its application of the TSM test. The Circuit first erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve. Under the correct analysis, any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed. Second, the appeals court erred in assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem. The court wrongly concluded that because Asano's primary purpose was solving the constant ratio problem, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. It is common sense that familiar items may have obvious uses beyond their primary purposes, and a person of ordinary skill often will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, it provided an obvious example of an adjustable pedal with a fixed pivot point, and the prior art was replete with patents indicating that such a point was an ideal mount for a sensor. Third, the court erred in concluding that a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try. When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of *403 ordinary skill and common sense. Finally, the court drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. Rigid preventative rules that deny recourse to common sense are neither necessary under, nor consistent with, this Court's case law. Pp. 1741 - 1743.

2. Application of the foregoing standards demonstrates that claim 4 is obvious. Pp. 1743 - 1746.

(a) The Court rejects Teleflex's argument that the Asano pivot mechanism's design prevents its combination with a sensor in the manner claim 4 describes. This argument was not raised before the District Court, and it is unclear whether it was raised before the Federal Circuit. Given the significance of the District Court's finding that combining Asano with a pivot-mounted pedal position sensor fell within claim 4's scope, it is apparent that Teleflex would have made clearer challenges if it intended to preserve this claim. Its failure to clearly raise the argument, and the appeals court's silence on the issue, lead this Court to accept the District Court's conclusion. Pp. 1743 - 1744.

**1733 (b) The District Court correctly concluded that when Engelgau designed the claim 4 subject matter, it was obvious to a person of ordinary skill in the art to combine Asano with a pivot-mounted pedal position sensor. There then was a marketplace creating a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for doing so. The Federal Circuit considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet trucks and disclosed in the '068 patent. The proper question was whether a pedal designer of ordinary skill in the art, facing the wide range of needs created by developments in the field, would have seen an obvious benefit to upgrading Asano with a sensor. For such a designer starting with Asano, the question was where to attach the sensor. The '936 patent taught the utility of putting the sensor on the pedal device. Smith, in turn, explained not to put the sensor on the pedal footpad, but instead on the structure. And from Rixon's known wire-chafing problems, and Smith's teaching that the pedal assemblies must not precipitate any motion in the connecting wires, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious such point is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor there. Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Teleflex has not shown anything in the prior art that taught away from the *404 use of Asano, nor any secondary factors to dislodge the determination that claim 4 is obvious. Pp. 1744 - 1746.

3. The Court disagrees with the Federal Circuit's holding that genuine issues of material fact precluded summary judgment. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the prior art's content, the patent claim's scope, and the level of ordinary skill in the art are not in material dispute and the claim's obviousness is apparent, summary judgment is appropriate. Pp. 1745 - 1746.

119 Fed.Appx. 282, reversed and remanded.

KENNEDY, J., delivered the opinion for a unanimous Court.

James W. Dabney, for petitioner.

Thomas G. Hungar, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Thomas C. Goldstein, for respondents.

John F. Duffy, Fried, Frank, Harris, Shriver & Jacobson LLP, Of Counsel, James W. Dabney, Counsel of Record, New York, New York, Stephen S. Rabinowitz, Henry C. Lebowitz, Mitchell E. Epner, Darcy M. Goddard, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York, Attorneys for Petitioner.

Kenneth C. Bass, III, Robert G. Sterne, Sterne, Kessler Goldstein & Fox P.L.L.C., Washington, DC, Rodger D. Young, Steven Susser, David Poirier, Young & Susser, P.C., Southfield, Thomas C. Goldstein, Counsel of Record, Michael A. O'Shea, Garreth A. Sarosi, Christopher R. Pudelski, Sarah C. Rispin, Akin Gump Strauss Hauer & Feld, LLP, Washington, DC, Samuel J. Haidle, David M. LaPrairie, Howard & Howard, Attorneys, P.C., Bloomfield Hills, MI, Tracy L. Casadio, **1734 Elizabeth H. Rader, Akin Gump Strauss Hauer & Feld, LLP, Los Angeles, CA, Brief for the Respondents.

Justice KENNEDY delivered the opinion of the Court.

*405 Teleflex Incorporated and its subsidiary Technology Holding Company-both referred to here as Teleflex-sued KSR International Company for patent infringement. The patent at issue, United States Patent No. 6,237,565 B1, is entitled*406 “Adjustable Pedal Assembly With Electronic Throttle Control.” Supplemental App. 1. The patentee is Steven J. Engelgau, and the patent is referred to as “the Engelgau patent.” Teleflex holds the exclusive license to the patent.

Claim 4 of the Engelgau patent describes a mechanism for combining an electronic sensor with an adjustable automobile pedal so the pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine. When Teleflex accused KSR of infringing the Engelgau patent by adding an electronic sensor to one of KSR's previously designed pedals, KSR countered that claim 4 was invalid under the Patent Act, 35 U.S.C. § 103, (2000 ed. and Supp. IV), because its subject matter was obvious.

Section 103 forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Court set out a framework for applying the statutory language of § 103, language itself based on the logic of the earlier decision in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683 (1851), and its progeny. See 383 U.S., at 15-17, 86 S.Ct. 684. The analysis is objective:

“Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” Id., at 17-18, 86 S.Ct. 684.

*407 While the sequence of these questions might be reordered in any particular case, the factors continue to define the inquiry that controls. If a court, or patent examiner, conducts this analysis and concludes the claimed subject matter was obvious, the claim is invalid under § 103.

Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that **1735 test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse.

I
A
In car engines without computer-controlled throttles, the accelerator pedal interacts with the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating around a pivot point. In a cable-actuated throttle control the rotation caused by pushing down the pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection unit. The wider the valves open, the more fuel and air are released, causing combustion to increase and the car to accelerate. When the driver takes his foot off the pedal, the opposite occurs as the cable is released and the valves slide closed.

In the 1990's it became more common to install computers in cars to control engine operation. Computer-controlled *408 throttles open and close valves in response to electronic signals, not through force transferred from the pedal by a mechanical link. Constant, delicate adjustments of air and fuel mixture are possible. The computer's rapid processing of factors beyond the pedal's position improves fuel efficiency and engine performance.

For a computer-controlled throttle to respond to a driver's operation of the car, the computer must know what is happening with the pedal. A cable or mechanical link does not suffice for this purpose; at some point, an electronic sensor is necessary to translate the mechanical operation into digital data the computer can understand.

Before discussing sensors further we turn to the mechanical design of the pedal itself. In the traditional design a pedal can be pushed down or released but cannot have its position in the footwell adjusted by sliding the pedal forward or back. As a result, a driver who wishes to be closer or farther from the pedal must either reposition himself in the driver's seat or move the seat in some way. In cars with deep footwells these are imperfect solutions for drivers of smaller stature. To solve the problem, inventors, beginning in the 1970's, designed pedals that could be adjusted to change their location in the footwell. Important for this case are two adjustable pedals disclosed in U.S. Patent Nos. 5,010,782 (filed July 28, 1989) (Asano) and 5,460,061 (filed Sept. 17, 1993) (Redding). The Asano patent reveals a support structure that houses the pedal so that even when the pedal location is adjusted relative to the driver, one of the pedal's pivot points stays fixed. The pedal is also designed so that the force necessary to push the pedal down is the same regardless of adjustments to its location. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.

We return to sensors. Well before Engelgau applied for his challenged patent, some inventors had obtained patents involving electronic pedal sensors for computer-controlled *409 throttles. These inventions, such as the device disclosed in U.S. Patent No. 5,241,936 (filed Sept. 9, 1991) ('936), taught that it was preferable to detect the pedal's position in the pedal assembly, not in the engine. The '936 patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. U.S. Patent No. 5,063,811 (filed July 9, 1990) (Smith) taught that to prevent the **1736 wires connecting the sensor to the computer from chafing and wearing out, and to avoid grime and damage from the driver's foot, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad.

In addition to patents for pedals with integrated sensors inventors obtained patents for self-contained modular sensors. A modular sensor is designed independently of a given pedal so that it can be taken off the shelf and attached to mechanical pedals of various sorts, enabling the pedals to be used in automobiles with computer-controlled throttles. One such sensor was disclosed in U.S. Patent No. 5,385,068 (filed Dec. 18, 1992) ('068). In 1994, Chevrolet manufactured a line of trucks using modular sensors “attached to the pedal assembly support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates in operation.” 298 F.Supp.2d 581, 589 (E.D.Mich.2003).

The prior art contained patents involving the placement of sensors on adjustable pedals as well. For example, U.S. Patent No. 5,819,593 (filed Aug. 17, 1995) (Rixon) discloses an adjustable pedal assembly with an electronic sensor for detecting the pedal's position. In the Rixon pedal the sensor is located in the pedal footpad. The Rixon pedal was known to suffer from wire chafing when the pedal was depressed and released.

This short account of pedal and sensor technology leads to the instant case.

B
KSR, a Canadian company, manufactures and supplies auto parts, including pedal systems. Ford Motor Company hired *410 KSR in 1998 to supply an adjustable pedal system for various lines of automobiles with cable-actuated throttle controls. KSR developed an adjustable mechanical pedal for Ford and obtained U.S. Patent No. 6,151,986 (filed July 16, 1999) ('986) for the design. In 2000, KSR was chosen by General Motors Corporation (GMC or GM) to supply adjustable pedal systems for Chevrolet and GMC light trucks that used engines with computer-controlled throttles. To make the '986 pedal compatible with the trucks, KSR merely took that design and added a modular sensor.

Teleflex is a rival to KSR in the design and manufacture of adjustable pedals. As noted, it is the exclusive licensee of the Engelgau patent. Engelgau filed the patent application on August 22, 2000 as a continuation of a previous application for U.S. Patent No. 6,109,241, which was filed on January 26, 1999. He has sworn he invented the patent's subject matter on February 14, 1998. The Engelgau patent discloses an adjustable electronic pedal described in the specification as a “simplified vehicle control pedal assembly that is less expensive, and which uses fewer parts and is easier to package within the vehicle.” Engelgau, col. 2, lines 2-5, Supplemental App. 6. Claim 4 of the patent, at issue here, describes:

“A vehicle control pedal apparatus comprising:

a support adapted to be mounted to a vehicle structure;

an adjustable pedal assembly having a pedal arm moveable in for[e] and aft directions with respect to said support;

a pivot for pivotally supporting said adjustable pedal assembly with respect to said support and defining a pivot axis; and

an electronic control attached to said support for controlling a vehicle system;

said apparatus characterized by said electronic control being responsive to said pivot for providing a signal that corresponds to pedal arm position as said pedal arm pivots*411 about said pivot **1737 axis between rest and applied positions wherein the position of said pivot remains constant while said pedal arm moves in fore and aft directions with respect to said pivot.” Id., col. 6, lines 17-36, Supplemental App. 8 (diagram numbers omitted).

We agree with the District Court that the claim discloses “a position-adjustable pedal assembly with an electronic pedal position sensor attached to the support member of the pedal assembly. Attaching the sensor to the support member allows the sensor to remain in a fixed position while the driver adjusts the pedal.” 298 F.Supp.2d, at 586-587.

Before issuing the Engelgau patent the U.S. Patent and Trademark Office (PTO) rejected one of the patent claims that was similar to, but broader than, the present claim 4. The claim did not include the requirement that the sensor be placed on a fixed pivot point. The PTO concluded the claim was an obvious combination of the prior art disclosed in Redding and Smith, explaining:

“ ‘Since the prior ar[t] references are from the field of endeavor, the purpose disclosed ... would have been recognized in the pertinent art of Redding. Therefore it would have been obvious ... to provide the device of Redding with the ... means attached to a support member as taught by Smith.’ ” Id., at 595.

In other words Redding provided an example of an adjustable pedal and Smith explained how to mount a sensor on a pedal's support structure, and the rejected patent claim merely put these two teachings together.

Although the broader claim was rejected, claim 4 was later allowed because it included the limitation of a fixed pivot point, which distinguished the design from Redding's. Ibid. Engelgau had not included Asano among the prior art references, and Asano was not mentioned in the patent's prosecution. Thus, the PTO did not have before it an adjustable *412 pedal with a fixed pivot point. The patent issued on May 29, 2001 and was assigned to Teleflex.

Upon learning of KSR's design for GM, Teleflex sent a warning letter informing KSR that its proposal would violate the Engelgau patent. “ ‘Teleflex believes that any supplier of a product that combines an adjustable pedal with an electronic throttle control necessarily employs technology covered by one or more’ ” of Teleflex's patents. Id., at 585. KSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for infringement, asserting KSR's pedal infringed the Engelgau patent and two other patents. Ibid. Teleflex later abandoned its claims regarding the other patents and dedicated the patents to the public. The remaining contention was that KSR's pedal system for GM infringed claim 4 of the Engelgau patent. Teleflex has not argued that the other three claims of the patent are infringed by KSR's pedal, nor has Teleflex argued that the mechanical adjustable pedal designed by KSR for Ford infringed any of its patents.

C
The District Court granted summary judgment in KSR's favor. After reviewing the pertinent history of pedal design, the scope of the Engelgau patent, and the relevant prior art, the court considered the validity of the contested claim. By direction of 35 U.S.C. § 282, an issued patent is presumed valid. The District Court applied Graham's framework to determine whether under summary-judgment standards KSR had overcome the presumption and demonstrated that claim 4 was obvious in light of the prior art in existence when **1738 the claimed subject matter was invented. See § 102(a).

The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for *413 vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.

Following Graham's direction, the court compared the teachings of the prior art to the claims of Engelgau. It found “little difference.” 298 F.Supp.2d, at 590. Asano taught everything contained in claim 4 except the use of a sensor to detect the pedal's position and transmit it to the computer controlling the throttle. That additional aspect was revealed in sources such as the '068 patent and the sensors used by Chevrolet.

Under the controlling cases from the Court of Appeals for the Federal Circuit, however, the District Court was not permitted to stop there. The court was required also to apply the TSM test. The District Court held KSR had satisfied the test. It reasoned (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to the wire chafing problems in Rixon, namely locating the sensor on the fixed structure of the pedal. This could lead to the combination of Asano, or a pedal like it, with a pedal position sensor.

The conclusion that the Engelgau design was obvious was supported, in the District Court's view, by the PTO's rejection of the broader version of claim 4. Had Engelgau included Asano in his patent application, it reasoned, the PTO would have found claim 4 to be an obvious combination of Asano and Smith, as it had found the broader version an obvious combination of Redding and Smith. As a final matter, the District Court held that the secondary factor of Teleflex's commercial success with pedals based on Engelgau's design did not alter its conclusion. The District Court granted summary judgment for KSR.

With principal reliance on the TSM test, the Court of Appeals reversed. It ruled the District Court had not been strict enough in applying the test, having failed to make *414 “ ‘finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention’ ... to attach an electronic control to the support bracket of the Asano assembly.” 119 Fed.Appx., at 288 (brackets in original) (quoting In re Kotzab, 217 F.3d 1365, 1371 (C.A.Fed.2000)). The Court of Appeals held that the District Court was incorrect that the nature of the problem to be solved satisfied this requirement because unless the “prior art references address[ed] the precise problem that the patentee was trying to solve,” the problem would not motivate an inventor to look at those references. 119 Fed.Appx., at 288.

Here, the Court of Appeals found, the Asano pedal was designed to solve the “ ‘constant ratio problem’ ”-that is, to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted-whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. Ibid. As for Rixon, the court explained, that pedal suffered from the problem of wire chafing but was not designed to solve it. In the court's view Rixon did not teach anything helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not “necessarily go to the issue of motivation **1739 to attach the electronic control on the support bracket of the pedal assembly.” Ibid. When the patents were interpreted in this way, the Court of Appeals held, they would not have led a person of ordinary skill to put a sensor on the sort of pedal described in Asano.

That it might have been obvious to try the combination of Asano and a sensor was likewise irrelevant, in the court's view, because “ ‘ “[o]bvious to try” has long been held not to constitute obviousness.’ ” Id., at 289 (quoting In re Deuel, 51 F.3d 1552, 1559 (C.A.Fed.1995)).

The Court of Appeals also faulted the District Court's consideration of the PTO's rejection of the broader version of claim 4. The District Court's role, the Court of Appeals explained, was not to speculate regarding what the PTO might *415 have done had the Engelgau patent mentioned Asano. Rather, the court held, the District Court was obliged first to presume that the issued patent was valid and then to render its own independent judgment of obviousness based on a review of the prior art. The fact that the PTO had rejected the broader version of claim 4, the Court of Appeals said, had no place in that analysis.

The Court of Appeals further held that genuine issues of material fact precluded summary judgment. Teleflex had proffered statements from one expert that claim 4 “ ‘was a simple, elegant, and novel combination of features,’ ” 119 Fed.Appx., at 290, compared to Rixon, and from another expert that claim 4 was nonobvious because, unlike in Rixon, the sensor was mounted on the support bracket rather than the pedal itself. This evidence, the court concluded, sufficed to require a trial.

II
A
We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here. To be sure, Graham recognized the need for “uniformity and definiteness.” 383 U.S., at 18, 86 S.Ct. 684. Yet the principles laid down in Graham reaffirmed the “functional approach” of Hotchkiss, 11 How. 248, 13 L.Ed. 683. See 383 U.S., at 12, 86 S.Ct. 684. To this end, Graham set forth a broad inquiry and invited courts, where appropriate, to look at any secondary considerations that would prove instructive. Id., at 17, 86 S.Ct. 684.

Neither the enactment of § 103 nor the analysis in Graham disturbed this Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art . For over a half century, the Court has held that a “patent for a combination *416 which only unites old elements with no change in their respective functions ... obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful men.” Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162 (1950). This is a principal reason for declining to allow patents for what is obvious. The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. Three cases decided after Graham illustrate the application of this doctrine.

In United States v. Adams, 383 U.S. 39, 40, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966), a companion case to Graham, the Court considered the obviousness of a “wet battery” that varied from prior designs in two ways: **1740 It contained water, rather than the acids conventionally employed in storage batteries; and its electrodes were magnesium and cuprous chloride, rather than zinc and silver chloride. The Court recognized that when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result. 383 U.S., at 50-51, 86 S.Ct. 708. It nevertheless rejected the Government's claim that Adams's battery was obvious. The Court relied upon the corollary principle that when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be nonobvious. Id., at 51-52, 86 S.Ct. 708. When Adams designed his battery, the prior art warned that risks were involved in using the types of electrodes he employed. The fact that the elements worked together in an unexpected and fruitful manner supported the conclusion that Adams's design was not obvious to those skilled in the art.

In Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969), the Court elaborated on this approach. The subject matter of the patent before the Court was a device combining two pre-existing elements: a radiant-heat *417 burner and a paving machine. The device, the Court concluded, did not create some new synergy: The radiant-heat burner functioned just as a burner was expected to function; and the paving machine did the same. The two in combination did no more than they would in separate, sequential operation. Id., at 60-62, 90 S.Ct. 305. In those circumstances, “while the combination of old elements performed a useful function, it added nothing to the nature and quality of the radiant-heat burner already patented,” and the patent failed under § 103. Id., at 62, 90 S.Ct. 305 (footnote omitted).

Finally, in Sakraida v. Ag Pro, Inc., 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976), the Court derived from the precedents the conclusion that when a patent “simply arranges old elements with each performing the same function it had been known to perform” and yields no more than one would expect from such an arrangement, the combination is obvious. Id., at 282, 96 S.Ct. 1532.

[1] Headnote Citing References The principles underlying these cases are instructive when the question is whether a patent claiming the combination of elements of prior art is obvious. When a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. Sakraida and Anderson's-Black Rock are illustrative-a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.

Following these principles may be more difficult in other cases than it is here because the claimed subject matter may involve more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. *418 Often, it will be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having **1741 ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue. To facilitate review, this analysis should be made explicit. See In re Kahn, 441 F.3d 977, 988 (C.A.Fed.2006) (“[R]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness”). As our precedents make clear, however, the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.

B
[2] Headnote Citing References When it first established the requirement of demonstrating a teaching, suggestion, or motivation to combine known elements in order to show that the combination is obvious, the Court of Customs and Patent Appeals captured a helpful insight. See Application of Bergel, 48 C.C.P.A. 1102, 292 F.2d 955, 956-957 (1961). As is clear from cases such as Adams, a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. Although common sense directs one to look with care at a patent application that claims as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does. This is so because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity *419 will be combinations of what, in some sense, is already known.

Helpful insights, however, need not become rigid and mandatory formulas; and when it is so applied, the TSM test is incompatible with our precedents. The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents. The diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility.

In the years since the Court of Customs and Patent Appeals set forth the essence of the TSM test, the Court of Appeals no doubt has applied the test in accord with these principles in many cases. There is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis. But when a court transforms the general principle into a rigid rule that limits the obviousness inquiry, as the Court of Appeals did here, it errs.

C
[3] Headnote Citing References[4] Headnote Citing References The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the **1742 patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways *420 in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims.

[5] Headnote Citing References The first error of the Court of Appeals in this case was to foreclose this reasoning by holding that courts and patent examiners should look only to the problem the patentee was trying to solve. 119 Fed.Appx., at 288. The Court of Appeals failed to recognize that the problem motivating the patentee may be only one of many addressed by the patent's subject matter. The question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art. Under the correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.

The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. Ibid. The primary purpose of Asano was solving the constant ratio problem; so, the court concluded, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. Ibid. Common sense teaches, however, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, the design provided an obvious example of an adjustable pedal with a fixed pivot point; and the prior art was replete with patents indicating that a fixed pivot point was an ideal mount for a sensor. The idea that a designer hoping to make an adjustable electronic pedal would ignore Asano because Asano was designed to solve the constant *421 ratio problem makes little sense. A person of ordinary skill is also a person of ordinary creativity, not an automaton.

[6] Headnote Citing References The same constricted analysis led the Court of Appeals to conclude, in error, that a patent claim cannot be proved obvious merely by showing that the combination of elements was “obvious to try.” Id., at 289 (internal quotation marks omitted). When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.

The Court of Appeals, finally, drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning. See Graham, 383 U.S., at 36, 86 S.Ct. 684 (warning against a “temptation to read into the prior art the teachings of the invention in issue” and instructing courts to “ ‘guard against slipping into the use of hindsight’ ” (quoting Monroe Auto Equipment Co. v. Heckethorn Mfg. & Supply Co., 332 F.2d 406, 412 (C.A.6 1964))). Rigid preventative rules that deny factfinders recourse to common sense, however, are **1743 neither necessary under our case law nor consistent with it.

We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter. See, e.g., DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356, 1367 (2006) (“Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense”); Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (2006) (“There is flexibility in our obviousness jurisprudence because a motivation*422 may be found implicitly in the prior art. We do not have a rigid test that requires an actual teaching to combine ...”). Those decisions, of course, are not now before us and do not correct the errors of law made by the Court of Appeals in this case. The extent to which they may describe an analysis more consistent with our earlier precedents and our decision here is a matter for the Court of Appeals to consider in its future cases. What we hold is that the fundamental misunderstandings identified above led the Court of Appeals in this case to apply a test inconsistent with our patent law decisions.

III
[7] Headnote Citing References When we apply the standards we have explained to the instant facts, claim 4 must be found obvious. We agree with and adopt the District Court's recitation of the relevant prior art and its determination of the level of ordinary skill in the field. As did the District Court, we see little difference between the teachings of Asano and Smith and the adjustable electronic pedal disclosed in claim 4 of the Engelgau patent. A person having ordinary skill in the art could have combined Asano with a pedal position sensor in a fashion encompassed by claim 4, and would have seen the benefits of doing so.

A
Teleflex argues in passing that the Asano pedal cannot be combined with a sensor in the manner described by claim 4 because of the design of Asano's pivot mechanisms. See Brief for Respondents 48-49, and n. 17. Therefore, Teleflex reasons, even if adding a sensor to Asano was obvious, that does not establish that claim 4 encompasses obvious subject matter. This argument was not, however, raised before the District Court. There Teleflex was content to assert only that the problem motivating the invention claimed by the Engelgau patent would not lead to the solution of combining of Asano with a sensor. See Teleflex's Response to KSR's Motion*423 for Summary Judgment of Invalidity in No. 02-74586 (ED Mich.), pp. 18-20, App. 144a-146a. It is also unclear whether the current argument was raised before the Court of Appeals, where Teleflex advanced the nonspecific, conclusory contention that combining Asano with a sensor would not satisfy the limitations of claim 4. See Brief for Plaintiffs-Appellants in No. 04-1152 (CA Fed.), pp. 42-44. Teleflex's own expert declarations, moreover, do not support the point Teleflex now raises. See Declaration of Clark J. Radcliffe, Ph.D., Supplemental App. 204-207; Declaration of Timothy L. Andresen, id., at 208-210. The only statement in either declaration that might bear on the argument is found in the Radcliffe declaration:

“Asano ... and Rixon ... are complex mechanical linkage-based devices that are expensive to produce and assemble and difficult to package. It is exactly these difficulties with prior art designs that [Engelgau] resolves. The use of an adjustable pedal with a single pivot reflecting pedal position combined with an electronic control mounted between the **1744 support and the adjustment assembly at that pivot was a simple, elegant, and novel combination of features in the Engelgau '565 patent.” Id., at 206, ¶ 16.

Read in the context of the declaration as a whole this is best interpreted to mean that Asano could not be used to solve “[t]he problem addressed by Engelgau '565[:] to provide a less expensive, more quickly assembled, and smaller package adjustable pedal assembly with electronic control.” Id., at 205, ¶ 10.

The District Court found that combining Asano with a pivot-mounted pedal position sensor fell within the scope of claim 4. 298 F.Supp.2d, at 592-593. Given the sigificance of that finding to the District Court's judgment, it is apparent that Teleflex would have made clearer challenges to it if it intended to preserve this claim. In light of Teleflex's failure*424 to raise the argument in a clear fashion, and the silence of the Court of Appeals on the issue, we take the District Court's conclusion on the point to be correct.

B
The District Court was correct to conclude that, as of the time Engelgau designed the subject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with a pivot-mounted pedal position sensor. There then existed a marketplace that created a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for achieving this advance. The Court of Appeals considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet truckline and disclosed in the '068 patent. The District Court employed this narrow inquiry as well, though it reached the correct result nevertheless. The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading Asano with a sensor.

In automotive design, as in many other fields, the interaction of multiple components means that changing one component often requires the others to be modified as well. Technological developments made it clear that engines using computer-controlled throttles would become standard. As a result, designers might have decided to design new pedals from scratch; but they also would have had reason to make pre-existing pedals work with the new engines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now accused of infringing the Engelgau patent.

For a designer starting with Asano, the question was where to attach the sensor. The consequent legal question, then, is whether a pedal designer of ordinary skill starting with Asano would have found it obvious to put the sensor on *425 a fixed pivot point. The prior art discussed above leads us to the conclusion that attaching the sensor where both KSR and Engelgau put it would have been obvious to a person of ordinary skill.

The '936 patent taught the utility of putting the sensor on the pedal device, not in the engine. Smith, in turn, explained to put the sensor not on the pedal's footpad but instead on its support structure. And from the known wire-chafing problems of Rixon, and Smith's teaching that “the pedal assemblies must not precipitate any motion in the connecting wires,” Smith, col. 1, lines 35-37, Supplemental App. 274, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious nonmoving point on the structure from which a sensor can **1745 easily detect the pedal's position is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor on a pivot, thereby designing an adjustable electronic pedal covered by claim 4.

Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Following similar steps to those just explained, a designer would learn from Smith to avoid sensor movement and would come, thereby, to Asano because Asano disclosed an adjustable pedal with a fixed pivot.

Teleflex indirectly argues that the prior art taught away from attaching a sensor to Asano because Asano in its view is bulky, complex, and expensive. The only evidence Teleflex marshals in support of this argument, however, is the Radcliffe declaration, which merely indicates that Asano would not have solved Engelgau's goal of making a small, simple, and inexpensive pedal. What the declaration does not indicate is that Asano was somehow so flawed that there was no reason to upgrade it, or pedals like it, to be compatible with modern engines. Indeed, Teleflex's own declarations*426 refute this conclusion. Dr. Radcliffe states that Rixon suffered from the same bulk and complexity as did Asano. See id., at 206. Teleflex's other expert, however, explained that Rixon was itself designed by adding a sensor to a pre-existing mechanical pedal. See id., at 209. If Rixon's base pedal was not too flawed to upgrade, then Dr. Radcliffe's declaration does not show Asano was either. Teleflex may have made a plausible argument that Asano is inefficient as compared to Engelgau's preferred embodiment, but to judge Asano against Engelgau would be to engage in the very hindsight bias Teleflex rightly urges must be avoided. Accordingly, Teleflex has not shown anything in the prior art that taught away from the use of Asano.

Like the District Court, finally, we conclude Teleflex has shown no secondary factors to dislodge the determination that claim 4 is obvious. Proper application of Graham and our other precedents to these facts therefore leads to the conclusion that claim 4 encompassed obvious subject matter. As a result, the claim fails to meet the requirement of § 103.

We need not reach the question whether the failure to disclose Asano during the prosecution of Engelgau voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption-that the PTO, in its expertise, has approved the claim-seems much diminished here.

IV
[8] Headnote Citing References A separate ground the Court of Appeals gave for reversing the order for summary judgment was the existence of a dispute over an issue of material fact. We disagree with the Court of Appeals on this point as well. To the extent the court understood the Graham approach to exclude the possibility of summary judgment when an expert provides a conclusory affidavit addressing the question of obviousness, it misunderstood the role expert testimony plays in the analysis.*427 In considering summary judgment on that question the district court can and should take into account expert testimony, which may resolve or keep open certain questions of fact. That is not the end of the issue, however. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the content of the prior art, the scope of the patent **1746 claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate. Nothing in the declarations proffered by Teleflex prevented the District Court from reaching the careful conclusions underlying its order for summary judgment in this case.

* * *
We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. See U.S. Const., Art. I, § 8, cl. 8. These premises led to the bar on patents claiming obvious subject matter established in Hotchkiss and codified in § 103. Application of the bar must not be confined within a test or formulation too constrained to serve its purpose.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2007.
KSR Intern. Co. v. Teleflex Inc.
550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705, 75 USLW 4289, 82 U.S.P.Q.2d 1385, 07 Cal. Daily Op. Serv. 4654, 20 Fla. L. Weekly Fed. S 248

Main Page

2010-04-12T14:47:21Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Egbert v. Lippmann, 104 U.S. 333 (1881))]]
*[[Elizabeth v. American Nicholson Pavement Company, 97 U.S. 126 (1877)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Metallizing Engineering Co., Inc. v. Kenyon Bearing & Auto Parts Co., Inc., 153 F.2d 516 (1946)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Quanta Computers Inc v. LG Electronics (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:KSR International Co. v. Teleflex, Inc., 119 Fed Appx. 282 (2007)

2010-04-11T18:20:54Z

Cep503:

Held: The Federal Circuit addressed the obviousness question in a narrow, rigid manner that is inconsistent with § 103 and this Court's precedents. KSR provided **1731 convincing evidence that mounting an available sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art and that the benefit of doing so would be obvious. Its arguments, and the record, demonstrate that the Engelgau patent's claim 4 is obvious. Pp. 1739 - 1746.

Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art.

In car engines without computer-controlled throttles, the accelerator pedal interacts with the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating around a pivot point. In a cable-actuated throttle control the rotation caused by pushing down the pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection unit. The wider the valves open, the more fuel and air are released, causing combustion to increase and the car to accelerate. When the driver takes his foot off the pedal, the opposite occurs as the cable is released and the valves slide closed.

In the 1990's it became more common to install computers in cars to control engine operation. Computer-controlled *408 throttles open and close valves in response to electronic signals, not through force transferred from the pedal by a mechanical link. Constant, delicate adjustments of air and fuel mixture are possible. The computer's rapid processing of factors beyond the pedal's position improves fuel efficiency and engine performance.

For a computer-controlled throttle to respond to a driver's operation of the car, the computer must know what is happening with the pedal. A cable or mechanical link does not suffice for this purpose; at some point, an electronic sensor is necessary to translate the mechanical operation into digital data the computer can understand.

Upon learning of KSR's design for GM, Teleflex sent a warning letter informing KSR that its proposal would violate the Engelgau patent. “ ‘Teleflex believes that any supplier of a product that combines an adjustable pedal with an electronic throttle control necessarily employs technology covered by one or more’ ” of Teleflex's patents. Id., at 585. KSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for infringement, asserting KSR's pedal infringed the Engelgau patent and two other patents. Ibid. Teleflex later abandoned its claims regarding the other patents and dedicated the patents to the public. The remaining contention was that KSR's pedal system for GM infringed claim 4 of the Engelgau patent. Teleflex has not argued that the other three claims of the patent are infringed by KSR's pedal, nor has Teleflex argued that the mechanical adjustable pedal designed by KSR for Ford infringed any of its patents.

The District Court was correct to conclude that, as of the time Engelgau designed the subject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with a pivot-mounted pedal position sensor. There then existed a marketplace that created a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for achieving this advance. The Court of Appeals considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet truckline and disclosed in the '068 patent. The District Court employed this narrow inquiry as well, though it reached the correct result nevertheless. The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading Asano with a sensor.

In automotive design, as in many other fields, the interaction of multiple components means that changing one component often requires the others to be modified as well. Technological developments made it clear that engines using computer-controlled throttles would become standard. As a result, designers might have decided to design new pedals from scratch; but they also would have had reason to make pre-existing pedals work with the new engines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now accused of infringing the Engelgau patent.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

Talk:KSR International Co. v. Teleflex, Inc., 119 Fed Appx. 282 (2007)

2010-04-10T20:27:30Z

Cep503: Created page with 'Patent claiming the combination of elements of prior art is obvious if the improvement is no more than the predictable use of prior art elements according to their established fu…'

Patent claiming the combination of elements of prior art is obvious if the improvement is no more than the predictable use of prior art elements according to their established functions.

Patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. 35 U.S.C.A. § 103.

Patent's subject matter can be proved obvious by noting that there existed at time of invention a known problem for which there was an obvious solution encompassed by patent's claims. 35 U.S.C.A. § 103.

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In determining whether patent combining known elements is obvious, question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art; under correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide reason for combining the elements in the manner claimed. 35 U.S.C.A. § 103.

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When there is design need or market pressure to solve a problem and there are finite number of identified, predictable solutions, person of ordinary skill has good reason to pursue the known options within his or her technical grasp, and if this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense; in that instance, the fact that a combination was obvious to try might show that patent for it was obvious. 35 U.S.C.A. § 103.

[7] Headnote Citing References KeyCite Citing References for this Headnote

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Patent claim disclosing position-adjustable pedal assembly with electronic pedal position sensor attached to support member of pedal assembly was invalid as obvious, in view of patent for adjustable pedal with a fixed pivot, and patent teaching a solution to wire chafing problems, namely locating the sensor on support structure; it was obvious to person of ordinary skill in the art to combine first patent with pivot-mounted pedal position sensor. 35 U.S.C.A. § 103.

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Where content of prior art, scope of patent claim, and level of ordinary skill in the art are not in material dispute, and obviousness of claim is apparent in light of these factors, summary judgment is appropriate. 35 U.S.C.A. § 103.

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5,010,782, 5,063,811, 5,241,936, 5,385,068, 5,460,061, 5,819,593, 6,151,976. Cited as Prior Art.

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6,109,241. Cited.

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6,237,565. Invalid.

**1728 *398 Syllabus FN*

FN* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

To control a conventional automobile's speed, the driver depresses or releases the gas pedal, which interacts with the throttle via a cable or other mechanical link. Because the pedal's position in the footwell normally cannot be adjusted, a driver wishing to be closer or farther from it must either reposition himself in the seat **1729 or move the seat, both of which can be imperfect solutions for smaller drivers in cars with deep footwells. This prompted inventors to design and patent pedals that could be adjusted to change their locations. The Asano patent reveals a support structure whereby, when the pedal location is adjusted, one of the pedal's pivot points stays fixed. Asano is also designed so that the force necessary to depress the pedal is the same regardless of location adjustments. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.

In newer cars, computer-controlled throttles do not operate through force transferred from the pedal by a mechanical link, but open and close valves in response to electronic signals. For the computer to know what is happening with the pedal, an electronic sensor must translate the mechanical operation into digital data. Inventors had obtained a number of patents for such sensors. The so-called '936 patent taught that it was preferable to detect the pedal's position in the pedal mechanism, not in the engine, so the patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. The Smith patent taught that to prevent the wires connecting the sensor to the computer from chafing and wearing out, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad. Inventors had also patented self-contained modular sensors, which can be taken off the shelf and attached to any mechanical pedal to allow it to function with a computer-controlled throttle. The '068 patent disclosed one such sensor. Chevrolet also manufactured trucks using modular sensors attached to the pedal support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates. Other patents disclose electronic sensors attached to adjustable pedal assemblies. For example, the Rixon patent locates the sensor in the pedal footpad, but is known for wire chafing.

*399 After petitioner KSR developed an adjustable pedal system for cars with cable-actuated throttles and obtained its '976 patent for the design, General Motors Corporation (GMC) chose KSR to supply adjustable pedal systems for trucks using computer-controlled throttles. To make the '976 pedal compatible with the trucks, KSR added a modular sensor to its design. Respondents (Teleflex) hold the exclusive license for the Engelgau patent, claim 4 of which discloses a position-adjustable pedal assembly with an electronic pedal position sensor attached a fixed pivot point. Despite having denied a similar, broader claim, the U.S. Patent and Trademark Office (PTO) had allowed claim 4 because it included the limitation of a fixed pivot position, which distinguished the design from Redding's. Asano was neither included among the Engelgau patent's prior art references nor mentioned in the patent's prosecution, and the PTO did not have before it an adjustable pedal with a fixed pivot point. After learning of KSR's design for GMC, Teleflex sued for infringement, asserting that KSR's pedal system infringed the Engelgau patent's claim 4. KSR countered that claim 4 was invalid under § 103 of the Patent Act, which forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.”

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545, set out an objective analysis for applying § 103: “[T]he scope and content of the prior art are ... determined; differences between the prior art and the **1730 claims at issue are ... ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” While the sequence of these questions might be reordered in any particular case, the factors define the controlling inquiry. However, seeking to resolve the obviousness question with more uniformity and consistency, the Federal Circuit has employed a “teaching, suggestion, or motivation” (TSM) test, under which a patent claim is only proved obvious if the prior art, the problem's nature, or the knowledge of a person having ordinary skill in the art reveals some motivation or suggestion to combine the prior art teachings.

The District Court granted KSR summary judgment. After reviewing pedal design history, the Engelgau patent's scope, and the relevant prior art, the court considered claim 4's validity, applying Graham's framework to determine whether under summary-judgment standards *400 KSR had demonstrated that claim 4 was obvious. The court found “little difference” between the prior art's teachings and claim 4: Asano taught everything contained in the claim except using a sensor to detect the pedal's position and transmit it to a computer controlling the throttle. That additional aspect was revealed in, e.g., the '068 patent and Chevrolet's sensors. The court then held that KSR satisfied the TSM test, reasoning (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to Rixon's chafing problems by positioning the sensor on the pedal's fixed structure, which could lead to the combination of a pedal like Asano with a pedal position sensor.

Reversing, the Federal Circuit ruled the District Court had not applied the TSM test strictly enough, having failed to make findings as to the specific understanding or principle within a skilled artisan's knowledge that would have motivated one with no knowledge of the invention to attach an electronic control to the Asano assembly's support bracket. The Court of Appeals held that the District Court's recourse to the nature of the problem to be solved was insufficient because, unless the prior art references addressed the precise problem that the patentee was trying to solve, the problem would not motivate an inventor to look at those references. The appeals court found that the Asano pedal was designed to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted, whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. The Rixon pedal, said the court, suffered from chafing but was not designed to solve that problem and taught nothing helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not necessarily go to the issue of motivation to attach the electronic control on the pedal assembly's support bracket. So interpreted, the court held, the patents would not have led a person of ordinary skill to put a sensor on an Asano-like pedal. That it might have been obvious to try that combination was likewise irrelevant. Finally, the court held that genuine issues of material fact precluded summary judgment.

Held: The Federal Circuit addressed the obviousness question in a narrow, rigid manner that is inconsistent with § 103 and this Court's precedents. KSR provided **1731 convincing evidence that mounting an available sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art and that the benefit of doing so would be obvious. Its arguments, and the record, demonstrate that the Engelgau patent's claim 4 is obvious. Pp. 1739 - 1746.

*401 1. Graham provided an expansive and flexible approach to the obviousness question that is inconsistent with the way the Federal Circuit applied its TSM test here. Neither § 103's enactment nor Graham's analysis disturbed the Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art. See Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162. Such a combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. See, e.g., United States v. Adams, 383 U.S. 39, 50-52, 86 S.Ct. 708, 15 L.Ed.2d 572. When a work is available in one field, design incentives and other market forces can prompt variations of it, either in the same field or in another. If a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, § 103 likely bars its patentability. Moreover, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond that person's skill. A court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions. Following these principles may be difficult if the claimed subject matter involves more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. To determine whether there was an apparent reason to combine the known elements in the way a patent claims, it will often be necessary to look to interrelated teachings of multiple patents; to the effects of demands known to the design community or present in the marketplace; and to the background knowledge possessed by a person having ordinary skill in the art. To facilitate review, this analysis should be made explicit. But it need not seek out precise teachings directed to the challenged claim's specific subject matter, for a court can consider the inferences and creative steps a person of ordinary skill in the art would employ. Pp. 1739 - 1741.

(a) The TSM test captures a helpful insight: A patent composed of several elements is not proved obvious merely by demonstrating that each element was, independently, known in the prior art. Although common sense directs caution as to a patent application claiming as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the art to combine the elements as the new invention does. Inventions usually rely upon building blocks long since uncovered, and claimed discoveries almost necessarily will be combinations of what, in some sense, is already known. Helpful insights,*402 however, need not become rigid and mandatory formulas. If it is so applied, the TSM test is incompatible with this Court's precedents. The diversity of inventive pursuits and of modern technology counsels against confining the obviousness analysis by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasizing the importance of published articles and the explicit **1732 content of issued patents. In many fields there may be little discussion of obvious techniques or combinations, and market demand, rather than scientific literature, may often drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, for patents combining previously known elements, deprive prior inventions of their value or utility. Since the TSM test was devised, the Federal Circuit doubtless has applied it in accord with these principles in many cases. There is no necessary inconsistency between the test and the Graham analysis. But a court errs where, as here, it transforms general principle into a rigid rule limiting the obviousness inquiry. Pp. 1740 - 1741.

(b) The flaws in the Federal Circuit's analysis relate mostly to its narrow conception of the obviousness inquiry consequent in its application of the TSM test. The Circuit first erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve. Under the correct analysis, any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed. Second, the appeals court erred in assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem. The court wrongly concluded that because Asano's primary purpose was solving the constant ratio problem, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. It is common sense that familiar items may have obvious uses beyond their primary purposes, and a person of ordinary skill often will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, it provided an obvious example of an adjustable pedal with a fixed pivot point, and the prior art was replete with patents indicating that such a point was an ideal mount for a sensor. Third, the court erred in concluding that a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try. When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of *403 ordinary skill and common sense. Finally, the court drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. Rigid preventative rules that deny recourse to common sense are neither necessary under, nor consistent with, this Court's case law. Pp. 1741 - 1743.

2. Application of the foregoing standards demonstrates that claim 4 is obvious. Pp. 1743 - 1746.

(a) The Court rejects Teleflex's argument that the Asano pivot mechanism's design prevents its combination with a sensor in the manner claim 4 describes. This argument was not raised before the District Court, and it is unclear whether it was raised before the Federal Circuit. Given the significance of the District Court's finding that combining Asano with a pivot-mounted pedal position sensor fell within claim 4's scope, it is apparent that Teleflex would have made clearer challenges if it intended to preserve this claim. Its failure to clearly raise the argument, and the appeals court's silence on the issue, lead this Court to accept the District Court's conclusion. Pp. 1743 - 1744.

**1733 (b) The District Court correctly concluded that when Engelgau designed the claim 4 subject matter, it was obvious to a person of ordinary skill in the art to combine Asano with a pivot-mounted pedal position sensor. There then was a marketplace creating a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for doing so. The Federal Circuit considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet trucks and disclosed in the '068 patent. The proper question was whether a pedal designer of ordinary skill in the art, facing the wide range of needs created by developments in the field, would have seen an obvious benefit to upgrading Asano with a sensor. For such a designer starting with Asano, the question was where to attach the sensor. The '936 patent taught the utility of putting the sensor on the pedal device. Smith, in turn, explained not to put the sensor on the pedal footpad, but instead on the structure. And from Rixon's known wire-chafing problems, and Smith's teaching that the pedal assemblies must not precipitate any motion in the connecting wires, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious such point is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor there. Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Teleflex has not shown anything in the prior art that taught away from the *404 use of Asano, nor any secondary factors to dislodge the determination that claim 4 is obvious. Pp. 1744 - 1746.

3. The Court disagrees with the Federal Circuit's holding that genuine issues of material fact precluded summary judgment. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the prior art's content, the patent claim's scope, and the level of ordinary skill in the art are not in material dispute and the claim's obviousness is apparent, summary judgment is appropriate. Pp. 1745 - 1746.

119 Fed.Appx. 282, reversed and remanded.

KENNEDY, J., delivered the opinion for a unanimous Court.

James W. Dabney, for petitioner.

Thomas G. Hungar, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Thomas C. Goldstein, for respondents.

John F. Duffy, Fried, Frank, Harris, Shriver & Jacobson LLP, Of Counsel, James W. Dabney, Counsel of Record, New York, New York, Stephen S. Rabinowitz, Henry C. Lebowitz, Mitchell E. Epner, Darcy M. Goddard, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York, Attorneys for Petitioner.

Kenneth C. Bass, III, Robert G. Sterne, Sterne, Kessler Goldstein & Fox P.L.L.C., Washington, DC, Rodger D. Young, Steven Susser, David Poirier, Young & Susser, P.C., Southfield, Thomas C. Goldstein, Counsel of Record, Michael A. O'Shea, Garreth A. Sarosi, Christopher R. Pudelski, Sarah C. Rispin, Akin Gump Strauss Hauer & Feld, LLP, Washington, DC, Samuel J. Haidle, David M. LaPrairie, Howard & Howard, Attorneys, P.C., Bloomfield Hills, MI, Tracy L. Casadio, **1734 Elizabeth H. Rader, Akin Gump Strauss Hauer & Feld, LLP, Los Angeles, CA, Brief for the Respondents.

Justice KENNEDY delivered the opinion of the Court.

*405 Teleflex Incorporated and its subsidiary Technology Holding Company-both referred to here as Teleflex-sued KSR International Company for patent infringement. The patent at issue, United States Patent No. 6,237,565 B1, is entitled*406 “Adjustable Pedal Assembly With Electronic Throttle Control.” Supplemental App. 1. The patentee is Steven J. Engelgau, and the patent is referred to as “the Engelgau patent.” Teleflex holds the exclusive license to the patent.

Claim 4 of the Engelgau patent describes a mechanism for combining an electronic sensor with an adjustable automobile pedal so the pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine. When Teleflex accused KSR of infringing the Engelgau patent by adding an electronic sensor to one of KSR's previously designed pedals, KSR countered that claim 4 was invalid under the Patent Act, 35 U.S.C. § 103, (2000 ed. and Supp. IV), because its subject matter was obvious.

Section 103 forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Court set out a framework for applying the statutory language of § 103, language itself based on the logic of the earlier decision in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683 (1851), and its progeny. See 383 U.S., at 15-17, 86 S.Ct. 684. The analysis is objective:

“Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” Id., at 17-18, 86 S.Ct. 684.

*407 While the sequence of these questions might be reordered in any particular case, the factors continue to define the inquiry that controls. If a court, or patent examiner, conducts this analysis and concludes the claimed subject matter was obvious, the claim is invalid under § 103.

Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that **1735 test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse.

I
A
In car engines without computer-controlled throttles, the accelerator pedal interacts with the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating around a pivot point. In a cable-actuated throttle control the rotation caused by pushing down the pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection unit. The wider the valves open, the more fuel and air are released, causing combustion to increase and the car to accelerate. When the driver takes his foot off the pedal, the opposite occurs as the cable is released and the valves slide closed.

In the 1990's it became more common to install computers in cars to control engine operation. Computer-controlled *408 throttles open and close valves in response to electronic signals, not through force transferred from the pedal by a mechanical link. Constant, delicate adjustments of air and fuel mixture are possible. The computer's rapid processing of factors beyond the pedal's position improves fuel efficiency and engine performance.

For a computer-controlled throttle to respond to a driver's operation of the car, the computer must know what is happening with the pedal. A cable or mechanical link does not suffice for this purpose; at some point, an electronic sensor is necessary to translate the mechanical operation into digital data the computer can understand.

Before discussing sensors further we turn to the mechanical design of the pedal itself. In the traditional design a pedal can be pushed down or released but cannot have its position in the footwell adjusted by sliding the pedal forward or back. As a result, a driver who wishes to be closer or farther from the pedal must either reposition himself in the driver's seat or move the seat in some way. In cars with deep footwells these are imperfect solutions for drivers of smaller stature. To solve the problem, inventors, beginning in the 1970's, designed pedals that could be adjusted to change their location in the footwell. Important for this case are two adjustable pedals disclosed in U.S. Patent Nos. 5,010,782 (filed July 28, 1989) (Asano) and 5,460,061 (filed Sept. 17, 1993) (Redding). The Asano patent reveals a support structure that houses the pedal so that even when the pedal location is adjusted relative to the driver, one of the pedal's pivot points stays fixed. The pedal is also designed so that the force necessary to push the pedal down is the same regardless of adjustments to its location. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.

We return to sensors. Well before Engelgau applied for his challenged patent, some inventors had obtained patents involving electronic pedal sensors for computer-controlled *409 throttles. These inventions, such as the device disclosed in U.S. Patent No. 5,241,936 (filed Sept. 9, 1991) ('936), taught that it was preferable to detect the pedal's position in the pedal assembly, not in the engine. The '936 patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. U.S. Patent No. 5,063,811 (filed July 9, 1990) (Smith) taught that to prevent the **1736 wires connecting the sensor to the computer from chafing and wearing out, and to avoid grime and damage from the driver's foot, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad.

In addition to patents for pedals with integrated sensors inventors obtained patents for self-contained modular sensors. A modular sensor is designed independently of a given pedal so that it can be taken off the shelf and attached to mechanical pedals of various sorts, enabling the pedals to be used in automobiles with computer-controlled throttles. One such sensor was disclosed in U.S. Patent No. 5,385,068 (filed Dec. 18, 1992) ('068). In 1994, Chevrolet manufactured a line of trucks using modular sensors “attached to the pedal assembly support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates in operation.” 298 F.Supp.2d 581, 589 (E.D.Mich.2003).

The prior art contained patents involving the placement of sensors on adjustable pedals as well. For example, U.S. Patent No. 5,819,593 (filed Aug. 17, 1995) (Rixon) discloses an adjustable pedal assembly with an electronic sensor for detecting the pedal's position. In the Rixon pedal the sensor is located in the pedal footpad. The Rixon pedal was known to suffer from wire chafing when the pedal was depressed and released.

This short account of pedal and sensor technology leads to the instant case.

B
KSR, a Canadian company, manufactures and supplies auto parts, including pedal systems. Ford Motor Company hired *410 KSR in 1998 to supply an adjustable pedal system for various lines of automobiles with cable-actuated throttle controls. KSR developed an adjustable mechanical pedal for Ford and obtained U.S. Patent No. 6,151,986 (filed July 16, 1999) ('986) for the design. In 2000, KSR was chosen by General Motors Corporation (GMC or GM) to supply adjustable pedal systems for Chevrolet and GMC light trucks that used engines with computer-controlled throttles. To make the '986 pedal compatible with the trucks, KSR merely took that design and added a modular sensor.

Teleflex is a rival to KSR in the design and manufacture of adjustable pedals. As noted, it is the exclusive licensee of the Engelgau patent. Engelgau filed the patent application on August 22, 2000 as a continuation of a previous application for U.S. Patent No. 6,109,241, which was filed on January 26, 1999. He has sworn he invented the patent's subject matter on February 14, 1998. The Engelgau patent discloses an adjustable electronic pedal described in the specification as a “simplified vehicle control pedal assembly that is less expensive, and which uses fewer parts and is easier to package within the vehicle.” Engelgau, col. 2, lines 2-5, Supplemental App. 6. Claim 4 of the patent, at issue here, describes:

“A vehicle control pedal apparatus comprising:

a support adapted to be mounted to a vehicle structure;

an adjustable pedal assembly having a pedal arm moveable in for[e] and aft directions with respect to said support;

a pivot for pivotally supporting said adjustable pedal assembly with respect to said support and defining a pivot axis; and

an electronic control attached to said support for controlling a vehicle system;

said apparatus characterized by said electronic control being responsive to said pivot for providing a signal that corresponds to pedal arm position as said pedal arm pivots*411 about said pivot **1737 axis between rest and applied positions wherein the position of said pivot remains constant while said pedal arm moves in fore and aft directions with respect to said pivot.” Id., col. 6, lines 17-36, Supplemental App. 8 (diagram numbers omitted).

We agree with the District Court that the claim discloses “a position-adjustable pedal assembly with an electronic pedal position sensor attached to the support member of the pedal assembly. Attaching the sensor to the support member allows the sensor to remain in a fixed position while the driver adjusts the pedal.” 298 F.Supp.2d, at 586-587.

Before issuing the Engelgau patent the U.S. Patent and Trademark Office (PTO) rejected one of the patent claims that was similar to, but broader than, the present claim 4. The claim did not include the requirement that the sensor be placed on a fixed pivot point. The PTO concluded the claim was an obvious combination of the prior art disclosed in Redding and Smith, explaining:

“ ‘Since the prior ar[t] references are from the field of endeavor, the purpose disclosed ... would have been recognized in the pertinent art of Redding. Therefore it would have been obvious ... to provide the device of Redding with the ... means attached to a support member as taught by Smith.’ ” Id., at 595.

In other words Redding provided an example of an adjustable pedal and Smith explained how to mount a sensor on a pedal's support structure, and the rejected patent claim merely put these two teachings together.

Although the broader claim was rejected, claim 4 was later allowed because it included the limitation of a fixed pivot point, which distinguished the design from Redding's. Ibid. Engelgau had not included Asano among the prior art references, and Asano was not mentioned in the patent's prosecution. Thus, the PTO did not have before it an adjustable *412 pedal with a fixed pivot point. The patent issued on May 29, 2001 and was assigned to Teleflex.

Upon learning of KSR's design for GM, Teleflex sent a warning letter informing KSR that its proposal would violate the Engelgau patent. “ ‘Teleflex believes that any supplier of a product that combines an adjustable pedal with an electronic throttle control necessarily employs technology covered by one or more’ ” of Teleflex's patents. Id., at 585. KSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for infringement, asserting KSR's pedal infringed the Engelgau patent and two other patents. Ibid. Teleflex later abandoned its claims regarding the other patents and dedicated the patents to the public. The remaining contention was that KSR's pedal system for GM infringed claim 4 of the Engelgau patent. Teleflex has not argued that the other three claims of the patent are infringed by KSR's pedal, nor has Teleflex argued that the mechanical adjustable pedal designed by KSR for Ford infringed any of its patents.

C
The District Court granted summary judgment in KSR's favor. After reviewing the pertinent history of pedal design, the scope of the Engelgau patent, and the relevant prior art, the court considered the validity of the contested claim. By direction of 35 U.S.C. § 282, an issued patent is presumed valid. The District Court applied Graham's framework to determine whether under summary-judgment standards KSR had overcome the presumption and demonstrated that claim 4 was obvious in light of the prior art in existence when **1738 the claimed subject matter was invented. See § 102(a).

The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for *413 vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.

Following Graham's direction, the court compared the teachings of the prior art to the claims of Engelgau. It found “little difference.” 298 F.Supp.2d, at 590. Asano taught everything contained in claim 4 except the use of a sensor to detect the pedal's position and transmit it to the computer controlling the throttle. That additional aspect was revealed in sources such as the '068 patent and the sensors used by Chevrolet.

Under the controlling cases from the Court of Appeals for the Federal Circuit, however, the District Court was not permitted to stop there. The court was required also to apply the TSM test. The District Court held KSR had satisfied the test. It reasoned (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to the wire chafing problems in Rixon, namely locating the sensor on the fixed structure of the pedal. This could lead to the combination of Asano, or a pedal like it, with a pedal position sensor.

The conclusion that the Engelgau design was obvious was supported, in the District Court's view, by the PTO's rejection of the broader version of claim 4. Had Engelgau included Asano in his patent application, it reasoned, the PTO would have found claim 4 to be an obvious combination of Asano and Smith, as it had found the broader version an obvious combination of Redding and Smith. As a final matter, the District Court held that the secondary factor of Teleflex's commercial success with pedals based on Engelgau's design did not alter its conclusion. The District Court granted summary judgment for KSR.

With principal reliance on the TSM test, the Court of Appeals reversed. It ruled the District Court had not been strict enough in applying the test, having failed to make *414 “ ‘finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention’ ... to attach an electronic control to the support bracket of the Asano assembly.” 119 Fed.Appx., at 288 (brackets in original) (quoting In re Kotzab, 217 F.3d 1365, 1371 (C.A.Fed.2000)). The Court of Appeals held that the District Court was incorrect that the nature of the problem to be solved satisfied this requirement because unless the “prior art references address[ed] the precise problem that the patentee was trying to solve,” the problem would not motivate an inventor to look at those references. 119 Fed.Appx., at 288.

Here, the Court of Appeals found, the Asano pedal was designed to solve the “ ‘constant ratio problem’ ”-that is, to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted-whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. Ibid. As for Rixon, the court explained, that pedal suffered from the problem of wire chafing but was not designed to solve it. In the court's view Rixon did not teach anything helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not “necessarily go to the issue of motivation **1739 to attach the electronic control on the support bracket of the pedal assembly.” Ibid. When the patents were interpreted in this way, the Court of Appeals held, they would not have led a person of ordinary skill to put a sensor on the sort of pedal described in Asano.

That it might have been obvious to try the combination of Asano and a sensor was likewise irrelevant, in the court's view, because “ ‘ “[o]bvious to try” has long been held not to constitute obviousness.’ ” Id., at 289 (quoting In re Deuel, 51 F.3d 1552, 1559 (C.A.Fed.1995)).

The Court of Appeals also faulted the District Court's consideration of the PTO's rejection of the broader version of claim 4. The District Court's role, the Court of Appeals explained, was not to speculate regarding what the PTO might *415 have done had the Engelgau patent mentioned Asano. Rather, the court held, the District Court was obliged first to presume that the issued patent was valid and then to render its own independent judgment of obviousness based on a review of the prior art. The fact that the PTO had rejected the broader version of claim 4, the Court of Appeals said, had no place in that analysis.

The Court of Appeals further held that genuine issues of material fact precluded summary judgment. Teleflex had proffered statements from one expert that claim 4 “ ‘was a simple, elegant, and novel combination of features,’ ” 119 Fed.Appx., at 290, compared to Rixon, and from another expert that claim 4 was nonobvious because, unlike in Rixon, the sensor was mounted on the support bracket rather than the pedal itself. This evidence, the court concluded, sufficed to require a trial.

II
A
We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here. To be sure, Graham recognized the need for “uniformity and definiteness.” 383 U.S., at 18, 86 S.Ct. 684. Yet the principles laid down in Graham reaffirmed the “functional approach” of Hotchkiss, 11 How. 248, 13 L.Ed. 683. See 383 U.S., at 12, 86 S.Ct. 684. To this end, Graham set forth a broad inquiry and invited courts, where appropriate, to look at any secondary considerations that would prove instructive. Id., at 17, 86 S.Ct. 684.

Neither the enactment of § 103 nor the analysis in Graham disturbed this Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art . For over a half century, the Court has held that a “patent for a combination *416 which only unites old elements with no change in their respective functions ... obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful men.” Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162 (1950). This is a principal reason for declining to allow patents for what is obvious. The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. Three cases decided after Graham illustrate the application of this doctrine.

In United States v. Adams, 383 U.S. 39, 40, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966), a companion case to Graham, the Court considered the obviousness of a “wet battery” that varied from prior designs in two ways: **1740 It contained water, rather than the acids conventionally employed in storage batteries; and its electrodes were magnesium and cuprous chloride, rather than zinc and silver chloride. The Court recognized that when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result. 383 U.S., at 50-51, 86 S.Ct. 708. It nevertheless rejected the Government's claim that Adams's battery was obvious. The Court relied upon the corollary principle that when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be nonobvious. Id., at 51-52, 86 S.Ct. 708. When Adams designed his battery, the prior art warned that risks were involved in using the types of electrodes he employed. The fact that the elements worked together in an unexpected and fruitful manner supported the conclusion that Adams's design was not obvious to those skilled in the art.

In Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969), the Court elaborated on this approach. The subject matter of the patent before the Court was a device combining two pre-existing elements: a radiant-heat *417 burner and a paving machine. The device, the Court concluded, did not create some new synergy: The radiant-heat burner functioned just as a burner was expected to function; and the paving machine did the same. The two in combination did no more than they would in separate, sequential operation. Id., at 60-62, 90 S.Ct. 305. In those circumstances, “while the combination of old elements performed a useful function, it added nothing to the nature and quality of the radiant-heat burner already patented,” and the patent failed under § 103. Id., at 62, 90 S.Ct. 305 (footnote omitted).

Finally, in Sakraida v. Ag Pro, Inc., 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976), the Court derived from the precedents the conclusion that when a patent “simply arranges old elements with each performing the same function it had been known to perform” and yields no more than one would expect from such an arrangement, the combination is obvious. Id., at 282, 96 S.Ct. 1532.

[1] Headnote Citing References The principles underlying these cases are instructive when the question is whether a patent claiming the combination of elements of prior art is obvious. When a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. Sakraida and Anderson's-Black Rock are illustrative-a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.

Following these principles may be more difficult in other cases than it is here because the claimed subject matter may involve more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. *418 Often, it will be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having **1741 ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue. To facilitate review, this analysis should be made explicit. See In re Kahn, 441 F.3d 977, 988 (C.A.Fed.2006) (“[R]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness”). As our precedents make clear, however, the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.

B
[2] Headnote Citing References When it first established the requirement of demonstrating a teaching, suggestion, or motivation to combine known elements in order to show that the combination is obvious, the Court of Customs and Patent Appeals captured a helpful insight. See Application of Bergel, 48 C.C.P.A. 1102, 292 F.2d 955, 956-957 (1961). As is clear from cases such as Adams, a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. Although common sense directs one to look with care at a patent application that claims as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does. This is so because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity *419 will be combinations of what, in some sense, is already known.

Helpful insights, however, need not become rigid and mandatory formulas; and when it is so applied, the TSM test is incompatible with our precedents. The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents. The diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility.

In the years since the Court of Customs and Patent Appeals set forth the essence of the TSM test, the Court of Appeals no doubt has applied the test in accord with these principles in many cases. There is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis. But when a court transforms the general principle into a rigid rule that limits the obviousness inquiry, as the Court of Appeals did here, it errs.

C
[3] Headnote Citing References[4] Headnote Citing References The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the **1742 patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways *420 in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims.

[5] Headnote Citing References The first error of the Court of Appeals in this case was to foreclose this reasoning by holding that courts and patent examiners should look only to the problem the patentee was trying to solve. 119 Fed.Appx., at 288. The Court of Appeals failed to recognize that the problem motivating the patentee may be only one of many addressed by the patent's subject matter. The question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art. Under the correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.

The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. Ibid. The primary purpose of Asano was solving the constant ratio problem; so, the court concluded, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. Ibid. Common sense teaches, however, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, the design provided an obvious example of an adjustable pedal with a fixed pivot point; and the prior art was replete with patents indicating that a fixed pivot point was an ideal mount for a sensor. The idea that a designer hoping to make an adjustable electronic pedal would ignore Asano because Asano was designed to solve the constant *421 ratio problem makes little sense. A person of ordinary skill is also a person of ordinary creativity, not an automaton.

[6] Headnote Citing References The same constricted analysis led the Court of Appeals to conclude, in error, that a patent claim cannot be proved obvious merely by showing that the combination of elements was “obvious to try.” Id., at 289 (internal quotation marks omitted). When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.

The Court of Appeals, finally, drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning. See Graham, 383 U.S., at 36, 86 S.Ct. 684 (warning against a “temptation to read into the prior art the teachings of the invention in issue” and instructing courts to “ ‘guard against slipping into the use of hindsight’ ” (quoting Monroe Auto Equipment Co. v. Heckethorn Mfg. & Supply Co., 332 F.2d 406, 412 (C.A.6 1964))). Rigid preventative rules that deny factfinders recourse to common sense, however, are **1743 neither necessary under our case law nor consistent with it.

We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter. See, e.g., DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356, 1367 (2006) (“Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense”); Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (2006) (“There is flexibility in our obviousness jurisprudence because a motivation*422 may be found implicitly in the prior art. We do not have a rigid test that requires an actual teaching to combine ...”). Those decisions, of course, are not now before us and do not correct the errors of law made by the Court of Appeals in this case. The extent to which they may describe an analysis more consistent with our earlier precedents and our decision here is a matter for the Court of Appeals to consider in its future cases. What we hold is that the fundamental misunderstandings identified above led the Court of Appeals in this case to apply a test inconsistent with our patent law decisions.

III
[7] Headnote Citing References When we apply the standards we have explained to the instant facts, claim 4 must be found obvious. We agree with and adopt the District Court's recitation of the relevant prior art and its determination of the level of ordinary skill in the field. As did the District Court, we see little difference between the teachings of Asano and Smith and the adjustable electronic pedal disclosed in claim 4 of the Engelgau patent. A person having ordinary skill in the art could have combined Asano with a pedal position sensor in a fashion encompassed by claim 4, and would have seen the benefits of doing so.

A
Teleflex argues in passing that the Asano pedal cannot be combined with a sensor in the manner described by claim 4 because of the design of Asano's pivot mechanisms. See Brief for Respondents 48-49, and n. 17. Therefore, Teleflex reasons, even if adding a sensor to Asano was obvious, that does not establish that claim 4 encompasses obvious subject matter. This argument was not, however, raised before the District Court. There Teleflex was content to assert only that the problem motivating the invention claimed by the Engelgau patent would not lead to the solution of combining of Asano with a sensor. See Teleflex's Response to KSR's Motion*423 for Summary Judgment of Invalidity in No. 02-74586 (ED Mich.), pp. 18-20, App. 144a-146a. It is also unclear whether the current argument was raised before the Court of Appeals, where Teleflex advanced the nonspecific, conclusory contention that combining Asano with a sensor would not satisfy the limitations of claim 4. See Brief for Plaintiffs-Appellants in No. 04-1152 (CA Fed.), pp. 42-44. Teleflex's own expert declarations, moreover, do not support the point Teleflex now raises. See Declaration of Clark J. Radcliffe, Ph.D., Supplemental App. 204-207; Declaration of Timothy L. Andresen, id., at 208-210. The only statement in either declaration that might bear on the argument is found in the Radcliffe declaration:

“Asano ... and Rixon ... are complex mechanical linkage-based devices that are expensive to produce and assemble and difficult to package. It is exactly these difficulties with prior art designs that [Engelgau] resolves. The use of an adjustable pedal with a single pivot reflecting pedal position combined with an electronic control mounted between the **1744 support and the adjustment assembly at that pivot was a simple, elegant, and novel combination of features in the Engelgau '565 patent.” Id., at 206, ¶ 16.

Read in the context of the declaration as a whole this is best interpreted to mean that Asano could not be used to solve “[t]he problem addressed by Engelgau '565[:] to provide a less expensive, more quickly assembled, and smaller package adjustable pedal assembly with electronic control.” Id., at 205, ¶ 10.

The District Court found that combining Asano with a pivot-mounted pedal position sensor fell within the scope of claim 4. 298 F.Supp.2d, at 592-593. Given the sigificance of that finding to the District Court's judgment, it is apparent that Teleflex would have made clearer challenges to it if it intended to preserve this claim. In light of Teleflex's failure*424 to raise the argument in a clear fashion, and the silence of the Court of Appeals on the issue, we take the District Court's conclusion on the point to be correct.

B
The District Court was correct to conclude that, as of the time Engelgau designed the subject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with a pivot-mounted pedal position sensor. There then existed a marketplace that created a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for achieving this advance. The Court of Appeals considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet truckline and disclosed in the '068 patent. The District Court employed this narrow inquiry as well, though it reached the correct result nevertheless. The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading Asano with a sensor.

In automotive design, as in many other fields, the interaction of multiple components means that changing one component often requires the others to be modified as well. Technological developments made it clear that engines using computer-controlled throttles would become standard. As a result, designers might have decided to design new pedals from scratch; but they also would have had reason to make pre-existing pedals work with the new engines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now accused of infringing the Engelgau patent.

For a designer starting with Asano, the question was where to attach the sensor. The consequent legal question, then, is whether a pedal designer of ordinary skill starting with Asano would have found it obvious to put the sensor on *425 a fixed pivot point. The prior art discussed above leads us to the conclusion that attaching the sensor where both KSR and Engelgau put it would have been obvious to a person of ordinary skill.

The '936 patent taught the utility of putting the sensor on the pedal device, not in the engine. Smith, in turn, explained to put the sensor not on the pedal's footpad but instead on its support structure. And from the known wire-chafing problems of Rixon, and Smith's teaching that “the pedal assemblies must not precipitate any motion in the connecting wires,” Smith, col. 1, lines 35-37, Supplemental App. 274, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious nonmoving point on the structure from which a sensor can **1745 easily detect the pedal's position is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor on a pivot, thereby designing an adjustable electronic pedal covered by claim 4.

Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Following similar steps to those just explained, a designer would learn from Smith to avoid sensor movement and would come, thereby, to Asano because Asano disclosed an adjustable pedal with a fixed pivot.

Teleflex indirectly argues that the prior art taught away from attaching a sensor to Asano because Asano in its view is bulky, complex, and expensive. The only evidence Teleflex marshals in support of this argument, however, is the Radcliffe declaration, which merely indicates that Asano would not have solved Engelgau's goal of making a small, simple, and inexpensive pedal. What the declaration does not indicate is that Asano was somehow so flawed that there was no reason to upgrade it, or pedals like it, to be compatible with modern engines. Indeed, Teleflex's own declarations*426 refute this conclusion. Dr. Radcliffe states that Rixon suffered from the same bulk and complexity as did Asano. See id., at 206. Teleflex's other expert, however, explained that Rixon was itself designed by adding a sensor to a pre-existing mechanical pedal. See id., at 209. If Rixon's base pedal was not too flawed to upgrade, then Dr. Radcliffe's declaration does not show Asano was either. Teleflex may have made a plausible argument that Asano is inefficient as compared to Engelgau's preferred embodiment, but to judge Asano against Engelgau would be to engage in the very hindsight bias Teleflex rightly urges must be avoided. Accordingly, Teleflex has not shown anything in the prior art that taught away from the use of Asano.

Like the District Court, finally, we conclude Teleflex has shown no secondary factors to dislodge the determination that claim 4 is obvious. Proper application of Graham and our other precedents to these facts therefore leads to the conclusion that claim 4 encompassed obvious subject matter. As a result, the claim fails to meet the requirement of § 103.

We need not reach the question whether the failure to disclose Asano during the prosecution of Engelgau voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption-that the PTO, in its expertise, has approved the claim-seems much diminished here.

IV
[8] Headnote Citing References A separate ground the Court of Appeals gave for reversing the order for summary judgment was the existence of a dispute over an issue of material fact. We disagree with the Court of Appeals on this point as well. To the extent the court understood the Graham approach to exclude the possibility of summary judgment when an expert provides a conclusory affidavit addressing the question of obviousness, it misunderstood the role expert testimony plays in the analysis.*427 In considering summary judgment on that question the district court can and should take into account expert testimony, which may resolve or keep open certain questions of fact. That is not the end of the issue, however. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the content of the prior art, the scope of the patent **1746 claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate. Nothing in the declarations proffered by Teleflex prevented the District Court from reaching the careful conclusions underlying its order for summary judgment in this case.

* * *
We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. See U.S. Const., Art. I, § 8, cl. 8. These premises led to the bar on patents claiming obvious subject matter established in Hotchkiss and codified in § 103. Application of the bar must not be confined within a test or formulation too constrained to serve its purpose.

KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals*428 analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2007.
KSR Intern. Co. v. Teleflex Inc.
550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705, 75 USLW 4289, 82 U.S.P.Q.2d 1385, 07 Cal. Daily Op. Serv. 4654, 20 Fla. L. Weekly Fed. S 248

KSR International Co. v. Teleflex, Inc., 119 Fed Appx. 282 (2007)

2010-04-10T20:09:43Z

Main Page

2010-04-10T20:09:04Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Egbert v. Lippmann, 104 U.S. 333 (1881))]]
*[[Elizabeth v. American Nicholson Pavement Company, 97 U.S. 126 (1877)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[KSR International Co. v. Teleflex, Inc., 119 Fed Appx. 282 (2007)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Metallizing Engineering Co., Inc. v. Kenyon Bearing & Auto Parts Co., Inc., 153 F.2d 516 (1946)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Quanta Computers Inc v. LG Electronics (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)

2010-04-06T21:26:17Z

Cep503: Created page with 'An action was brought for infringement of a combination patent on a convertible folding top for automobiles. The United States District Court for the District of Massachusetts re…'

An action was brought for infringement of a combination patent on a convertible folding top for automobiles. The United States District Court for the District of Massachusetts rendered a judgment for the plaintiff, and the defendants appealed. The Court of Appeals, 270 F.2d 200, affirmed the judgment, and the Supreme Court granted certiorari. The Supreme Court, Mr. Justice Whittaker, held that the maintenance of the use of the whole of a patented combination through the replacement of a spent, unpatented element does not constitute infringing reconstruction, and that the replacement of the fabric of patented convertible folding top was permissible repair and not infringing reconstruction, and that automobile owner did not infringe and the manufacturer of the fabric did not contributorily infringe the patent.

Supreme Court granted certiorari to determine question whether owner of combination patent, comprised entirely of unpatented elements, had patent, monopoly on manufacture, sale, or use of the several unpatented components of patented combination.
Validity of the patent is not challenged in this Court. The principal, and we think the determinative, question presented here is whether the owner of a combination *339 patent, comprised entirely of unpatented elements, has a patent monopoly on the manufacture, sale or use of the several unpatented components of the patented combination. More specifically, and limited to the particular case here, does the car owner infringe**601 (and the supplier contributorily infringe) the combination patent when he replaces the spent fabric without the patentee's consent?
No element, not itself separately patented, that constitutes one of the elements of a combination patent is entitled to patent monopoly, however essential it may be to the patented combination and no matter how costly or difficult replacement may be. While there is language in some lower court opinions indicating that ‘repair’ or ‘reconstruction’ depends on a number of factors, it is significant that each of the three cases of this Court, cited for that proposition, holds that a license to use a patented combination includes the right ‘to preserve its fitness for use so far as it may be affected by wear or breakage.’ *346 Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 325, 336, 29 S.Ct. 503, 507, 53 L.Ed. 816; Heyer v. Duplicator Mfg. Co., supra, 263 U.S. at page 102, 44 S.Ct. at page 32; and Wilson v. Simpson, supra, 9 How. at page 123, 13 L.Ed. 66. We hold that maintenance of the ‘use of the whole’ of the patented combination through replacement of a spent, unpatented element does not constitute reconstruction.

Mr. Justice BLACK, concurring.

*357 In my judgment it would create mischievous results for a majority of this Court to create or approve ambiguous evidentiary standards which could only obfuscate the simple fact of whether a person is ‘making’ a patented article composed of old unpatentable elements. For example, there should be no attempt to decide whether there is a making by comparing the time that the different elements of such a patent normally will exist if let alone. The owner is under no obligation to let them alone. Every owner has the right to repair and patch each part of the property he bought and paid for in order to make it last as long as he can. Everyone knows that this patented top is likely to last as long as the car itself if it is repaired from time to time. An accident might wholly destroy the entire top and then it might have to be replaced by a new one, which if done without the patentee's consent would of course be an infringement. I cannot suppose, however, that if the bows upon which the fabric rests at the top, or the metal frames upon which it stands, or the metal wiper which helps to level off the curtain folds, or the snaps that may have to be used, should happen to become worn out or destroyed, that anyone could reasonably come to the conclusion that a replacement of one of these worn-out parts would be a complete rebuilding of the old top or the ‘making’ of a new one and therefore an infringement of the patent. Such a contention would seem little short of fantastic to me, and the same is true as to replacement of the fabric.

This case is of great importance in our competitive economy. The record shows that petitioner is but one of many small business enterprises filling a useful place in manufacturing the comparatively smaller parts of larger products like automobiles. It is quite right and in keeping with our patent system that small business enterprises should no more than **611 large enterprises be allowed to *358 infringe the patents of others. But businessmen are certainly entitled to know when they are committing an infringement. It is for that reason that the patent statutes require applicants to define with particularity and claim without ambiguity the subject matter which is regarded to be an invention.

The established policy in this Nation for more than a century has been that when an article described in a patent is sold and ‘passes to the hands of the purchaser, it is no longer within the limits of the monopoly. It passes outside of it, and is no longer under the protection of the act of congress.

Mr. Justice BRENNAN, concurring in the result.

For more than a hundred years it has been the law that the owner of a device covered by a combination patent can, without infringing, keep the device in good working order by replacing, either himself or through any source he wishes, unpatented parts, but that he may not, without rendering himself liable for infringement, reconstruct the device itself, whether because of its deterioration or for any other reason, and even though all of the component parts of the device are themselves unpatented.

Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)

2010-04-06T21:09:02Z

Cep503: Created page with 'Supreme Court of the United States ARO MANUFACTURING CO., Inc., et al., Petitioners, v. CONVERTIBLE TOP REPLACEMENT CO., Inc. No. 21. Argued Oct. 13 and 17, 1960. Decided Feb. 2…'

Supreme Court of the United States
ARO MANUFACTURING CO., Inc., et al., Petitioners,
v.
CONVERTIBLE TOP REPLACEMENT CO., Inc.

No. 21.
Argued Oct. 13 and 17, 1960.
Decided Feb. 27, 1961.
Rehearing Denied April 17, 1961.

See 365 U.S. 890, 81 S.Ct. 1024.

Mr. Justice Harlan, Mr. Justice Frankfurter, and Mr. Justice Stewart dissented.

Mr. Ralph S. Spritzer, Washington, D.C., for United States, as amicus curiae.

Mr. Elliott I. Pollock, Washington, D.C., for respondent.

Mr. Justice WHITTAKER delivered the opinion of the Court.

On April 17, 1956, respondent, Convertible Top Replacement Co., Inc., acquired a ‘Territorial Grant’ (coextensive with ‘the Commonwealth of Massachusetts') of all rights in Letters Patent No. 2,569,724, commonly known as the Mackie-Duluk patent, and 10 days later commenced this action against petitioners, Aro Manufacturing Co., Inc., and several of its officers, to enjoin the alleged infringement and contributory infringement of the patent and for an accounting of profits.

The patent-one for a ‘Convertible Folding Top with Automatic Seal at Rear Quarter’-covers the combination, in an automobile body, of a flexible top fabric, supporting structures, and a mechanism for sealing the fabric against the side of the automobile body in order to keep out the rain. Tops embodying the patent have been installed by several automobile manufacturers in various models of convertibles. The components of the patented combination, other than the fabric, normally are usable for the lifetime of the car, but the fabric has a much *338 shorter life. It usually so suffers from wear and tear, or so deteriorates in appearance, as to become ‘spent,’ and normally is replaced, after about three years of use. The consequent demand for replacement fabrics has given rise to a substantial industry, in which petitioner, Aro Manufacturing Co., is a national leader. It manufactures and sells replacement fabrics designed to fit the models of convertibles equipped with tops embodying the combination covered by the patent in suit.

[1] Headnote Citing References After trial without a jury, the court held that the patent was valid, infringed and contributorily infringed by petitioners. It accordingly enjoined them from further manufacture, sale or use of these replacement fabrics, and appointed a master to hear evidence concerning, and to report to the court on, the matter of damages. The Court of Appeals affirmed, 270 F.2d 200, and we granted certiorari, 362 U.S. 902, 80 S.Ct. 609, 4 L.Ed.2d 553.

The Court of Appeals, after holding that the patent was valid, stated that the ‘basic question’ presented was whether petitioners' conduct constituted ‘making a permissible replacement of a part (the fabric) which expectedly became worn out or defective sooner than other parts of the patented combination’ or whether such replacement constituted ‘a forbidden reconstruction of the combination.’ It then held that replacement of the fabric constituted reconstruction of the combination and thus infringed or contributorily infringed the patent. It reached that conclusion principally upon the ground that ‘the life of the fabric is not so short, nor is the fabric so cheap, that we can safely assume that an owner would rationally believe that in replacing it he was making only a minor repair to his top structure.’ 270 F.2d at pages 202, 205.

Validity of the patent is not challenged in this Court. The principal, and we think the determinative, question presented here is whether the owner of a combination *339 patent, comprised entirely of unpatented elements, has a patent monopoly on the manufacture, sale or use of the several unpatented components of the patented combination. More specifically, and limited to the particular case here, does the car owner infringe**601 (and the supplier contributorily infringe) the combination patent when he replaces the spent fabric without the patentee's consent?

The fabric with which we deal here is an unpatented element of respondent's combination patent,FN1 which covers only the combination of certain components, one of which is a ‘flexible top material.'FN2 The patent makes no claim to invention based on the fabric or on its shape, pattern or design. Whether the fabric or its shape might have been patentable is immaterial,FN3 for the fact is that neither the fabric nor its shape has been patented. No claim that the fabric or its shape, pattern or design constituted the invention was made in the application or included in the patent.

FN1. There are 10 claims in the patent. Claims 1 through 9 of the patent each specifically begin: ‘In a convertible automobile body, the combination of * * *.’ Claim 10 does not contain the word ‘combination’ but nevertheless equally claims only a combination.

FN2. Among other elements in the claims are the automobile body structure or tonneau, a folding bow structure, a sealing strip, and a wiping arm.

FN3. Graver Tank & Mfg. Co. v. Linde Air Products Co., 336 U.S. 271, 277, 69 S.Ct. 535, 538, 93 L.Ed. 672; Universal Oil Products Co. v. Globe Oil & Refining Co., 322 U.S. 471, 484, 64 S.Ct. 1110, 1116, 88 L.Ed. 1399; Milcor Steel Co. v. George Fuller Co., 316 U.S. 143, 145-146, 62 S.Ct. 969, 970-971, 86 L.Ed. 1332.

[2] Headnote Citing References[3] Headnote Citing References Since the patentees never claimed the fabric or its shape as their invention, and the claims made in the patent are the sole measure of the grant,FN4 the fabric is no more than an unpatented element of the combination which was *340 claimed as the invention, and the patent did not confer a monopoly over the fabric or its shape. In Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661, 667, 64 S.Ct. 268, 272, 88 L.Ed. 376, this Court ruled the point as follows:

FN4. Mercoid Corp. v. Mic-Continent Inv. Co., 320 U.S. 661, 667, 64 S.Ct. 268, 272, 88 L.Ed. 376; Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 684, 64 S.Ct. 278, 280, 88 L.Ed. 396; McClain v. Ortmayer, 141 U.S. 419, 423-424, 12 S.Ct. 76, 77, 35 L.Ed. 800; Pennock v. Dialogue, 2 Pet. 1, 16, 7 L.Ed. 327.

‘The patent is for a combination only. Since none of the separate elements of the combination is claimed as the invention, none of them when dealt with separately is protected by the patent monopoly.’

And in Mercoid Corp. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 684, 64 S.Ct. 278, 280, the Court said:

‘The fact that an unpatented part of a combination patent may distinguish the invention does not draw to it the privileges of a patent. That may be done only in the manner provided by law. However worthy it may be, however essential to the patent, an unpatented part of a combination patent is no more entitled to monopolistic protection than any other unpatented device.’

See also McClain v. Ortmayer, 141 U.S. 419, 423-424, 12 S.Ct. 76, 35 L.Ed. 800; Pennock v. Dialogue, 2 Pet. 1, 16, 7 L.Ed. 327.

[4] Headnote Citing References It follows that petitioners' manufacture and sale of the fabric is not a direct infringement under 35 U.S.C. s 271(a), 35 U.S.C.A. s 271(a). FN5 Cimiotti Unhairing Co. v. American Fur Co., 198 U.S. 399, 410, 25 S.Ct. 697, 702, 49 L.Ed. 1100; Eames v. Godfrey, 1 Wall. 78, 79, 17 L.Ed. 547; Prouty v. Ruggles, 16 Pet. 336, 341, 10 L.Ed. 985; U.S. Industries, Inc., v. Otis Engineering Co., 5 Cir., 254 F.2d 198, 203. But the question remains **602 whether petitioners' manufacture and sale of the fabric constitute a contributory infringement of the patent under 35 U.S.C. s 271(c), *341 35 U.S.C.A. s 271(c).FN6 It is admitted that petitioners know that the purchasers intend to use the fabric for replacement purposes on automobile convertible tops which are covered by the claims of respondent's combination patent, and such manufacture and sale with that knowledge might well constitute contributory infringement under s 271(c), if, but only if, such a replacement by the purchaser himself would in itself constitute a direct infringement under s 271(a), for it is settled that if there is no direct infringement of a patent there can be no contributory infringement. In Mercoid v. Mid-Continent, supra, it was said: ‘In a word, if there is no infringement of a patent there can be no contributory infringer,’ 320 U.S. at page 677, 64 S.Ct. at page 276, and that ‘if the purchaser and user could not be amerced as an infringer certainly one who sold to him * * * cannot be amerced for contributing to a non-existent infringement.’ Id., 320 U.S. at page 674, 64 S.Ct. at page 275.FN7 It is plain that s 271(c)-a part of the Patent Code enacted in 1952-made no change in the fundamental precept that there can be no contributory infringement in the absence of a direct infringement. That section defines contributory infringement in terms of direct infringement-namely the sale of a component of a *342 patented combination or machine for use ‘in an infringement of such patent.’ And s 271(a) of the new Patent Code, which defines ‘infringement,’ left intact the entire body of case law on direct infringement.FN8 The determinative question, therefore, comes down to whether the car owner would infringe the combination patent by replacing the wornout fabric element of the patented convertible top on his car, or even more specifically, whether such a replacement by the car owner is infringing ‘reconstruction’ or permissible ‘repair.’

FN5. Section 271(a) provides:‘Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.’

FN6. Section 271(c) is as follows:‘Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfring use, shall be liable as a contributory infringer.’ (Emphasis added.)

FN7. Although these statements were made in the dissenting opinions of Mr. Justice Frankfurter and Mr. Justice Roberts, respectively, there is nothing in the majority opinion remotely suggesting any disagreement with the fundamental conclusion that there can be no contributory infringement in the absence of direct infringement.

FN8. The reviser's note on s 271(a) specifically stated that it is ‘declaratory only.’ 35 U.S.C.A. following s 271.‘The prior statute had no section defining or dealing with what constitutes infringement of a patent,’ and s 271(a) was adopted ‘for completeness.’ Federico, Commentary on the New Patent Act, 35 U.S.C.A. preceding s 1, at p. 51.

This Court's decisions specifically dealing with whether the replacement of an unpatented part, in a patented combination, that has worn out, been broken or otherwise spent, is permissible ‘repair’ or infringing ‘reconstruction,’ have steadfastly refused to extend the patent monopoly beyond the terms of the grant. Wilson v. Simpson, 9 How. 109, 13 L.Ed. 66-doubtless the leading case in this Court that deals with the distinction-concerned a patented planing machine which included, as elements, certain cutting knives which normally wore out in a few months' use. The purchaser was held to have the right to replace those knives without the patentee's consent. The Court held that, although there is no right to ‘rebuild’ a patented combination, the entity ‘exists' notwithstanding the fact that destruction or impairment **603 of one of its elements renders it inoperable; and that, accordingly, replacement of that worn-out essential part is permissible restoration of the machine to the original use for which it was bought. 9 How. at page 123. The Court explained that it is ‘the use of the whole’ of the *343 combination which a purchaser buys, and that repair or replacement of the worn-out, damaged or destroyed part is but an exercise of the right ‘to give duration to that which he owns, or has a right to use as a whole.’ Ibid.FN9

FN9. None of this Court's later decisions dealing with the distinctions between ‘repair’ and ‘reconstruction’ have added to the exposition made in Wilson v. Simpson, supra, and that opinion has long been recognized as the Court's authoritative expression on the subject. Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425, 14 S.Ct. 627, 38 L.Ed. 500, and Heyer v. Duplicator Mfg. Co., 263 U.S. 100, 44 S.Ct. 31, 68 L.Ed. 189, held that an owner or licensee of a patented machine or combination does not infringe the patent by replacing an unpatented element of the combination which has only a temporary period of usefulness, so that replacement is necessary for continued utilization of the machine or combination as a whole. Those cases came clearly within the Wilson case. American Cotton-Tie Co. v. Simmons, 106 U.S. 89, 1 S.Ct. 52, 54, 27 L.Ed. 79, the only other repair-reconstruction case decided by this Court since Wilson, found infringement by one who bought up, as scrap metal, patented metal straps, used in tying cotton bales, after the straps had been used and severed (in unbinding the bales), and who then welded or otherwise reconnected the straps at the severed point and resold them for further use in baling cotton. The case is distinguishable on its facts, and the fact that the ties were marked ‘Licensed to use once only,’ was deemed of importance by the Court. Cf. Henry v. A. B. Dick Co., 224 U.S. 1, 32 S.Ct. 364, 56 L.Ed. 645.

[5] Headnote Citing References The distilled essence of the Wilson case was stated by Judge Learned Hand in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 425: ‘The (patent) monopolist cannot prevent those to whom he sells from * * * reconditioning articles worn by use, unless they in fact make a new article.’ Instead of applying this plain and practical test, the courts below focused attention on operative facts not properly determinative of the question of permissible repair versus forbidden reconstruction. The Court of Appeals found that the fabric ‘is not a minor or relatively inexpensive component’ of the patented combination, or an element that would expectedly wear out after a very short period of use-although its ‘expectable life span’ is shorter than *344 that of the other components-and, for these reasons, concluded that ‘an owner would (not) rationally believe that * * * he was making only a minor repair’ in replacing the worn-out fabric, but that, instead, the replacement ‘would be counted a major reconstruction.’ 270 F.2d at page 205. We think that test was erroneous.

Respondent has strenuously urged, as an additional relevant factor, the ‘essentialness' of the fabric element to the combination constituting the invention. It argues that the particular shape of the fabric was the advance in the art-the very ‘heart’ of the invention-which brought the combination up to the inventive level, and, therefore, concludes that its patent should be held to grant it a monopoly on the fabric. The rule for which respondent contends is: That when an element of a patented machine or combination is relatively durable-even though not so durable as the entire patented device which the owner purchased-relatively expensive, relatively difficult to replace, and is an ‘essential’ or ‘distinguishing’ part of the patented combination, any replacement of that element, when it wears out or is otherwise spent, constitutes infringing ‘reconstruction,’ and, therefore, a new license must be obtained from, and another royalty paid to, the patentee for that privilege.

**604 [6] Headnote Citing References We cannot agree. For if anything is settled in the patent law, it is that the combination patent covers only the totality of the elements in the claim and that no element, separately viewed, is within the grant. See the Mercoid cases, supra, 320 U.S. at page 667, 64 S.Ct. at page 272; 320 U.S. at page 684, 64 S.Ct. at page 280.FN10 The basic fallacy in respondent's position is that it requires the ascribing to one element of the patented combination*345 the status of patented invention in itself. Yet this Court has made it clear in the two Mercoid cases that there is no legally recognizable or protected ‘essential’ element, ‘gist’ or ‘heart’ of the invention in a combination patent. In Mercoid Corp. v. Mid-Continent Co., supra, the Court said:

FN10. Although the Mercoid cases involve the doctrine of patent misuse, which is not an issue in this case, they also specifically delimit the character of a combination patent monopoly and it is upon that matter that they are relevant here.

‘That result may not be obviated in the present case by calling the combustion stoker switch the ‘heart of the invention’ or the ‘advance in the art.’ The patent is for a combination only. Since none of the separate elements of the combination is claimed as the invention, none of them when dealt with separately is protected by the patent monopoly.' 320 U.S. at page 667, 64 S.Ct. at page 272.

And in Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., supra, the Court said:

‘The fact that an unpatented part of a combination patent may distinguish the invention does not draw to it the privileges of a patent. That may be done only in the manner provided by law. However worthy it may be, however essential to the patent, an unpatented part of a combination patent is no more entitled to monopolistic protection than any other unpatented device.’ 320 U.S. at page 684, 64 S.Ct. at page 280.

[7] Headnote Citing References[8] Headnote Citing References No element, not itself separately patented, that constitutes one of the elements of a combination patent is entitled to patent monopoly, however essential it may be to the patented combination and no matter how costly or difficult replacement may be. While there is language in some lower court opinions indicating that ‘repair’ or ‘reconstruction’ depends on a number of factors, it is significant that each of the three cases of this Court, cited for that proposition, holds that a license to use a patented combination includes the right ‘to preserve its fitness for use so far as it may be affected by wear or breakage.’ *346 Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 325, 336, 29 S.Ct. 503, 507, 53 L.Ed. 816; Heyer v. Duplicator Mfg. Co., supra, 263 U.S. at page 102, 44 S.Ct. at page 32; and Wilson v. Simpson, supra, 9 How. at page 123, 13 L.Ed. 66. We hold that maintenance of the ‘use of the whole’ of the patented combination through replacement of a spent, unpatented element does not constitute reconstruction.

[9] Headnote Citing References[10] Headnote Citing References The decisions of this Court require the conclusion that reconstruction of a patented entity, comprised of unpatented elements, is limited to such a true reconstruction of the entity as to ‘in fact make a new article,’ United States v. Aluminum Co. of America, supra, 148 F.2d at page 425, after the entity, viewed as a whole, has become spent. In order to call the monopoly, conferred by the patent grant, into play for a second time, it must, indeed, be a second creation of the patented entity, as, for example, in American Cotton Tie Co. v. Simmons, supra. Mere replacement of individual unpatented parts, one at a time, whether of the same part repeatedly or different parts successively, is no more than the lawful right of the owner to repair his property. Measured by this test, the replacement of the fabric **605 involved in this case must be characterized as permissible ‘repair,’ not ‘reconstruction.’

Reversed.

Mr. Justice BLACK, concurring.

I fully concur in the judgment of reversal and with the opinion of the Court but want to express some additional views because of the concurring opinion of my Brother BRENNAN and the dissenting opinion of my Brother HARLAN. The latter two opinions, in my judgment, attempt to introduce wholly unnecessary and undesirable confusions, intricacies and complexities into what has been essentially a very simple question under the opinions of this Court, and that is: How can a court decide whether a person who has bought and owns a patented commodity composed of a combination of unpatented *347 elements is actually making a new one so as to infringe the patent, rather than merely replacing a worn-out part or parts necessary to continue the use of the commodity, which does not constitute patent infringement? I put the question as one of direct infringement because I agree with the other three opinions in this case that the petitioner Aro Manufacturing Co. here who cut out and sold fabrics to replace worn-out covers in patented automobile tops can be guilty of contributory infringement only if automobile owners who buy the fabrics and use them in their own cars are themselves guilty of direct infringements and liable for treable damages.FN1 The crucial question here therefore is one of direct, not contributory, infringement. For this reason it seems to me that most of the talk in the case about contributory infringement and misuse of patents is confusing and beside the point. For the same reason the emphasis in this Court, the District Court and the Court of Appeals on the recodification FN2 of the patent laws in 1952 seems to me to be out of place. The language and history of that Act show plainly: *348 (1) that Congress wanted to continue in force, but not expand, the judge-made doctrine of contributory infringement under which a person who knowingly aids, encourages or abets the direct infringement of a patent is to be held liable as a contributory infringer;FN3 (2) that Congress *349 did not **606 want patentees to be barred from prosecuting their claims for direct infringement merely because they exercised their right to assert a claim in or out of court for contributory infringement;FN4 (3) that the long-existing scope of a patentee's monopoly rights was not to be expanded *350 beyond what it had always been, that is, the exclusive right to make, use or sell a patented invention during the life of the patent.FN5 The present case, therefore, narrows down to this and no **607 more: Is the making or the use of a new piece of fabric to replace the worn-out fabric cover of an automobile top attached to an automobile that the owner has bought and paid for as his own an infringement of a patent on that top? Note immediately that if it is an infringement it must be because the owner of the top, in doing nothing but replacing the worn-out fabric, ‘makes' the patented invention which is the top with all its parts. Common sense and prior decisions of this Court require us to hold that an automobile owner does not ‘make’ a whole top when he merely replaces its worn-out fabric cover.

FN1. This elementary principle was brought to the attention of Congress by Mr. Giles S. Rich, the chief draftsman of the provisions on contributory infringement in the 1952 recodification:‘Mr. Rich. * * * I should state at the outset that wherever there is contributory infringement there is somewhere something called direct infringement, and to that direct infringement someone has contributed. It is a very different thing from a concept like contributory negligence.’ Hearings before Subcommittee of House Judiciary Committee on H.R. 3760, 82d Cong., 1st Sess. 151 (1951).

FN2. If anyone is inclined despite other evidence to the contrary to attribute to Congress a purpose to accomplish any farreaching changes in the substantive law by this enactment, he should take note that just before the bill was passed in the Senate, Senator Saltonstall asked on the floor, ‘Does the bill change the law in any way or only codify the present patent laws?’ Senator McCarran, Chairman of the Judiciary Committee which had been in charge of the bill for the Senate, replied, ‘It codifies the present patent laws.’ 98 Cong.Rec. 9323 (July 4, 1952).

FN3. To this end, the 1952 Act provides (35 U.S.C. s 271, 35 U.S.C.A. s 271):‘(b) Whoever actively induces infringement of a patent shall be liable as an infringer.‘(c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.’The hearings and committee reports show that the only purpose of these provisions was to prevent this Court's decision in Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376, from being treated as having obliterated the law of contributory infringement:‘Mr. Rogers. Then I take it from your statements, that there is some difference of opinion among those engaged in the practice of patent law as to whether or not the Supreme Court in its decisions has done away with contributory infringement.‘Mr. Rich. There is a great difference of opinion on the part of the bar and also apparently on the part of the judiciary * * *.‘Mr. Rogers. Then in effect this recodification, particularly as to section 231 (from which came the present s 271), would point out to the court, at least that it was the sense of Congress that we remove this question of confusion as to whether contributory infringement existed at all, and state in positive law that there is such a thing as contributory infringement, or at least it be the sense of Congress by the enactment of this law that if you have in the Mercoid case done away with contributory infringement, then we reinstate it as a matter of substantive law of the United States and that you shall hereafter in a proper case recognize or hold liable one who has contributed to the infringement of a patent.‘That is the substantive law that we would write if we adopted this section 231 as it now exists. Is that not about right?‘Mr. Rich. That is a very excellent statement. * * *’ Hearings, supra, note 1, at 159.‘* * * Considerable doubt and confusion as to the scope of contributory infringement has resulted from a number of decisions of the courts in recent years. The purpose of this section is to codify in statutory form principles of contributory infringement and at the same time eliminate this doubt and confusion.’ H.R.Rep. No. 1923 on H.R. 7794, 82d Cong., 2d Sess. 9.

FN4. To protect a patentee's right to sue for contributory infringement, the 1952 Act provides:‘(d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement.’ 35 U.S.C. s 271(d), 35 U.S.C.A. s 271(d).This provision was designed specifically to prevent the Mercoid case from being interpreted to mean that any effort to enforce a patent against a contributory infringer in itself constitutes a forfeiture of patent rights:‘Mr. Rich. * * *‘Other decisions following Mercoid have made it quite clear that at least some courts are going to say that any effort whatever to enforce a patent against a contributory infringer is in itself misuse. The cases are cited in the old hearings. Therefore, we have always felt-we who study this subject particularly-that to put any measure of contributory infringement into law you must, to that extent and to that extent only, specifically make exceptions to the misuse doctrine, and that is the purpose of paragraph (d).’ Hearings, supra, note 1, at 161-162.‘* * * The last paragraph of this section provides that one who merely does what he is authorized to do by statute is not guilty of misuse of the patent.’ H.R.Rep. No. 1923, supra, note 3, at 9.

FN5. The 1952 Act carried out this purpose by providing:‘(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.’ 35 U.S.C. s 271(a), 35 U.S.C.A. s 271(a).Although there was no statutory provision defining infringement prior to 1952, the definition adopted is consonant with the long-standing statutory prescription of the terms of the patent grant, which was contained in s 4884 of the Revised Statutes as follows:‘Every patent shall contain a short title or description of the invention or discovery, correctly indicating its nature and design, and a grant to the patentee * * * of the exclusive right to make, use, and vend the invention or discovery throughout the United States * * *.’ (Emphasis supplied.)This provision is now contained without substantial change in 35 U.S.C. s 154, 35 U.S.C.A. s 154.

Let us first take a quick look at the top described in the patent. It is composed first and foremost of a metal frame, no part of which is, or could have been, patented. It also includes several other pieces of metal, one of them called a ‘wiper,’ which is simply a plain piece of metal that is not and could not have been patented. Again, *351 there is a piece of fabric cut in a certain shape to fit and cover the unpatented frame. Of course this fabric could not be patented unless it had some peculiar novel quality of its own, but no such characteristic is or could have been claimed. The District Court held that this aggregation of nonpatentable parts was patentable as achieving a new result. The Court of Appeals, without passing on this question at all, merely took it for granted that a patentable ‘discovery’ has been made. I shall also act on that assumption although I am not sure in just what respect the aggregation of these common components could possibly have served a new purpose or have been the result of anything more than the simplest childlike mechanical skill. In fact, the patentee must have known all about the old-fashioned surrey with the fringe on top and with isinglass curtains you could roll right down in case of a change in the weather. The top is also reminiscent of the tops of Model T Fords which began to scare horses on country roads nearly half a century ago. A reading of the record indicates that the new discovery might be thought to inhere in the fact that (a) this top protects from rain better than any that had previously been manufactured, (b) it could be made rainproof from the inside rather than requiring some one to get outside and manipulate snaps, or (c) the folding material is fastened ‘below the top of the tonneau’ and ‘a wiping arm automatically operated by the bow structure (is used) for wiping the inside of the folding material as the top is raised and pressing it against the top of the tonneau.’ None of these alleged additions to the present stock of surrey and Tin Lizzie knowledge, however, gives us much aid in determining the real issue being decided here, which is whether replacing the fabric amounts to the ‘making’ of a new top and thus a direct infringement of the patent. It is of importance in considering this question that the District Court found, and *352 the Court of Appeals agreed, that the only thing the defendant made was the fabric portions of convertible tops. Certainly I suppose it would not be claimed that the sale of unshaped woolen fabric-a staple article of commerce-would make a tailor or merchant **608 guilty of contributory infringement if he sold it to the owner of a pair of patented trousers for patching purposes. But evidently the contention is that when petitioner here put his scissors or whatever cutting instrument he used on the fabric and shaped it so that it would fit the top, he was thereby aiding the top's owner to ‘make’ a new top, or at least to ‘reconstruct’ one from the ground up. Nothing in any of the prior cases of this Court indicates that such a contention should be sustained.

The case that may well be classified as the leading one on the subject of ‘making’ or ‘reconstruction’ as distinguished from ‘repair’ is Wilson v. Simpson, 9 How. 109, decided in 1850. That case involved a patent on a planing machine composed of unpatented parts described as the frame, the cogwheels, the shaft, and other elementary parts, which, when put together, constituted what was known as the ‘Woodworth planing-machine.’ Able counsel argued for the patentee that the cutting knives, which had to be replaced from time to time, could not be replaced without thereby infringing the patent. The contention was that the machine ceased to exist or have any ‘material existence’ the moment its knives wore out, and that for this reason replacement of the knives amounted to a ‘making’ of the whole patented invention which infringed the patentee's exclusive right to ‘make, use, and vend.’ The Court refused to accept this conceptualistic and misleading argument as to when a tangible machine ceases to have a ‘material existence.’ It did agree that ‘when the material of the combination ceases to exist, in whatever way that may occur, the right to *353 renew it depends upon the right to make the invention. If the right to make does not exist, there is no right to rebuild the combination.’ Id., at page 123. But the Court then went on to enunciate what has been the accepted rule in this Court ever since with respect to component parts of the combination: ‘When the wearing or injury is partial, then repair is restoration, and not reconstruction. * * * And it is no more than that, though it shall be a replacement of an essential part of a combination.’ Ibid.

In further explanation the Court pointed out that ‘(f)orm may be given to a piece of any material,-wood, metal, or glass,-so as to produce an original result, or to aid the efficiency of one already known, and that would be the subject for a patent.’ It went on to say that if that patented article should happen to be broken so that its parts could not be readjusted or so worn out and beyond repair as to be wholly useless, then a purchaser could not make another to replace it without infringing, but would have to buy a new one. This because the Court said that would amount to an ‘entire reconstruction’ of the patented article. ‘If, however,’ and this is of crucial importance with reference to the combination patent in the present case, ‘this same thing is a part of an original combination, essential to its use, then the right to repair and replace recurs.’ Id., at page 124.

The common-sense rule of Wilson v. Simpson was followed in Heyer v. Duplicator Mfg. Co., 263 U.S. 100, 44 S.Ct. 31, 68 L.Ed. 189. Involved there was a combination patent, a multiple copying machine, ‘one element of which,’ the Court said, ‘is a band of gelatine to which is transferred the print to be multiplied and which yields copies up to about a hundred. This band is attached to a spool or spindle which fits into the machine. Anyone may make and sell the gelatine composition but the ground of recovery was that the defendant*354 made and sold bands of sizes fitted for use in the plaintiff's machines and attached them to spindles, with intent that they should be so used. The main question is whether purchasers of these machines have a right to replace the gelatine bands from any source that they choose. If they have that right the defendant in selling to them does no wrong.’ **609 Id., 263 U.S. at page 101, 44 S.Ct. at page 31. A unanimous Court, speaking through Mr. Justice Holmes, recognized that the rule of Wilson v. S impson disposed of this question, saying that ‘(s)ince Wilson v. Simpson, 9 How. 109, 123, 13 L.Ed. 66, it has been the established law that a patentee had not ‘a more equitable right to force the disuse of the machine entirely, on account of the inoperativeness of a part of it, than the purchaser has to repair, who has, in the whole of it, a right of use.‘‘ 263 U.S. at page 101, 44 S.Ct. at page 32. Like the bands of gelatine in Heyer, the fabric in the present case is a common article of commerce, and also like the gelatine it has to have a special form to fit into the combination.

None of this Court's cases relied upon by my Brothers HARLAN and BRENNAN justifies adoption of the supposed guides and standards referred to in their opinions. Deciding whether a patented article is ‘made’ does not depend on whether an unpatented element of it is perishable, or how long some of the elements last, or what the patentee's or a purchaser's intentions were about them, regardless of whether the application of such standards is considered a question of law, as it is by Mr. Justice BRENNAN, or a question of fact, as it is by Mr. Justice HARLAN. The holdings of prior cases in this Court have not actually rested on such minor and insignificant factors in determining when an article has been ‘made’ and when it has not. A case in which only a minimal component has been omitted from a ‘making’ of the combination, such as the extreme example of omission of a single bolt from a patented machine or a button from a patented garment, might call upon this Court to articulate some rather obvious*355 refinements to this simple test of ‘making.'FN6 But this is by no means such a case and it is dangerously misleading to suggest that so clear a case as this one requires the application of a Pandora's flock of insignificant standards, especially when it is recognized, as it must be upon analysis, that consistent application of the standards suggested would actually change the basic test from ‘making’ to something not satisfactorily defined but indisputably different. And surely the scope of a patent should never depend upon a psychoanalysis of the patentee's or purchaser's intentions, a test which can only confound confusion.FN7 The common sense of the whole matter is, as recognized in the Wilson case and again in the opinion of the Court today, that in none but the most extraordinary case-difficult even to imagine-will a court ever have to invoke specially contrived evidentiary standards to determine whether there has actually been a new ‘making’ of the patented article.

FN6. This point was made by Mr. Rich in the course of the hearings as follows: ‘If the part he is supplying is in substance the very thing which was invented, it seems to me personally, that he is an infringer, and he should not be let off on some little technicality that there is something minor in the whole apparatus that he is not supplying.’ Hearings, supra, note 1, at 153. (Emphasis supplied.) Of course, as Mr. Rich well knew, ‘the very thing’ which is invented in any combination patent is the combination itself and not any unpatented component part of it-in this case, the whole convertible top, not the fabric used in it.

FN7. Cf. Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 679-680, 64 S.Ct. 268, 277-278, 88 L.Ed. 376 (Jackson, J., dissenting on other grounds).

Neither Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 325, 29 S.Ct. 503, 53 L.Ed. 816, nor Cotton-Tie Co. v. Simmons, 106 U.S. 89, 1 S.Ct. 52, 27 L.Ed. 79, nor any other cases of this Court that have treated this subject, depart from this common-sense rule of Wilson v. Simpson. In fact, as Mr. Justice Holmes pointed out in Heyer v. Duplicator Mfg. Co., supra, the question in Leeds & Catlin did not concern ‘a right to substitute*356 worn out parts' and '(t)he authority of Wilson v. Simpson and the **610 cases that have followed it was fully recognized (in Leeds & Catlin) and must be recognized here.’ 263 U.S. at page 102, 44 S.Ct. at page 32. The Cotton-Tie case likewise contains no support for holding that replacing the fabric in this top amounts to a ‘making’ or even a ‘remaking’ of the whole convertible top. The patent involved there was a cotton bale tie. Marked on each, for whatever it was worth, was ‘Licensed to use once only.’ (106 U.S. 89, 1 S.Ct. 54.) After these ties had been used once and broken off the cotton bales, the old tie material, along with the buckles, was sold as scrap, then re-rolled, straightened, riveted together, and cut into proper lengths and attached to an old buckle. It was this making of completely new ties out of the discarded scrap material that was held to amount to a making of the patented device and therefore an infringement.FN8 Cf. Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425, 433-434, 14 S.Ct. 627, 630-631, 38 L.Ed. 500. Morgan Envelope, in addition to its distinction of the Cotton-Tie case, is notable for its explicit reaffirmance of Wilson v. Simpson and for its statement by a unanimous Court that ‘(t)he true distinction’ is whether the component part of the combination is ‘the subject of a separate patent.’ 152 U.S. at page 435, 14 S.Ct. at page 631. I agree with my Brother WHITTAKER that this remains the true distinction today. FN9

FN8. See Transcript of Record, pp. 29-33, Cotton-Tie Co. v. Simmons, 106 U.S. 89, 1 S.Ct. 52, 27 L.Ed. 79.

FN9. I am perfectly content with the dissenting opinion's denomination of our interpretation as a ‘reconstruction’ of the cases in the sense in which I understand that term to be applied in these cases. I regret to say, however, that we cannot claim this interpretation to be a ‘discovery’ in the patent sense. It was anticipated by Judge Learned Hand's citation of Wilson v. Simpson for the proposition that ‘(t)he (patent) monopolist cannot prevent those to whom he sells from * * * reconditioning articles worn by use, unless they in fact make a new article.’ United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 425.

*357 In my judgment it would create mischievous results for a majority of this Court to create or approve ambiguous evidentiary standards which could only obfuscate the simple fact of whether a person is ‘making’ a patented article composed of old unpatentable elements. For example, there should be no attempt to decide whether there is a making by comparing the time that the different elements of such a patent normally will exist if let alone. The owner is under no obligation to let them alone. Every owner has the right to repair and patch each part of the property he bought and paid for in order to make it last as long as he can. Everyone knows that this patented top is likely to last as long as the car itself if it is repaired from time to time. An accident might wholly destroy the entire top and then it might have to be replaced by a new one, which if done without the patentee's consent would of course be an infringement. I cannot suppose, however, that if the bows upon which the fabric rests at the top, or the metal frames upon which it stands, or the metal wiper which helps to level off the curtain folds, or the snaps that may have to be used, should happen to become worn out or destroyed, that anyone could reasonably come to the conclusion that a replacement of one of these worn-out parts would be a complete rebuilding of the old top or the ‘making’ of a new one and therefore an infringement of the patent. Such a contention would seem little short of fantastic to me, and the same is true as to replacement of the fabric.

This case is of great importance in our competitive economy. The record shows that petitioner is but one of many small business enterprises filling a useful place in manufacturing the comparatively smaller parts of larger products like automobiles. It is quite right and in keeping with our patent system that small business enterprises should no more than **611 large enterprises be allowed to *358 infringe the patents of others. But businessmen are certainly entitled to know when they are committing an infringement. It is for that reason that the patent statutes require applicants to define with particularity and claim without ambiguity the subject matter which is regarded to be an invention. 35 U.S.C. ss 112, 154, 35 U.S.C.A. ss 112, 154. In the absence of suits like this how could a businessman even suspect that he might be infringing a patent by marketing an unpatented and unpatentable part of a combination like this fabric top? It has long been settled with respect to combination patents that the monopoly rights extend only to the patented combination as a whole and that the public is free to appropriate any unpatented part of it, ‘however important.’ Special Equipment Co. v. Coe, 324 U.S. 370, 376, 65 S.Ct. 741, 744, 89 L.Ed. 1006, and cases cited. And in the 1952 recodification Congress was very careful, in what is now 35 U.S.C. s 271(c), 35 U.S.C.A. s 271(c), to specify that a vendor is liable as a contributory infringer only if he has sold the component part ‘knowing’ that it is to be used in an infringement.FN10 But to what avail these congressional precautions if this Court, by its opinions, would subject small businessmen to the devastating uncertainties of nebulous and permissive standards of infringement under which courts could impose treble damages upon them for making parts, distinct, separable, minor parts, or even major parts of a combination patent, upon which parts no patent has been or legally could have been issued. The fact that subjection of a small business enterprise to treble damages for such activities can have disastrous or even lethal consequences is suggested by the observation of the *359 District Court in this very case that petitioner had not made a supersedeas bond, whether because unable or unwilling to do so the court said it was not informed. The efforts of Congress to help small business enterprises keep their heads above water in the Small Business Act of 1953,FN11 which was enacted almost contemporaneously with the recodification of the patent laws, could be frustrated at least in large part by subjecting those engaged in industrial activities to the constantly overhanging threat of suits for patent infringements for the sale of unpatented articles. And I think it is indisputable that the unpredictability in any given case of the resolution of the intricate standards suggested by my Brothers HARLAN and BRENNAN would deter small businessmen from engaging even in activities that all members of this Court would ultimately agree do not constitute contributory infringement. In our own case these standards led to opposite conclusions when applied by three distinguished judges of the Court of Appeals and when applied by Mr. Justice BRENNAN.

FN10. If the wording of the statutory provision be thought to leave any doubt on this point, the intent of Congress is made manifest by the fact that the position of the word ‘knowing’ (originally ‘knowingly’) in subsection (c) was changed after the hearings for this very purpose. See Hearings, supra, note 1, at 13, 142, 164, 176.

FN11. 67 Stat. 232, as amended, 15 U.S.C. ss 631-651, 15 U.S.C.A. ss 631-651.

The established policy in this Nation for more than a century has been that when an article described in a patent is sold and ‘passes to the hands of the purchaser, it is no longer within the limits of the monopoly. It passes outside of it, and is no longer under the protection of the act of congress. * * * Contracts in relation to it are regulated by the laws of the State, and are subject to state jurisdiction.'FN12 In this day of advanced technology and mechanical appliances upon which so many people depend, **612 *360 this wise policy against permitting patentees to expand their control of commodities after they reach the hands of bona fide purchasers is all the more important. Congress surely did not intend for it to be left within the sole discretion of the patent monopolist whether an unpatented component part will be separately available to the purchaser for replacement in the combination or whether, when that part wears out, the purchaser will be forced to replace a larger subcombination of the patented product or perhaps even the entire aggregation. I have an idea it would greatly surprise and shock the owners of convertible automobiles throughout this country to learn that there is a serious contention made that if they buy a new fabric to replace the worn-out fabric on their convertible top, loose legal formulas like those suggested by my Brothers HARLAN and BRENNAN can be applied to make them liable for treble damages, attorneys' fees and heavy costs. No such doctrine should be allowed to gain a foothold through judicial decisions. If bona fide purchasers of goods throughout the Nation are to be subjected to any such phenomenal expansion of the right of patentees, Congress, not this Court, should do it. One royalty to one patentee for one sale is enough under our patent law as written. And this proposition can be stated with knowledge that there is not a single sentence, clause, phrase or word in the entire legislative history of the 1952 recodification which could have led Congress to believe that it was being asked by means of the provisions enacted to enlarge the scope of a patentee's exclusive right to ‘make, use, and vend’ the thing patented.

FN12. Bloomer v. McQuewan, 14 How. 539, 549-550, 14 L.Ed. 532; see United States v. Univis Lens Co., 316 U.S. 241, 251, 62 S.Ct. 1088, 1093, 86 L.Ed. 1408, and cases collected in General Talking Pictures Corp. v. Western Electric Co., 305 U.S. 124, 128, 59 S.Ct. 116, 118, 83 L.Ed. 81, note 1 (dissenting opinion). This century-long mandate cannot be set aside because of what my Brother HARLAN now conceives to be a more enlightened policy in this field of law.

A fundamental error underlying the misleading standards suggested by my Brothers HARLAN and BRENNAN is the notion that in a case of this kind a court is obliged to search for the alleged ‘heart’ or ‘core’ of the combination patent. This misconception, which has unequivocally*361 been rejected in our prior decisions,FN13 is nothing but an unwarranted transformation, and expansion of a combination patent, which was correctly described by Mr. Justice Jackson as conferring only a ‘* * * right in an abstruse relationship between things in which individually there is no right.'FN14 A patented combination is no more than that, a novel relationship brought to bear on what presumably are familiar elements already in the public domain. Such familiar elements are not removed from the public domain merely because of their use, however crucial, in the novel combination. Of course, if novelty should inhere in one of the parts as well as in the whole, then that novel ‘heart’ or ‘core’ can be separately patented and separately protected. But in the absence of such a separate patent, which in this case would presumably be some sort of patent on the utility of the shape of the fabric, the public has the right to make, use and vend each part subject only to the established limitation of contributory infringement: that a part may not be knowingly supplied for use by an unauthorized person in a new making of what is in effect the whole combination.

FN13. See Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 667-668, 64 S.Ct. 268, 272, 88 L.Ed. 376, and cases cited.

FN14. Id., 320 U.S. at page 679, 64 S.Ct. at page 277 (dissenting opinion).

Finally, petitioners point out that there is a serious constitutional question involved in the claim that automobile owners can be mulcted for damages for replacing the worn-out fabric in their convertible tops. Article I, s 8 of the Constitution provides:

‘The Congress shall have Power * * * to promote the Progress**613 of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.’

*362 I have no doubt of the wide powers of the States to govern the sale of fabrics, clipped or unclipped, cut or uncut, cloth, oilcloth, isinglass or plastic. But it is difficult for me to think that shaping up a common piece of fabric with a common pair of scissors or other cutter can be exalted to that important category of ‘Discoveries' that the Constitution authorizes Congress to promote by special federal legislation. Nor do I believe that a purpose should be attributed to Congress to allow the courts, by means of an incalculable weighing of a complex of nebulous standards, to divine whether persons should be given monopoly rights on account of the way they trim ordinary fabrics. If there is anything sure about the 1952 recodification it is that the purpose was to clarify not to confuse the law. The test applied in the opinion of the Court today will not confuse, is in accord with our prior decisions endorsed by Congress and, most important, is in keeping with the general purposes of this Nation to retain an economy in which competition is a general law of trade except where actual ‘Discoveries' have been made.

Mr. Justice BRENNAN, concurring in the result.

I agree that the replacement of the top was ‘repair’ and not ‘reconstruction,’ but I cannot agree that the test suggested by my Brother WHITTAKER for determination of that question is the correct one. My Brother HARLAN'S dissent cogently states the reasons why I also think that is too narrow a standard of what constitutes impermissible ‘reconstruction.’ For there are circumstances in which the replacement of a single unpatented component of a patented combination short of a second creation of the patented entity may constitute ‘reconstruction.’ Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 325, 29 S.Ct. 503, 53 L.Ed. 816; Davis Electrical Works v. Edison Electric Light Co., 1 Cir., 60 F. 276; cf. Williams v. Hughes Tool Co., 10 Cir., 186 F.2d 278. These holdings applied the long-established standard for *363 determination of ‘repair’ or ‘reconstruction.’ Under that standard there is no single test to which all must yield; rather the determination is to be based upon the consideration of a number of factors. Wilson v. Simpson, 9 How. 109, 13 L.Ed. 66; Heyer v. Duplicator Mfg. Co., 263 U.S. 100, 44 S.Ct. 31, 68 L.Ed. 189.FN1 Appropriately to be considered are the life of the part replaced in relation to the useful life of the **614 whole combination,FN2 the importance of the replaced element to *364 the inventive concept,FN3 the cost of the component relative to the cost of the combination,FN4 the common sense understanding and intention of the patent owner and the buyer of the combination as to its perishable components, FN5 whether the purchased component replaces a worn-out part or is brought for some other purpose,FN6 and other pertinent factors. FN7

FN1. The standard has been variously expressed. See, e.g., ‘Whether the bounds of legitimate repair have been exceeded must be determined upon the facts of each case as it is presented.’ Morrin v. Robert White Engineering Works, 2 Cir. 143 F. 519, 520. ‘In the absence of a crucial test to which all must yield, the only aid comes from various minor or incidental considerations, and their combined effect.’ Davis Electrical Works v. Edison Electric Light Co., 1 Cir., 60 F. 276, 280. ‘The right, in our view, must depend in every case upon the special facts of the case as they show the relation of the two classes of parts-those supplied and those remaining in the original construction-to the patented unit. * * * there might be a structure where the putting in of a certain number of new parts would be ‘reconstruction,’ whereas the putting in of a smaller number would be ‘repair,’ or even where the putting in of one new part would be reconstruction but the putting in of two or three would not be, depending in each case upon whether, after the replacement, the structure as a whole could reasonably be said to be a new structure or the old one.' Automotive Parts Co. v. Wisconsin Axle Co., 6 Cir., 81 F.2d 125, 127. ‘Each case, as it arises, must be decided in the light of all the facts and circumstances presented, and with an intelligent comprehension of the scope, nature, and purpose of the patented invention, and the fair and reasonable intention of the parties.’ Goodyear Shoe Machinery Co. v. Jackson, 1 Cir., 112 F. 146, 150. ‘The dividing line between repairs and a making over cannot be verbally located. What has been done can with more or less confidence be pronounced to be one or the other, but neither the one nor the other can be defined.’ Hess-Bright Mfg. Co. v. Bearings Co., D.C., 271 F. 350, 352.

FN2. Wilson v. Simpson, supra; Heyer v. Duplicator Manufacturing Co., supra; Williams v. Barnes, 7 Cir., 234 F. 339; Micromatic Home Corp. v. Mid-West Abrasive Co., 6 Cir., 177 F.2d 934; Payne v. Dickinson, 3 Cir., 109 F.2d 52; El Dorado Foundry, Machine & Supply Co. v. Fluid Packed Pump Co., 8 Cir., 81 F.2d 782; Slocomb & Co., Inc., v. A. C. Layman Machine Co., D.C., 227 F. 94, affirmed, 3 Cir., 230 F. 1021. In the Slocomb case the Court said, 227 F. at page 98: ‘If * * * patented mechanism be composed of various parts and elements the most expensive of which have an average life of twenty years, and other parts or features of comparatively trifling cost are subjected in the operation of the mechanism to such wear as to require renewal or replacement within a period of a few months, or of a year or two, it would seem reasonable and sensible to treat such renewal or replacement as involving repairs in contradistinction to reconstruction.’

FN3. Leeds & Catlin Co. v. Victor Talking Machine Co., supra; Davis Electrical Works v. Edison Electric Light Co., supra, ‘in certain stages of use the essence of a device, though in appearance only a small portion of it, may be lost, and its renewal amount to reconstruction.’ 60 F. at pages 279-280. Morrin v. Robert White Engineering Works, supra, 143 F. at page 519.

FN4. Heyer v. Duplicator Mfg. Co., supra; American Safety Razor Corp. v. Frings Bros. Co., 3 Cir., 62 F.2d 416; El Dorado Foundry, Machine & Supply Co. v. Fluid Packed Pump Co., supra; Slocomb & Co., Inc., v. Layman Machine Co., supra.

FN5. Westinghouse Elec. & Mfg. Co. v. Hesser, 6 Cir., 131 F.2d 406, 410: ‘Where the perishable nature of the parts are recognized by the patentee, and where the parts are adapted to be removed from the patented combination and, from time to time, replaced, replacement of such parts is repair and not reconstruction.’And as regards indicia of an understanding see El Dorado Foundry, Machine & Supply Co. v. Fluid Packed Pump Co., supra; Slocomb & Co., Inc., v. Layman Machine Co., supra; Electric Auto-Lite Co. v. P. & D. Mfg. Co., 2 Cir., 78 F.2d 700.

FN6. See Leeds & Catlin Co. v. Victor Talking Machine Co., supra; Connecticut Telephone & Elec. Co. v. Automotive Equipment Co., D.C., 14 F.2d 957, affirmed, 3 Cir., 19 F.2d 990.

FN7. Is the replaced part the dominant structural element of the combination? Southwestern Tool Co. v. Hughes Tool Co., 10 Cir., 98 F.2d 42; Automotive Parts Co. v. Wisconsin Axle Co., supra, 81 F.2d at page 127: ‘if the new parts so dominate the structural substance of the whole as to justify the conclusion that it has been made anew, there is a rebuilding or reconstruction; and conversely, where the original parts, after replacement, are so large a part of the whole structural substance as to preponderate over the new, there has not been a reconstruction but only repair.’Has there been physical destruction of the combination from use of the component? Cotton-Tie Co. v. Simmons, 106 U.S. 89, 1 S.Ct. 52, 27 L.Ed. 79.

*365 It is true that some decisions of this Court in patent misuse cases FN8 raised doubt as to the continuing vitality of this standard in actions such as this one for relief from contributory infringement.**615 But the Congress swept away that doubt when it gave the standard statutory sanction in 1952.FN9 My Brother WHITTAKER'S test that *366 ‘(m)ere replacement of individual unpatented parts, one at a time, whether of the same part repeatedly or different parts successively, is no more than the lawful right of the owner to repair his property’ plainly would not heed the congressional mandate. Instead Congress meant, as I read the legislative history of the 1952 Act, that the courts should recognize, in actions for contributory infringement, the distinction between components stated in Wilson v. Simpson, supra, the leading case in this field:

FN8. See, e.g., Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 669, 64 S.Ct. 268, 273, ‘The result of this decision, together with those which have preceded it, is to limit substantially the doctrine of contributory infringement. What residuum may be left we need not stop to consider.’

FN9. 35 U.S.C. s 271, 35 U.S.C.A. s 271. The purpose of (c) of this section appears in the House Judiciary Committee Report, H.R.Rep.No.1923 on H.R. 7794, 82d Cong., 2d Sess., p. 9. ‘The doctrine of contributory infringement has been part of our law for about 80 years. It has been applied to enjoin those who sought to cause infringement by supplying someone else with the means and directions for infringing a patent. One who makes a special device constituting the heart of a patented machine and supplies it to others with directions (specific or implied) to complete the machine is obviously appropriating the benefit of the patented invention. It is for this reason that the doctrine of contributory infringement, which prevents appropriating another man's patented invention, has been characterized as ‘an expression both of law and morals.’ Considerable doubt and confusion as to the scope of contributory infringement has resulted from a number of decisions of the courts in recent years. The purpose of this section is to codify in statutory form principles of contributory infringement and at the same time eliminate this doubt and confusion.' The legislative history makes it clear that paragraph (d) complements (c) with the view to avoid the application of the patent misuse doctrine to conduct such as that of the patent owner in the present case. See Hearings, H.R. 3760, 82d Cong., 1st Sess., Subcommittee of the House Judiciary Committee, 1951, pp. 161-162, 169-175.

'The other constituent parts of this invention, though liable to be worn out, are not made with reference to any use of them which will require them to be replaced. These, without having a definite duration, are contemplated by the inventor to last so long as the materials of which they are formed can hold together in use in such a combination. No replacement of them at intermediate intervals is meant or is necessary. They may be repaired as the use may require. With such intentions, they are put into the structure. So it is understood by a purchaser, and beyond the duration of them a purchaser of the machine has not a longer use.' 9 How. 125-126.

Giles S. Rich, the chief draftsman of s 271(c), when told that manufacturers of replacement parts for automobiles, tractors, and other machines had protested against the section in fear of being held contributory infringers under it, replied: ‘Whether or not they would be liable would depend on the facts in each particular case. And I think that the best way to clear that up is to take up section (c) and deal with the matter specifically and point out to you the limitations that are there, which have to be met before anybody is held liable, and then leave it to you to decide whether a parts supplier should be held liable or not, depending on the kind of a *367 part he may be supplying. If the part he is supplying is in substance the very thing which was invented, it seems to me personally, that he is an infringer, and he should not be let off on some little technicality that there is something minor in the whole apparatus that he is not supplying.’ Hearings, H.R. 3760, 82d Cong., 1st Sess., supra, p. 153. He added: ‘in each case you would have to look at the details and see what was invented, and in effect whether the alleged infringer is appropriating somebody else's invention, or whether he is not.’ Hearings, supra, p. 157.

However, I disagree with my Brother HARLAN that we should refrain from **616 making an independent application of the proper standard in this case because of the conclusion of both lower courts that the replacement of the top constituted ‘reconstruction.’ I would suppose that ‘repair’ or ‘reconstruction’ is so far a question of law as to relieve appellate review from the restraints of Federal Rule of Civil Procedure 52(a), 28 U.S.C.A. See United States v. E.I. Du Pont de Nemours & Co., 353 U.S. 586, 598, 77 S.Ct. 872, 879, 1 L.Ed. 1057. In no previous case presenting the question of ‘repair’ or ‘reconstruction’ has this Court believed itself restrained from making an independent determination. Wilson v. Simpson, supra; American Cotton-Tie Co. v. Simmons, supra; Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425, 14 S.Ct. 627, 38 L.Ed. 500; Leeds & Catlin Co. v. Victor Talking Machine Co., supra; Heyer v. Duplicator Mfg. Co., supra. And here the error of the two courts below is manifest. The life of the top was approximately three years in contrast to the several times longer life of the other components of the combination. The top was replaceable at a cost of from $30 to $70 depending on the fabric; in contrast the cost of other elements of the combination was approximately $400. These considerations of themselves suggest that the replacement was mere ‘repair’ of the worn component and not ‘reconstruction’ *368 of the patented combination. Surely they support the inference that all concerned knew that the fabric of the top would become weather-beaten or unable to perform its protective function long before those other components, not so exposed and more durable as well, wore out. Its perishable nature coupled with its fractional cost as compared to the whole combination and its ready replaceability all point to the conclusion reached here. And particularly persuasive, I think, that this replacement was mere ‘repair,’ is the role of the top relative to other components in the inventive concept. Patentable novelty inhered not merely in the shape of the fabric; the record shows that a wiping arm which pressed the material in such way as to create a seal at the belt line of the vehicle played a significantly important role in the inventive concept. The claim for the combination is that it made possible an automatic top, made the top weathertight and prevented unauthorized access to the vehicle. The wiper arm, rather than the shape of the material alone, accomplished the inventive purposes of providing a top which was weathertight and prevented unauthorized access.FN10 The shape of the fabric was thus not the essence of the device and in all the circumstances it seems reasonable and sensible to treat the replacement of the top as ‘repair.’

FN10. This appears from the patent claims and from the testimony of respondent's patent and engineering experts. The following representation was made in connection with amended claims: ‘The real invention is fastening the folding material considerably below the top of the tonneau and then using a wiping arm automatically operated by the bow structure for wiping the inside of the folding material as the top is raised and pressing it against the top of the tonneau.’

I, therefore, think that the judgment of the Court of Appeals must be reversed, except, however, as to the relief granted respondent in respect of the replacements made on Ford cars before July 21, 1955.

*369 Mr. Justice HARLAN, whom Mr. Justice FRANKFURTER and Mr. Justice STEWART join, dissenting.

For more than a hundred years it has been the law that the owner of a device covered by a combination patent can, without infringing, keep the device in good working order by replacing, either himself or through any source he wishes, unpatented parts, but that he may not, without rendering himself liable for infringement, reconstruct the device itself, whether because of its deterioration or for any other reason, and even though all of the component parts of the device are themselves unpatented. **617 Wilson v. Simpson, 9 How. 109, 13 L.Ed. 66; American Cotton-Tie Co. v. Simmons, 106 U.S. 89, 1 S.Ct. 52, 27 L.Ed. 79; Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425, 14 S.Ct. 627, 38 L.Ed. 500; Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U.S. 325, 29 S.Ct. 503, 53 L.Ed. 816; Heyer v. Duplicator Mfg. Co., 263 U.S. 100, 44 S.Ct. 31, 68 L.Ed. 189. The underlying rationale of the rule is of course that the owner's license to use the device carries with it an implied license to keep it fit for the use for which it was intended, but not to duplicate the invention itself. Correlatively, one who knowingly participates in an impermissible reconstruction of a patented combination is guilty of contributory infringement. ‘Direct’ and ‘contributory’ infringements are now codified in s 271 of the Patent Act of 1952. 35 U.S.C. s 271, 35 U.S.C.A. s 271. FN1

FN1. ‘(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.‘(b) Whoever actively induces infringement of a patent shall be liable as an infringer.‘(c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.’

*370 In this case the District Court and the Court of Appeals upon full consideration have concurred in finding that Aro's replacement-supplying of the fabric portion of respondent's convertible automobile tops contributorily infringed the latter's territorial rights under the valid Mackie-Duluk combination patent, in that such activity constituted a deliberate participation on Aro's part in a forbidden reconstruction of the patented combination. In reversing, the Court holds that there can be no direct infringement (and hence, of course, no contributory infringement) of a combination patent by replacement of any of the components of the patented entity unless (1) such component is itself separately patented or (2) the entire entity is rebuilt at one time. Since the fabric cover component of the Mackie-Duluk top was not itself separately patented, and since it constituted but one part of the patented combination, the Court concludes that Aro's supplying of such covers for replacement on cars equipped with respondent's tops did not as a matter of law constitute contributory infringement.FN2

FN2. The Mackie-Duluk invention was described by the Court of Appeals as follows:‘Folding tops for vehicles consisting of bows of wood or metal covered with a flexible waterproof fabric * * * are, of course, as old as the automobile art which in the beginning only adopted with necessary modifications the much older art of collapsible tops for chaises, buggies and some other horse drawn vehicles. The rear panels of the folding tops of earlier days were fastened permanently at the bottom to the outside of the top of the rear portion of the body of the vehicle, and the quarters, the rear portions of the sides of the vehicle, if protected at all, were protected with flaps or curtains, sometimes integral with the top and sometimes not, fastened at the bottom to the outside of the top of the body with buttons, snaps or some equivalent means of fastening. Naturally, to prevent tearing, these quarter flaps had to be unfastened by hand when the top was lowered and when the top was put up fastened again by hand for neat appearance and also to prevent the entrance of rain. This manual fastening and unfastening of the bottoms of the quarter flaps presented no great problem until the advent of the so-called convertible automobile with a folding top operated mechanically rather than manually. The problem presented by the quarter flaps of tops of this kind was first partially solved by fastening the bottom of the flap to the outside of the top of the body of the vehicle with ‘releasable fastening means,’ that is to say, with some sort of slide fastening device which would detach automatically when the top was lowered. The major part of the problem remained, however, for when the top was put up the flaps had to be fastened manually, which meant that the operator was required to get out of the car altogether, or at least to reach out, often, of course, in the rain. The object of the Mackie-Duluk patent was ‘to provide an automatic fastening and sealing means at the top and sides of the tonneau of the convertible’ which ‘never has to be operated or touched by the driver of the car.’ And, as we have already indicated, the District Court found that the patentees succeeded in attaining their object by devising a patentable combination of elements.‘The Mackie-Duluk device consisted of providing an elongated flap intergral with the quarter sections of the fabric top adapted to be permanently fastened at the bottom deep within the body of the car, at or perhaps below, but certainly not in front, of the axis of rotation of the bows, to a trough welded to the body of the car and provided with a drain to carry off water entering between the flap and the car body. In addition, to minimize the entrance of water between the body and the flap, they provided a ‘wiper arm’ so-called, which in effect acted as an additional, low rearward bow pressing the downwardly extending flap outwardly against the top of the body of the vehicle as the top is raised from its folded position to close, or substantially to close, any gap there might be between the inside of the top of the body of the car and the flap extending downward into the interior of the automobile body.' 270 F.2d at pages 202-203.The District Court said:'Mackie-Duluk was a substantial and enlightened step, filling a long-felt want, in a field in which defendants have produced, with one exception, only paper patents, the most emphasized being foreign, which did not even purport to do what Mackie-Duluk accomplished.' Id., at page 201.

**618 *371 My Brother BRENNAN'S opinion, while disagreeing with that conclusion, would reverse because on its view of the record, untrammeled by the contrary findings and conclusions of the two lower courts, it is concluded that what *372 here took place constituted ‘repair’ and not ‘reconstruction’ of the Mackie-Duluk tops.

I am unable to subscribe to either of these views.

I.
I believe that the narrow concept of what constitutes impermissible reconstruction, reflected in the opinion of the Court, departs from detablished principles-principles which, it will be shown, were approved by Congress when it enacted s 271 of the new Patent Act, over objections of the Department of Justice altogether comparable to the position which it now advances as amicus in the present case.

The all-important thing is to determine from the past decisions of this Court what the proper test of ‘reconstruction’ is, for I agree that 35 U.S.C. s 271(c), 35 U.S.C.A. s 271(c), limits contributory infringement to that which would be direct infringement, and that s 271(a), dealing with direct infringement, leaves intact the pre-existing case law. The cases cited above amply demonstrate that there is no single yardstick for determining whether particular substitutions of new for original unpatented parts of a patented combination amount to permissible repair or forbidden reconstruction. The matter is to be resolved ‘on principles of common sense applied to the specific facts' of a given case, Heyer, supra, 263 U.S. at page 102, 44 S.Ct. at page 32. The single simple rule of ‘reconstruction’ which the Court finds in those cases can, in my view, only be divined at the expense of reconstructing the decisions themselves.

The leading case is Wilson v. Simpson, supra. There, in holding that the owner of a planing machine covered by a combination patent could replace from any source he desired the unpatented cutting knives thereof, the Court said, 9 How. at page 125:

‘The right of the assignee (the owner of the machine) to replace the **619 cutter-knives is not because *373 they are of perishable materials, but because the inventor of the machine has so arranged them as a part of its combination, that the machine could not be continued in use without a succession of knives at short intervals. Unless they were replaced, the invention would have been but of little use to the inventor or to others. The other constituent parts of this invention, though liable to be worn out, are not made with reference to any use of them which will require them to be replaced. These, without having a definite duration, are contemplated by the inventor to last so long as the materials of which they are formed can hold together in use in such a combination. No replacement of them at intermediate intervals is meant or is necessary. They may be repaired as the use may require. With such intentions, they are put into the structure. So it is understood by a purchaser, and beyond the duration of them a purchaser of the machine has not a longer use. But if another constituent part of the combination is meant to be only temporary in the use of the whole, and to be frequently replaced, because it will not last as long as the other parts of the combination, its inventor cannot complain, if he sells the use of his machine, that the purchaser uses it in the way the inventor meant it to be used, and in the only way in which the machine can be used.’

In the Cotton-Tie case, supra, the question was whether combination patents for the making of ties for cotton bales, consisting of a metal buckle and band, were infringed by one who bought as scrap metal such ties and bands after severance from cotton bales, and resold them for further use as baling ties after piecing together several segments of the old bands and reconnecting the resulting single band with the original buckle. In holding that *374 this was an impermissible reconstruction of the patented combination,FN3 the Court said:

FN3. While, as the Court remarks (365 U.S. at page 343, 81 S.Ct. at page 610, note 9), the Court there did refer to the fact that the original ties were stamped ‘Licensed to use once only,’ it is manifest that nothing really turned on that point.

‘Whatever right to defendants could acquire to the use of the old buckle, they acquired no right to combine it with a substantially new band, to make a cotton-bale tie. They so combined it when they combined it with a band made of the pieces of the old band in the way described. What the defendants did in piecing together the pieces of the old band was not a repair of the band or the tie, in any proper sense. The band was voluntarily severed by the consumer at the cotton-mill because the tie had performed its function of confining he bale of cotton in its transit from the plantation or the press to the mill. Its capacity for use as a tie was voluntarily destroyed. As it left the bale it could not be used again as a tie. As a tie the defendants reconstructed it, although they used the old buckle without repairing that. The case is not like putting new cutters into a planing-machine, as in Wilson v. Simpson, 9 How. 109 (13 L.Ed. 66) in place of cutters worn out by use. The principle of that case was that temporary parts wearing out in a machine might be replaced to preserve the machine, in accordance with the intention of the vendor, without amounting to a reconstruction of the machine.’ 106 U.S. at pages 93-94, 1 S.Ct. at page 56.

In Morgan Envelope, supra, the Court found no contributory infringement on the part of one supplying toilet paper **620 rolls specially designed for use in a patented combination, comprising a dispenser and the paper rolls themselves. Remarking (152 U.S. at page 433, 14 S.Ct. at page 630) that there ‘are doubtless many cases to the effect that the manufacture and sale *375 of a single element of a combination, with intent that it shall be united to the other elements, and so complete the combination, is an infringement,’ the Court found the situation before it distinguishable in that ‘the element (paper roll) made by the alleged infringer is an article of manufacture perishable in its nature, which it is the object of the mechanism (the dispenser) to deliver, and which must be renewed periodically, whenever the device is put to use.’ Ibid. On similar grounds the Court in Heyer, supra, found no contributory infringement in the intentional supplying of unpatented gelatine bands for use in a duplicating machine covered by a combination patent, of which one element was the gelatine band.

On the other hand, in Leeds & Catlin, supra, the intentional supplying of phonograph records for use on respondent's talking machines, which were protected by a combination patent covering both machine and records, was held to be contributory infringement, it being found that records were the ‘operative ultimate tool of the invention,’ that respondent's records were not inherently ‘perishable’ in nature, and that the supplying of the competitor's records was not to replace records ‘deteriorated by use’ or which had suffered ‘breakage.’ 233 U.S. at page 336, 29 S.Ct. at page 507.

These cases destroy the significance of two factors on which the Court heavily relies for its conclusion in the present case: first, that the fabric top was an unpatented element of the Mackie-Duluk invention, and, second, that Aro's tops constituted a replacement of but one part of the patented combination. For as was said in Leeds & Catlin (233 U.S. at page 333, 29 S.Ct. at page 505), ‘(i)t can make no difference as to the infringement or noninfringement of a combination that one of its elements or all of its elements are unpatented’; and in all of these cases the claimed infringing replacement involved only one of the elements of the patented combination. Further, thd different results reached in the cases, two finding ‘reconstruction’ and *376 three only ‘repair,’ also vitiate the reasoning of the Court, in that they show that the issue of reconstruction vel non turns not upon any single factor, but depends instead upon a variety of circumstances, differing from case to case. The true rule was well put by this same Court of Appeals in its earlier decision in Goodyear Shoe Machinery Co. v. Jackson, 112 F. 146, 150:

‘It is impracticable, as well as unwise, to attempt to lay down any rule on this subject, owing to the number and infinite variety of patented inventions. Each case, as it arises, must be decided in the light of all the facts and circumstances presented, and with an intelligent comprehension of the scope, nature, and purpose of the patented invention, and the fair and reasonable intention of the parties. Having clearly in mind the specification and claims of the patent, together with the condition of decay or destruction of the patented device or machine, the question whether its restoration to a sound state was legitimate repair, or a substantial reconstruction or reproduction of the patented invention, should be determined less by definitions or technical rules than by the exercise of sound common sense and an intelligent judgment.’

More particularly, none of the past cases in this Court or in the lower federal courts remotely suggests that ‘reconstruction’ can be found only in a situation**621 where the patented combination has been rebuilt de novo from the ground up. FN4

FN4. Compare note 7, infra.

The reference which the Court makes to the Mercoid cases, 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376; 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396, is, in my opinion, entirely inapposite, since those cases, as the Court recognizes, 365 U.S., at page 344, 81 S.Ct. at page 604, note 10, supra, dealt with the issue of patent misuse, an issue which specifically is not before the Court *377 at this time.FN5 I realize that some of the language in the first Mercoid case (320 U.S. at pages 667-669, 64 S.Ct. at pages 272-273), and more particularly its disapproving remarks about Leeds & Catlin ( id., 320 U.S. at page 668, 64 S.Ct. at page 272), may be said to cast doubt on what it appears to me the contributory infringement cases plainly establish. Yet I cannot believe that Mercoid is properly to be read as throwing into discard all the teaching of the repair-reconstruction cases. What was said in Mercoid about contributory infringement must be read in the context of Mercoid's claim, found to have been established, that Mid-Continent had misused its combination patent by attempting in effect to wield it as a weapon to monopolize the sale of an unpatented element, a claim which is not here made.

FN5. The District Court found against Aro's claim of patent misuse based on respondent's acquisition of territorial rights in the Mackie-Duluk patent. Aro did not appeal that finding.

I think it significant that in stating (320 U.S. at page 668, 64 S.Ct. at page 272) that the doctrine of the Leeds & Catlin case ‘must no longer prevail against the defense that a combination patent is being used to protect an unpatented part from competition,’ the Court went on to say, at pages 668-669 of 320 U.S., at page 272 of 64 S.Ct.:

‘That result obtains here though we assume for the purposes of this case that Mercoid was a contributory infringer and that respondents could have enjoined the infringement had they not misused the patent for the purpose of monopolizing unpatented material. Inasmuch as their misuse of the patent would have precluded them from enjoining a direct infringement (citing the Morton Salt case (Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363)) they cannot stand in any better position with respect to a contributory infringer. Where there is a collision between the principle of the Carbice case (Carbice Corp. v. American Patents Corp., 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819) and the conventional rules governing either direct or contributory infringement, the former prevails.’ (Italics supplied.)

*378 Thus Mercoid, far from modifying the doctrine of the Wilson line of cases as to what constitutes contributory infringement, assumed that doctrine and defined the special circumstances when the court would refuse to give a patentee the benefit of that doctrine.FN6 Those circumstances are not present in this case.

FN6. It seems clear from the legislative history of the 1952 Act that Congress intended (1) to reaffirm the doctrine of contributory infringement as laid down in Wilson v. Simpson and reasserted in cases like Leeds & Catlin, (2) to give that doctrine precedence against a claim of patent misuse as conceived in the Mercoid cases, at least where the misuse is said to inhere simply in assertion of patent rights. Both the proponents of the statute and the Department of Justice which opposed it assumed that contributory infringement, as defined in the Wilson line of cases, was one thing, and misuse, as then most recently defined in Mercoid, another. See Hearings before Subcommittee of House Judiciary Committee on H.R. 3866, 81st Cong., 1st Sess. 53-59 (1949); Hearings before Subcommittee of House Judiciary Committee on H.R. 3760, 82d Cong., 1st Sess. 168-175 (1951). The opinion of the Court seems to reconfirm Mercoid to fuller effectiveness than it had even before the 1952 Act by treating it as if the test of whether there was contributory infringement at all was to be found in its language.

**622 As for my Brother BLACK'S opinion, the congressional action of 1952, reaffirming what I consider must be taken as the doctrine of the Wilson line of cases, also requires rejection of what he now conceives to be a more enlightened policy in this field of law.FN7

FN7. This policy was before the Committee in the form of an objection to the proposed codification of the Wilson line of cases and its doctrine in the 1952 Act. Despite the objection Congress passed s 271 without amendment.‘Mr. Crumpacker: We have received protests from manufacturers of replacement parts for such things as automobiles, farm tractors, and the like, who evidently feel that the language used in this H.R. 3760 would make them contributory infringers of patents on the original article, the tractor or something of that sort.‘Mr. Rich (who was the principal spokesman for the group which drafted the present statute): Those were the most vociferous objectors to the old bills on the subject. Whether or not they would be liable would depend on the facts in each particular case. * * *’ Hearings before Subcommittee of House Judiciary Committee on H.R. 3760, 82d Cong., 1st Sess., at p. 153 (1951).

*379 II.
My Brother BRENNAN'S opinion for reversal rests, as I understand it, not upon the view that the two courts below applied wrong legal standards in reaching their conclusion, but that “repair' or ‘reconstruction’ is so far a question of law as to relieve appellate review from the restraints of Federal Rule of Civil Procedure 52(a)' and to allow the ‘making (of) an independent application of the proper standard’ to the facts in this case. (Italics supplied.) For reasons larger than this particular litigation I cannot agree that it is either necessary or appropriate for us to substitute our particular judgment on this particular application of correct standards to the facts.

We do not sit in judgment on the decisions of the lower federal courts because we are endowed with some special measure of discernment, but because it is imperative that on matters of general concern, that is on matters of principle, there should be one authoritative and unifying expositor of federal law. I need not join issue on whether Rule 52(a) serves to constrict appellate review in cases like this, cf. Graver Tank & Mfg. Co., v. Linde Air Products Co., 336 U.S. 271, 275, 279, 69 S.Ct. 535, 537, 539, 93 L.Ed. 672, for the rule which I believe should limit us is based on the purposes which this Court can and should fulfill.

In this case there is no question but that the two courts below adverted to all the relevant standards but, having done so, they concluded that on the facts before them there was contributory infringement. I cannot see what else my Brother BRENNAN is doing but reaching a different conclusion of his own. I cannot understand how such a conclusion, even were it accepted by a majority of the *380 Court, could provide greater guidance to either courts or litigants than would a mere statement of approbation for the standards espoused by the courts below.

Because the question of ‘repair’ or ‘reconstruction’ must be a mixed question of law and fact, it does not follow that we should review other than gross misapplications (certainly not present here), when the legal ingredient of this mixture is concededly correct. In the analogous area of determining the issue of patentable novelty, Courts of Appeal have consistently deferred to the judgment of the District Court (see the excellent statement of Judge Fahy in Standard Oil Development Co. v. Marzall, 86 U.S.App.D.C. 210, 181 F.2d 280, 283-284), and where they have departed from this judgment the reason has generally been because the District Court had failed to reach its conclusions by reference to correct standards. See Kwikset Locks, Inc., v. Hillgren, 9 Cir., 210 F.2d 483; **623 cf. Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 153, 154, 71 S.Ct. 127, 130, 131, 95 L.Ed. 162. Whether this practice be considered as compelled by the dictates of good sense or by Rule 52(a), surely particular judgments fairly and reasonably reached in two lower courts in light of correct legal standards deserve at least that same deference from us.

I would affirm.

U.S. 1961.
ARO MFG. CO. v. CONVERTIBLE TOP REPLACEMENT CO.
365 U.S. 336, 81 S.Ct. 599, 5 L.Ed.2d 592, 128 U.S.P.Q. 354

Main Page

2010-04-06T21:08:22Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Quanta Computers Inc v. LG Electronics (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:Microsoft Corp v. At&T Corp., 550 U.S. 437 (2007)

2010-03-29T15:17:41Z

Cep503: Courtney

This case concerns the applicability of § 271(f) to computer software first sent from the United States to a foreign manufacturer on a master disk, or by electronic transmission, then copied by the foreign recipient for installation on computers made and sold abroad.

AT & T holds a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft's Windows operating system, it is conceded, has the potential to infringe AT & T's patent, because Windows incorporates software code *442 that, when installed, enables a computer to process speech in the manner claimed by that patent. It bears emphasis, however, that uninstalled Windows software does not infringe AT & T's patent any more than a computer standing alone does; instead, the patent is infringed only when a computer is loaded with Windows and is thereby rendered capable of performing as the patented speech processor. The question before us: Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied**1751 abroad from a master disk or electronic transmission dispatched by Microsoft from the United States? Our answer is “No.”

The master disk or electronic transmission Microsoft sends from the United States is never installed on any of the foreign-made computers in question. Instead, copies made abroad are used for installation. Because Microsoft does not export from the United States the copies actually installed, it does not “suppl[y] ... from the United States” “components” of the relevant computers, and therefore is not liable under § 271(f) as currently written.

Plausible arguments can be made for and against extending § 271(f) to the conduct charged in this case as infringing AT & T's patent. Recognizing that § 271(f) is an exception to the general rule that our patent law does not apply extraterritorially, we resist giving the language in which Congress cast § 271(f) an expansive interpretation. Our decision leaves to Congress' informed judgment any adjustment of § 271(f) it deems necessary or proper.

III A This case poses two questions: First, when, or in what form, does software qualify as a “component” under § 271(f)? Second,**1754 were “components” of the foreign-made computers involved in this case “supplie[d]” by Microsoft “from the United States”? FN7

FN8. Microsoft and the United States stress that to count as a component, the copy of software must be expressed as “object code.” “Software in the form in which it is written and understood by humans is called ‘source code.’ To be functional, however, software must be converted (or ‘compiled’) into its machine-usable version,” a sequence of binary number instructions typed “object code.” Brief for United States as Amicus Curiae 4, n. 1; 71 USPQ 2d 1118, 1119, n. 5, 2004 WL 406640 (S.D.N.Y.2004) (recounting Microsoft's description of the software development process). It is stipulated that object code was on the master disks and electronic transmissions Microsoft dispatched from the United States.

FN9. On this view of “component,” the copies of Windows on the master disks and electronic transmissions that Microsoft sent from the United States could not themselves serve as a basis for liability, because those copies were not installed on the foreign manufacturers' computers. See § 271(f)(1) (encompassing only those components “combin[ed] ... outside of the United States in a manner that would infringe the patent if such combination occurred within the United States”).

The distinctions advanced by AT & T do not persuade us to characterize software, uncoupled from a medium, as a combinable component. Blueprints too, or any design information for that matter, can be independently developed, bought, *451 and sold. If the point of AT & T's argument is that we do not see blueprints lining stores' shelves, the same observation may be made about software in the abstract: What retailers **1756 sell, and consumers buy, are copies of software. Likewise, before software can be contained in and continuously performed by a computer, before it can be updated or deleted, an actual, physical copy of the software must be delivered by CD-ROM or some other means capable of interfacing with the computer.FN12

Because it is so easy to encode software's instructions onto a medium that can be read by a computer, AT & T intimates, that extra step should not play a decisive role under § 271(f). But the extra step is what renders the software a usable, combinable part of a computer; easy or not, the copy-producing step is essential. Moreover, many tools may be used easily and inexpensively to generate the parts of a device. A machine for making sprockets might be used by a manufacturer to produce tens of thousands of sprockets an hour. That does not make the machine a “component” of the tens of thousands of devices in which the sprockets are incorporated, at least not under any ordinary understanding of the term “component.” Congress, of course, might have included within § 271(f)'s compass, for example, not only combinable “components” of a patented invention, but also “information, instructions, or tools from which those components readily may be generated.” It did not. In sum, a *452 copy of Windows, not Windows in the abstract, qualifies as a “component” under § 271(f).FN13

Section 271(f) prohibits the supply of components “from the United States ... in such manner as to actively induce the combination of such components.” § 271(f)(1) (emphasis added). Under this formulation, the very components supplied from the United States, and not copies thereof, trigger § 271(f) liability when combined abroad to form the patented invention at issue. Here, as we have repeatedly noted, see supra, at 1750 - 1751, 1752 - 1753, the copies of Windows actually installed on the foreign computers were not themselves supplied from the United States.FN14 Indeed, those copies did not exist until they were generated by third parties outside the United States.FN15 Copying software abroad, all might agree, *454 is indeed easy and inexpensive. But the same could be said of other items: “Keys or machine parts might be copied from a master; chemical or biological substances might be created by reproduction; and paper products might be made by electronic copying and printing.” Brief for United States as Amicus Curiae 24. See also supra, at 1755 - 1756 (rejecting argument similarly based on ease of copying in construing “component”). Section 271(f) contains no instruction to gauge when duplication is easy and cheap enough to deem a copy in fact made abroad nevertheless “supplie[d] ... from the United States.” The absence of anything addressing copying in the statutory text weighs against a judicial determination that replication abroad of a master dispatched from the United States “supplies” the foreign-made copies from the United States within the intendment of § 271(f).FN16

AT & T alternately contends that the presumption holds no sway here given that § 271(f), by its terms, applies only to domestic conduct, i.e., to the supply of a patented invention's components “from the United States.” § 271(f)(1). AT & T's reading, however, “converts a single act of supply from the United States into a **1759 springboard for liability each time a copy of the software is subsequently made [abroad] and combined with computer hardware [abroad] for sale [abroad.]” Brief for United States as Amicus Curiae 29; see 414 F.3d, at 1373, 1375 (Rader, J., dissenting). In short, foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries. If AT & T desires to prevent copying in foreign countries, its remedy today lies in obtaining and enforcing foreign patents. See Deepsouth, 406 U.S., at 531, 92 S.Ct. 1700. FN17

There is no dispute, we note again, that § 271(f) is inapplicable to the export of design tools-blueprints, schematics, templates, and prototypes-all of which may provide the information required to construct and combine overseas the components of inventions patented under United States law. See supra, at 1755 - 1756. We have no license to attribute to Congress an unstated intention to place the information Microsoft dispatched from the United States in a separate category.

Congress is doubtless aware of the ease with which software (and other electronic media) can be copied, and has not left the matter untouched. In 1998, Congress addressed “the ease with which pirates could copy and distribute a copyrightable work in digital form.” Universal City Studios, Inc. v. Corley, 273 F.3d 429, 435 (C.A.2 2001). The resulting measure, the Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq., “backed with legal sanctions the efforts of copyright owners to protect their works from piracy behind digital walls such as encryption codes or password protections.” Universal City Studios, 273 F.3d, at 435. If *459 the patent law is to be adjusted better “to account for the realities of software distribution,” 414 F.3d, at 1370, the alteration should be made after focused legislative consideration, and not by the Judiciary forecasting Congress' likely disposition.

Because no physical object originating in the United States was combined with these computers, there was no violation of § 271(f). Accordingly, it is irrelevant that the Windows software was not copied onto the foreign-made computers directly from the master disk or from an electronic transmission that originated in the United States. To be sure, if these computers could not run Windows without inserting and keeping a CD-ROM in the appropriate drive, then the CD-ROMs might be components of the computer. But that is not the case here.

Justice STEVENS, dissenting.

I disagree with the Court's suggestion that because software is analogous to an abstract set of instructions, it cannot be regarded as a “component” within the meaning of § 271(f). See ante, at 1754 - 1755. Whether attached or detached from any medium, software plainly satisfies the dictionary definition of that word. See ante, at 1755, n. 11 (observing that “ ‘[c]omponent’ is commonly defined as ‘a constituent part,’ ‘element,’ or ‘ingredient’ ”). And unlike a blueprint that merely instructs a user how to do something, software actually causes infringing conduct to occur. It is more like a roller that causes a player piano to produce sound than sheet music that tells a pianist what to do. Moreover, it is surely not “a staple article or commodity of commerce suitable for substantial noninfringing use” as that term is used in § 271(f)(2). On the contrary, its sole intended use is an infringing use.

Microsoft Corp v. At&T Corp., 550 U.S. 437 (2007)

2010-03-29T06:15:42Z

Cep503: Created page with 'Supreme Court of the United States MICROSOFT CORPORATION, Petitioner, v. AT & T CORP. No. 05-1056. Argued Feb. 21, 2007. Decided April 30, 2007. Justice Alito filed opinion con…'

Supreme Court of the United States
MICROSOFT CORPORATION, Petitioner,
v.
AT & T CORP.

No. 05-1056.
Argued Feb. 21, 2007.
Decided April 30, 2007.

Justice Alito filed opinion concurring as to all but footnote 14, in which Justices Thomas and Breyer joined.

Justice Stevens filed dissenting opinion.

Chief Justice Roberts took no part in consideration or decision of case.

Justice GINSBURG delivered the opinion of the Court, except as to footnote 14.

[1] Headnote Citing References *441 It is the general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country. There is an exception. Section 271(f) of the Patent Act, adopted in 1984, provides that infringement does occur when one “supplies ... from the United States,” for “combination” abroad, a patented invention's “components.” 35 U.S.C. § 271(f)(1). This case concerns the applicability of § 271(f) to computer software first sent from the United States to a foreign manufacturer on a master disk, or by electronic transmission, then copied by the foreign recipient for installation on computers made and sold abroad.

AT & T holds a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft's Windows operating system, it is conceded, has the potential to infringe AT & T's patent, because Windows incorporates software code *442 that, when installed, enables a computer to process speech in the manner claimed by that patent. It bears emphasis, however, that uninstalled Windows software does not infringe AT & T's patent any more than a computer standing alone does; instead, the patent is infringed only when a computer is loaded with Windows and is thereby rendered capable of performing as the patented speech processor. The question before us: Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied**1751 abroad from a master disk or electronic transmission dispatched by Microsoft from the United States? Our answer is “No.”

The master disk or electronic transmission Microsoft sends from the United States is never installed on any of the foreign-made computers in question. Instead, copies made abroad are used for installation. Because Microsoft does not export from the United States the copies actually installed, it does not “suppl[y] ... from the United States” “components” of the relevant computers, and therefore is not liable under § 271(f) as currently written.

Plausible arguments can be made for and against extending § 271(f) to the conduct charged in this case as infringing AT & T's patent. Recognizing that § 271(f) is an exception to the general rule that our patent law does not apply extraterritorially, we resist giving the language in which Congress cast § 271(f) an expansive interpretation. Our decision leaves to Congress' informed judgment any adjustment of § 271(f) it deems necessary or proper.

I
Our decision some 35 years ago in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 92 S.Ct. 1700, 32 L.Ed.2d 273 (1972), a case about a shrimp deveining machine, led Congress to enact § 271(f). In that case, Laitram, holder of a patent on the time-and-expense-saving machine, sued Deepsouth, manufacturer of an infringing deveiner. Deepsouth conceded that the Patent Act *443 barred it from making and selling its deveining machine in the United States, but sought to salvage a portion of its business: Nothing in United States patent law, Deepsouth urged, stopped it from making in the United States the parts of its deveiner, as opposed to the machine itself, and selling those parts to foreign buyers for assembly and use abroad. Id., at 522-524, 92 S.Ct. 1700.FN1 We agreed.

FN1. Deepsouth shipped its deveining equipment “to foreign customers in three separate boxes, each containing only parts of the 1 3/4 -ton machines, yet the whole [was] assemblable in less than one hour.” Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 524, 92 S.Ct. 1700, 32 L.Ed.2d 273 (1972).

Interpreting our patent law as then written, we reiterated in Deepsouth that it was “not an infringement to make or use a patented product outside of the United States.” Id., at 527, 92 S.Ct. 1700; see 35 U.S.C. § 271(a) (1970 ed.) (“[W]hoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.”). Deepsouth's foreign buyers did not infringe Laitram's patent, we held, because they assembled and used the deveining machines outside the United States. Deepsouth, we therefore concluded, could not be charged with inducing or contributing to an infringement. 406 U.S., at 526-527, 92 S.Ct. 1700.FN2 Nor could Deepsouth be held liable as a direct infringer, for it did not make, sell, or use the patented invention-the fully assembled deveining machine-within the United States. The parts of the machine were not themselves patented, we noted, hence export of those parts, unassembled, did not rank as an infringement of Laitram's**1752 patent. Id., at 527-529, 92 S.Ct. 1700.

FN2. See 35 U.S.C. § 271(b) (1970 ed.) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”); § 271(c) (rendering liable as a contributory infringer anyone who sells or imports a “component” of a patented invention, “knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial non-infringing use”).

Laitram had argued in Deepsouth that resistance to extension of the patent privilege to cover exported parts “derived *444 from too narrow and technical an interpretation of the [Patent Act].” Id., at 529, 92 S.Ct. 1700. Rejecting that argument, we referred to prior decisions holding that “a combination patent protects only against the operable assembly of the whole and not the manufacture of its parts.” Id., at 528, 92 S.Ct. 1700. Congress' codification of patent law, we said, signaled no intention to broaden the scope of the privilege. Id., at 530, 92 S.Ct. 1700 (“When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.”). And we again emphasized that

“[o]ur patent system makes no claim to extraterritorial effect; these acts of Congress do not, and were not intended to, operate beyond the limits of the United States; and we correspondingly reject the claims of others to such control over our markets.” Id., at 531, 92 S.Ct. 1700 (quoting Brown v. Duchesne, 19 How. 183, 195, 15 L.Ed. 595 (1857)).

Absent “a clear congressional indication of intent,” we stated, courts had no warrant to stop the manufacture and sale of the parts of patented inventions for assembly and use abroad. 406 U.S., at 532, 92 S.Ct. 1700.

Focusing its attention on Deepsouth, Congress enacted § 271(f). See Patent Law Amendments Act of 1984, § 101, 98 Stat. 3383; Fisch & Allen, The Application of Domestic Patent Law to Exported Software: 35 U.S.C. § 271(f), 25 U. Pa. J. Int'l Econ. L. 557, 565 (2004) (hereinafter Fisch & Allen) (“Congress specifically intended § 271(f) as a response to the Supreme Court's decision in Deepsouth”).FN3 The provision expands the definition of infringement to include *445 supplying from the United States a patented invention's components:

FN3. See also, e.g., Patent Law Amendments of 1984, S.Rep. No. 98-663, pp. 2-3 (1984) (describing § 271(f) as “a response to the Supreme Court's 1972 Deepsouth decision which interpreted the patent law not to make it infringement where the final assembly and sale is abroad”); Section-by-Section Analysis of H.R. 6286, 130 Cong. Rec. 28069 (1984) ( “This proposal responds to the United States Supreme Court decision in Deepsouth ... concerning the need for a legislative solution to close a loophole in [the] patent law.”).

“(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
“(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” 35 U.S.C. § 271(f).

II
Windows is designed, authored, and tested at Microsoft's Redmond, Washington, headquarters. Microsoft sells Windows**1753 to end users and computer manufacturers, both foreign and domestic. Purchasing manufacturers install the software onto the computers they sell. Microsoft sends to each of the foreign manufacturers a master version of Windows, either on a disk or via encrypted electronic transmission. The manufacturer uses the master version to generate copies. Those copies, not the master sent by Microsoft, are installed on the foreign manufacturer's computers. Once assembly*446 is complete, the foreign-made computers are sold to users abroad. App. to Pet. for Cert. 45a-46a.FN4

FN4. Microsoft also distributes Windows to foreign manufacturers indirectly, by sending a master version to an authorized foreign “replicator”; the replicator then makes copies and ships them to the manufacturers. App. to Pet. for Cert. 45a-46a.

AT & T's patent ('580 patent) is for an apparatus (as relevant here, a computer) capable of digitally encoding and compressing recorded speech. Windows, the parties agree, contains software that enables a computer to process speech in the manner claimed by the '580 patent. In 2001, AT & T filed an infringement suit in the United States District Court for the Southern District of New York, charging Microsoft with liability for domestic and foreign installations of Windows.

Neither Windows software ( e.g., in a box on the shelf) nor a computer standing alone ( i.e., without Windows installed) infringes AT & T's patent. Infringement occurs only when Windows is installed on a computer, thereby rendering it capable of performing as the patented speech processor. Microsoft stipulated that by installing Windows on its own computers during the software development process, it directly infringed the '580 patent.FN5 Microsoft further acknowledged that by licensing copies of Windows to manufacturers of computers sold in the United States, it induced infringement of AT & T's patent.FN6 Id., at 42a; Brief for Petitioner 3-4; Brief for Respondent 9, 19.

FN5. See 35 U.S.C. § 271(a) (“[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”).

FN6. See § 271(b) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”).

Microsoft denied, however, any liability based on the master disks and electronic transmissions it dispatched to foreign manufacturers, thus joining issue with AT & T. By sending Windows to foreign manufacturers, AT & T contended, Microsoft “supplie[d] ... from the United States,” *447 for “ combination” abroad, “components” of AT & T's patented speech processor; accordingly, AT & T urged, Microsoft was liable under § 271(f). See supra, at 1752 - 1753 (reproducing text of § 271(f)). Microsoft responded that unincorporated software, because it is intangible information, cannot be typed a “component” of an invention under § 271(f). In any event, Microsoft urged, the foreign-generated copies of Windows actually installed abroad were not “supplie[d] ... from the United States.” Rejecting these responses, the District Court held Microsoft liable under § 271(f). 71 USPQ 2d 1118 (S.D.N.Y.2004). On appeal, a divided panel of the Court of Appeals for the Federal Circuit affirmed. 414 F.3d 1366 (2005). We granted certiorari, 549 U.S. 991, 127 S.Ct. 467, 166 L.Ed.2d 333 (2006), and now reverse.

III
A
This case poses two questions: First, when, or in what form, does software qualify as a “component” under § 271(f)? Second,**1754 were “components” of the foreign-made computers involved in this case “supplie[d]” by Microsoft “from the United States”? FN7

FN7. The record leaves unclear which paragraph of § 271(f) AT & T's claim invokes. While there are differences between § 271(f)(1) and (f)(2), see, e.g., infra, at 1760, n. 18, the parties do not suggest that those differences are outcome determinative. Cf. infra, at 1757 - 1758, n. 16 (explaining why both paragraphs yield the same result). For clarity's sake, we focus our analysis on the text of § 271(f)(1).

As to the first question, no one in this litigation argues that software can never rank as a “component” under § 271(f). The parties disagree, however, over the stage at which software becomes a component. Software, the “set of instructions, known as code, that directs a computer to perform specified functions or operations,” Fantasy Sports Properties, Inc. v. Sportsline.com, Inc., 287 F.3d 1108, 1118 (C.A.Fed.2002), can be conceptualized in (at least) two ways. One can speak of software in the abstract: the instructions *448 themselves detached from any medium. (An analogy: The notes of Beethoven's Ninth Symphony.) One can alternatively envision a tangible “copy” of software, the instructions encoded on a medium such as a CD-ROM. (Sheet music for Beethoven's Ninth.) AT & T argues that software in the abstract, not simply a particular copy of software, qualifies as a “component” under § 271(f). Microsoft and the United States argue that only a copy of software, not software in the abstract, can be a component.FN8

FN8. Microsoft and the United States stress that to count as a component, the copy of software must be expressed as “object code.” “Software in the form in which it is written and understood by humans is called ‘source code.’ To be functional, however, software must be converted (or ‘compiled’) into its machine-usable version,” a sequence of binary number instructions typed “object code.” Brief for United States as Amicus Curiae 4, n. 1; 71 USPQ 2d 1118, 1119, n. 5, 2004 WL 406640 (S.D.N.Y.2004) (recounting Microsoft's description of the software development process). It is stipulated that object code was on the master disks and electronic transmissions Microsoft dispatched from the United States.

The significance of these diverse views becomes apparent when we turn to the second question: Were components of the foreign-made computers involved in this case “supplie[d]” by Microsoft “from the United States”? If the relevant components are the copies of Windows actually installed on the foreign computers, AT & T could not persuasively argue that those components, though generated abroad, were “supplie[d] ... from the United States” as § 271(f) requires for liability to attach.FN9 If, on the other hand, Windows in the abstract qualifies as a component within § 271(f)'s compass, it would not matter that the master copies of Windows software dispatched from the United *449 States were not themselves installed abroad as working parts of the foreign computers.FN10

FN9. On this view of “component,” the copies of Windows on the master disks and electronic transmissions that Microsoft sent from the United States could not themselves serve as a basis for liability, because those copies were not installed on the foreign manufacturers' computers. See § 271(f)(1) (encompassing only those components “combin[ed] ... outside of the United States in a manner that would infringe the patent if such combination occurred within the United States”).

FN10. The Federal Circuit panel in this case, relying on that court's prior decision in Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325 (2005), held that software qualifies as a component under § 271(f). We are unable to determine, however, whether the Federal Circuit panels regarded as a component software in the abstract, or a copy of software.

With this explanation of the relationship between the two questions in view, we further consider the twin inquiries.

**1755 B
[2] Headnote Citing References First, when, or in what form, does software become a “component” under § 271(f)? We construe § 271(f)'s terms “in accordance with [their] ordinary or natural meaning.” FDIC v. Meyer, 510 U.S. 471, 476, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). Section 271(f) applies to the supply abroad of the “components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components.” § 271(f)(1) (emphasis added). The provision thus applies only to “such components” FN11 as are combined to form the “patented invention” at issue. The patented invention here is AT & T's speech-processing computer.

FN11. “Component” is commonly defined as “a constituent part,” “element,” or “ingredient.” Webster's Third New International Dictionary of the English Language 466 (1981).

Until it is expressed as a computer-readable “copy,” e.g., on a CD-ROM, Windows software-indeed any software detached from an activating medium-remains uncombinable. It cannot be inserted into a CD-ROM drive or downloaded from the Internet; it cannot be installed or executed on a computer. Abstract software code is an idea without physical embodiment, and as such, it does not match § 271(f)'s categorization: “components” amenable to “combination.” Windows abstracted from a tangible copy no doubt is information-a detailed set of instructions-and thus might *450 be compared to a blueprint (or anything containing design information, e.g., a schematic, template, or prototype). A blueprint may contain precise instructions for the construction and combination of the components of a patented device, but it is not itself a combinable component of that device. AT & T and its amici do not suggest otherwise. Cf. Pellegrini v. Analog Devices, Inc., 375 F.3d 1113, 1117-1119 (C.A.Fed.2004) (transmission abroad of instructions for production of patented computer chips not covered by § 271(f)).

AT & T urges that software, at least when expressed as machine-readable object code, is distinguishable from design information presented in a blueprint. Software, unlike a blueprint, is “modular”; it is a stand-alone product developed and marketed “for use on many different types of computer hardware and in conjunction with many other types of software.” Brief for Respondent 5; Tr. of Oral Arg. 46. Software's modularity persists even after installation; it can be updated or removed (deleted) without affecting the hardware on which it is installed. Ibid. Software, unlike a blueprint, is also “dynamic.” Tr. of Oral Arg. 46. After a device has been built according to a blueprint's instructions, the blueprint's work is done (as AT & T puts it, the blueprint's instructions have been “exhausted,” ibid.). Software's instructions, in contrast, are contained in and continuously performed by a computer. Brief for Respondent 27-28; Tr. of Oral Arg. 46. See also Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325, 1339 (C.A.Fed.2005) ( “[S]oftware code ... drives the functional nucleus of the finished computer product.” (quoting Imagexpo, L.L.C. v. Microsoft Corp., 299 F.Supp.2d 550, 553 (E.D.Va.2003))).

The distinctions advanced by AT & T do not persuade us to characterize software, uncoupled from a medium, as a combinable component. Blueprints too, or any design information for that matter, can be independently developed, bought, *451 and sold. If the point of AT & T's argument is that we do not see blueprints lining stores' shelves, the same observation may be made about software in the abstract: What retailers **1756 sell, and consumers buy, are copies of software. Likewise, before software can be contained in and continuously performed by a computer, before it can be updated or deleted, an actual, physical copy of the software must be delivered by CD-ROM or some other means capable of interfacing with the computer.FN12

FN12. The dissent, embracing AT & T's argument, contends that, “unlike a blueprint that merely instructs a user how to do something, software actually causes infringing conduct to occur.” Post, at 1763 (STEVENS, J., dissenting). We have emphasized, however, that Windows can “caus[e] infringing conduct to occur”- i.e., function as part of AT & T's speech-processing computer-only when expressed as a computer-readable copy. Abstracted from a usable copy, Windows code is intangible, uncombinable information, more like notes of music in the head of a composer than “a roller that causes a player piano to produce sound.” Ibid.

Because it is so easy to encode software's instructions onto a medium that can be read by a computer, AT & T intimates, that extra step should not play a decisive role under § 271(f). But the extra step is what renders the software a usable, combinable part of a computer; easy or not, the copy-producing step is essential. Moreover, many tools may be used easily and inexpensively to generate the parts of a device. A machine for making sprockets might be used by a manufacturer to produce tens of thousands of sprockets an hour. That does not make the machine a “component” of the tens of thousands of devices in which the sprockets are incorporated, at least not under any ordinary understanding of the term “component.” Congress, of course, might have included within § 271(f)'s compass, for example, not only combinable “components” of a patented invention, but also “information, instructions, or tools from which those components readily may be generated.” It did not. In sum, a *452 copy of Windows, not Windows in the abstract, qualifies as a “component” under § 271(f).FN13

FN13. We need not address whether software in the abstract, or any other intangible, can ever be a component under § 271(f). If an intangible method or process, for instance, qualifies as a “patented invention” under § 271(f) (a question as to which we express no opinion), the combinable components of that invention might be intangible as well. The invention before us, however, AT & T's speech-processing computer, is a tangible thing.

C
[3] Headnote Citing References The next question, has Microsoft “supplie[d] ... from the United States” components of the computers here involved? Under a conventional reading of § 271(f)'s text, the answer would be “No,” for the foreign-made copies of Windows actually installed on the computers were “supplie[d]” from places outside the United States. The Federal Circuit majority concluded, however, that “for software ‘components,’ the act of copying is subsumed in the act of ‘supplying.’ ” 414 F.3d, at 1370. A master sent abroad, the majority observed, differs not at all from the exact copies, easily, inexpensively, and swiftly generated from the master; hence “sending a single copy abroad with the intent that it be replicated invokes § 271(f) liability for th[e] foreign-made copies.” Ibid.; cf. post, at 1762 - 1763 (STEVENS, J., dissenting) (“[A] master disk is the functional equivalent of a warehouse of components ... that Microsoft fully expects to be incorporated into foreign-manufactured computers.”).

Judge Rader, dissenting, noted that “supplying” is ordinarily understood to mean an activity separate and distinct from any subsequent “copying, replicating, or reproducing-in effect manufacturing.” 414 F.3d, at 1372-1373 (internal quotation marks omitted); see id., at 1373 (“[C]opying**1757 and supplying are separate acts with different consequences-particularly when the ‘supplying’ occurs in the United States and the copying occurs in Düsseldorf or Tokyo. As a matter of logic, one cannot supply one hundred components of a patented*453 invention without first making one hundred copies of the component ... .”). He further observed: “The only true difference between making and supplying software components and physical components [of other patented inventions] is that copies of software components are easier to make and transport.” Id., at 1374. But nothing in § 271(f)'s text, Judge Rader maintained, renders ease of copying a relevant, no less decisive, factor in triggering liability for infringement. See ibid. We agree.

Section 271(f) prohibits the supply of components “from the United States ... in such manner as to actively induce the combination of such components.” § 271(f)(1) (emphasis added). Under this formulation, the very components supplied from the United States, and not copies thereof, trigger § 271(f) liability when combined abroad to form the patented invention at issue. Here, as we have repeatedly noted, see supra, at 1750 - 1751, 1752 - 1753, the copies of Windows actually installed on the foreign computers were not themselves supplied from the United States.FN14 Indeed, those copies did not exist until they were generated by third parties outside the United States.FN15 Copying software abroad, all might agree, *454 is indeed easy and inexpensive. But the same could be said of other items: “Keys or machine parts might be copied from a master; chemical or biological substances might be created by reproduction; and paper products might be made by electronic copying and printing.” Brief for United States as Amicus Curiae 24. See also supra, at 1755 - 1756 (rejecting argument similarly based on ease of copying in construing “component”). Section 271(f) contains no instruction to gauge when duplication is easy and cheap enough to deem a copy in fact made abroad nevertheless “supplie[d] ... from the United States.” The absence of anything addressing copying in the statutory text weighs against a judicial determination that replication abroad of a master dispatched from the United States “supplies” the foreign-made copies from the United States within the intendment of § 271(f).FN16

FN14. In a footnote, Microsoft suggests that even a disk shipped from the United States, and used to install Windows directly on a foreign computer, would not give rise to liability under § 271(f) if the disk were removed after installation. See Brief for Petitioner 37, n. 11; cf. post, at 1761 - 1762 (ALITO, J., concurring). We need not and do not reach that issue here.

FN15. The dissent analogizes Microsoft's supply of master versions of Windows abroad to “the export of an inventory of ... knives to be warehoused until used to complete the assembly of an infringing machine.” Post, at 1761. But as we have underscored, foreign-made copies of Windows, not the masters Microsoft dispatched from the United States, were installed on the computers here involved. A more apt analogy, therefore, would be the export of knives for copying abroad, with the foreign-made copies “warehoused until used to complete the assembly of an infringing machine.” Ibid. Without stretching § 271(f) beyond the text Congress composed, a copy made entirely abroad does not fit the description “supplie [d] ... from the United States.”

FN16. Our analysis, while focusing on § 271(f)(1), is equally applicable to § 271(f)(2). But cf. post, at 1762 (STEVENS, J., dissenting) (asserting “paragraph (2) ... best supports AT & T's position here”). While the two paragraphs differ, among other things, on the quantity of components that must be “supplie[d] ... from the United States” for liability to attach, see infra, at 1760, n. 18, that distinction does not affect our analysis. Paragraph (2), like (1), covers only a “component” amenable to “combination.” § 271(f)(2); see supra, at 1754 - 1756 (explaining why Windows in the abstract is not a combinable component). Paragraph (2), like (1), encompasses only the “[s]uppl[y] ... from the United States” of “such [a] component” as will itself “be combined outside of the United States.” § 271(f)(2); see supra, at 1756 - 1757 and this page (observing that foreign-made copies of Windows installed on computers abroad were not “supplie[d] ... from the United States”). It is thus unsurprising that AT & T does not join the dissent in suggesting that the outcome might turn on whether we view the case under paragraph (1) or (2).

**1758 D
Any doubt that Microsoft's conduct falls outside § 271(f)'s compass would be resolved by the presumption against extraterritoriality, on which we have already touched. See supra, at 1750 - 1751, 1752. The presumption that United States law governs domestically but does not rule the world applies *455 with particular force in patent law. The traditional understanding that our patent law “operate[s] only domestically and d[oes] not extend to foreign activities,” Fisch & Allen, supra, at 559, is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States. 35 U.S.C. § 154(a)(1) (patentee's rights over invention apply to manufacture, use, or sale “throughout the United States” and to importation “into the United States”). See Deepsouth, 406 U.S., at 531, 92 S.Ct. 1700 (“Our patent system makes no claim to extraterritorial effect”; our legislation “d[oes] not, and [was] not intended to, operate beyond the limits of the United States, and we correspondingly reject the claims of others to such control over our markets.” (quoting Brown, 19 How., at 195, 15 L.Ed. 595)).

As a principle of general application, moreover, we have stated that courts should “assume that legislators take account of the legitimate sovereign interests of other nations when they write American laws.” F. Hoffmann-La Roche Ltd. v. Empagran S. A., 542 U.S. 155, 164, 124 S.Ct. 2359, 159 L.Ed.2d 226 (2004); see EEOC v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991). Thus, the United States accurately conveyed in this case: “Foreign conduct is [generally] the domain of foreign law,” and in the area here involved, in particular, foreign law “may embody different policy judgments about the relative rights of inventors, competitors, and the public in patented inventions.” Brief for United States as Amicus Curiae 28. Applied to this case, the presumption tugs strongly against construction of § 271(f) to encompass as a “component” not only a physical copy of software, but also software's intangible code, and to render “supplie [d] ... from the United States” not only exported copies of software, but also duplicates made abroad.

AT & T argues that the presumption is inapplicable because Congress enacted § 271(f) specifically to extend the reach of United States patent law to cover certain activity abroad. But as this Court has explained, “the presumption is not defeated*456 ... just because [a statute] specifically addresses [an] issue of extraterritorial application,” Smith v. United States, 507 U.S. 197, 204, 113 S.Ct. 1178, 122 L.Ed.2d 548 (1993); it remains instructive in determining the extent of the statutory exception. See Empagran, 542 U.S., at 161-162, 164-165, 124 S.Ct. 2359; Smith, 507 U.S., at 204, 113 S.Ct. 1178.

AT & T alternately contends that the presumption holds no sway here given that § 271(f), by its terms, applies only to domestic conduct, i.e., to the supply of a patented invention's components “from the United States.” § 271(f)(1). AT & T's reading, however, “converts a single act of supply from the United States into a **1759 springboard for liability each time a copy of the software is subsequently made [abroad] and combined with computer hardware [abroad] for sale [abroad.]” Brief for United States as Amicus Curiae 29; see 414 F.3d, at 1373, 1375 (Rader, J., dissenting). In short, foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries. If AT & T desires to prevent copying in foreign countries, its remedy today lies in obtaining and enforcing foreign patents. See Deepsouth, 406 U.S., at 531, 92 S.Ct. 1700. FN17

FN17. AT & T has secured patents for its speech processor in Canada, France, Germany, Great Britain, Japan, and Sweden. App. in No. 04-1285 (CA Fed.), p. 1477. AT & T and its amici do not relate what protections and remedies are, or are not, available under these foreign regimes. Cf. Brief for Respondent 46 (observing that “foreign patent protections are sometimes weaker than their U.S. counterparts” (emphasis added)).

IV
AT & T urges that reading § 271(f) to cover only those copies of software actually dispatched from the United States creates a “loophole” for software makers. Liability for infringing a United States patent could be avoided, as Microsoft's practice shows, by an easily arranged circumvention: Instead of making installation copies of software in the United States, the copies can be made abroad, swiftly and at small cost, by generating them from a master supplied *457 from the United States. The Federal Circuit majority found AT & T's plea compelling:

“Were we to hold that Microsoft's supply by exportation of the master versions of the Windows & reg; software-specifically for the purpose of foreign replication-avoids infringement, we would be subverting the remedial nature of § 271(f), permitting a technical avoidance of the statute by ignoring the advances in a field of technology-and its associated industry practices-that developed after the enactment of § 271(f) .... Section § 271(f), if it is to remain effective, must therefore be interpreted in a manner that is appropriate to the nature of the technology at issue.” 414 F.3d, at 1371.

While the majority's concern is understandable, we are not persuaded that dynamic judicial interpretation of § 271(f) is in order. The “loophole,” in our judgment, is properly left for Congress to consider, and to close if it finds such action warranted.

There is no dispute, we note again, that § 271(f) is inapplicable to the export of design tools-blueprints, schematics, templates, and prototypes-all of which may provide the information required to construct and combine overseas the components of inventions patented under United States law. See supra, at 1755 - 1756. We have no license to attribute to Congress an unstated intention to place the information Microsoft dispatched from the United States in a separate category.

Section 271(f) was a direct response to a gap in our patent law revealed by this Court's Deepsouth decision. See supra, at 1752, and n. 3. The facts of that case were undeniably at the fore when § 271(f) was in the congressional hopper. In Deepsouth, the items exported were kits containing all the physical, readily assemblable parts of a shrimp deveining machine (not an intangible set of instructions), and those parts themselves (not foreign-made copies of them) *458 would be combined abroad by foreign buyers. Having attended to the gap made evident in Deepsouth, Congress did not address other arguable gaps: Section 271(f) does not identify as an infringing**1760 act conduct in the United States that facilitates making a component of a patented invention outside the United States; nor does the provision check “suppl[ying] ... from the United States” information, instructions, or other materials needed to make copies abroad.FN18 Given that Congress did not home in on the loophole AT & T describes, and in view of the expanded extraterritorial thrust AT & T's reading of § 271(f) entails, our precedent leads us to leave in Congress' court the patent-protective determination AT & T seeks. Cf. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 431, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (“In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests.”).

FN18. Section 271(f)'s text does, in one respect, reach past the facts of Deepsouth. While Deepsouth exported kits containing all the parts of its deveining machines, § 271(f)(1) applies to the supply abroad of “all or a substantial portion of” a patented invention's components. And § 271(f)(2) applies to the export of even a single component if it is “especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use.”

Congress is doubtless aware of the ease with which software (and other electronic media) can be copied, and has not left the matter untouched. In 1998, Congress addressed “the ease with which pirates could copy and distribute a copyrightable work in digital form.” Universal City Studios, Inc. v. Corley, 273 F.3d 429, 435 (C.A.2 2001). The resulting measure, the Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq., “backed with legal sanctions the efforts of copyright owners to protect their works from piracy behind digital walls such as encryption codes or password protections.” Universal City Studios, 273 F.3d, at 435. If *459 the patent law is to be adjusted better “to account for the realities of software distribution,” 414 F.3d, at 1370, the alteration should be made after focused legislative consideration, and not by the Judiciary forecasting Congress' likely disposition.

* * *
For the reasons stated, the judgment of the Court of Appeals for the Federal Circuit is

Reversed.

THE CHIEF JUSTICE took no part in the consideration or decision of this case.

Justice ALITO, with whom Justice THOMAS and Justice BREYER join, concurring as to all but footnote 14.

I agree with the Court that no “component[s]” of the foreign-made computers involved in this case were “supplie[d]” by Microsoft “from the United States.” 35 U.S.C. § 271(f)(1). I write separately because I reach this conclusion through somewhat different reasoning.

I
Computer programmers typically write programs in a “human readable” programming language. This “ ‘source code’ ” is then generally converted by the computer into a “machine readable code” or “machine language” expressed in a binary format. Brief for Respondent 5, n. 1 (citing R. White, How Computers Work 87, 94 (8th ed.2006)); E. Walters, Essential Guide to Computing 204-205 (2001). During the Windows writing process, the program exists in the form of machine readable code on the magnetic tape fields of Microsoft's computers' hard drives. **1761 White, supra, at 144-145; Walters, supra, at 54-55.

When Microsoft finishes writing its Windows program in the United States, it encodes Windows onto CD-ROMs known as “ ‘golden masters' ” in the form of machine readable*460 code. App. 31, ¶ 4. This is done by engraving each disk in a specific way such that another computer can read the engravings, understand what they mean, and write the code onto the magnetic fields of its hard drive. Ibid.; Brief for Petitioner 4, n. 2.

Microsoft ships these disks (or sends the code via electronic transmission) abroad, where the code is copied onto other disks that are then placed into foreign-made computers for purposes of installing the Windows program. App. 31-32, ¶¶ 5-8. No physical aspect of a Windows CD-ROM-original disk or copy-is ever incorporated into the computer itself. See Stenograph L.L.C. v. Bossard Assocs., Inc., 144 F.3d 96, 100 (C.A.D.C.1998) (noting that, within the context of the Copyright Act, “installation of software onto a computer results in ‘copying’ ”); White, supra, at 144-145, 172-173. The intact CD-ROM is then removed and may be discarded without affecting the computer's implementation of the code.FN* The parties agree for purposes of this litigation that a foreign-made computer containing the Windows code would violate AT & T's patent if present in the United States. Pet. for Cert. 42a, ¶ 5.

FN* In a sense, the whole process is akin to an author living prior to the existence of the printing press, who created a story in his mind, wrote a manuscript, and sent it to a scrivener, who in turn copied the story by hand into a blank book.

II
A
I agree with the Court that a component of a machine, whether a shrimp deveiner or a personal computer, must be something physical. Ante, at 1754 - 1756. This is because the word “component,” when concerning a physical device, is most naturally read to mean a physical part of the device. See Webster's Third New International Dictionary 466 (1976) (component is a “constituent part: Ingredient”); Random House Dictionary of the English Language 301 (1967) *461 (component is a “a component part; constituent”). Furthermore, § 271(f) requires that the component be “combined” with other components to form the infringing device, meaning that the component must remain a part of any. Webster's, supra, at 452 (combine means “to join in physical or chemical union”; “to become one”; “to unite into a chemical compound”); Random House, supra, at 293 (combine means “to bring or join into a close union or whole”). For these reasons, I agree with the Court that a set of instructions on how to build an infringing device, or even a template of the device, does not qualify as a component. Ante, at 1754 - 1755.

B
As the parties agree, an inventor can patent a machine that carries out a certain process, and a computer may constitute such a machine when it executes commands-given to it by code-that allow it to carry out that process. Such a computer would not become an infringing device until enough of the code is installed on the computer to allow it to execute the process in question. The computer would not be an infringing device prior to the installation, or even during the installation. And the computer remains an infringing device after the installation process because, even though the original installation device (such as a CD-ROM) has been removed **1762 from the computer, the code remains on the hard drive.

III
Here, Windows software originating in the United States was sent abroad, whether on a master disk or by means of an electronic transmission, and eventually copied onto the hard drives of the foreign-made computers. Once the copying process was completed, the Windows program was recorded in a physical form, i.e., in magnetic fields on the computers' hard drives. See Brief for Respondent 5. The physical form of the Windows program on the master disk, i.e., the engravings on the CD-ROM, remained on the disk *462 in a form unchanged by the copying process. See Brief for Petitioner 4, n. 2 (citing White, How Computers Work, at 144-145, 172-173). There is nothing in the record to suggest that any physical part of the disk became a physical part of the foreign-made computer, and such an occurrence would be contrary to the general workings of computers.

Because no physical object originating in the United States was combined with these computers, there was no violation of § 271(f). Accordingly, it is irrelevant that the Windows software was not copied onto the foreign-made computers directly from the master disk or from an electronic transmission that originated in the United States. To be sure, if these computers could not run Windows without inserting and keeping a CD-ROM in the appropriate drive, then the CD-ROMs might be components of the computer. But that is not the case here.

* * *
Because the physical incarnation of code on the Windows CD-ROM supplied from the United States is not a “component” of an infringing device under § 271(f), it logically follows that a copy of such a CD-ROM also is not a component. For this reason, I join the Court's opinion, except for footnote 14.

Justice STEVENS, dissenting.

As the Court acknowledges, “[p]lausible arguments can be made for and against extending § 271(f) to the conduct charged in this case as infringing AT & T's patent.” Ante, at 1751. Strong policy considerations, buttressed by the presumption against the application of domestic patent law in foreign markets, support Microsoft Corporation's position. I am, however, persuaded that an affirmance of the Court of Appeals' judgment is more faithful to the intent of the Congress that enacted § 271(f) than a reversal.

*463 The provision was a response to our decision in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 92 S.Ct. 1700, 32 L.Ed.2d 273 (1972), holding that a patent on a shrimp deveining machine had not been infringed by the export of components for assembly abroad. Paragraph (1) of § 271(f) would have been sufficient on its own to overrule Deepsouth,FN* but it is paragraph (2) that best suppORTS AT & T'S POSITION HEre. It provides:

FN* “Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” 35 U.S.C. § 271(f)(1).

“Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made **1763 or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” § 271(f)(2).
Under this provision, the export of a specially designed knife that has no use other than as a part of a patented deveining machine would constitute infringement. It follows that § 271(f)(2) would cover the export of an inventory of such knives to be warehoused until used to complete the assembly of an infringing machine.
The relevant component in this case is not a physical item like a knife. Both Microsoft and the Court think that means it cannot be a “component.” See ante, at 1755. But if a disk *464 with software inscribed on it is a “component,” I find it difficult to understand why the most important ingredient of that component is not also a component. Indeed, the master disk is the functional equivalent of a warehouse of components-components that Microsoft fully expects to be incorporated into foreign-manufactured computers. Put somewhat differently: On the Court's view, Microsoft could be liable under § 271(f) only if it sends individual copies of its software directly from the United States with the intent that each copy would be incorporated into a separate infringing computer. But it seems to me that an indirect transmission via a master disk warehouse is likewise covered by § 271(f).

I disagree with the Court's suggestion that because software is analogous to an abstract set of instructions, it cannot be regarded as a “component” within the meaning of § 271(f). See ante, at 1754 - 1755. Whether attached or detached from any medium, software plainly satisfies the dictionary definition of that word. See ante, at 1755, n. 11 (observing that “ ‘[c]omponent’ is commonly defined as ‘a constituent part,’ ‘element,’ or ‘ingredient’ ”). And unlike a blueprint that merely instructs a user how to do something, software actually causes infringing conduct to occur. It is more like a roller that causes a player piano to produce sound than sheet music that tells a pianist what to do. Moreover, it is surely not “a staple article or commodity of commerce suitable for substantial noninfringing use” as that term is used in § 271(f)(2). On the contrary, its sole intended use is an infringing use.

I would therefore affirm the judgment of the Court of Appeals.

U.S.,2007.
Microsoft Corp. v. AT & T Corp.
550 U.S. 437, 127 S.Ct. 1746, 167 L.Ed.2d 737, 75 USLW 4307, 82 U.S.P.Q.2d 1400, 07 Cal. Daily Op. Serv. 4660, 20 Fla. L. Weekly Fed. S 232, 33 A.L.R. Fed. 2d 745

Main Page

2010-03-29T06:14:25Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1994)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
**[[In Re Bilski, Dky concurring opinion]]
**[[In Re Bilski, Newman dissenting opinion]]
**[[In Re Bilski, Mayer dissenting opinion]]
**[[In Re Bilski, Rader dissenting opinion]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Microsoft Corp v. At&T Corp.]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[U.S. v. Univis Lens Co., 316 U.S. 241 (1942)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
**[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
**[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (1991)

2010-03-23T22:30:31Z

Cep503: /* Maura */

== Maura ==

It is well settled in this court that a party seeking a preliminary injunction
must establish a right thereto in light of four factors: 1) a reasonable likelihood of success on the merits; 2) irreparable harm; 3) the balance of hardships tipping in favor of the requesting party; and 4) that the issuance of an injunction is in the public interest.

It is important to keep in mind that the issue before us is not who should ultimately be held to have title to the patent, but whether, in view of the state of the title, it can be said that FilmTec has a reasonable likelihood of success on the merits of that issue, sufficient to warrant the grant of the preliminary injunction.

Since property rights in an invention itself could not, under any conventional meaning of the term, be considered real property,3 they are by definition personal property.4 While early cases have pointed to the myriad ways in which patent rights--that is, property in patents--are closer in analogy to real than to personal property,5 the statutes establish as a matter of law that patents today have the attributes of personal property.6 And 35 U.S.C. Sec.261 makes clear that an application for patent as well as the patent itself may be assigned.7 Further, it is settled law that between the time of an invention and the issuance of a patent, rights in an invention may be assigned and legal title to the ensuing patent will pass to the assignee upon grant of the patent.

Once the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee (subject to the rights of a subsequent purchaser under Sec. 261), and the assignor-inventor would have nothing remaining to assign. In this case, if Cadotte granted MRI rights in inventions made during his employ, and if the subject matter of the '344 patent was invented by Cadotte during his employ with MRI, then Cadotte had nothing to give to FilmTec and his purported assignment to FilmTec is a nullity. Thus, FilmTec would lack both title to the '344 patent and standing to bring the present action. See 28 U.S.C. Sec. 1498 (1988).

Because of the district court's view of the title issue, no specific findings were made on either of these questions. As a result, we do not know who held legal title to the invention and to the patent application and therefore we do not know if FilmTec could make a sufficient legal showing to establish the likelihood of success necessary to support a preliminary injunction.

C.

It is well established that when a legal title holder of a patent transfers his or her title to a third party purchaser for value without notice of an outstanding equitable claim or title, the purchaser takes the entire ownership of the patent, free of any prior equitable encumbrance. Hendrie v. Sayles, 98 U.S. 546, 549, 25 L.Ed. 176 (1879). This is an application of the common law bona fide purchaser for value rule.
Section 261 of Title 35 goes a step further. It adopts the principle of the real property recording acts, and provides that the bona fide purchaser for value cuts off the rights of a prior assignee who has failed to record the prior assignment in the Patent and Trademark Office by the dates specified in the statute. Although the statute does not expressly so say, it is clear that the statute is intended to cut off prior legal interests, which the common law rule did not.

In our view of the title issue, it cannot be said on this record that FilmTec has established a reasonable likelihood of success on the merits. It is thus unnecessary for us to consider the other issues raised on appeal concerning the propriety of the injunction. The grant of the preliminary injunction is vacated and the case remanded to the district court to reconsider the propriety of the preliminary injunction in light of the four Chrysler factors and for further proceedings consistent with this opinion.

==Courtney==

Since property rights in an invention itself could not, under any conventional meaning of the term, be considered real property,[3] they are by definition personal property.[4] While early cases have pointed to the myriad ways in which patent rights-that is, property in patents-are closer in analogy to real than to personal property,[5] the statutes establish as a matter of law that patents today have the attributes of personal property.[6] And 35 U.S.C. § 261 makes clear that an application for patent as well as the patent itself may be assigned.[7] Further, it is settled law that between the time of an invention and the issuance of a patent, rights in an invention may be assigned and legal title to the ensuing patent will pass to the assignee upon grant of the patent. Gayler v. Wilder, 51 U.S. (10 How.) 477, 493, 13 L.Ed. 504 (1850); see 4 A. Deller, Walker on Patents § 334 (1965).

If an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest.[8] An assignment of an expectant interest can be a valid assignment. Mitchell v. Winslow, 17 F.Cas. 527, 531-32 (C.C.D.Me.1843) (non-existing [personal] property may be the subject of valid assignment); see generally Contract Rights as Commercial Security: Present and Future Intangibles, 67 Yale L.J. 847, 854 n. 27 (1958). In such a situation, the assignee holds at most an equitable title. Mitchell v. Winslow, 17 F.Cas. at 532.

Once the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee (subject to the rights of a subsequent purchaser under § 261), and the assignor-inventor would have nothing remaining to assign. In this case, if Cadotte granted MRI rights in inventions made during his employ, and if the subject matter of the '344 patent was invented by Cadotte during his employ with MRI, then Cadotte had nothing to give to FilmTec and his purported assignment to FilmTec is a nullity. Thus, FilmTec would lack both title to the '344 patent and standing to bring the present action. See 28 U.S.C. § 1498 (1988).

The question of FilmTec's right to maintain the action against Allied should not be confused with the question of whether Allied could defend by arguing that title to the patent was in a third party-the Government-and therefore Allied has a good defense against any infringement suit. The plea in jus tertii (title in a third person) as it was known at common law was held in some early cases to be a good defense to a possessory action, although more recent cases reject the defense and allow recovery on a prior possession.[9] But the issue here is not whether title lies in the Government or some other third party; it is rather whether FilmTec has made a sufficient showing to establish reasonable likelihood of success on the merits, which includes a showing that title to the patent and the rights thereunder are in FilmTec.

It is well established that when a legal title holder of a patent transfers his or her title to a third party purchaser for value without notice of an outstanding equitable claim or title, the purchaser takes the entire ownership of the patent, free of any prior equitable encumbrance. Hendrie v. Sayles, 98 U.S. 546, 549, 25 L.Ed. 176 (1879). This is an application of the common law bona fide purchaser for value rule.

In our view of the title issue, it cannot be said on this record that FilmTec has established a reasonable likelihood of success on the merits. It is thus unnecessary for us to consider the other issues raised on appeal concerning the propriety of the injunction. The grant of the preliminary injunction is vacated and the case remanded to the district court to reconsider the propriety of the preliminary injunction in light of the four Chrysler factors and for further proceedings consistent with this opinion.

Talk:Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)

2010-03-23T22:27:10Z

Cep503: /* Maura */

== Maura ==

It is contended that this power to control further sales is given by statute to the owner of such a copyright in conferring the sole right to ‘vend’ a copyrighted book.

‘There are such wide differences between the right of multiplying and vending copies of a production protected by the copyright statute and the rights secured to an inventor under the patent statutes, that the cases which relate to the one subject are not altogether controlling as to the other.’

The learned counsel for the appellant in this case, in the argument at bar, disclaims relief because of any contract, and relies solely upon the copyright statutes, and rights therein conferred. The copyright statutes ought to be reasonably construed, with a view to effecting the purposes intended by Congress. They ought not to be unduly extended by judicial construction to include privileges not intended to be conferred, nor so narrowly construed as to deprive those entitled to their benefit of the rights Congress intended to grant.

In order to secure this right it was provided in that statute, as it has been in subsequent ones, that the authors of books, their executors, administrators, or assigns, shall have the ‘sole right and liberty of printing, reprinting, publishing, and vending’ such book for a term of years, upon complying with the statutory conditions set forth in the act as essential to the acquiring of a valid copyright. Each and all of these statutory rights should be given such protection as the act of Congress requires, in order to secure the rights conferred upon authors and others entitled to the benefit of the act. Let us see more specifically what are the statutory rights, in this behalf, secured to one who has complied with the provisions of the law and become the owner of a copyright. They may be found in §§ 4952, 4965, and 4970 of the Revised Statutes of the United States, and are as follows:

‘Sec. 4952. Any citizen of the United States or resident therein, who shall be the author, inventor, designer, or proprietor of any book, map, chart, dramatic or musical composition, engraving, cut, print, or photograph or negative thereof, or of a painting, drawing, chromo, statute, statuary, and of models or designs intended to be perfected as works of the fine arts, and the executors, administrators, or assigns of any such person, shall, upon complying with the provisions of this chapter, have the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending the same.’ U. S. Comp. Stat. 1901, p. 3406.

‘Sec. 4965. If any person, after the recording of the title of any map, chart, musical composition, print, cut, engraving, or photograph, or chromo, or of the description of any painting, drawing, statue, statuary, or model or design intended to be perfected and executed as a work of the fine arts, as provided by this chapter, shall, within the term limited, and without the consent of the proprietor of the copyright first obtained in writing, signed in presence of two or more witnesses, engrave, etch, work, copy, print, publish, or import, either in whole or in part, or by varying the main design with intent to evade the law, or, knowing the same to be so printed, published, or imported, shall sell or expose to sale any copy of such map or other article, as aforesaid, he shall forfeit to the proprietor all the plates on which the same shall be copied, and every sheet thereof, either copied or printed, and shall further forfeit one dollar for every sheet of the same found in his possession, either printing, printed, copied, published, imported, or exposed for sale; and in case of a painting, statute, or statuary, he shall forfeit ten dollars for every copy of the same in his possession, or by him sold or exposed for sale, one half thereof to the proprietor and the other half to the use of the United States.’ U. S. Comp. Stat. 1901, p. 3414.

The purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it.

In our view the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.

To add to the right of exclusive sale the authority to control all future retail sales, by a notice that such sales must be made at a fixed sum, would give a right not included in the terms of the statute, and, in our view, extend its operation, by construction, beyond its meaning, when interpreted with a view to ascertaining the legislative intent in its enactment.

==Courtney==

The present case involves rights under the copyright act. The facts disclose a sale of a book at wholesale by the owners of the copyright, at a satisfactory price, and this without agreement between the parties to such sale obligating the purchaser to control future sales, and where the alleged right springs from the protection of the copyright law alone. It is contended that this power to control further sales is given by statute to the owner of such a copyright in conferring the sole right to ‘vend’ a copyrighted book.

While the nature of the property and the protection intended to be given the inventor or author as the reward of genius or intellect in the production of his book or work of art is to be considered in construing the act of Congress, it is evident that to secure the author the right to multiply copies of his work may be said to have been the main purpose of the copyright statutes. Speaking for this court in Stephens v. Cady, 14 How. 528, 530, 14 L. ed. 528, 529, Mr. Justice Nelson said:

‘The copyright is an exclusive right to the multiplication of the copies, for the benefit of the author or his assigns, disconnected from the plate, or any other physical existence. It is an incorporeal right to print and publish the map; or, as said by Lord Mansfield in Millar v. Taylor, 4 Burr. 2396, ‘a propeety in notion, and has no corporeal, tangible substance.’'

The precise question, therefore, in this case is, Does the sole right to vend (named in § 4952) secure to the owner of the copyright the right, after a sale of the book to a purchaser, to restrict future sales of the book at retail, to the right to sell it at a certain price per copy, because of a notice in the book that a sale at a different price will be treated as an infringement, which notice has been brought home to one undertaking to sell for less than the named sum? We do not think the statute can be given such a construction, and it is to be remembered that this is purely a question of statutory construction. There is no claim in this case of contract limitation, nor license agreement controlling the subsequent sales of the book.

In our view the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract. This conclusion is reached in view of the language of the statute, read in the light of its main purpose to secure the right of multiplying copies of the work,-a right which is the special creation of the statute. True, the statute also secures, to make this right of multiplication effectual, the sole right to vend copies of the book, the production of the author's thought and conception. The owner of the copyright in this case did sell copies of the book in quantities and at a price satisfactory to it. It has exercised the right to vend. What the complainant contends for embraces not only the right to sell the copies, but to qualify the title of a future purchaser by the reservation of the right to have the remedies of the statute against an infringer because of the printed notice of its purpose so to do unless the purchaser sells at a price fixed in the notice. To add to the right of exclusive sale the authority to control all future retail sales, by a notice that such sales must be made at a fixed sum, would give a right not included in the terms of the statute, and, in our view, extend its operation, by construction, beyond its meaning, when interpreted with a view to ascertaining the legislative intent in its enactment.

Talk:U.S. v. Univis Lens Co., 316 U.S. 241 (1942)

2010-03-23T22:23:42Z

Cep503: /* Maura */

== Maura ==

The court thought that without the granted license the final step in finishing the lens would infringe the patent and concluded that for this reason the Corporation could condition its licenses upon the maintenance by the licensee of the prescribed retail price. See United States v. General Electric Co., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362. But it held that the prescription retailer licenses are unlawful because their restrictions upon the resale of the finished product are not within the patent monopoly and are proscribed by the Sherman Act.

The court accordingly limited the relief which it granted to an injunction restraining respondents from carrying out or enforcing the restrictive provisions of the prescription retailer licenses and the fair trade agreements, and from using its licensing system—as has been done in one instance—as the means of preventing a particular competitor from manufacturing and distributing multifocal lens blank similar in appearance to those produced by the Lens Company.

An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it, and upon familiar principles the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold. Leitch Mfg. Co. v. Barber Co., 302 U.S. 458, 460, 461, 58 S.Ct. 288, 289, 82 L.Ed. 371; B. B. Chemical Co. v. Ellis, 314 U.S. 495, 62 S.Ct. 406, 86 L.Ed. —-. Sale of a lens blank by the patentee or by his licensee is thus in itself both a complete transfer of ownership of the blank, which is within the protection of the patent law, and a license to practice the final stage of the patent procedure. In the present case the entire consideration and compensation for both is the purchase price paid by the finishing licensee to the Lens Company. We have no question here of what other stipulations, for royalties or otherwise, might have been exacted as a part of the entire transaction, which do not seek to control the disposition of the patented article after the sale. The question is whether the patentee or his licensee, no longer aided by the patent, may lawfully exercise such control.

The declared purpose of the patent law is to promote the progress of science and the useful arts by granting to the inventor a limited monopoly, the exercise of which will enable him to secure the financial rewards for his invention. Constitution of the United States, Art. I, § 8, Cl. 8; 35 U.S.C. §§ 31, 40, 35 U.S.C.A. §§ 31, 40. The full extent of the monopoly is the patentee's 'exclusive right to make use, and vend the invention or discovery'. The patentee may surrender his monopoly in whole by the sale of his patent or in part by the sale of an artile embodying the invention. His monopoly remains so long as he retains the ownership of the patented article. But sale of it exhausts the monopoly in that article and the patentee may not thereafter, by virtue of his patent, control the use or disposition of the article. Bloomer v. McQuewan, 14 How. 539, 549, 550, 14 L.Ed. 532; Adams v. Burke, 17 Wall. 453, 21 L.Ed. 700; Hobbie v. Jennison, 149 U.S. 355, 13 S.Ct. 879, 37 L.Ed. 766. Hence the patentee cannot control the resale price of patented articles which he has sold, either by resort to an infringement suit, or, consistently with the Sherman Act (unless the Miller-Tydings Act applies), by stipulating for price maintenance by his vendees.

We think that all the considerations which support these results lead to the conclusion that where one has sold an uncompleted article which, because it embodies essential features of his patented invention, is within the protection of his patent, and has destined the article to be finished by the purchaser in conformity to the patent, he has sold his invention so far as it is or may be embodied in that particular article. The reward he was demanded and received is for the article and the invention which it embodies and which his vendee is to practice upon it. He has thus parted with his right to assert the patent monopoly with respect to it and is no longer free to control the price at which it may be sold either in its unfinished or finished form.

The first vending of any article manufactured under a patent puts the article beyond the reach of the monopoly which that patent confers. Whether the licensee sells the patented article in its completed form or sells it before completion for the purpose of enabling the buyer to finish and sell it, he has equally parted with the article, and made it the vehicle for transferring to the buyer ownership of the invention with respect to that article. To that extent he has parted with his patent monopoly in either case, and has received in the purchase price every benefit of that monopoly which the patent law secures to him. If he were permitted to control the price at which it could be sold by others he would extend his monopoly quite as much in the one case as in the other, and he would extend it beyond the fair meaning of the patent statutes and the construction which has hitherto been given to them.

The Miller-Tydings Act provides that nothing in the Sherman Act 'shall render illegal, contracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trade mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others * * *.' whenever such agreements are lawful where the resale is made.

Affirmed in part, and reversed in part and remanded with directions.

==Courtney==

We think that all the considerations which support these results lead to the conclusion that where one has sold an uncompleted article which, because it embodies essential features of his patented invention, is within the protection of his patent, and has destined the article to be finished by the purchaser in conformity to the patent, he has sold his invention so far as it is or may be embodied in that particular article. The reward he was demanded and received is for the article and the invention which it embodies and which his vendee is to practice upon it. He has thus parted with his right to assert the patent monopoly with respect to it and is no longer free to control the price at which it may be sold either in its unfinished or finished form. No one would doubt that if the patentee's licensee had sold the blanks to a wholesaler or finishing retailer, without more, the purchaser would not infringe by grinding and selling them. The added stipulation by the patentee fixing resale prices derives no support from the patent and must stand on the same footing under the Sherman Act as like stipulations with respect to unpatented commodities. Ethyl Gasoline Corp. v. United States, supra.

The first vending of any article manufactured under a patent puts the article beyond the reach of the monopoly which that patent confers. Whether the licensee sells the patented article in its completed form or sells it before completion for the purpose of enabling the buyer to finish and sell it, he has equally parted with the article, and made it the vehicle for transferring to the buyer ownership of the invention with respect to that article. To that extent he has parted with his patent monopoly in either case, and has received in the purchase price every benefit of that monopoly which the patent law secures to him. If he were permitted to control the price at which it could be sold by others he would extend his monopoly quite as much in the one case as in the other, and he would extend it beyond the fair meaning of the patent statutes and the construction which has hitherto been given to them.

The price fixing features of appellees' licensing system, which are not within the protection of the patent law, violate the Sherman Act save only as the fair trade agreements may bring them within the Miller-Tydings Act. Agreements for price maintenance of articles moving in interstate commerce are, without more, unreasonable restraints within the meaning of the Sherman Act because they eliminate competition, United States v. Trenton Potteries, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989; United States v. Socony Vacuum, 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129, and restrictions imposed by the seller upon resale prices of articles moving in interstate commerce were, until the enactment of the Miller-Tydings Act, 50 Stat. 693, 15 U.S.C.A. s 1 consistently held to be violations of the Sherman Act. Ethyl Gasoline Co. v. United States, supra, 309 U.S., page 457, 60 S.Ct. page 625, 84 L.Ed. 852, and cases cited.

In the contracts the Lens Company is designated as the manufacturer of ‘eye glass lenses' which are distributed and sold under the trade-mark of the manufacturer. But the Lens Company manufactures the blanks and not the finished lenses to which the resale prices apply. It is therefore not the manufacturer of the ‘commodity’ which the licensees sell, and the licensees are not engaged in the ‘resale’ of the same commodity they buy. We find nothing in the language of the Miller-Tydings Act, or in its legislative history to indicate that its provisions were to be so applied to products manufactured in successive stages by different processors that the first would be free to control the price of his successors. The prescribed prices are thus not within the Miller-Tydings exception to the Sherman Act.

Appellees stress the features of their licensing system by which it is said they protect the public interest and their own good will by the selection as licensees of those who are specially skilled and competent to render the service which they undertake. But if we assume that such restrictions might otherwise be valid, cf. Fashion Guild v. Trade Commission, 312 U.S. 457, 467, 668, 61 S.Ct. 703, 707, 85 L.Ed. 949, these features are so interwoven with and identified with the price restrictions which are the core of the licensing system that the case is an appropriate one for the suppression of the entire licensing scheme even though some of its features, independently established, might have been ued for lawful purposes. Ethyl Gasoline Corp. v. United States, supra, 309 U.S. page 461, 60 S.Ct. page 627, 84 L.Ed. 852. The injunction of the district court will therefore be continued, and extended so as to suppress all the license contracts and the maintenance of the licensing system which appellees have established, other than the Corporation's license to the Lens Company. The judgment in No. 856 is affirmed. The judgment in No. 855 is reversed, and both cases are remanded to the district court for the entry of an appropriate decree in conformity to this opinion.

Talk:Traffix Devices, Inc. vs. Marketing Displays, Inc., 532 U.S. 23 (2001)

2010-03-21T18:11:35Z

Cep503: Courtney

Talk:Traffix Devices, Inc. vs. Marketing Displays, Inc., 532 U.S. 23 (2001)

2010-03-21T17:34:28Z

Cep503: Created page with 'Manufacturer of “WindMaster” outdoor sign stands brought trademark and trade dress infringement action against competitor that used “WindBuster” mark for its traffic sign…'

Manufacturer of “WindMaster” outdoor sign stands brought trademark and trade dress infringement action against competitor that used “WindBuster” mark for its traffic sign stands. The United States District Court for the Eastern District of Michigan, 967 F.Supp. 953, enjoined competitor's use of infringing trademark and dismissed counterclaim, but, 971 F.Supp. 262, granted summary judgment for competitor on trade dress claim. Competitor appealed, and manufacturer cross-appealed. The Court of Appeals for the Sixth Circuit, 200 F.3d 929, affirmed in part, reversed in part, and remanded. Competitor petitioned for certiorari which was granted. The Supreme Court, Justice Kennedy, held that existence of expired utility patents claiming dual-spring design mechanism for keeping outdoor signs upright in adverse wind conditions created strong evidentiary inference of design's functionality, and failure of manufacturer to overcome that inference by showing that design was merely ornamental, incidental, or arbitrary precluded trade dress protection for the design.

The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a“ trade dress” which may not be used by a competitor in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods.

[2] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TII Marks Protected
Key Number Symbol382Tk1061 Form, Features, or Design of Product as Marks; Trade Dress
Key Number Symbol382Tk1062 k. In General. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Protection for trade dress exists to promote competition.

[3] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TII Marks Protected
Key Number Symbol382Tk1061 Form, Features, or Design of Product as Marks; Trade Dress
Key Number Symbol382Tk1064 k. Functionality. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Trade dress protection may not be claimed for product features that are functional.

[4] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TII Marks Protected
Key Number Symbol382Tk1061 Form, Features, or Design of Product as Marks; Trade Dress
Key Number Symbol382Tk1064 k. Functionality. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Key Number Symbol382T Trademarks Headnote Citing References KeyCite Citing References for this Headnote
Key Number Symbol382TIX Actions and Proceedings
Key Number Symbol382TIX(C) Evidence
Key Number Symbol382Tk1601 Presumptions and Burden of Proof
Key Number Symbol382Tk1611 k. Trade Dress. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Key Number Symbol382T Trademarks Headnote Citing References KeyCite Citing References for this Headnote
Key Number Symbol382TIX Actions and Proceedings
Key Number Symbol382TIX(C) Evidence
Key Number Symbol382Tk1620 Weight and Sufficiency
Key Number Symbol382Tk1631 k. Trade Dress. Most Cited Cases
(Formerly 382k43 Trade Regulation)

A prior utility patent is strong evidence that the features therein claimed are functional, and if trade dress protection is sought for those features the strong evidence of functionality based on the previous patent adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection. Lanham Trade-Mark Act, § 43(a)(3), 15 U.S.C.A. § 1125(a)(3).

[5] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TII Marks Protected
Key Number Symbol382Tk1061 Form, Features, or Design of Product as Marks; Trade Dress
Key Number Symbol382Tk1064 k. Functionality. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Where an expired utility patent claimed the feature for which trade dress protection is claimed, the party seeking to establish such protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

[6] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TIX Actions and Proceedings
Key Number Symbol382TIX(C) Evidence
Key Number Symbol382Tk1601 Presumptions and Burden of Proof
Key Number Symbol382Tk1611 k. Trade Dress. Most Cited Cases
(Formerly 382k571.1 Trade Regulation)

Existence of expired utility patents claiming dual-spring design mechanism for keeping outdoor signs upright in adverse wind conditions created strong evidentiary inference of design's functionality, and failure of manufacturer to overcome that inference by showing that design was merely ornamental, incidental, or arbitrary precluded trade dress protection for the design.

[7] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol382T Trademarks
Key Number Symbol382TII Marks Protected
Key Number Symbol382Tk1061 Form, Features, or Design of Product as Marks; Trade Dress
Key Number Symbol382Tk1064 k. Functionality. Most Cited Cases
(Formerly 382k43 Trade Regulation)

Although a functional feature not entitled to trade dress protection is one the exclusive use of which would put competitors at a significant non-reputation-related disadvantage, competitive necessity is not a necessary test for functionality; rather, a feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device.

**1256 Syllabus FN*

FN* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

*23 Respondent, Marketing Displays, Inc. (MDI), holds now-expired utility patents for a “dual-spring design” mechanism that keeps temporary road and other outdoor signs upright in adverse wind conditions. MDI claims that its sign stands were recognizable to buyers and users because the patented design was visible near the sign stand's base. After the patents expired and petitioner TrafFix Devices, Inc., began marketing sign stands with a dual-spring mechanism copied from MDI's design, MDI brought suit under the Trademark Act of 1946 for, inter alia, trade dress infringement. The District Court granted TrafFix's motion for summary judgment, holding that no reasonable trier of fact could determine that MDI had established secondary meaning in its alleged trade dress, i.e., consumers did not associate the dual-spring design's look with MDI; and, as an independent reason, that there could be no trade dress protection for the design because it was functional. The Sixth Circuit reversed. Among other things, it suggested that the District Court committed legal error by looking only to the dual-spring design when evaluating MDI's trade dress because a competitor had to find some way to hide the design or otherwise set it apart from MDI's; explained, relying on Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248, that exclusive use of a feature must put competitors at a significant non-reputation-related disadvantage before trade dress protection is denied on functionality grounds; and noted a split among the Circuits on the issue whether an expired utility patent forecloses the possibility of trade dress protection in the product's design.

Held: Because MDI's dual-spring design is a functional feature for which there is no trade dress protection, MDI's claim is barred. Pp. 1259-1263.

**1257 (a) Trade dress can be protected under federal law, but the person asserting such protection in an infringement action must prove that the matter sought to be protected is not functional, 15 U.S.C. § 1125(a)(3). Trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products. An expired utility patent has vital significance in resolving a trade dress claim, for a utility patent is strong evidence that the features therein claimed are functional. The central advance claimed in the expired utility*24 patents here is the dual-spring design, which is an essential feature of the trade dress MDI now seeks to protect. However, MDI did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents. The springs are necessary to the device's operation, and they would have been covered by the claims of the expired patents even though they look different from the embodiment revealed in those patents, see Sarkisian v. Winn-Proof Corp., 697 F.2d 1313. The rationale for the rule that the disclosure of a feature in a utility patent's claims constitutes strong evidence of functionality is well illustrated in this case. The design serves the important purpose of keeping the sign upright in heavy wind conditions, and statements in the expired patent applications indicate that it does so in a unique and useful manner and at a cost advantage over alternative designs. Pp. 1259-1261.

(b) In reversing the summary judgment against MDI, the Sixth Circuit gave insufficient weight to the importance of the expired utility patents, and their evidentiary significance, in establishing the device's functionality. The error was likely caused by its misinterpretation of trade dress principles in other respects. “ ‘In general terms a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Qualitex, supra, at 165, 115 S.Ct. 1300 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, n. 10, 102 S.Ct. 2182, 72 L.Ed.2d 606). This Court has expanded on that meaning, observing that a functional feature is one “the exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage,” Qualitex, supra, at 165, 115 S.Ct. 1300, but that language does not mean that competitive necessity is a necessary test for functionality. Where the design is functional under the Inwood formulation there is no need to proceed further to consider competitive necessity. This Court has allowed trade dress protection to inherently distinctive product features on the assumption that they were not functional. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774, 112 S.Ct. 2753, 120 L.Ed.2d 615. Here, however, beyond serving the purpose of informing consumers that the sign stands are made by MDI, the design provides a unique and useful mechanism to resist the wind's force. Functionality having been established, whether the design has acquired secondary meaning need not be considered. Nor is it necessary to speculate about other design possibilities. Finally, this Court need not resolve here the question whether the Patent Clause of the Constitution, of its own force, prohibits the holder of an expired utility patent from claiming trade dress protection. Pp. 1261-1263.

200 F.3d 929, reversed and remanded.

*25 KENNEDY, J., delivered the opinion for a unanimous Court.

John G. Roberts, Washington, DC, for petitioner.

Lawrence G. Wallace, Washington, DC, for United States as amicus curiae, by special leave of the Court.

John A. Artz, Southfield, MI, for respondent.

Justice KENNEDY delivered the opinion of the Court.

Temporary road signs with warnings like “Road Work Ahead” or “Left Shoulder Closed” must withstand strong gusts of wind. An inventor named Robert Sarkisian obtained two utility patents for a mechanism built upon two springs (the dual-spring design) to keep these and other outdoor signs upright despite adverse wind conditions. The holder of the now-expired Sarkisian patents, respondent Marketing Displays, Inc. (MDI), established a successful business in the manufacture and sale of sign stands incorporating the patented feature. MDI's stands for road signs were recognizable to buyers and users (it says) because the dual-spring design was visible near the base of the sign.

*26 This litigation followed after the patents expired and a competitor, TrafFix Devices, Inc., sold sign stands with a visible spring mechanism that looked like MDI's. MDI and TrafFix products looked alike because they were. When TrafFix started in business, it sent an MDI product abroad to have it reverse engineered, that is to say copied. Complicating matters, TrafFix marketed its sign stands under a name similar to MDI's. MDI used the name “WindMaster,” while TrafFix, its new competitor, used “WindBuster.”

MDI brought suit under the Trademark Act of 1946 (Lanham Act), 60 Stat. 427, as amended, 15 U.S.C. § 1051 et seq. , against TrafFix for trademark infringement (based on the similar names), trade dress infringement (based on the copied dual-spring design), and unfair competition. TrafFix counterclaimed on antitrust theories. After the United States District Court for the Eastern District of Michigan considered cross-motions for summary judgment, MDI prevailed on its trademark claim for the confusing similarity of names and was held not liable on the antitrust counterclaim; and those two rulings, affirmed by the Court of Appeals, are not before us.

I
We are concerned with the trade dress question. The District Court ruled against MDI on its trade dress claim. 971 F.Supp. 262 (E.D.Mich.1997). After determining that the one element of MDI's trade dress at issue was the dual-spring design, id., at 265, it held that “no reasonable trier of fact could determine that MDI has established secondary meaning” in its alleged trade dress, id., at 269. In other words, consumers did not associate the look of the dual-spring design with MDI. As a second, independent reason to grant summary judgment in favor of TrafFix, the District Court determined the dual-spring design was functional. On this rationale secondary meaning is irrelevant because there can be no trade dress protection in any event. In ruling on the functional aspect of the design, the District Court *27 noted that Sixth Circuit precedent indicated that the burden was on MDI to prove that its trade dress was nonfunctional, and not on TrafFix to show that it was functional (a rule since adopted by Congress, see 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V)), and then went on to consider MDI's arguments that the dual-spring design was subject to trade dress protection. Finding none of MDI's contentions persuasive, the District Court concluded MDI had not “proffered sufficient evidence which would enable a reasonable trier of fact to find that MDI's vertical dual-spring design is non-functional.” 971 F.Supp., at 276. Summary judgment was entered against MDI on its trade dress claims.

The Court of Appeals for the Sixth Circuit reversed the trade dress ruling. 200 F.3d 929 (1999). The Court of Appeals held the District Court had erred in ruling MDI failed to show a genuine issue of material fact regarding whether it had secondary**1259 meaning in its alleged trade dress, id., at 938, and had erred further in determining that MDI could not prevail in any event because the alleged trade dress was in fact a functional product configuration, id., at 940. The Court of Appeals suggested the District Court committed legal error by looking only to the dual-spring design when evaluating MDI's trade dress. Basic to its reasoning was the Court of Appeals' observation that it took “little imagination to conceive of a hidden dual-spring mechanism or a tri or quad-spring mechanism that might avoid infringing [MDI's] trade dress.” Ibid. The Court of Appeals explained that “[i]f TrafFix or another competitor chooses to use [MDI's] dual-spring design, then it will have to find some other way to set its sign apart to avoid infringing [MDI's] trade dress.” Ibid. It was not sufficient, according to the Court of Appeals, that allowing exclusive use of a particular feature such as the dual-spring design in the guise of trade dress would “hinde[r] competition somewhat.” Rather, “[e]xclusive use of a feature must ‘put competitors at a significant non-reputation-related disadvantage’ before trade *28 dress protection is denied on functionality grounds.” Ibid. (quoting Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995)). In its criticism of the District Court's ruling on the trade dress question, the Court of Appeals took note of a split among Courts of Appeals in various other Circuits on the issue whether the existence of an expired utility patent forecloses the possibility of the patentee's claiming trade dress protection in the product's design. 200 F.3d, at 939. Compare Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 246 (C.A.5 1997) (holding that trade dress protection is not foreclosed), Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277 (C.A.7 1998) (same), and Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (C.A.Fed.1999) (same), with Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F.3d 1498, 1500 (C.A.10 1995) (“Where a product configuration is a significant inventive component of an invention covered by a utility patent ... it cannot receive trade dress protection”). To resolve the conflict, we granted certiorari. 530 U.S. 1260, 120 S.Ct. 2715, 147 L.Ed.2d 981 (2000).

II
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References It is well established that trade dress can be protected under federal law. The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a trade dress which may not be used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods. In these respects protection for trade dress exists to promote competition. As we explained just last Term, see Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000), various Courts of Appeals have allowed claims of trade dress infringement relying on the general provision of the Lanham Act which provides a cause of action to one who is injured when a person uses “any word, term name, symbol, or device, or any *29 combination thereof ... which is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods.” 15 U.S.C. § 1125(a)(1)(A). Congress confirmed this statutory protection for trade dress by amending the Lanham Act to recognize the concept. Title 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V) provides: “In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.” This burden of proof gives force to the well-established rule that trade dress protection may not be claimed for product features that are functional. **1260 Qualitex, supra, at 164-165, 115 S.Ct. 1300; Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). And in Wal-Mart, supra, we were careful to caution against misuse or overextension of trade dress. We noted that “product design almost invariably serves purposes other than source identification.” Id., at 213, 120 S.Ct. 1339.

Trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products. In general, unless an intellectual property right such as a patent or copyright protects an item, it will be subject to copying. As the Court has explained, copying is not always discouraged or disfavored by the laws which preserve our competitive economy. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 160, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Allowing competitors to copy will have salutary effects in many instances. “Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology.” Ibid.

[4] Headnote Citing References[5] Headnote Citing References The principal question in this case is the effect of an expired patent on a claim of trade dress infringement. A prior patent, we conclude, has vital significance in resolving the trade dress claim. A utility patent is strong evidence that the features therein claimed are functional. If trade dress protection is sought for those features the strong evidence *30 of functionality based on the previous patent adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection. Where the expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

[6] Headnote Citing References In the case before us, the central advance claimed in the expired utility patents (the Sarkisian patents) is the dual-spring design; and the dual-spring design is the essential feature of the trade dress MDI now seeks to establish and to protect. The rule we have explained bars the trade dress claim, for MDI did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents.

The dual springs shown in the Sarkisian patents were well apart (at either end of a frame for holding a rectangular sign when one full side is the base) while the dual springs at issue here are close together (in a frame designed to hold a sign by one of its corners). As the District Court recognized, this makes little difference. The point is that the springs are necessary to the operation of the device. The fact that the springs in this very different-looking device fall within the claims of the patents is illustrated by MDI's own position in earlier litigation. In the late 1970's, MDI engaged in a long-running intellectual property battle with a company known as Winn-Proof. Although the precise claims of the Sarkisian patents cover sign stands with springs “spaced apart,” U.S. Patent No. 3,646,696, col. 4; U.S. Patent No. 3,662,482, col. 4, the Winn-Proof sign stands (with springs much like the sign stands at issue here) were found to infringe the patents by the United States District Court for the District of Oregon, and the Court of Appeals for the *31 Ninth Circuit affirmed the judgment. Sarkisian v. Winn-Proof Corp., 697 F.2d 1313 (1983). Although the Winn-Proof traffic sign stand (with dual springs close together) did not appear, then, to infringe the literal terms of the patent claims (which called for “spaced apart” springs), the Winn-Proof sign stand was found to infringe the patents under the doctrine of equivalents, which allows a finding of patent infringement even when the accused product does not fall within the literal terms of the claims. Id., at 1321-1322; see generally **1261 Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997). In light of this past ruling-a ruling procured at MDI's own insistence-it must be concluded the products here at issue would have been covered by the claims of the expired patents.

The rationale for the rule that the disclosure of a feature in the claims of a utility patent constitutes strong evidence of functionality is well illustrated in this case. The dual-spring design serves the important purpose of keeping the sign upright even in heavy wind conditions; and, as confirmed by the statements in the expired patents, it does so in a unique and useful manner. As the specification of one of the patents recites, prior art “devices, in practice, will topple under the force of a strong wind.” U.S. Patent No. 3,662,482, col. 1. The dual-spring design allows sign stands to resist toppling in strong winds. Using a dual-spring design rather than a single spring achieves important operational advantages. For example, the specifications of the patents note that the “use of a pair of springs ... as opposed to the use of a single spring to support the frame structure prevents canting or twisting of the sign around a vertical axis,” and that, if not prevented, twisting “may cause damage to the spring structure and may result in tipping of the device.” U.S. Patent No. 3,646,696, col. 3. In the course of patent prosecution, it was said that “[t]he use of a pair of spring connections as opposed to a single spring connection ... forms an important part of this combination” because it *32 “forc[es] the sign frame to tip along the longitudinal axis of the elongated ground-engaging members.” App. 218. The dual-spring design affects the cost of the device as well; it was acknowledged that the device “could use three springs but this would unnecessarily increase the cost of the device.” Id., at 217. These statements made in the patent applications and in the course of procuring the patents demonstrate the functionality of the design. MDI does not assert that any of these representations are mistaken or inaccurate, and this is further strong evidence of the functionality of the dual-spring design.

III
[7] Headnote Citing References In finding for MDI on the trade dress issue the Court of Appeals gave insufficient recognition to the importance of the expired utility patents, and their evidentiary significance, in establishing the functionality of the device. The error likely was caused by its misinterpretation of trade dress principles in other respects. As we have noted, even if there has been no previous utility patent the party asserting trade dress has the burden to establish the nonfunctionality of alleged trade dress features. MDI could not meet this burden. Discussing trademarks, we have said “ ‘[i]n general terms, a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Qualitex, 514 U.S., at 165, 115 S.Ct. 1300 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, n. 10, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982)). Expanding upon the meaning of this phrase, we have observed that a functional feature is one the “exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage.” 514 U.S., at 165, 115 S.Ct. 1300. The Court of Appeals in the instant case seemed to interpret this language to mean that a necessary test for functionality is “whether the particular product configuration is a competitive necessity.” 200 F.3d, at 940. See also Vornado, 58 F.3d, at 1507 (“Functionality, by contrast, has been defined *33 both by our circuit, and more recently by the Supreme Court, in terms of competitive need”). This was incorrect as a comprehensive definition. As explained in Qualitex, supra, and Inwood, supra, a feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device. The Qualitex decision did not purport to displace this **1262 traditional rule. Instead, it quoted the rule as Inwood had set it forth. It is proper to inquire into a “significant non-reputation-related disadvantage” in cases of esthetic functionality, the question involved in Qualitex. Where the design is functional under the Inwood formulation there is no need to proceed further to consider if there is a competitive necessity for the feature. In Qualitex, by contrast, esthetic functionality was the central question, there having been no indication that the green-gold color of the laundry press pad had any bearing on the use or purpose of the product or its cost or quality.

The Court has allowed trade dress protection to certain product features that are inherently distinctive. Two Pesos, 505 U.S., at 774, 112 S.Ct. 2753. In Two Pesos, however, the Court at the outset made the explicit analytic assumption that the trade dress features in question (decorations and other features to evoke a Mexican theme in a restaurant) were not functional. Id., at 767, n. 6, 112 S.Ct. 2753. The trade dress in those cases did not bar competitors from copying functional product design features. In the instant case, beyond serving the purpose of informing consumers that the sign stands are made by MDI (assuming it does so), the dual-spring design provides a unique and useful mechanism to resist the force of the wind. Functionality having been established, whether MDI's dual-spring design has acquired secondary meaning need not be considered.

There is no need, furthermore, to engage, as did the Court of Appeals, in speculation about other design possibilities, such as using three or four springs which might serve the same purpose. 200 F.3d, at 940. Here, the functionality of the spring design means that competitors need not explore *34 whether other spring juxtapositions might be used. The dual-spring design is not an arbitrary flourish in the configuration of MDI's product; it is the reason the device works. Other designs need not be attempted.

Because the dual-spring design is functional, it is unnecessary for competitors to explore designs to hide the springs, say, by using a box or framework to cover them, as suggested by the Court of Appeals. Ibid. The dual-spring design assures the user the device will work. If buyers are assured the product serves its purpose by seeing the operative mechanism that in itself serves an important market need. It would be at cross-purposes to those objectives, and something of a paradox, were we to require the manufacturer to conceal the very item the user seeks.

In a case where a manufacturer seeks to protect arbitrary, incidental, or ornamental aspects of features of a product found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs, a different result might obtain. There the manufacturer could perhaps prove that those aspects do not serve a purpose within the terms of the utility patent. The inquiry into whether such features, asserted to be trade dress, are functional by reason of their inclusion in the claims of an expired utility patent could be aided by going beyond the claims and examining the patent and its prosecution history to see if the feature in question is shown as a useful part of the invention. No such claim is made here, however. MDI in essence seeks protection for the dual-spring design alone. The asserted trade dress consists simply of the dual-spring design, four legs, a base, an upright, and a sign. MDI has pointed to nothing arbitrary about the components of its device or the way they are assembled. The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply *35 because an investment has been made to encourage the public to associate a particular functional**1263 feature with a single manufacturer or seller. The Court of Appeals erred in viewing MDI as possessing the right to exclude competitors from using a design identical to MDI's and to require those competitors to adopt a different design simply to avoid copying it. MDI cannot gain the exclusive right to produce sign stands using the dual-spring design by asserting that consumers associate it with the look of the invention itself. Whether a utility patent has expired or there has been no utility patent at all, a product design which has a particular appearance may be functional because it is “essential to the use or purpose of the article” or “affects the cost or quality of the article.” Inwood, 456 U.S., at 850, n. 10, 102 S.Ct. 2182.

TrafFix and some of its amici argue that the Patent Clause of the Constitution, Art. I, § 8, cl. 8, of its own force, prohibits the holder of an expired utility patent from claiming trade dress protection. Brief for Petitioner 33-36; Brief for Panduit Corp. as Amicus Curiae 3; Brief for Malla Pollack as Amicus Curiae 2. We need not resolve this question. If, despite the rule that functional features may not be the subject of trade dress protection, a case arises in which trade dress becomes the practical equivalent of an expired utility patent, that will be time enough to consider the matter. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2001.
Traffix Devices, Inc. v. Marketing Displays, Inc.
532 U.S. 23, 121 S.Ct. 1255, 149 L.Ed.2d 164, 69 USLW 4172, 58 U.S.P.Q.2d 1001, 01 Cal. Daily Op. Serv. 2223, 2001 Daily Journal D.A.R. 2796, 14 Fla. L. Weekly Fed. S 135, 2001 DJCAR 1496

Traffix Devices, Inc. vs. Marketing Displays, Inc., 532 U.S. 23 (2001)

2010-03-21T17:31:06Z

Cep503:

Supreme Court of the United States
TRAFFIX DEVICES, INC., Petitioner,
v.
MARKETING DISPLAYS, INC.

No. 99-1571.
Argued Nov. 29, 2000.
Decided March 20, 2001.
200 F.3d 929, reversed and remanded.

*25 KENNEDY, J., delivered the opinion for a unanimous Court.

John G. Roberts, Washington, DC, for petitioner.

Lawrence G. Wallace, Washington, DC, for United States as amicus curiae, by special leave of the Court.

John A. Artz, Southfield, MI, for respondent.

Justice KENNEDY delivered the opinion of the Court.

Temporary road signs with warnings like “Road Work Ahead” or “Left Shoulder Closed” must withstand strong gusts of wind. An inventor named Robert Sarkisian obtained two utility patents for a mechanism built upon two springs (the dual-spring design) to keep these and other outdoor signs upright despite adverse wind conditions. The holder of the now-expired Sarkisian patents, respondent Marketing Displays, Inc. (MDI), established a successful business in the manufacture and sale of sign stands incorporating the patented feature. MDI's stands for road signs were recognizable to buyers and users (it says) because the dual-spring design was visible near the base of the sign.

*26 This litigation followed after the patents expired and a competitor, TrafFix Devices, Inc., sold sign stands with a visible spring mechanism that looked like MDI's. MDI and TrafFix products looked alike because they were. When TrafFix started in business, it sent an MDI product abroad to have it reverse engineered, that is to say copied. Complicating matters, TrafFix marketed its sign stands under a name similar to MDI's. MDI used the name “WindMaster,” while TrafFix, its new competitor, used “WindBuster.”

MDI brought suit under the Trademark Act of 1946 (Lanham Act), 60 Stat. 427, as amended, 15 U.S.C. § 1051 et seq. , against TrafFix for trademark infringement (based on the similar names), trade dress infringement (based on the copied dual-spring design), and unfair competition. TrafFix counterclaimed on antitrust theories. After the United States District Court for the Eastern District of Michigan considered cross-motions for summary judgment, MDI prevailed on its trademark claim for the confusing similarity of names and was held not liable on the antitrust counterclaim; and those two rulings, affirmed by the Court of Appeals, are not before us.

I
We are concerned with the trade dress question. The District Court ruled against MDI on its trade dress claim. 971 F.Supp. 262 (E.D.Mich.1997). After determining that the one element of MDI's trade dress at issue was the dual-spring design, id., at 265, it held that “no reasonable trier of fact could determine that MDI has established secondary meaning” in its alleged trade dress, id., at 269. In other words, consumers did not associate the look of the dual-spring design with MDI. As a second, independent reason to grant summary judgment in favor of TrafFix, the District Court determined the dual-spring design was functional. On this rationale secondary meaning is irrelevant because there can be no trade dress protection in any event. In ruling on the functional aspect of the design, the District Court *27 noted that Sixth Circuit precedent indicated that the burden was on MDI to prove that its trade dress was nonfunctional, and not on TrafFix to show that it was functional (a rule since adopted by Congress, see 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V)), and then went on to consider MDI's arguments that the dual-spring design was subject to trade dress protection. Finding none of MDI's contentions persuasive, the District Court concluded MDI had not “proffered sufficient evidence which would enable a reasonable trier of fact to find that MDI's vertical dual-spring design is non-functional.” 971 F.Supp., at 276. Summary judgment was entered against MDI on its trade dress claims.

The Court of Appeals for the Sixth Circuit reversed the trade dress ruling. 200 F.3d 929 (1999). The Court of Appeals held the District Court had erred in ruling MDI failed to show a genuine issue of material fact regarding whether it had secondary**1259 meaning in its alleged trade dress, id., at 938, and had erred further in determining that MDI could not prevail in any event because the alleged trade dress was in fact a functional product configuration, id., at 940. The Court of Appeals suggested the District Court committed legal error by looking only to the dual-spring design when evaluating MDI's trade dress. Basic to its reasoning was the Court of Appeals' observation that it took “little imagination to conceive of a hidden dual-spring mechanism or a tri or quad-spring mechanism that might avoid infringing [MDI's] trade dress.” Ibid. The Court of Appeals explained that “[i]f TrafFix or another competitor chooses to use [MDI's] dual-spring design, then it will have to find some other way to set its sign apart to avoid infringing [MDI's] trade dress.” Ibid. It was not sufficient, according to the Court of Appeals, that allowing exclusive use of a particular feature such as the dual-spring design in the guise of trade dress would “hinde[r] competition somewhat.” Rather, “[e]xclusive use of a feature must ‘put competitors at a significant non-reputation-related disadvantage’ before trade *28 dress protection is denied on functionality grounds.” Ibid. (quoting Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995)). In its criticism of the District Court's ruling on the trade dress question, the Court of Appeals took note of a split among Courts of Appeals in various other Circuits on the issue whether the existence of an expired utility patent forecloses the possibility of the patentee's claiming trade dress protection in the product's design. 200 F.3d, at 939. Compare Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 246 (C.A.5 1997) (holding that trade dress protection is not foreclosed), Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277 (C.A.7 1998) (same), and Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (C.A.Fed.1999) (same), with Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F.3d 1498, 1500 (C.A.10 1995) (“Where a product configuration is a significant inventive component of an invention covered by a utility patent ... it cannot receive trade dress protection”). To resolve the conflict, we granted certiorari. 530 U.S. 1260, 120 S.Ct. 2715, 147 L.Ed.2d 981 (2000).

II
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References It is well established that trade dress can be protected under federal law. The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a trade dress which may not be used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods. In these respects protection for trade dress exists to promote competition. As we explained just last Term, see Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000), various Courts of Appeals have allowed claims of trade dress infringement relying on the general provision of the Lanham Act which provides a cause of action to one who is injured when a person uses “any word, term name, symbol, or device, or any *29 combination thereof ... which is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods.” 15 U.S.C. § 1125(a)(1)(A). Congress confirmed this statutory protection for trade dress by amending the Lanham Act to recognize the concept. Title 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V) provides: “In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.” This burden of proof gives force to the well-established rule that trade dress protection may not be claimed for product features that are functional. **1260 Qualitex, supra, at 164-165, 115 S.Ct. 1300; Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). And in Wal-Mart, supra, we were careful to caution against misuse or overextension of trade dress. We noted that “product design almost invariably serves purposes other than source identification.” Id., at 213, 120 S.Ct. 1339.

Trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products. In general, unless an intellectual property right such as a patent or copyright protects an item, it will be subject to copying. As the Court has explained, copying is not always discouraged or disfavored by the laws which preserve our competitive economy. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 160, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Allowing competitors to copy will have salutary effects in many instances. “Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology.” Ibid.

[4] Headnote Citing References[5] Headnote Citing References The principal question in this case is the effect of an expired patent on a claim of trade dress infringement. A prior patent, we conclude, has vital significance in resolving the trade dress claim. A utility patent is strong evidence that the features therein claimed are functional. If trade dress protection is sought for those features the strong evidence *30 of functionality based on the previous patent adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection. Where the expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

[6] Headnote Citing References In the case before us, the central advance claimed in the expired utility patents (the Sarkisian patents) is the dual-spring design; and the dual-spring design is the essential feature of the trade dress MDI now seeks to establish and to protect. The rule we have explained bars the trade dress claim, for MDI did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents.

The dual springs shown in the Sarkisian patents were well apart (at either end of a frame for holding a rectangular sign when one full side is the base) while the dual springs at issue here are close together (in a frame designed to hold a sign by one of its corners). As the District Court recognized, this makes little difference. The point is that the springs are necessary to the operation of the device. The fact that the springs in this very different-looking device fall within the claims of the patents is illustrated by MDI's own position in earlier litigation. In the late 1970's, MDI engaged in a long-running intellectual property battle with a company known as Winn-Proof. Although the precise claims of the Sarkisian patents cover sign stands with springs “spaced apart,” U.S. Patent No. 3,646,696, col. 4; U.S. Patent No. 3,662,482, col. 4, the Winn-Proof sign stands (with springs much like the sign stands at issue here) were found to infringe the patents by the United States District Court for the District of Oregon, and the Court of Appeals for the *31 Ninth Circuit affirmed the judgment. Sarkisian v. Winn-Proof Corp., 697 F.2d 1313 (1983). Although the Winn-Proof traffic sign stand (with dual springs close together) did not appear, then, to infringe the literal terms of the patent claims (which called for “spaced apart” springs), the Winn-Proof sign stand was found to infringe the patents under the doctrine of equivalents, which allows a finding of patent infringement even when the accused product does not fall within the literal terms of the claims. Id., at 1321-1322; see generally **1261 Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997). In light of this past ruling-a ruling procured at MDI's own insistence-it must be concluded the products here at issue would have been covered by the claims of the expired patents.

The rationale for the rule that the disclosure of a feature in the claims of a utility patent constitutes strong evidence of functionality is well illustrated in this case. The dual-spring design serves the important purpose of keeping the sign upright even in heavy wind conditions; and, as confirmed by the statements in the expired patents, it does so in a unique and useful manner. As the specification of one of the patents recites, prior art “devices, in practice, will topple under the force of a strong wind.” U.S. Patent No. 3,662,482, col. 1. The dual-spring design allows sign stands to resist toppling in strong winds. Using a dual-spring design rather than a single spring achieves important operational advantages. For example, the specifications of the patents note that the “use of a pair of springs ... as opposed to the use of a single spring to support the frame structure prevents canting or twisting of the sign around a vertical axis,” and that, if not prevented, twisting “may cause damage to the spring structure and may result in tipping of the device.” U.S. Patent No. 3,646,696, col. 3. In the course of patent prosecution, it was said that “[t]he use of a pair of spring connections as opposed to a single spring connection ... forms an important part of this combination” because it *32 “forc[es] the sign frame to tip along the longitudinal axis of the elongated ground-engaging members.” App. 218. The dual-spring design affects the cost of the device as well; it was acknowledged that the device “could use three springs but this would unnecessarily increase the cost of the device.” Id., at 217. These statements made in the patent applications and in the course of procuring the patents demonstrate the functionality of the design. MDI does not assert that any of these representations are mistaken or inaccurate, and this is further strong evidence of the functionality of the dual-spring design.

III
[7] Headnote Citing References In finding for MDI on the trade dress issue the Court of Appeals gave insufficient recognition to the importance of the expired utility patents, and their evidentiary significance, in establishing the functionality of the device. The error likely was caused by its misinterpretation of trade dress principles in other respects. As we have noted, even if there has been no previous utility patent the party asserting trade dress has the burden to establish the nonfunctionality of alleged trade dress features. MDI could not meet this burden. Discussing trademarks, we have said “ ‘[i]n general terms, a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Qualitex, 514 U.S., at 165, 115 S.Ct. 1300 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, n. 10, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982)). Expanding upon the meaning of this phrase, we have observed that a functional feature is one the “exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage.” 514 U.S., at 165, 115 S.Ct. 1300. The Court of Appeals in the instant case seemed to interpret this language to mean that a necessary test for functionality is “whether the particular product configuration is a competitive necessity.” 200 F.3d, at 940. See also Vornado, 58 F.3d, at 1507 (“Functionality, by contrast, has been defined *33 both by our circuit, and more recently by the Supreme Court, in terms of competitive need”). This was incorrect as a comprehensive definition. As explained in Qualitex, supra, and Inwood, supra, a feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device. The Qualitex decision did not purport to displace this **1262 traditional rule. Instead, it quoted the rule as Inwood had set it forth. It is proper to inquire into a “significant non-reputation-related disadvantage” in cases of esthetic functionality, the question involved in Qualitex. Where the design is functional under the Inwood formulation there is no need to proceed further to consider if there is a competitive necessity for the feature. In Qualitex, by contrast, esthetic functionality was the central question, there having been no indication that the green-gold color of the laundry press pad had any bearing on the use or purpose of the product or its cost or quality.

The Court has allowed trade dress protection to certain product features that are inherently distinctive. Two Pesos, 505 U.S., at 774, 112 S.Ct. 2753. In Two Pesos, however, the Court at the outset made the explicit analytic assumption that the trade dress features in question (decorations and other features to evoke a Mexican theme in a restaurant) were not functional. Id., at 767, n. 6, 112 S.Ct. 2753. The trade dress in those cases did not bar competitors from copying functional product design features. In the instant case, beyond serving the purpose of informing consumers that the sign stands are made by MDI (assuming it does so), the dual-spring design provides a unique and useful mechanism to resist the force of the wind. Functionality having been established, whether MDI's dual-spring design has acquired secondary meaning need not be considered.

There is no need, furthermore, to engage, as did the Court of Appeals, in speculation about other design possibilities, such as using three or four springs which might serve the same purpose. 200 F.3d, at 940. Here, the functionality of the spring design means that competitors need not explore *34 whether other spring juxtapositions might be used. The dual-spring design is not an arbitrary flourish in the configuration of MDI's product; it is the reason the device works. Other designs need not be attempted.

Because the dual-spring design is functional, it is unnecessary for competitors to explore designs to hide the springs, say, by using a box or framework to cover them, as suggested by the Court of Appeals. Ibid. The dual-spring design assures the user the device will work. If buyers are assured the product serves its purpose by seeing the operative mechanism that in itself serves an important market need. It would be at cross-purposes to those objectives, and something of a paradox, were we to require the manufacturer to conceal the very item the user seeks.

In a case where a manufacturer seeks to protect arbitrary, incidental, or ornamental aspects of features of a product found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs, a different result might obtain. There the manufacturer could perhaps prove that those aspects do not serve a purpose within the terms of the utility patent. The inquiry into whether such features, asserted to be trade dress, are functional by reason of their inclusion in the claims of an expired utility patent could be aided by going beyond the claims and examining the patent and its prosecution history to see if the feature in question is shown as a useful part of the invention. No such claim is made here, however. MDI in essence seeks protection for the dual-spring design alone. The asserted trade dress consists simply of the dual-spring design, four legs, a base, an upright, and a sign. MDI has pointed to nothing arbitrary about the components of its device or the way they are assembled. The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply *35 because an investment has been made to encourage the public to associate a particular functional**1263 feature with a single manufacturer or seller. The Court of Appeals erred in viewing MDI as possessing the right to exclude competitors from using a design identical to MDI's and to require those competitors to adopt a different design simply to avoid copying it. MDI cannot gain the exclusive right to produce sign stands using the dual-spring design by asserting that consumers associate it with the look of the invention itself. Whether a utility patent has expired or there has been no utility patent at all, a product design which has a particular appearance may be functional because it is “essential to the use or purpose of the article” or “affects the cost or quality of the article.” Inwood, 456 U.S., at 850, n. 10, 102 S.Ct. 2182.

TrafFix and some of its amici argue that the Patent Clause of the Constitution, Art. I, § 8, cl. 8, of its own force, prohibits the holder of an expired utility patent from claiming trade dress protection. Brief for Petitioner 33-36; Brief for Panduit Corp. as Amicus Curiae 3; Brief for Malla Pollack as Amicus Curiae 2. We need not resolve this question. If, despite the rule that functional features may not be the subject of trade dress protection, a case arises in which trade dress becomes the practical equivalent of an expired utility patent, that will be time enough to consider the matter. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2001.
Traffix Devices, Inc. v. Marketing Displays, Inc.
532 U.S. 23, 121 S.Ct. 1255, 149 L.Ed.2d 164, 69 USLW 4172, 58 U.S.P.Q.2d 1001, 01 Cal. Daily Op. Serv. 2223, 2001 Daily Journal D.A.R. 2796, 14 Fla. L. Weekly Fed. S 135, 2001 DJCAR 1496

Traffix Devices, Inc. vs. Marketing Displays, Inc., 532 U.S. 23 (2001)

2010-03-21T17:30:33Z

Cep503: Created page with 'Supreme Court of the United States TRAFFIX DEVICES, INC., Petitioner, v. MARKETING DISPLAYS, INC. No. 99-1571. Argued Nov. 29, 2000. Decided March 20, 2001. FN* The syllabus…'

Supreme Court of the United States
TRAFFIX DEVICES, INC., Petitioner,
v.
MARKETING DISPLAYS, INC.

No. 99-1571.
Argued Nov. 29, 2000.
Decided March 20, 2001.
FN* The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 50 L.Ed. 499.

*23 Respondent, Marketing Displays, Inc. (MDI), holds now-expired utility patents for a “dual-spring design” mechanism that keeps temporary road and other outdoor signs upright in adverse wind conditions. MDI claims that its sign stands were recognizable to buyers and users because the patented design was visible near the sign stand's base. After the patents expired and petitioner TrafFix Devices, Inc., began marketing sign stands with a dual-spring mechanism copied from MDI's design, MDI brought suit under the Trademark Act of 1946 for, inter alia, trade dress infringement. The District Court granted TrafFix's motion for summary judgment, holding that no reasonable trier of fact could determine that MDI had established secondary meaning in its alleged trade dress, i.e., consumers did not associate the dual-spring design's look with MDI; and, as an independent reason, that there could be no trade dress protection for the design because it was functional. The Sixth Circuit reversed. Among other things, it suggested that the District Court committed legal error by looking only to the dual-spring design when evaluating MDI's trade dress because a competitor had to find some way to hide the design or otherwise set it apart from MDI's; explained, relying on Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248, that exclusive use of a feature must put competitors at a significant non-reputation-related disadvantage before trade dress protection is denied on functionality grounds; and noted a split among the Circuits on the issue whether an expired utility patent forecloses the possibility of trade dress protection in the product's design.

Held: Because MDI's dual-spring design is a functional feature for which there is no trade dress protection, MDI's claim is barred. Pp. 1259-1263.

**1257 (a) Trade dress can be protected under federal law, but the person asserting such protection in an infringement action must prove that the matter sought to be protected is not functional, 15 U.S.C. § 1125(a)(3). Trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products. An expired utility patent has vital significance in resolving a trade dress claim, for a utility patent is strong evidence that the features therein claimed are functional. The central advance claimed in the expired utility*24 patents here is the dual-spring design, which is an essential feature of the trade dress MDI now seeks to protect. However, MDI did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents. The springs are necessary to the device's operation, and they would have been covered by the claims of the expired patents even though they look different from the embodiment revealed in those patents, see Sarkisian v. Winn-Proof Corp., 697 F.2d 1313. The rationale for the rule that the disclosure of a feature in a utility patent's claims constitutes strong evidence of functionality is well illustrated in this case. The design serves the important purpose of keeping the sign upright in heavy wind conditions, and statements in the expired patent applications indicate that it does so in a unique and useful manner and at a cost advantage over alternative designs. Pp. 1259-1261.

(b) In reversing the summary judgment against MDI, the Sixth Circuit gave insufficient weight to the importance of the expired utility patents, and their evidentiary significance, in establishing the device's functionality. The error was likely caused by its misinterpretation of trade dress principles in other respects. “ ‘In general terms a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Qualitex, supra, at 165, 115 S.Ct. 1300 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, n. 10, 102 S.Ct. 2182, 72 L.Ed.2d 606). This Court has expanded on that meaning, observing that a functional feature is one “the exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage,” Qualitex, supra, at 165, 115 S.Ct. 1300, but that language does not mean that competitive necessity is a necessary test for functionality. Where the design is functional under the Inwood formulation there is no need to proceed further to consider competitive necessity. This Court has allowed trade dress protection to inherently distinctive product features on the assumption that they were not functional. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774, 112 S.Ct. 2753, 120 L.Ed.2d 615. Here, however, beyond serving the purpose of informing consumers that the sign stands are made by MDI, the design provides a unique and useful mechanism to resist the wind's force. Functionality having been established, whether the design has acquired secondary meaning need not be considered. Nor is it necessary to speculate about other design possibilities. Finally, this Court need not resolve here the question whether the Patent Clause of the Constitution, of its own force, prohibits the holder of an expired utility patent from claiming trade dress protection. Pp. 1261-1263.

200 F.3d 929, reversed and remanded.

*25 KENNEDY, J., delivered the opinion for a unanimous Court.

John G. Roberts, Washington, DC, for petitioner.

Lawrence G. Wallace, Washington, DC, for United States as amicus curiae, by special leave of the Court.

John A. Artz, Southfield, MI, for respondent.

Justice KENNEDY delivered the opinion of the Court.

Temporary road signs with warnings like “Road Work Ahead” or “Left Shoulder Closed” must withstand strong gusts of wind. An inventor named Robert Sarkisian obtained two utility patents for a mechanism built upon two springs (the dual-spring design) to keep these and other outdoor signs upright despite adverse wind conditions. The holder of the now-expired Sarkisian patents, respondent Marketing Displays, Inc. (MDI), established a successful business in the manufacture and sale of sign stands incorporating the patented feature. MDI's stands for road signs were recognizable to buyers and users (it says) because the dual-spring design was visible near the base of the sign.

*26 This litigation followed after the patents expired and a competitor, TrafFix Devices, Inc., sold sign stands with a visible spring mechanism that looked like MDI's. MDI and TrafFix products looked alike because they were. When TrafFix started in business, it sent an MDI product abroad to have it reverse engineered, that is to say copied. Complicating matters, TrafFix marketed its sign stands under a name similar to MDI's. MDI used the name “WindMaster,” while TrafFix, its new competitor, used “WindBuster.”

MDI brought suit under the Trademark Act of 1946 (Lanham Act), 60 Stat. 427, as amended, 15 U.S.C. § 1051 et seq. , against TrafFix for trademark infringement (based on the similar names), trade dress infringement (based on the copied dual-spring design), and unfair competition. TrafFix counterclaimed on antitrust theories. After the United States District Court for the Eastern District of Michigan considered cross-motions for summary judgment, MDI prevailed on its trademark claim for the confusing similarity of names and was held not liable on the antitrust counterclaim; and those two rulings, affirmed by the Court of Appeals, are not before us.

I
We are concerned with the trade dress question. The District Court ruled against MDI on its trade dress claim. 971 F.Supp. 262 (E.D.Mich.1997). After determining that the one element of MDI's trade dress at issue was the dual-spring design, id., at 265, it held that “no reasonable trier of fact could determine that MDI has established secondary meaning” in its alleged trade dress, id., at 269. In other words, consumers did not associate the look of the dual-spring design with MDI. As a second, independent reason to grant summary judgment in favor of TrafFix, the District Court determined the dual-spring design was functional. On this rationale secondary meaning is irrelevant because there can be no trade dress protection in any event. In ruling on the functional aspect of the design, the District Court *27 noted that Sixth Circuit precedent indicated that the burden was on MDI to prove that its trade dress was nonfunctional, and not on TrafFix to show that it was functional (a rule since adopted by Congress, see 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V)), and then went on to consider MDI's arguments that the dual-spring design was subject to trade dress protection. Finding none of MDI's contentions persuasive, the District Court concluded MDI had not “proffered sufficient evidence which would enable a reasonable trier of fact to find that MDI's vertical dual-spring design is non-functional.” 971 F.Supp., at 276. Summary judgment was entered against MDI on its trade dress claims.

The Court of Appeals for the Sixth Circuit reversed the trade dress ruling. 200 F.3d 929 (1999). The Court of Appeals held the District Court had erred in ruling MDI failed to show a genuine issue of material fact regarding whether it had secondary**1259 meaning in its alleged trade dress, id., at 938, and had erred further in determining that MDI could not prevail in any event because the alleged trade dress was in fact a functional product configuration, id., at 940. The Court of Appeals suggested the District Court committed legal error by looking only to the dual-spring design when evaluating MDI's trade dress. Basic to its reasoning was the Court of Appeals' observation that it took “little imagination to conceive of a hidden dual-spring mechanism or a tri or quad-spring mechanism that might avoid infringing [MDI's] trade dress.” Ibid. The Court of Appeals explained that “[i]f TrafFix or another competitor chooses to use [MDI's] dual-spring design, then it will have to find some other way to set its sign apart to avoid infringing [MDI's] trade dress.” Ibid. It was not sufficient, according to the Court of Appeals, that allowing exclusive use of a particular feature such as the dual-spring design in the guise of trade dress would “hinde[r] competition somewhat.” Rather, “[e]xclusive use of a feature must ‘put competitors at a significant non-reputation-related disadvantage’ before trade *28 dress protection is denied on functionality grounds.” Ibid. (quoting Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995)). In its criticism of the District Court's ruling on the trade dress question, the Court of Appeals took note of a split among Courts of Appeals in various other Circuits on the issue whether the existence of an expired utility patent forecloses the possibility of the patentee's claiming trade dress protection in the product's design. 200 F.3d, at 939. Compare Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 246 (C.A.5 1997) (holding that trade dress protection is not foreclosed), Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277 (C.A.7 1998) (same), and Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (C.A.Fed.1999) (same), with Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F.3d 1498, 1500 (C.A.10 1995) (“Where a product configuration is a significant inventive component of an invention covered by a utility patent ... it cannot receive trade dress protection”). To resolve the conflict, we granted certiorari. 530 U.S. 1260, 120 S.Ct. 2715, 147 L.Ed.2d 981 (2000).

II
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References It is well established that trade dress can be protected under federal law. The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a trade dress which may not be used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods. In these respects protection for trade dress exists to promote competition. As we explained just last Term, see Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000), various Courts of Appeals have allowed claims of trade dress infringement relying on the general provision of the Lanham Act which provides a cause of action to one who is injured when a person uses “any word, term name, symbol, or device, or any *29 combination thereof ... which is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods.” 15 U.S.C. § 1125(a)(1)(A). Congress confirmed this statutory protection for trade dress by amending the Lanham Act to recognize the concept. Title 15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V) provides: “In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.” This burden of proof gives force to the well-established rule that trade dress protection may not be claimed for product features that are functional. **1260 Qualitex, supra, at 164-165, 115 S.Ct. 1300; Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). And in Wal-Mart, supra, we were careful to caution against misuse or overextension of trade dress. We noted that “product design almost invariably serves purposes other than source identification.” Id., at 213, 120 S.Ct. 1339.

Trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products. In general, unless an intellectual property right such as a patent or copyright protects an item, it will be subject to copying. As the Court has explained, copying is not always discouraged or disfavored by the laws which preserve our competitive economy. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 160, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Allowing competitors to copy will have salutary effects in many instances. “Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology.” Ibid.

[4] Headnote Citing References[5] Headnote Citing References The principal question in this case is the effect of an expired patent on a claim of trade dress infringement. A prior patent, we conclude, has vital significance in resolving the trade dress claim. A utility patent is strong evidence that the features therein claimed are functional. If trade dress protection is sought for those features the strong evidence *30 of functionality based on the previous patent adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection. Where the expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

[6] Headnote Citing References In the case before us, the central advance claimed in the expired utility patents (the Sarkisian patents) is the dual-spring design; and the dual-spring design is the essential feature of the trade dress MDI now seeks to establish and to protect. The rule we have explained bars the trade dress claim, for MDI did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents.

The dual springs shown in the Sarkisian patents were well apart (at either end of a frame for holding a rectangular sign when one full side is the base) while the dual springs at issue here are close together (in a frame designed to hold a sign by one of its corners). As the District Court recognized, this makes little difference. The point is that the springs are necessary to the operation of the device. The fact that the springs in this very different-looking device fall within the claims of the patents is illustrated by MDI's own position in earlier litigation. In the late 1970's, MDI engaged in a long-running intellectual property battle with a company known as Winn-Proof. Although the precise claims of the Sarkisian patents cover sign stands with springs “spaced apart,” U.S. Patent No. 3,646,696, col. 4; U.S. Patent No. 3,662,482, col. 4, the Winn-Proof sign stands (with springs much like the sign stands at issue here) were found to infringe the patents by the United States District Court for the District of Oregon, and the Court of Appeals for the *31 Ninth Circuit affirmed the judgment. Sarkisian v. Winn-Proof Corp., 697 F.2d 1313 (1983). Although the Winn-Proof traffic sign stand (with dual springs close together) did not appear, then, to infringe the literal terms of the patent claims (which called for “spaced apart” springs), the Winn-Proof sign stand was found to infringe the patents under the doctrine of equivalents, which allows a finding of patent infringement even when the accused product does not fall within the literal terms of the claims. Id., at 1321-1322; see generally **1261 Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997). In light of this past ruling-a ruling procured at MDI's own insistence-it must be concluded the products here at issue would have been covered by the claims of the expired patents.

The rationale for the rule that the disclosure of a feature in the claims of a utility patent constitutes strong evidence of functionality is well illustrated in this case. The dual-spring design serves the important purpose of keeping the sign upright even in heavy wind conditions; and, as confirmed by the statements in the expired patents, it does so in a unique and useful manner. As the specification of one of the patents recites, prior art “devices, in practice, will topple under the force of a strong wind.” U.S. Patent No. 3,662,482, col. 1. The dual-spring design allows sign stands to resist toppling in strong winds. Using a dual-spring design rather than a single spring achieves important operational advantages. For example, the specifications of the patents note that the “use of a pair of springs ... as opposed to the use of a single spring to support the frame structure prevents canting or twisting of the sign around a vertical axis,” and that, if not prevented, twisting “may cause damage to the spring structure and may result in tipping of the device.” U.S. Patent No. 3,646,696, col. 3. In the course of patent prosecution, it was said that “[t]he use of a pair of spring connections as opposed to a single spring connection ... forms an important part of this combination” because it *32 “forc[es] the sign frame to tip along the longitudinal axis of the elongated ground-engaging members.” App. 218. The dual-spring design affects the cost of the device as well; it was acknowledged that the device “could use three springs but this would unnecessarily increase the cost of the device.” Id., at 217. These statements made in the patent applications and in the course of procuring the patents demonstrate the functionality of the design. MDI does not assert that any of these representations are mistaken or inaccurate, and this is further strong evidence of the functionality of the dual-spring design.

III
[7] Headnote Citing References In finding for MDI on the trade dress issue the Court of Appeals gave insufficient recognition to the importance of the expired utility patents, and their evidentiary significance, in establishing the functionality of the device. The error likely was caused by its misinterpretation of trade dress principles in other respects. As we have noted, even if there has been no previous utility patent the party asserting trade dress has the burden to establish the nonfunctionality of alleged trade dress features. MDI could not meet this burden. Discussing trademarks, we have said “ ‘[i]n general terms, a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Qualitex, 514 U.S., at 165, 115 S.Ct. 1300 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, n. 10, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982)). Expanding upon the meaning of this phrase, we have observed that a functional feature is one the “exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage.” 514 U.S., at 165, 115 S.Ct. 1300. The Court of Appeals in the instant case seemed to interpret this language to mean that a necessary test for functionality is “whether the particular product configuration is a competitive necessity.” 200 F.3d, at 940. See also Vornado, 58 F.3d, at 1507 (“Functionality, by contrast, has been defined *33 both by our circuit, and more recently by the Supreme Court, in terms of competitive need”). This was incorrect as a comprehensive definition. As explained in Qualitex, supra, and Inwood, supra, a feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device. The Qualitex decision did not purport to displace this **1262 traditional rule. Instead, it quoted the rule as Inwood had set it forth. It is proper to inquire into a “significant non-reputation-related disadvantage” in cases of esthetic functionality, the question involved in Qualitex. Where the design is functional under the Inwood formulation there is no need to proceed further to consider if there is a competitive necessity for the feature. In Qualitex, by contrast, esthetic functionality was the central question, there having been no indication that the green-gold color of the laundry press pad had any bearing on the use or purpose of the product or its cost or quality.

The Court has allowed trade dress protection to certain product features that are inherently distinctive. Two Pesos, 505 U.S., at 774, 112 S.Ct. 2753. In Two Pesos, however, the Court at the outset made the explicit analytic assumption that the trade dress features in question (decorations and other features to evoke a Mexican theme in a restaurant) were not functional. Id., at 767, n. 6, 112 S.Ct. 2753. The trade dress in those cases did not bar competitors from copying functional product design features. In the instant case, beyond serving the purpose of informing consumers that the sign stands are made by MDI (assuming it does so), the dual-spring design provides a unique and useful mechanism to resist the force of the wind. Functionality having been established, whether MDI's dual-spring design has acquired secondary meaning need not be considered.

There is no need, furthermore, to engage, as did the Court of Appeals, in speculation about other design possibilities, such as using three or four springs which might serve the same purpose. 200 F.3d, at 940. Here, the functionality of the spring design means that competitors need not explore *34 whether other spring juxtapositions might be used. The dual-spring design is not an arbitrary flourish in the configuration of MDI's product; it is the reason the device works. Other designs need not be attempted.

Because the dual-spring design is functional, it is unnecessary for competitors to explore designs to hide the springs, say, by using a box or framework to cover them, as suggested by the Court of Appeals. Ibid. The dual-spring design assures the user the device will work. If buyers are assured the product serves its purpose by seeing the operative mechanism that in itself serves an important market need. It would be at cross-purposes to those objectives, and something of a paradox, were we to require the manufacturer to conceal the very item the user seeks.

In a case where a manufacturer seeks to protect arbitrary, incidental, or ornamental aspects of features of a product found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs, a different result might obtain. There the manufacturer could perhaps prove that those aspects do not serve a purpose within the terms of the utility patent. The inquiry into whether such features, asserted to be trade dress, are functional by reason of their inclusion in the claims of an expired utility patent could be aided by going beyond the claims and examining the patent and its prosecution history to see if the feature in question is shown as a useful part of the invention. No such claim is made here, however. MDI in essence seeks protection for the dual-spring design alone. The asserted trade dress consists simply of the dual-spring design, four legs, a base, an upright, and a sign. MDI has pointed to nothing arbitrary about the components of its device or the way they are assembled. The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply *35 because an investment has been made to encourage the public to associate a particular functional**1263 feature with a single manufacturer or seller. The Court of Appeals erred in viewing MDI as possessing the right to exclude competitors from using a design identical to MDI's and to require those competitors to adopt a different design simply to avoid copying it. MDI cannot gain the exclusive right to produce sign stands using the dual-spring design by asserting that consumers associate it with the look of the invention itself. Whether a utility patent has expired or there has been no utility patent at all, a product design which has a particular appearance may be functional because it is “essential to the use or purpose of the article” or “affects the cost or quality of the article.” Inwood, 456 U.S., at 850, n. 10, 102 S.Ct. 2182.

TrafFix and some of its amici argue that the Patent Clause of the Constitution, Art. I, § 8, cl. 8, of its own force, prohibits the holder of an expired utility patent from claiming trade dress protection. Brief for Petitioner 33-36; Brief for Panduit Corp. as Amicus Curiae 3; Brief for Malla Pollack as Amicus Curiae 2. We need not resolve this question. If, despite the rule that functional features may not be the subject of trade dress protection, a case arises in which trade dress becomes the practical equivalent of an expired utility patent, that will be time enough to consider the matter. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

U.S.,2001.
Traffix Devices, Inc. v. Marketing Displays, Inc.
532 U.S. 23, 121 S.Ct. 1255, 149 L.Ed.2d 164, 69 USLW 4172, 58 U.S.P.Q.2d 1001, 01 Cal. Daily Op. Serv. 2223, 2001 Daily Journal D.A.R. 2796, 14 Fla. L. Weekly Fed. S 135, 2001 DJCAR 1496

Main Page

2010-03-21T17:29:39Z

Cep503: /* ALPHABETICAL LISTING OF CASES */

<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[Traffix Devices, Inc. vs. Marketing Displays, Inc.]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
*[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
*[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]

Talk:In Re Bilski, Rader dissenting opinion

2010-03-19T03:40:45Z

Cep503: /* Maura */

== Maura ==

Thus, the Patent Act from its inception focused patentability on the specific characteristics of the claimed invention-its novelty and utility-not on its particular subject matter category.

Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (citations omitted). Indeed section 101's term “process” contains no hint of an exclusion for certain types of methods. This court today nonetheless holds that a process is eligible only if it falls within certain subsets of “process.” Ironically the Patent Act itself specifically defines “process” without any of these judicial innovations. 35 U.S.C. § 100(b). Therefore, as Diehr commands, this court should refrain from creating new circuitous judge-made tests.

The language of section 101 conveys no implication that the Act extends patent protection to some subcategories of processes but not others. It does not mean “some” or even “most,” but all.

The abstractness and natural law preclusions not only make sense, they explain the purpose of the expansive language of section 101. Natural laws and phenomena can never qualify for patent protection because they cannot be invented at all. After all, God or Allah or Jahveh or Vishnu or the Great Spirit provided these laws and phenomena as humanity's common heritage. Furthermore, abstract ideas can never qualify for patent protection because the Act intends, as section 101 explains, to provide “useful” technology. An abstract idea must be applied to (transformed into) a practical use before it qualifies for protection. The fine print of Supreme Court opinions conveys nothing more than these basic principles. Yet this court expands (transforms? ) some Supreme Court language into rules that defy the Supreme Court's own rule.

In sum, this court today invents several circuitous and unnecessary tests. It should have merely noted that Bilski attempts to patent an abstract idea. Nothing more was needed. Instead this opinion propagates unanswerable questions: What form or amount of “transformation” suffices? When is a “representative” of a physical object sufficiently linked to that object to satisfy the transformation test? (e.g., Does only vital sign data taken directly from a patient qualify, or can population data derived in part from statistics and extrapolation be used?) What link to a machine is sufficient to invoke the “or machine” prong? Are the “specific” machines of Benson required, or can a general purpose computer qualify? What constitutes “extra- solution activity?” If a process may meet eligibility muster as a “machine,” why does the Act “require” a machine link for a “process” to show eligibility? Does the rule against redundancy itself suggest an inadequacy in this complex spider web of tests supposedly “required” by the language of section 101?

Innovation has moved beyond the brick and mortar world. Even this court's test, with its caveats and winding explanations seems to recognize this. Today's software transforms our lives without physical anchors. This court's test not only risks hobbling these advances, but precluding patent protection for tomorrow's technologies. “We still do not know one thousandth of one percent of what nature has revealed to us.” Attributed to Albert Einstein. If this court has its way, the Patent Act may not incentivize, but complicate, our search for the vast secrets of nature. When all else fails, consult the statute.

==Courtney==

This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single sentence: “Because Bilski claims merely an abstract idea, this court affirms the Board's rejection.” If the only problem of this vast judicial tome were its circuitous path, I would not dissent, but this venture also disrupts settled and wise principles of law.

Much of the court's difficulty lies in its reliance on dicta taken out of context from numerous Supreme Court opinions dealing with the technology of the past. In other words, as innovators seek the path to the next tech no-revolution, this court ties our patent system to dicta from an industrial age decades removed from the bleeding edge. A direct reading of the Supreme Court's principles and cases on patent eligibility would yield the one-sentence resolution suggested above. Because this court, however, links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes, I must respectfully dissent.

Read in context, section 101 gives further reasons for interpretation without innovation. Specifically, section 101 itself distinguishes patent eligibility from the conditions of patentability-providing generously for patent eligibility, but noting that patentability requires substantially more. The language sweeps in “ any new and useful process ... [and] any improvement.” 35 U.S.C. § 101 (emphasis supplied). As an expansive modifier, “any” embraces the broad and ordinary meanings of the term “process,” for instance. The language of section 101 conveys no implication that the Act extends patent protection to some subcategories of processes but not others. It does not mean “some” or even “most,” but all.

Unlike the laws of other nations that include broad exclusions to eligible subject matter, such as European restrictions on software and other method patents, see European Patent Convention of 1973, Art. 52(2)(c) and (3), and prohibitions against patents deemed contrary to the public morality, see id. at Art. 53(a), U.S. law and policy have embraced advances without regard to their subject matter. That promise of protection, in turn, fuels the research that, at least for now, makes this nation the world's innovation leader.

II With all of its legal sophistry, the court's new test for eligibility today does not answer the most fundamental question of all: why would the expansive language of section 101 preclude protection of innovation simply because it is not transformational or properly linked to a machine (whatever that means)? Stated even more simply, why should some categories of invention deserve no protection?

The abstractness and natural law preclusions not only make sense, they explain the purpose of the expansive language of section 101. Natural laws and phenomena can never qualify for patent protection because they cannot be invented at all. After all, God or Allah or Jahveh or Vishnu or the Great Spirit provided these laws and phenomena as humanity's common heritage. Furthermore, abstract ideas can never qualify for patent protection because the Act intends, as section 101 explains, to provide “useful” technology. An abstract idea must be applied to (transformed into) a practical use before it qualifies for protection. The fine print of Supreme Court opinions conveys nothing more than these basic principles. Yet this court expands (transforms?) some Supreme Court language into rules that defy the Supreme Court's own rule.

When considering the eligibility of “processes,” this court should focus on the potential for an abstract claim. Such an abstract claim would appear in a form that is not even susceptible to examination against prior art under the traditional tests for patentability. Thus this court would wish to ensure that the claim supplied some concrete, tangible technology for examination. Indeed the hedging claim at stake in this appeal is a classic example of abstractness. Bilski's method for hedging risk in commodities trading is either a vague economic concept or obvious on its face. Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class. In any event, this facially abstract claim does not warrant the creation of new eligibility exclusions.ocess.

The distinction between “phenomena of nature,” “mental processes,” and “abstract intellectual concepts” is not difficult to draw. The fundamental error in that Lab. Corp. dissent is its failure to recognize the difference between a patent ineligible relationship-i.e., that between high homocysteine levels and folate and cobalamin deficiencies-and a patent eligible process for applying that relationship to achieve a useful, tangible, and concrete result-i.e., diagnosis of potentially fatal conditions in patients. Nothing abstract here. Moreover, testing blood for a dangerous condition is not a natural phenomenon, but a human invention.

In sum, this court today invents several circuitous and unnecessary tests. It should have merely noted that Bilski attempts to patent an abstract idea. Nothing more was needed. Instead this opinion propagates unanswerable questions: What form or amount of “transformation” suffices? When is a “representative” of a physical object sufficiently linked to that object to satisfy the transformation test? (e.g., Does only vital sign data taken directly from a patient qualify, or can population data derived in part from statistics and extrapolation be used?) What link to a machine is sufficient to invoke the “or machine” prong? Are the “specific” machines of Benson required, or can a general purpose computer qualify? What constitutes “extra-solution activity?” If a process may meet eligibility muster as a “machine,” why does the Act “require” a machine link for a “process” to show eligibility? Does the rule against redundancy itself suggest an inadequacy in this complex spider web of tests supposedly “required” by the language of section 101?

One final point, reading section 101 as it is written will not permit a flurry of frivolous and useless inventions. Even beyond the exclusion for abstractness, the final clause of section 101-“subject to the conditions and requirements of this title”-ensures that a claimed invention must still satisfy the “conditions and requirements” set forth in the remainder title 35. Id. These statutory conditions and requirements better serve the function of screening out unpatentable inventions than some vague “transformation” or “proper machine link” test.

In simple terms, the statute does not mention “transformations” or any of the other Industrial Age descriptions of subject matter categories that this court endows with inordinate importance today. The Act has not empowered the courts to impose limitations on patent eligible subject matter beyond the broad and ordinary meaning of the terms process, machine, manufacture, and composition of matter. It has instead preserved the promise of patent protection for still unknown fields of invention.

Innovation has moved beyond the brick and mortar world. Even this court's test, with its caveats and winding explanations seems to recognize this. Today's software transforms our lives without physical anchors. This court's test not only risks hobbling these advances, but precluding patent protection for tomorrow's technologies. “We still do not know one thousandth of one percent of what nature has revealed to us.” Attributed to Albert Einstein. If this court has its way, the Patent Act may not incentivize, but complicate, our search for the vast secrets of nature. When all else fails, consult the statute.

Talk:In Re Bilski, Mayer dissenting opinion

2010-03-19T03:36:28Z

Cep503: /* Maura */

== Maura ==

The patent system is intended to protect and promote advances in science and technology, not ideas about how to structure commercial transactions. Claim 1 of the application of Bernard L. Bilski and Rand A. Warsaw (“Bilski”) is not eligible for patent protection because it is directed to a method of conducting business. Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain. State Street and AT & T should be overruled.

When drafting the Constitution, the framers were well aware of the abuses that led to the English Statute of Monopolies and therefore “consciously acted to bar Congress from granting letters patent in particular types of business.”

By 1952, when Congress enacted the current Patent Act, it was widely acknowledged that methods of doing business were ineligible for patent protection. See, e.g., Loew's Drive-In Theatres, Inc. v. Park-In Theatres, Inc., 174 F.2d 547, 552 (1st Cir.1949) (“[A] system for the transaction of business ... however novel, useful, or commercially successful is not patentable apart from the means for making the system practically useful, or carrying it out.”); In re Patton, 29 C.C.P.A. 982, 127 F.2d 324 (1942) (noting that “a system of transacting business, apart from the means for carrying out such system” is not patentable); Hotel Sec. Checking Co. v. Lorraine Co., 160 F. 467, 469 (2d Cir.1908) (“A system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art.”); In re Moeser, 27 App. D.C. 307, 310 (1906) (holding that a system for burial insurance contracts was not patentable because “contracts or proposals for contracts, devised or adopted as a method of transacting a particular class of ... business, [are] not patentable as an art”); see also 145 Cong. Rec. H6,947 (Aug. 3, 1999) (statement of Rep. Manzullo) (“Before the State Street Bank and Trust case ... it was universally thought that methods of doing or conducting business were not patentable items.”).

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable.

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection.

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. Bilski, for example, likely spent only nominal sums to develop his hedging method. The reward he could reap if his application were allowed- exclusive rights over methods of managing risks in a wide array of commodity transactions-vastly exceeds any costs he might have incurred in devising his “invention.”

Instead of providing incentives to competitors to develop improved business techniques, business method patents remove building blocks of commercial innovation from the public domain. Dreyfuss, supra at 275-77. Because they restrict competitors from using and improving upon patented business methods, such patents stifle innovation.

One reason for the poor quality of business method patents is the lack of readily accessible prior art references. Because business methods were not patentable prior to State Street, “there is very little patent-related prior art readily at hand to the examiner corps.” Dreyfuss, supra at 269.

Like many business method applications, Bilski's application is very broadly drafted. It covers a wide range of means for “hedging” in commodity transactions. If his application were allowed, anyone who discussed ways to balance market risks in any sort of commodity could face potential infringement liability. By adopting overly expansive standards for patentability, the government enables private parties to impose broad and unwarranted burdens on speech and the free flow of ideas.

Indeed, although this court has struggled for years to set out what constitutes sufficient physical transformation to render a process patentable, we have yet to provide a consistent or satisfactory resolution of this issue.

The majority, however, fails to enlighten three of the thorniest issues in the patentability thicket: (1) the continued viability of business method patents, (2) what constitutes sufficient physical transformation or machine-implementation to render a process patentable, and (3) the extent to which computer software and computer-implemented processes constitute statutory subject matter.

==Courtney==

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

II. Business method patents have been justified, in significant measure, by a misapprehension of the legislative history of the 1952 Patent Act. In particular, proponents of such patents have asserted that the Act's legislative history states that Congress intended statutory subject matter to “include anything under the sun that is made by man.” AT & T, 172 F.3d at 1355 (Fed.Cir.1999) (citations and internal quotation marks omitted); see also Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Read in context, however, the legislative history says no such thing. The full statement from the committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” S.Rep. No.1979, 82d Cong., 2d Sess. 5 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399 (emphasis added); H.R.Rep. No.1923, 82d Cong., 2d Sess. 6 (1952) (emphasis added).

This statement does not support the contention that Congress intended “anything under the sun” to be patentable. To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable. See Diehr, 450 U.S. at 192 n. 14, 101 S.Ct. 1048 (Patentability cannot be established by the “token” use of technology.); Gottschalk v. Benson, 409 U.S. 63, 64-66, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) (finding unpatentable a method of programming a general purpose digital computer to convert signals from binary-coded decimal to pure binary form). Where a claimed business method simply uses a known machine to do what it was designed to do, such as using a computer to gather data or perform calculations, use of that machine will not bring otherwise unpatentable subject matter within the ambit of section 101. See Benson, 409 U.S. at 67, 93 S.Ct. 253 (finding a process unpatentable where “[t]he mathematical procedures [could] be carried out in existing computers long in use, no new machinery being necessary”).

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection. See, e.g., John R. Thomas, The Patenting of the Liberal Professions, 40 B.C. L.Rev. 1139 (1999) (arguing that affording patentability to business methods opens the door to obtaining patent protection for all aspects of human thought and behavior, and that patents should remain grounded in science and technology) (hereinafter “Thomas (1999)”). “[T]he primary purpose of our patent laws is not the creation of private fortunes for the owners of patents but is ‘to promote the progress of science and useful arts.’ ” *1004 Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511, 37 S.Ct. 416, 61 L.Ed. 871 (1917). Although business method patents may do much to enrich their owners, they do little to promote scientific research and technological innovation.

Patents granted in the wake of State Street have ranged from the somewhat ridiculous to the truly absurd. See, e.g., U.S. Patent No. 5,851,117 (method of training janitors to dust and vacuum using video displays); U.S. Patent No. 5,862,223 (method for selling expert advice); U.S. Patent No. 6,014,643 (method for trading securities); U.S. Patent No. 6,119,099 (method of enticing customers to order additional food at a fast food restaurant); U.S. Patent No. 6,329,919 (system for toilet reservations); U.S. Patent No. 7,255,277 (method of using color-coded bracelets to designate dating status in order to limit “the embarrassment of rejection”). There has even been a patent issued on a method for obtaining a patent. See U.S. Patent No. 6,049,811. Not surprisingly, State Street and its progeny have generated a thundering chorus of criticism. See Leo J. Raskind, The State Street Bank Decision: The Bad Business of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L.J. 61, 61 (1999) (“The Federal Circuit's recent endorsement of patent protection for methods of doing business marks so sweeping a departure from precedent as to invite a search for its justification.”); Pollack, supra at 119-20 (arguing that State Street was based upon a misinterpretation of both the legislative history and the language of section 101 and that “business method patents are problematical both socially and constitutionally”); Price, supra at 155 (“The fall out from State Street has created a gold-rush mentality toward patents and litigation in which companies .... gobble up patents on anything and everything.... It is a mad rush to get as many dumb patents as possible.” (citations and internal quotation marks omitted)); Thomas (1999), supra at 1160 (“After State Street, it is hardly an exaggeration to say that if you can name it, you can claim it.”); Sfekas, supra at 226 (“[T]he U.S. courts *1005 have set too broad a standard for patenting business methods.... These business method patents tend to be of lower quality and are unnecessary to achieve the goal of encouraging innovation in business.”); William Krause, Sweeping the E-Commerce Patent Minefield: The Need for a Workable Business Method Exception, 24 Seattle U.L.Rev. 79, 101 (2000) ( State Street “opened up a world of unlimited possession to anyone quick enough to take a business method and put it to use via computer software before anyone else.”); Moy, supra at 1051 (“To call [the situation following State Street ] distressing is an understatement. The consensus ... appears to be that patents should not be issuing for new business methods.”).

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

Business innovations, by their very nature, provide a competitive advantage and thus generate their own incentives. See Xiang, supra at 813 (“A business entity improves the way it does business in order to be more effective and efficient, to stay ahead of [the] competition, and to make more profit.”). The rapid “growth of fast food restaurants, self-service gasoline stations, quick oil change facilities ... automatic teller devices ... and alternatives for long-distance telephone services” casts real doubt about the need for the additional incentive of patent protection in the commercial realm. Raskind, supra at 93.

Although patents are not a prerequisite to business innovation, they are of undeniable importance in promoting technological advances. For example, the pharmaceutical*1006 industry relies on patent protection in order to recoup the large sums it invests to develop life-saving and life-enhancing drugs:

Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. Bilski, for example, likely spent only nominal sums to develop his hedging method. The reward he could reap if his application were allowed-exclusive rights over methods of managing risks in a wide array of commodity transactions-vastly exceeds any costs he might have incurred in devising his “invention.”

Allowing patents to issue on business methods shifts critical resources away from promoting and protecting truly useful technological advances. As discussed previously, the patent office has been deluged with business method applications in recent years. Time spent on such applications is time not spent on applications which claim true innovations. When already overburdened examiners are forced to devote significant time to reviewing large numbers of business method applications, the public's access to new and beneficial technologies is unjustifiably delayed.

Regardless of whether a claimed process involves a “physical transformation,” it should not be patent eligible unless it is directed to an advance in science or technology. See Benson, 409 U.S. at 64-71, 93 S.Ct. 253 (finding a process unpatentable even though it “transformed” binary-coded decimals into pure binary numbers using a general purpose computer). Although the Supreme Court has stated that a patentable process will usually involve a transformation of physical matter, see id. at 70, 93 S.Ct. 253, it has never found a process patent eligible which did not involve a scientific or technological innovation. See Diehr, 450 U.S. at 192-93, 101 S.Ct. 1048 (finding a process patentable where it involved new technology for curing rubber).

Talk:In Re Bilski, Newman dissenting opinion

2010-03-19T01:28:13Z

Cep503: /* Maura */

== Maura ==

The court achieves this result by redefining the word “process” in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today's electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today's Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.

This exclusion is imposed at the threshold, before it is determined whether the excluded process is new, non- obvious, enabled, described, particularly claimed, etc.; that is, before the new process is examined for patentability. For example, we do not know whether the Bilski process would be found patentable under the statutory criteria, for they were never applied.

This court's redefinition of “process” as limiting access to the patent system to those processes that use specific machinery or that transform matter, is contrary to two centuries of statutory definition.

Instead, the Court made clear that it was not barring patents on computer programs, and rejected the “argu[ment] 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’ ” in order to satisfy Section 101. Id. Although my colleagues now describe these statements as “equivocal,” maj. op. at 956, there is nothing equivocal about “We do not so hold.” Benson, 409 U.S. at 71, 93 S.Ct. 253. Nonetheless, this court now so holds.

A rule that unanticipated inventions are without protection would conflict with the core concept of the patent law that anticipation undermines patentability. Mr. Justice Douglas reminded that the *981 inventions most benefiting mankind are those that push back the frontiers of chemistry, physics, and the like. Congress employed broad general language in drafting § 101 precisely because such inventions are often unforeseeable.

However, the Court did not propose the “machine-or-transformation” test that this court now insists was “enunciated” in Diehr as a specific limit to Section 101. Maj. op. at 953-54. In Diehr there was no issue of machine or transformation, for the Diehr process both employed a machine and produced a chemical transformation: the process was conducted in “an openable rubber molding press,” and it cured the rubber. In discussing the known mathematical formula used by Diehr to calculate the relation between temperature and the rate of a chemical reaction, the Court recited the traditional exceptions of “laws of nature, natural phenomena, and abstract ideas,” 450 U.S. at 185, 101 S.Ct. 1048, and explained that the entirety of the process *982 must be considered, not an individual mathematical step.

Although the Court in Benson and in Flook took care to state that these early decisions do not require the restrictions that the Court was rejecting, this court now places heavy reliance on these early decisions, which this court describes as “consistent with the machine-or-transformation test later articulated in Benson and reaffirmed in Diehr.” Maj. op. at 955. As I have discussed, no such test was “articulated in Benson ” and “reaffirmed in Diehr.”

However, these early cases do show, contrary to the majority opinion, that a “process” has always been a distinct category of patentable invention, and not tied to either apparatus or transformation, as this court now holds. For example, in Tilghman v. Proctor the Court considered a patent on a process for separating fats and oils, and held that the process was not restricted to any particular apparatus.

However, the claims that were directed to the communication system that was described by Morse were held patentable, although no machine, transformation, or manufacture was required. See Morse's Claim 5 (“The system of signs, consisting of dots and spaces, and horizontal lines, for numerals, letters, words, or sentences, substantially as herein set forth and illustrated, for telegraphic purposes.”). I cannot discern how the Court's rejection of Morse's Claim 8 on what would now be Section 112 grounds, or the allowance of his other claims, supports this court's ruling today. Indeed, Morse's claim 5, to a system of signs, is no more “tangible” than the systems held patentable in Alappat and State Street Bank, discussed post and now cast into doubt, or the Bilski system here held ineligible for access to patenting.

This court now rejects its own CCPA and Federal Circuit precedent The majority opinion holds that there is a Supreme Court restriction on process patents, “enunciated” in Benson, Flook, and Diehr; and that this restriction was improperly ignored by the Federal Circuit and the Court of Customs and Patent Appeals, leading us into error which we must now correct. Thus this court announces that our prior decisions may no longer be relied upon.

In In re Alappat, 33 F.3d 1526 (Fed.Cir.1994) ( en banc ) the question was the eligibility for patent of a rasterizer that mathematically transforms data to eliminate aliasing in a digital oscilloscope. The court held that a computer-implemented system that produces a “useful, concrete, and tangible result” is Section 101 subject matter. Id. at 1544. This court now rules that “a ‘useful, concrete and tangible result’ analysis should no longer be relied on.” Maj. op. at 960 n. 19.

A close analysis of Diehr, Flook, and Benson reveals that the Supreme Court never intended to create an overly broad, fourth category of [mathematical] subject matter excluded from § 101. Rather, at the core of the Court's analysis in each of these cases lies an attempt by the Court to explain a rather straightforward concept, namely, that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, and thus that subject matter is not, in and of itself, entitled to patent protection.

The PTO reports that in Class 705, the examination classification associated with “business methods” and most likely to receive inventions that may not use machinery or transform physical matter, there were almost 10,000 patent applications filed in FY 2006 alone, and over 40,000 applications filed since FY 98 when State Street Bank was decided.

See Benjamin N. Cardozo, The Nature of the Judicial Process 149 (1921) (“[T]he labor of judges would be increased almost to the breaking point if every past decision could be reopened in every case, and one could not lay one's own course of bricks on the secure foundation of the courses laid by others who had gone before him.”).

Instead, the court states the “true issue before us” is “whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or mental process,” maj. op. at 952, and answers “yes.” With respect, that is the wrong question, and the wrong answer. Bilski's patent application describes his process of analyzing the effects of supply and demand on commodity prices and the use of a coupled transaction strategy to hedge against these risks; this is not a fundamental principle or an abstract idea; it is not a mental process or a law of nature. It is a “process,” set out in successive steps, for obtaining and analyzing information and carrying out a series of commercial transactions for the purpose of “managing the consumption risk costs of a commodity *996 sold by a commodity provider at a fixed price.”

Patents provide an incentive to invest in and work in new directions. In United States v. Line Material Co., 333 U.S. 287, 332, 68 S.Ct. 550, 92 L.Ed. 701 (1948), Justice Burton, joined by Chief Justice *998 Vinson and Justice Frankfurter, remarked that “the frontiers of science have expanded until civilization now depends largely upon discoveries on those frontiers to meet the infinite needs of the future. The United States, thus far, has taken a leading part in making those discoveries and in putting them to use.” This remains true today. It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future.

==Courtney==

The innovations of the “knowledge economy”-of “digital prosperity”-have been dominant contributors to today's economic *977 growth and societal change. Revision of the commercial structure affecting major aspects of today's industry should be approached with care, for there has been significant reliance on the law as it has existed, as many amici curiae pointed out. Indeed, the full reach of today's change of law is not clear, and the majority opinion states that many existing situations may require reassessment under the new criteria.

Uncertainty is the enemy of innovation. These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed. I respectfully dissent.

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.

The Court in Flook discussed that abstractions and fundamental principles have never been subject to patenting, but recognized the “unclear line” between an abstract principle and the application of such principle:

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.”

Whether the applications of physics and chemistry that are manifested in advances in computer hardware and software were more or less foreseeable than the advances in biology and biotechnology is debatable, but it is not debatable that these fields of endeavor have become primary contributors to today's economy and culture, as well as offering an untold potential for future advances. My colleagues offer no reason now to adopt a policy of exclusion of the unknown future from the subject matter now embraced in Section 101.

[W]hen a claim containing a mathematical 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 ( e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101.

That a patent can be granted for a process, there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture.

While most patents of an earlier era reflect the dominant mechanical and chemical technologies of that era, modern processes reflect the dramatic advances in telecommunications and computing that have occurred since the time of George III. See USPTO White Paper, Automated Financial or Management Data Processing Methods (Business Methods) 4 (2000), available at http:// www. uspto. gov/ web/ menu/ busmethp/ whitepaper. pdf (hereinafter USPTO White Paper) (“The full arrival of electricity as a component in business data processing system[s] was a watershed event.”). It is apparent that economic, or “business method,” or “human activity” patents were neither explicitly nor implicitly foreclosed from access to the English patent system.

Evolution of process patents in the United States The United States' history of patenting establishes the same point. The PTO has located various patents predating modern computer usages that can be described as financial or business methods. The USPTO White Paper at 3-4 and appendix A describes the history of financial apparatus and method patents dating back to 1799, including patents on bank notes, bills of *990 credit, bills of exchange, check blanks, detecting and preventing counterfeiting, coin counting, interest calculation tables, and lotteries, all within the first fifty years of the United States patent system. It is a distortion of these patents to describe the processes as “tied to” another statutory category-that is, paper and pencil. Concurring op. at 974-75 & n. 18. Replacement of paper with a computer screen, and pencil with electrons, does not “untie” the process. Fairly considered, the many older financial and business-oriented patents that the PTO and many of the amici have identified are of the same type as the Bilski claims; they were surely not rendered patent-eligible solely because they used “paper” to instantiate the financial strategies and transactions that comprised their contribution.

Instead, the court states the “true issue before us” is “whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or mental process,” maj. op. at 952, and answers “yes.” With respect, that is the wrong question, and the wrong answer. Bilski's patent application describes his process of analyzing the effects of supply and demand on commodity prices and the use of a coupled transaction strategy to hedge against these risks; this is not a fundamental principle or an abstract idea; it is not a mental process or a law of nature. It is a “process,” set out in successive steps, for obtaining and analyzing information and carrying out a series of commercial transactions for the purpose of “managing the consumption risk costs of a commodity *996 sold by a commodity provider at a fixed price.” Claim 1, preamble.

Talk:In Re Bilski, Dky concurring opinion

2010-03-18T15:51:23Z

Cep503: /* Maura */

== Maura ==

In fact, the unpatentability of processes not involving manufactures, machines, or compositions of matter has been firmly embedded in the statute since the time of the Patent Act of 1793, ch. 11, 1 Stat. 318 (1793). It is our dissenting colleagues who would legislate by expanding patentable subject matter far beyond what is allowed by the statute.

The English practice in 1793, imported into the American statutes, explicitly recognized a limit on patentable subject matter. As the Supreme Court recounted in Graham v. John Deere, the English concern about limiting the allowable scope of patents arose from an aversion to the odious Crown practice of granting patents on particular types of businesses to court favorites.

The question remains as to what processes were considered to be patentable in England at the time of the 1793 Act. Examination of the relevant sources leads to the conclusion that the method Bilski seeks to claim would not have been considered patentable subject matter as a process under the English statute.

There is no suggestion in any of this early consideration of process patents that processes for organizing human activity were or ever had been patentable. Rather, the uniform assumption was that the only processes that were patentable were processes for using or creating manufactures, machines, and compositions of matter.

To be sure, Congress intended the courts to have some latitude in interpreting § 101 to cover emerging technologies, Chakrabarty, 447 U.S. at 316, 100 S.Ct. 2204, and the categorical terms chosen are sufficiently broad to encompass a wide range of new technologies. But there is no evidence that Congress intended to confer upon the courts latitude to extend the categories of patentable subject matter in a significant way. To the contrary, the Supreme Court made clear that “Congress has performed its constitutional role in defining patentable subject matter in § 101; we perform ours in construing the language Congress has employed. In so doing, our obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose.”

It refers to things “made by man,” not to methods of organizing human activity. In this respect, the language is reminiscent of the 1799 use of the phrase “something made by the hands of man” by Chief Justice Lord Kenyon as a limitation on patentable subject matter under the Statute of Monopolies. The idea that an invention must be “made by man” was used to distinguish “a philosophical principle only, neither organized or capable of being organized” from a patentable manufacture.

In short, the history of § 101 fully supports the majority's holding that Bilski's claim does not recite patentable subject matter. Our decision does not reflect “legislative” work, but rather careful and respectful adherence to the Congressional purpose.

==Courtney==

Each of the five categories of patentable subject matter recognized by the 1793 Patent Act-(1) “manufacture,” (2) “machine,” (3) “composition of matter,” (4) “any new and useful improvement,” and (5) “art”-*969 was drawn either from the Statute of Monopolies and the common law refinement of its interpretation or resolved competing views being debated in England at the time. See To Promote the Progress, supra n. 4 at 239.

The absence of business method patents cannot be explained by an absence of entrepreneurial creativity in Great Britain during the century before the American Revolution. On the contrary, 1720 is widely hailed as the beginning of a new era in English public finance and the beginning of major innovations in business organization.

Likewise, Supreme Court decisions before the 1952 Patent Act assumed that the only processes that were patentable were those involving other types of patentable subject matter. In later cases the Supreme Court has recognized that these cases set forth the standard for process *975 patents in the pre-1952 period. Diehr, 450 U.S. at 182-84, 101 S.Ct. 1048; Gottschalk, 409 U.S. at 69-70, 93 S.Ct. 253. The leading case is Corning v. Burden, 56 U.S. 252, 15 How. 252, 14 L.Ed. 683 (1853). There, the Supreme Court discussed the patentability of processes:

A process, eo nomine, is not made the subject of a patent in our act of Congress. It is included under the general term ‘useful art.’ An art may require one or more processes or machines in order to produce a certain result or manufacture. The term machine includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. But where the result or effect is produced by chemical action, by the operation or application of some element or power of nature, or of one substance to another, such modes, methods, or operations, are called ‘processes.’ A new process is usually the result of discovery; a machine, of invention. The arts of tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores, and numerous others are usually carried on by processes, as distinguished from machines.... It is for the discovery or invention of some practicable method or means of producing a beneficial result or effect that a patent is granted, and not for the result or effect itself. It is when the term process is used to represent the means or method of producing a result that it is patentable, and it will include all methods or means which are not effected by mechanism or mechanical combinations.

That a process may be patentable, irrespective of the particular form of the instrumentalities used, cannot be disputed.... 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. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.

That a patent can be granted for a process there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture. A manufacturing process is clearly an art, within the meaning of the law.

Finally, nothing in the legislative history of the 1952 Act suggests that Congress intended to enlarge the category of patentable subject matter to include patents such as the method Bilski attempts to claim. As discussed above, the only change made by the 1952 Act was in replacing the word *976 “art” with the word “process.” The Supreme Court has already concluded that this change did not alter the substantive understanding of the statute. See Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (“[A] process has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.”).

The House Report accompanying the 1952 bill includes the now-famous reference to “anything under the sun made by man”:

A person may have “invented” a machine or a manufacture, which may include anything under the sun made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.

H.R.1923 at 7. Although this passage has been used by our court in past cases to justify a broad interpretation of patentable subject matter, I agree with Judge Mayer that, when read in context, the statement undercuts the notion that Congress intended to expand the scope of § 101. See Mayer, J., dissenting op. at 1000. It refers to things “made by man,” not to methods of organizing human activity. In this respect, the language is reminiscent of the 1799 use of the phrase “something made by the hands of man” by Chief Justice Lord Kenyon as a limitation on patentable subject matter under the Statute of Monopolies. The idea that an invention must be “made by man” was used to distinguish “a philosophical principle only, neither organized or capable of being organized” from a patentable manufacture. Hornblower, 8 T.R. at 98. Lord Kenyon held that the patent before him was not based on a mere principle, but was rather “a patent for a manufacture, which I understand to be something made by the hands of man.” Id. at 98 (emphases added); accord American Fruit Growers v. Brogdex Co., 283 U.S. 1, 11, 51 S.Ct. 328, 75 L.Ed. 801 (1931) (giving “anything made for use from raw or prepared materials” as one definition of “manufacture”).

In short, the history of § 101 fully supports the majority's holding that Bilski's claim does not recite patentable subject matter. Our decision does not reflect “legislative” work, but rather careful and respectful adherence to the Congressional purpose.

Talk:In Re Bilski

2010-03-13T21:50:51Z

Cep503: Created page with '==Courtney== Patent applicants challenged denial of patent application for method of hedging risk in field of commodities trading based on lack of patent-eligible subject matter.…'

==Courtney==
Patent applicants challenged denial of patent application for method of hedging risk in field of commodities trading based on lack of patent-eligible subject matter. The Patent and Trademark Office, Board of Patent Appeals and Interferences, 2006 WL 5738364, sustained rejection of all claims in application. Applicants appealed.

The examiner ultimately rejected claims 1-11 under 35 U.S.C. § 101, stating: “[r]egarding ... claims 1-11, 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.” See Board Decision, slip op. at 3. The examiner noted that Applicants had admitted their claims are not limited to operation on a computer, and he concluded that they were not limited by any specific apparatus. See id. at 4.

The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process. And the underlying legal question thus presented is what test or set of criteria governs the determination by the Patent and Trademark Office (“PTO”) or courts as to whether a claim to a process is patentable under § 101 or, conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle.

The question before us then is whether Applicants' claim recites a fundamental principle and, if so, whether it would pre-empt substantially all uses of that fundamental principle if allowed. Unfortunately, this inquiry is hardly straightforward. How does one determine whether a given claim would pre-empt all uses of a fundamental principle? Analogizing to the facts of Diehr or Benson is of limited usefulness because the more challenging process claims of the twenty-first century are seldom so clearly limited in scope as the highly specific, plainly corporeal industrial manufacturing process of Diehr; nor are they typically as broadly claimed or purely abstract and mathematical as the algorithm of Benson.

[5] Headnote Citing References[6] Headnote Citing References The Supreme Court, however, 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 rather than to pre-empt the principle itself. 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. See Benson, 409 U.S. at 70, 93 S.Ct. 253 (“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.”); Diehr, 450 U.S. at 192, 101 S.Ct. 1048 (holding that use of mathematical formula in process “transforming or reducing an article to a different state or thing” constitutes patent-eligible subject matter); see also Flook, 437 U.S. at 589 n. 9, 98 S.Ct. 2522 (“An argument can be made [that the Supreme] Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a ‘different state or thing’ ”); Cochrane v. Deener, 94 U.S. 780, 788, 24 L.Ed. 139 (1876) (“A process is ... an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing.”).FN7 A claimed process involving a fundamental principle that uses a particular machine or apparatus would not pre-empt uses of the principle that do not also use the specified machine or apparatus in the manner claimed. And a claimed process that transforms a particular article to a specified different state or thing by applying a fundamental principle would not pre-empt the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.

CONCLUSION Because the applicable test to determine whether a claim is drawn to a patent-eligible process under § 101 is the machine-or-transformation test set forth by the Supreme Court and clarified herein, and Applicants' claim here plainly fails that test, the decision of the Board is

AFFIRMED.

In Re Bilski, Rader dissenting opinion

2010-03-13T21:44:50Z

Cep503: Created page with 'RADER, Circuit Judge, dissenting. This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single se…'

RADER, Circuit Judge, dissenting.

This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single sentence: “Because Bilski claims merely an abstract idea, this court affirms the Board's rejection.” If the only problem of this vast judicial tome were its circuitous path, I would not dissent, but this venture also disrupts settled and wise principles of law.

Much of the court's difficulty lies in its reliance on dicta taken out of context from numerous Supreme Court opinions dealing with the technology of the past. In other words, as innovators seek the path to the next tech no-revolution, this court ties our patent system to dicta from an industrial age decades removed from the bleeding edge. A direct reading of the Supreme Court's principles and cases on patent eligibility would yield the one-sentence resolution suggested above. Because this court, however, links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes, I must respectfully dissent.

I
The Patent Law of the United States has always embodied the philosophy that “ingenuity should receive a liberal encouragement.” Writings of Thomas Jefferson 75-76 (Washington ed. 1871); see also Diamond v. Chakrabarty, 447 U.S. 303, 308-09, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). True to this principle, the original Act made “ any new and useful art, machine, manufacture or composition of matter” patent eligible. Act of Feb. 21, 1793, ch. 11, § 1, 1 Stat. 318 (emphasis supplied). Even as the laws have evolved, that bedrock principle remains at their foundation. Thus, the Patent Act from its inception focused patentability on the specific characteristics of the claimed invention-its novelty and utility-not on its particular subject matter category.

The modern incarnation of section 101 holds fast to that principle, setting forth the broad categories of patent eligible subject matter, and conditioning patentability on the characteristics, not the category, of the claimed invention:

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.

35 U.S.C. § 101 (2006) (emphases supplied). As I have suggested, the Supreme Court requires this court to rely on the “ordinary, contemporary, common meaning” of these words. Diamond v. Diehr, 450 U.S. 175, 182, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). If this court would follow that Supreme Court rule, it would afford broad patent protection to new and *1012 useful inventions that fall within the enumerated categories and satisfy the other conditions of patentability. That is, after all, precisely what the statute says.

In Diehr, the Supreme Court adopted a very useful algorithm for determining patentable subject matter, namely, follow the Patent Act itself. After setting forth the procedural history of that case, the Supreme Court stated: “In cases of statutory construction, we begin with the language of the statute.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048. With an eye to the Benson language (so central to this court's reasoning) that “[t]ransformation 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,” Gottschalk v. Benson, 409 U.S. 63, 72, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972), the Court then noted:

[I]n dealing with the patent laws, we have more than once cautioned that “courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’ ”

Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (citations omitted). Indeed section 101's term “process” contains no hint of an exclusion for certain types of methods. This court today nonetheless holds that a process is eligible only if it falls within certain subsets of “process.” Ironically the Patent Act itself specifically defines “process” without any of these judicial innovations. 35 U.S.C. § 100(b). Therefore, as Diehr commands, this court should refrain from creating new circuitous judge-made tests.

Read in context, section 101 gives further reasons for interpretation without innovation. Specifically, section 101 itself distinguishes patent eligibility from the conditions of patentability-providing generously for patent eligibility, but noting that patentability requires substantially more. The language sweeps in “ any new and useful process ... [and] any improvement.” 35 U.S.C. § 101 (emphasis supplied). As an expansive modifier, “any” embraces the broad and ordinary meanings of the term “process,” for instance. The language of section 101 conveys no implication that the Act extends patent protection to some subcategories of processes but not others. It does not mean “some” or even “most,” but all.

Unlike the laws of other nations that include broad exclusions to eligible subject matter, such as European restrictions on software and other method patents, see European Patent Convention of 1973, Art. 52(2)(c) and (3), and prohibitions against patents deemed contrary to the public morality, see id. at Art. 53(a), U.S. law and policy have embraced advances without regard to their subject matter. That promise of protection, in turn, fuels the research that, at least for now, makes this nation the world's innovation leader.

II
With all of its legal sophistry, the court's new test for eligibility today does not answer the most fundamental question of all: why would the expansive language of section 101 preclude protection of innovation simply because it is not transformational or properly linked to a machine (whatever that means)? Stated even more simply, why should some categories of invention deserve no protection?

This court, which reads the fine print of Supreme Court decisions from the Industrial Age with admirable precision, misses the real import of those decisions. The Supreme Court has answered the fundamental question above many times. The Supreme Court has counseled that the only limits on eligibility are inventions that embrace natural laws, natural phenomena, and abstract ideas. See, e.g., Diehr, 450 U.S. at 185, 101 S.Ct. 1048 (“This Court *1013 has undoubtedly recognized limits to § 101 and every discovery is not embraced within the statutory terms. Excluded from such patent protection are laws of nature, natural phenomena, and abstract ideas.”). In Diehr, the Supreme Court's last pronouncement on eligibility for “processes,” the Court said directly that its only exclusions from the statutory language are these three common law exclusions: “Our recent holdings ... stand for no more than these long-established principles.” Id. at 185, 101 S.Ct. 1048.

This point deserves repetition. The Supreme Court stated that all of the transformation and machine linkage explanations simply restated the abstractness rule. In reading Diehr to suggest a non-statutory transformation or preemption test, this court ignores the Court's admonition that all of its recent holdings do no more than restate the natural laws and abstractness exclusions. Id.; see also Chakrabarty, 447 U.S. at 310, 100 S.Ct. 2204 (“Here, by contrast, the patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature's handiwork, but his own; accordingly it is patentable subject matter under § 101.”); Parker v. Flook, 437 U.S. 584, 591-594, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (“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.”); In re Taner, 681 F.2d 787, 791 (C.C.P.A 1982) (“In Diehr, the Supreme Court made clear that Benson stands for no more than the long-established principle that laws of nature, natural phenomena, and abstract ideas are excluded from patent protection.”).

The abstractness and natural law preclusions not only make sense, they explain the purpose of the expansive language of section 101. Natural laws and phenomena can never qualify for patent protection because they cannot be invented at all. After all, God or Allah or Jahveh or Vishnu or the Great Spirit provided these laws and phenomena as humanity's common heritage. Furthermore, abstract ideas can never qualify for patent protection because the Act intends, as section 101 explains, to provide “useful” technology. An abstract idea must be applied to (transformed into) a practical use before it qualifies for protection. The fine print of Supreme Court opinions conveys nothing more than these basic principles. Yet this court expands (transforms?) some Supreme Court language into rules that defy the Supreme Court's own rule.

When considering the eligibility of “processes,” this court should focus on the potential for an abstract claim. Such an abstract claim would appear in a form that is not even susceptible to examination against prior art under the traditional tests for patentability. Thus this court would wish to ensure that the claim supplied some concrete, tangible technology for examination. Indeed the hedging claim at stake in this appeal is a classic example of abstractness. Bilski's method for hedging risk in commodities trading is either a vague economic concept or obvious on its face. Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class. In any event, this facially abstract claim does not warrant the creation of new eligibility exclusions.

III
This court's willingness to venture away from the statute follows on the heels of an *1014 oft-discussed dissent from the Supreme Court's dismissal of its grant of certiorari in Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 548 U.S. 124, 126 S.Ct. 2921, 165 L.Ed.2d 399 (2006). That dissent is premised on a fundamental misapprehension of the distinction between a natural phenomenon and a patentable process.

The distinction between “phenomena of nature,” “mental processes,” and “abstract intellectual concepts” is not difficult to draw. The fundamental error in that Lab. Corp. dissent is its failure to recognize the difference between a patent ineligible relationship-i.e., that between high homocysteine levels and folate and cobalamin deficiencies-and a patent eligible process for applying that relationship to achieve a useful, tangible, and concrete result-i.e., diagnosis of potentially fatal conditions in patients. Nothing abstract here. Moreover, testing blood for a dangerous condition is not a natural phenomenon, but a human invention.

The distinction is simple but critical: A patient may suffer from the unpatentable phenomenon of nature, namely high homocysteine levels and low folate. But the invention does not attempt to claim that natural phenomenon. Instead the patent claims a process for assaying a patient's blood and then analyzing the results with a new process that detects the life-threatening condition. Moreover, the sick patient does not practice the patented invention. Instead the patent covers a process for testing blood that produces a useful, concrete, and tangible result: incontrovertible diagnostic evidence to save lives. The patent does not claim the patent ineligible relationship between folate and homocysteine, nor does it foreclose future inventors from using that relationship to devise better or different processes. Contrary to the language of the dissent, it is the sick patient who “embod[ies] only the correlation between homocysteine and vitamin deficiency,” Lab. Corp., 548 U.S. at 137, 126 S.Ct. 2921, not the claimed process.

From the standpoint of policy, the Lab. Corp. dissent avoids the same fundamental question that the Federal Circuit does not ask or answer today: Is this entire field of subject matter undeserving of incentives for invention? If so, why? In the context of Lab. Corp. that question is very telling: the natural condition diagnosed by the invention is debilitating and even deadly. See U.S. Patent No. 4,940,658, col. 1, ll. 32-40 (“Accurate and early diagnosis of cobalamin and folate deficiencies ... is important because these deficiencies can lead to life-threatening hematologic abnormalities.... Accurate and early diagnosis of cobalamin deficiency is especially important because it can also lead to incapacitating and life-threatening neuropsychiatric abnormalities.”). Before the invention featured in Lab. Corp., medical science lacked an affordable, reliable, and fast means to detect this debilitating condition. Denial of patent protection for this innovation-precisely because of its elegance and simplicity (the chief aims of all good science)-would undermine and discourage future research for diagnostic tools. Put another way, does not Patent Law wish to encourage researchers to find simple blood tests or urine tests that predict and diagnose breast cancers or immunodeficiency diseases? In that context, this court might profitably ask whether its decisions incentivize research for cures and other important technical advances. Without such attention, this court inadvertently advises investors that they should divert their unprotectable investments away from discovery of “scientific relationships” within the body that diagnose breast cancer or Lou Gehrig's disease or Parkinson's or whatever.

*1015 IV
In sum, this court today invents several circuitous and unnecessary tests. It should have merely noted that Bilski attempts to patent an abstract idea. Nothing more was needed. Instead this opinion propagates unanswerable questions: What form or amount of “transformation” suffices? When is a “representative” of a physical object sufficiently linked to that object to satisfy the transformation test? (e.g., Does only vital sign data taken directly from a patient qualify, or can population data derived in part from statistics and extrapolation be used?) What link to a machine is sufficient to invoke the “or machine” prong? Are the “specific” machines of Benson required, or can a general purpose computer qualify? What constitutes “extra-solution activity?” If a process may meet eligibility muster as a “machine,” why does the Act “require” a machine link for a “process” to show eligibility? Does the rule against redundancy itself suggest an inadequacy in this complex spider web of tests supposedly “required” by the language of section 101?

One final point, reading section 101 as it is written will not permit a flurry of frivolous and useless inventions. Even beyond the exclusion for abstractness, the final clause of section 101-“subject to the conditions and requirements of this title”-ensures that a claimed invention must still satisfy the “conditions and requirements” set forth in the remainder title 35. Id. These statutory conditions and requirements better serve the function of screening out unpatentable inventions than some vague “transformation” or “proper machine link” test.

In simple terms, the statute does not mention “transformations” or any of the other Industrial Age descriptions of subject matter categories that this court endows with inordinate importance today. The Act has not empowered the courts to impose limitations on patent eligible subject matter beyond the broad and ordinary meaning of the terms process, machine, manufacture, and composition of matter. It has instead preserved the promise of patent protection for still unknown fields of invention.

Innovation has moved beyond the brick and mortar world. Even this court's test, with its caveats and winding explanations seems to recognize this. Today's software transforms our lives without physical anchors. This court's test not only risks hobbling these advances, but precluding patent protection for tomorrow's technologies. “We still do not know one thousandth of one percent of what nature has revealed to us.” Attributed to Albert Einstein. If this court has its way, the Patent Act may not incentivize, but complicate, our search for the vast secrets of nature. When all else fails, consult the statute.

545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385

In Re Bilski, Mayer dissenting opinion

2010-03-13T21:44:20Z

Cep503: Created page with 'MAYER, Circuit Judge, dissenting. The en banc order in this case asked: “Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, In…'

MAYER, Circuit Judge, dissenting.

The en banc order in this case asked: “Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed.Cir.1998), and AT & T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed.Cir.1999), in this case and, if so, whether those cases should be overruled in any respect?” I would answer that question with an emphatic “yes.” The patent system is intended to protect and promote advances in science and technology, not ideas about how to structure commercial transactions. Claim 1 of the application of Bernard L. Bilski and Rand A. Warsaw (“Bilski”) is not eligible for patent protection because it is directed to a method of conducting business. Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain. State Street and AT & T should be overruled.

I.
In discussing the scope of copyright protection, the Supreme Court has noted that “ ‘a page of history is worth a volume of logic.’ ” Eldred v. Ashcroft, 537 U.S. 186, 200, 123 S.Ct. 769, 154 L.Ed.2d 683 (2003) (quoting New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921)). The same holds true with respect to patent protection. From a historical perspective, it is highly unlikely that the framers of the Constitution's intellectual property clause intended to grant patent protection to methods of conducting business. To the contrary, “those who formulated the Constitution were familiar with the long struggle over monopolies so prominent in English history, where exclusive rights to engage even in ordinary business activities were granted so frequently by the Crown for the financial benefits accruing to the Crown only.” In re Yuan, 38 C.C.P.A. 967, 188 F.2d 377, 380 (1951). The Statute of Monopolies,FN1 enacted in 1624, curtailed the Crown's ability to grant “monopolies to court favorites in goods or businesses which had long before been enjoyed by the public.” Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). When drafting the Constitution, the framers were well aware of the abuses that led to the English Statute of Monopolies and therefore “consciously acted to bar Congress from granting letters patent in particular types of business.” In re Comiskey, 499 F.3d 1365, 1375 (Fed.Cir.2007); see also Malla Pollack, The Multiple Unconstitutionality of Business Method Patents: Common Sense, Congressional Consideration, and Constitutional History, 28 Rutgers Computer & Tech. L.J. 61, 90 (2002) (“[T]he ratifying generation did not agree to invention patents on advances in *999 trade itself, because trade monopolies were odious.”).

FN1. The Statute of Monopolies “grew out of abuses in the grant of exclusive franchises in various lines of business such as trading cards, alehouses and various staple products.” Robert P. Merges, As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform, 14 Berkeley Tech. L.J. 577, 585 (1999).

There is nothing in the early patent statutes to indicate that Congress intended business methods to constitute patentable subject matter. See Patent Act of 1790 § 4, 1 Stat. 109, 111 (1790); Patent Act of 1793 § 1, 1 Stat. 318, 319 (1793); Pollack, supra at 106 (“[I]f any nation was ripe for invention patents on business methods, it was the newly freed colonies of British North America.... [H]owever, no business method patents seem to have been granted.”). As early as 1869, the Commissioner of Patents said that “[i]t is contrary ... to the spirit of the law, as construed by the office for many years, to grant patents for methods of book-keeping,” Ex parte Abraham, 1869 Dec. Comm'r Pat. 59, 59 (1869), and by 1893 the courts had concluded that “a method of transacting common business ... does not seem to be patentable as an art,” United States Credit Sys. Co. v. Am. Credit Indem. Co., 53 F. 818, 819 (C.C.S.D.N.Y.1893), aff'd on other grounds, 59 F. 139 (2d Cir.1893). By 1952, when Congress enacted the current Patent Act, it was widely acknowledged that methods of doing business were ineligible for patent protection. See, e.g., Loew's Drive-In Theatres, Inc. v. Park-In Theatres, Inc., 174 F.2d 547, 552 (1st Cir.1949) (“[A] system for the transaction of business ... however novel, useful, or commercially successful is not patentable apart from the means for making the system practically useful, or carrying it out.”); In re Patton, 29 C.C.P.A. 982, 127 F.2d 324 (1942) (noting that “a system of transacting business, apart from the means for carrying out such system” is not patentable); Hotel Sec. Checking Co. v. Lorraine Co., 160 F. 467, 469 (2d Cir.1908) (“A system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art.”); In re Moeser, 27 App. D.C. 307, 310 (1906) (holding that a system for burial insurance contracts was not patentable because “contracts or proposals for contracts, devised or adopted as a method of transacting a particular class of ... business, [are] not patentable as an art”); see also 145 Cong. Rec. H6,947 (Aug. 3, 1999) (statement of Rep. Manzullo) (“Before the State Street Bank and Trust case ... it was universally thought that methods of doing or conducting business were not patentable items.”).

In passing the 1952 Act, Congress re-enacted statutory language that had long existed,FN2 thus signaling its intent to carry forward the body of case law that had developed under prior versions of the statute. Because there is nothing in the language of the 1952 Act, or its legislative history, to indicate that Congress intended to modify the rule against patenting business methods, we must presume that no change in the rule was intended. See, e.g., Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) (“[W]here a common-law principle is well established ... the courts may take it as given that Congress has legislated with an expectation that the principle will apply except when a statutory purpose to the contrary is evident.” (citations and internal quotation marks omitted)); Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783, 72 S.Ct. 1011, 96 L.Ed. 1294 (1952) (“Statutes which invade the common law ... are to be read with a presumption favoring the retention of long-established *1000 and familiar principles, except when a statutory purpose to the contrary is evident.”); see also In re Schrader, 22 F.3d 290, 295 (Fed.Cir.1994) (“When Congress approved the addition of the term ‘process' to the categories of patentable subject matter in 1952, it incorporated the definition of ‘process' that had evolved in the courts.” (footnote omitted)). If Congress had wished to change the established practice of disallowing patents on business methods, it was quite capable of doing so explicitly. See Parker v. Flook, 437 U.S. 584, 596, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (stressing that courts “must proceed cautiously when ... asked to extend patent rights into areas wholly unforeseen by Congress”).

FN2. Congress did substitute the word “process” for “art” in the 1952 Act, but “[a]nalysis of the eligibility of a claim of patent protection for a ‘process' did not change with the addition of that term to § 101.” Diamond v. Diehr, 450 U.S. 175, 184, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981).

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

II.
Business method patents have been justified, in significant measure, by a misapprehension of the legislative history of the 1952 Patent Act. In particular, proponents of such patents have asserted that the Act's legislative history states that Congress intended statutory subject matter to “include anything under the sun that is made by man.” AT & T, 172 F.3d at 1355 (Fed.Cir.1999) (citations and internal quotation marks omitted); see also Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Read in context, however, the legislative history says no such thing. The full statement from the committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” S.Rep. No.1979, 82d Cong., 2d Sess. 5 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399 (emphasis added); H.R.Rep. No.1923, 82d Cong., 2d Sess. 6 (1952) (emphasis added).

This statement does not support the contention that Congress intended “anything under the sun” to be patentable. To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Moreover, the cited legislative history is not discussing process claims at all. The quoted language is discussing “machines” and “manufactures;” it is therefore surprising that it has been thought a fit basis for allowing patents on business processes.

III.
The Constitution does not grant Congress unfettered authority to issue patents. See U.S. Const. art. I, § 8.FN3 Instead, the *1001 patent power is a “qualified authority ... [which] is limited to the promotion of advances in the ‘useful arts.’ ” Graham, 383 U.S. at 5, 86 S.Ct. 684; see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct. 1727, 1746, 167 L.Ed.2d 705 (2007) (reaffirming that patents are designed to promote “the progress of useful arts”). What the framers described as “useful arts,” we in modern times call “technology.” Paulik v. Rizkalla, 760 F.2d 1270, 1276 (Fed.Cir.1985) (en banc). Therefore, by mandating that patents advance the useful arts, “[t]he Constitution explicitly limited patentability to ... ‘the process today called technological innovation.’ ” Comiskey, 499 F.3d at 1375 (quoting Paulik, 760 F.2d at 1276); see also In re Foster, 58 C.C.P.A. 1001, 438 F.2d 1011 (1971) (“All that is necessary ... to make a sequence of operational steps a statutory ‘process' within 35 U.S.C. § 101 is that it be in the technological arts.”); Karl B. Lutz, Patents and Science: A Clarification of the Patent Clause of the U.S. Constitution, 18 Geo. Wash. L.Rev. 50, 54 (1949) (“The term ‘useful arts' as used in the Constitution ... is best represented in modern language by the word ‘technology.’ ”); James S. Sfekas, Controlling Business Method Patents: How the Japanese Standard for Patenting Software Could Bring Reasonable Limitations to Business Method Patents in the United States, 16 Pac. Rim. L. & Pol'y J. 197, 214 (2007) (At the time the Patent Clause was adopted, “the term ‘useful arts' was commonly used in contrast to the ideas of the ‘liberal arts' and the ‘fine arts,’ which were well-known ideas in the eighteenth century.”).

FN3. Article I, § 8 provides that “The Congress shall have Power ... To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The patent power “is the only one of the several powers conferred upon the Congress which is accompanied by a specific statement of the reason for it.” Yuan, 188 F.2d at 380.

Before State Street led us down the wrong path, this court had rightly concluded that patents were designed to protect technological innovations, not ideas about the best way to run a business.FN4 We had *1002 thus rejected as unpatentable a method for coordinating firefighting efforts, Patton, 127 F.2d at 326-27, a method for deciding how salesmen should best handle customers, In re Maucorps, 609 F.2d 481 (CCPA 1979), and a computerized method for aiding a neurologist in diagnosing patients, In re Meyer, 688 F.2d 789 (CCPA 1982).FN5 We stated that patentable processes must “be in the technological arts so as to be in consonance with the Constitutional purpose to promote the progress of ‘useful arts.’ ” In re Musgrave, 57 C.C.P.A. 1352, 431 F.2d 882, 893 (CCPA 1970) (emphasis added).

FN4. “[D]espite the assertions in State Street and Schrader, very few in the patent community believe that business methods have always been patentable. To the contrary, the dominant view is that the law has changed, and that the definition of patentable subject matter is now wider than it once was.” R. Carl Moy, Subjecting Rembrandt to the Rule of Law: Rule-Based Solutions for Determining the Patentability of Business Methods, 28 Wm. Mitchell L.Rev. 1047, 1060 (2002) (footnotes omitted); see also Rochelle Cooper Dreyfuss, Are Business Method Patents Bad for Business?, 16 Santa Clara Computer & High Tech. L.J. 263, 265-66 (2000) ( State Street gave “judicial recognition to business method patents.”). Over the course of two centuries, a few patents issued on what could arguably be deemed methods of doing business, see, e.g., U.S. Patent No. 5,664,115 (“Interactive Computer System to Match Buyers and Sellers of Real Estate, Businesses and Other Property Using the Internet”), but these patents were aberrations and the general rule, prior to State Street, was that methods of engaging in business were ineligible for patent protection. See Comiskey, 499 F.3d at 1374 (noting that “[a]t one time, ‘[t]hough seemingly within the category of process or method, a method of doing business [was] rejected as not being within the statutory classes.’ ” (quoting State Street, 149 F.3d at 1377)). One commentator has noted that although the United States Patent and Trademark Office (“USPTO”) “in an attempt to deflect criticism [has] issued an apologia ... asserting that business method patents are as old as the United States patent system,” this document is fundamentally flawed. See Pollack, supra at 73-75. She explains:
The USPTO wants us to believe that it found no records of patents whose points of invention were business methods, because no one had time to invent any new business methods until the human race had run its mechanical ingenuity to the peak of computer software; seemingly we were all too busy inventing the computer to think about anything else-especially new ways of doing business. I thought that we granted patents because, otherwise, people would be too busy making money by running businesses to take time out to invent anything except business methods. The USPTO [document], furthermore, is eliding the printed matter exception to patentable subject matter with the business method exception.
Id. at 75 (footnote omitted).

FN5. The claims in Patton were explicitly rejected on the basis that they were directed to a business method, while the claims in Maucorps and Meyer were rejected as attempts to patent mathematical algorithms. Subsequently, however, this court stated that the claimed processes in Maucorps and Meyer were directed toward business systems and should therefore not be considered patent eligible. In re Alappat, 33 F.3d 1526, 1541 (Fed.Cir.1994) (en banc). We noted that “ Maucorps dealt with a business methodology for deciding how salesmen should best handle respective customers and Meyer involved a ‘system’ for aiding a neurologist in diagnosing patients. Clearly, neither of the alleged ‘inventions' in those cases falls within any § 101 category.” Id.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable. See Diehr, 450 U.S. at 192 n. 14, 101 S.Ct. 1048 (Patentability cannot be established by the “token” use of technology.); Gottschalk v. Benson, 409 U.S. 63, 64-66, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) (finding unpatentable a method of programming a general purpose digital computer to convert signals from binary-coded decimal to pure binary form). Where a claimed business method simply uses a known machine to do what it was designed to do, such as using a computer to gather data or perform calculations, use of that machine will not bring otherwise unpatentable subject matter within the ambit of section 101. See Benson, 409 U.S. at 67, 93 S.Ct. 253 (finding a process unpatentable where “[t]he mathematical procedures [could] be carried out in existing computers long in use, no new machinery being necessary”).

Although the Supreme Court has not directly addressed the patentability of business methods, several of its decisions implicitly tether patentability to technological innovation. See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998) (“[T]he patent system represents a carefully crafted bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time.” (emphasis added)); Markman v. Westview Instruments, Inc., 517 U.S. 370, 390, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996) (“Congress created the Court of Appeals for the Federal Circuit as an exclusive appellate court for patent cases ... observing that increased uniformity would strengthen the United States patent system in such a way as to foster technological growth and industrial innovation.” (citations and internal quotation marks omitted) (emphasis added)); Benson, 409 U.S. at 71, 93 S.Ct. 253 (refusing to “freeze [the patentability *1003 of] process patents to old technologies, leaving no room for the revelations of the new, onrushing technology ” (emphases added)). Indeed, the Supreme Court has repeatedly emphasized that what renders subject matter patentable is “the application of the law of nature to a new and useful end.” Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948); see Diehr, 450 U.S. at 188 n. 11, 101 S.Ct. 1048; Benson, 409 U.S. at 67, 93 S.Ct. 253.FN6Applying laws of nature to new and useful ends is nothing other than “technology.” FN7 See, e.g., Microsoft Computer Dictionary 513 (5th ed. 2002) (The definition of “technology” is the “application of science and engineering to the development of machines and procedures in order to enhance or improve human conditions.”); American Heritage Dictionary of the English Language 1777 (4th ed. 2000) (“Technology” is the “application of science, especially to industrial or commercial objectives.”); see also Sfekas, supra at 214-15 (“The [Supreme] Court's holdings in Benson and Diehr are really stating a requirement that inventions must be technological.”); Schwartz, supra at 357 (The “clear and consistent body of Supreme Court case law establishes that the term ‘invention’ encompasses anything made by man that utilizes or harnesses one or more ‘laws of nature’ for human benefit.”). As the Supreme Court has made clear, “the act of invention ... consists neither in finding out the laws of nature, nor in fruitful research as to the operation of natural laws, but in discovering how those laws may be utilized or applied for some beneficial purpose, by a process, a device or a machine.” United States v. Dubilier Condenser Corp., 289 U.S. 178, 188, 53 S.Ct. 554, 77 L.Ed. 1114 (1933).

FN6. Laws of nature are those laws pertaining to the “natural sciences,” such as biology, chemistry, or physics. See, e.g., Webster's New International Dictionary 1507 (3d ed. 2002) (“Natural sciences” are the “branches of science ( [such] as physics, chemistry, [or] biology) that deal with matter, energy, and their interrelations and transformations or with objectively measured phenomena.”). They must be distinguished from other types of law, such as laws of economics or statutory enactments. Laws of nature do not involve “judgments on human conduct, ethics, morals, economics, politics, law, aesthetics, etc.” Musgrave, 431 F.2d at 890; see also Joy Y. Xiang, How Wide Should the Gate of “Technology” Be? Patentability of Business Methods in China, 11 Pac. Rim L. & Pol'y J. 795, 807 (2002) (noting that State Street's “ ‘useful, concrete and tangible result’ test is inconsistent with the ‘application of the law of nature’ patent eligibility scope outlined by the U.S. Supreme Court and [the Federal Circuit prior to State Street ].”).

FN7. One commentator notes that both Japan and the Republic of Korea explicitly define an “invention” as the application of a law of nature, and argues that the United States should follow a similar approach to patentability. See Andrew A. Schwartz, The Patent Office Meets the Poison Pill: Why Legal Methods Cannot be Patented, 20 Harv. J. Law & Tech. 333, 357 (2007).

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection. See, e.g., John R. Thomas, The Patenting of the Liberal Professions, 40 B.C. L.Rev. 1139 (1999) (arguing that affording patentability to business methods opens the door to obtaining patent protection for all aspects of human thought and behavior, and that patents should remain grounded in science and technology) (hereinafter “Thomas (1999)”). “[T]he primary purpose of our patent laws is not the creation of private fortunes for the owners of patents but is ‘to promote the progress of science and useful arts.’ ” *1004 Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511, 37 S.Ct. 416, 61 L.Ed. 871 (1917). Although business method patents may do much to enrich their owners, they do little to promote scientific research and technological innovation.

IV.
State Street has launched a legal tsunami, inundating the patent office with applications seeking protection for common business practices.FN8 Applications for Class 705 (business method) patents increased from fewer than 1,000 applications in 1997 to more than 11,000 applications in 2007. See United States Patent and Trademark Office, Class 705 Application Filings and Patents Issued Data, available at http:// www. uspto. gov/ web/ menu/ pbmethod/ application filing. htm (information available as of Jan. 2008); see Douglas L. Price, Assessing the Patentability of Financial Services and Products, 3 J. High Tech. L. 141, 153 (2004) (“The State Street case has opened the floodgates on business method patents.”).

FN8. Congress has acted to ameliorate some of the negative effects of granting patents on methods of doing business. It passed the American Inventors Protection Act (commonly referred to as the First Inventor Defense Act) which provides an affirmative defense against a business method patent infringement action if the defendant “acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.” See 35 U.S.C. § 273. Even where a defendant may qualify for this defense, however, he “still must engage in expensive litigation where [he] bears the burden of affirmatively raising and proving the defense.” See Nicholas A. Smith, Business Method Patents and Their Limits: Justifications, History, and the Emergence of A Claim Construction Jurisprudence, 9 Mich. Telecomm. & Tech. L.Rev. 171, 199 (2002).

Patents granted in the wake of State Street have ranged from the somewhat ridiculous to the truly absurd. See, e.g., U.S. Patent No. 5,851,117 (method of training janitors to dust and vacuum using video displays); U.S. Patent No. 5,862,223 (method for selling expert advice); U.S. Patent No. 6,014,643 (method for trading securities); U.S. Patent No. 6,119,099 (method of enticing customers to order additional food at a fast food restaurant); U.S. Patent No. 6,329,919 (system for toilet reservations); U.S. Patent No. 7,255,277 (method of using color-coded bracelets to designate dating status in order to limit “the embarrassment of rejection”). There has even been a patent issued on a method for obtaining a patent. See U.S. Patent No. 6,049,811. Not surprisingly, State Street and its progeny have generated a thundering chorus of criticism. See Leo J. Raskind, The State Street Bank Decision: The Bad Business of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L.J. 61, 61 (1999) (“The Federal Circuit's recent endorsement of patent protection for methods of doing business marks so sweeping a departure from precedent as to invite a search for its justification.”); Pollack, supra at 119-20 (arguing that State Street was based upon a misinterpretation of both the legislative history and the language of section 101 and that “business method patents are problematical both socially and constitutionally”); Price, supra at 155 (“The fall out from State Street has created a gold-rush mentality toward patents and litigation in which companies .... gobble up patents on anything and everything.... It is a mad rush to get as many dumb patents as possible.” (citations and internal quotation marks omitted)); Thomas (1999), supra at 1160 (“After State Street, it is hardly an exaggeration to say that if you can name it, you can claim it.”); Sfekas, supra at 226 (“[T]he U.S. courts *1005 have set too broad a standard for patenting business methods.... These business method patents tend to be of lower quality and are unnecessary to achieve the goal of encouraging innovation in business.”); William Krause, Sweeping the E-Commerce Patent Minefield: The Need for a Workable Business Method Exception, 24 Seattle U.L.Rev. 79, 101 (2000) ( State Street “opened up a world of unlimited possession to anyone quick enough to take a business method and put it to use via computer software before anyone else.”); Moy, supra at 1051 (“To call [the situation following State Street ] distressing is an understatement. The consensus ... appears to be that patents should not be issuing for new business methods.”).

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

A.
“[T]he underlying policy of the patent system [is] that ‘the things which are worth to the public the embarrassment of an exclusive patent,’ ... must outweigh the restrictive effect of the limited patent monopoly.” Graham, 383 U.S. at 10-11, 86 S.Ct. 684 (quoting letter from Thomas Jefferson to Isaac McPherson (Aug. 1813)). Thus, Congress may not expand the scope of “the patent monopoly without regard to the ... advancement or social benefit gained thereby.” Id. at 6, 86 S.Ct. 684.

Patents should be granted to those inventions “which would not be disclosed or devised but for the inducement of a patent.” Id. at 11, 86 S.Ct. 684. Methods of doing business have existed since the earliest days of the Patent Act and have flourished even in the absence of patent protection. See Brian P. Biddinger, Limiting the Business Method Patent: A Comparison and Proposed Alignment of European, Japanese and United States Patent Law, 69 Fordham L.Rev. 2523, 2544-50 (2001). Commentators have argued that “the broad grant of patent protection for methods of doing business is something of a square peg in a sinkhole of uncertain dimensions” since “[n]owhere in the substantial literature on innovation is there a statement that the United States economy suffers from a lack of innovation in methods of doing business.” Raskind, supra at 92-93. Instead, “the long history of U.S. business is one of innovation, emulation, and innovation again. It also is a history of remarkable creativity and success, all without business method patents until the past few years.” Smith, supra at 178; see also Sfekas, supra at 213 (“While innovation in business methods is a good thing, it is likely that there would be the same level of innovation even without patents on [such methods].”).

Business innovations, by their very nature, provide a competitive advantage and thus generate their own incentives. See Xiang, supra at 813 (“A business entity improves the way it does business in order to be more effective and efficient, to stay ahead of [the] competition, and to make more profit.”). The rapid “growth of fast food restaurants, self-service gasoline stations, quick oil change facilities ... automatic teller devices ... and alternatives for long-distance telephone services” casts real doubt about the need for the additional incentive of patent protection in the commercial realm. Raskind, supra at 93.

Although patents are not a prerequisite to business innovation, they are of undeniable importance in promoting technological advances. For example, the pharmaceutical*1006 industry relies on patent protection in order to recoup the large sums it invests to develop life-saving and life-enhancing drugs:

[T]he “fully loaded” cost of developing a single new pharmaceutical molecule, taking it though laboratory and clinical trials, and securing FDA approval for its marketing is today about $800 million (including the cost of project failures). Furthermore, fewer than one in five drug candidates that make it out of the laboratory survive this tortuous process and reach the marketplace in the form of FDA-approved pharmaceuticals.... Only patent protection can make the innovator's substantial investment in development and clinical testing economically rational.

Jay Dratler, Jr., Alice in Wonderland Meets the U.S. Patent System, 38 Akron L.Rev. 299, 313-14 (2005) (footnotes omitted).

Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. Bilski, for example, likely spent only nominal sums to develop his hedging method. The reward he could reap if his application were allowed-exclusive rights over methods of managing risks in a wide array of commodity transactions-vastly exceeds any costs he might have incurred in devising his “invention.”

B.
“[S]ometimes too much patent protection can impede rather than ‘promote the Progress of Science and useful Arts,’ the constitutional objective of patent and copyright protection.” Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 548 U.S. 124, 126, 126 S.Ct. 2921, 165 L.Ed.2d 399 (2006) (Breyer, J., joined by Stevens and Souter, JJ., dissenting from dismissal of writ of certiorari) (emphasis in original). This is particularly true in the context of patents on methods of conducting business. Instead of providing incentives to competitors to develop improved business techniques, business method patents remove building blocks of commercial innovation from the public domain. Dreyfuss, supra at 275-77. Because they restrict competitors from using and improving upon patented business methods, such patents stifle innovation. When “we grant rights to exclude unnecessarily, we ... limit competition with no quid pro quo. Retarding competition retards further development.” Pollack, supra at 76. “Think how the airline industry might now be structured if the first company to offer frequent flyer miles had enjoyed the sole right to award them or how differently mergers and acquisitions would be financed ... if the use of junk bonds had been protected by a patent.” Dreyfuss, supra at 264. By affording patent protection to business practices, “the government distorts the operation of the free market system and reduces the gains from the operation of the market.” Sfekas, supra at 214.

It is often consumers who suffer when business methods are patented. See Raskind, supra at 82. Patented products are more expensive because licensing fees are often passed on to consumers. See Lois Matelan, The Continuing Controversy Over Business Method Patents, 18 Fordham Intell. Prop. Med. & Ent. L.J. 189, 201 (2007). Further, as a general matter, “quantity and quality [of patented products] are less than they would be in a competitive market.” Dreyfuss, supra at 275.

*1007 Patenting business methods makes American companies less competitive in the global marketplace. American companies can now obtain exclusionary rights on methods of conducting business, but their counterparts in Europe and Japan generally cannot. See Biddinger, supra at 2546-47. Producing products in the United States becomes more expensive because American companies, unlike their overseas counterparts, must incur licensing fees in order to use patented business methods:

[O]nce a United States patent application for a new method of doing business becomes publicly available, companies in Europe and Japan may begin using the method outside the United States, while American companies in competition with the patentee would be unable to use the method in the United States without incurring licensing fees. The result is that companies outside of the United States receive the benefit of the novel method without incurring either the research and development costs of the inventor, or the licensing fees of the patentee's American competitors.

Id. at 2545-46.

C.
Another significant problem that plagues business method patents is that they tend to be of poor overall quality. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 397, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) (Kennedy, J., joined by Stevens, Souter, and Breyer, JJ., concurring) (noting the “potential vagueness and suspect validity” of some of “the burgeoning number of patents over business methods”). Commentators have lamented “the frequency with which the Patent Office issues patents on shockingly mundane business inventions.” Dreyfuss, supra at 268; see also Pollack, supra at 106 (“[M]any of the recently-issued business method patents are facially (even farcically) obvious to persons outside the USPTO.”). One reason for the poor quality of business method patents is the lack of readily accessible prior art references. Because business methods were not patentable prior to State Street, “there is very little patent-related prior art readily at hand to the examiner corps.” Dreyfuss, supra at 269.

Furthermore, information about methods of conducting business, unlike information about technological endeavors, is often not documented or published in scholarly journals. See Russell A. Korn, Is Legislation the Answer? An Analysis of the Proposed Legislation for Business Method Patents, 29 Fla. St. U.L.Rev. 1367, 1372-73 (2002). The fact that examiners lack the resources to weed out undeserving applications “has led to the improper approval of a large number of patents, leaving private parties to clean up the mess through litigation.” Krause, supra at 97.

Allowing patents to issue on business methods shifts critical resources away from promoting and protecting truly useful technological advances. As discussed previously, the patent office has been deluged with business method applications in recent years. Time spent on such applications is time not spent on applications which claim true innovations. When already overburdened examiners are forced to devote significant time to reviewing large numbers of business method applications, the public's access to new and beneficial technologies is unjustifiably delayed.

D.
Patenting business methods allows private parties to claim exclusive ownership of ideas and practices which rightfully belong in the public domain. “It is a matter of public interest that [economic] decisions, in the aggregate, be intelligent and well *1008 informed. To this end, the free flow of commercial information is indispensable.” Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 765, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976). Thus, “the stringent requirements for patent protection seek to assure that ideas in the public domain remain there for the free use of the public.” Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979).

Bilski's claimed method consists essentially of two conversations. The first conversation is between a commodity provider and a commodity consumer, while the second conversation is between the provider and “market participants” who have “a counter-risk position to ... consumers.” His claims provide almost no details as to the contents of these conversations.

Like many business method applications, Bilski's application is very broadly drafted. It covers a wide range of means for “hedging” in commodity transactions. If his application were allowed, anyone who discussed ways to balance market risks in any sort of commodity could face potential infringement liability. By adopting overly expansive standards for patentability, the government enables private parties to impose broad and unwarranted burdens on speech and the free flow of ideas. See Thomas F. Cotter, A Burkean Perspective on Patent Eligibility, 22 Berkeley Tech. L.J. 855, 880-82 (2007) (arguing that overly expansive patent eligibility standards can result in the granting of patents that threaten free speech, privacy and other constitutionally-protected rights); John R. Thomas, The Future of Patent Law: Liberty and Property in the Patent Law, 39 Hous. L.Rev. 569, 589 (2002) (arguing that “the patent law allows private actors to impose more significant restraints on speech than has ever been possible through copyright”); see also Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of New York, 447 U.S. 557, 569-70, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980) (The First Amendment mandates that restrictions on free speech in commercial transactions be “no more extensive than necessary.”).

To the extent that business methods are deemed patentable, individuals can face unexpected potential infringement liability for everyday conversations and commercial interactions. “[I]mplicit in the Patent Clause itself [is the understanding] that free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). In the wake of State Street, too many patent holders have been allowed to claim exclusive ownership of subject matter that rightfully belongs in the public domain.

V.
The majority's proposed “machine-or-transformation test” for patentability will do little to stem the growth of patents on non-technological methods and ideas. Quite simply, in the context of business method patent applications, the majority's proposed standard can be too easily circumvented. See Cotter, supra at 875 (noting that the physical transformation test for patentability can be problematic because “[i]n a material universe, every process will cause some sort of physical transformation, if only at the microscopic level or within the human body, including the brain”). Through clever draftsmanship, nearly every process claim can be rewritten to include a physical transformation. Bilski, for example, could simply add a requirement that a commodity consumer install a meter to record commodity consumption. He could then argue that installation*1009 of this meter was a “physical transformation,” sufficient to satisfy the majority's proposed patentability test.

Even as written, Bilski's claim arguably involves a physical transformation. Prior to utilizing Bilski's method, commodity providers and commodity consumers are not involved in transactions to buy and sell a commodity at a fixed rate. By using Bilski's claimed method, however, providers and consumers enter into a series of transactions allowing them to buy and sell a particular commodity at a particular price. Entering into a transaction is a physical process: telephone calls are made, meetings are held, and market participants must physically execute contracts. Market participants go from a state of not being in a commodity transaction to a state of being in such a transaction. The majority, however, fails to explain how this sort of physical transformation is insufficient to satisfy its proposed patent eligibility standard.

The majority suggests that a technological arts test is nothing more that a “shortcut” for its machine-or-transformation test. Ante at 964. To the contrary, however, the two tests are fundamentally different. Consider U.S. Patent No. 7,261,652, which is directed to a method of putting a golf ball, U.S. Patent No. 6,368,227, which is directed to a method of swinging on a swing suspended on a tree branch, and U.S. Patent No. 5,443,036, which is directed to a method of “inducing cats to exercise.” Each of these “inventions” involves a physical transformation that is central to the claimed method: the golfer's stroke is changed, a person on a swing starts swinging, and the sedentary cat becomes a fit feline. Thus, under the majority's approach, each of these inventions is patent eligible. Under a technological arts test, however, none of these inventions is eligible for patent protection because none involves any advance in science or technology.FN9

FN9. The majority's approach will encourage rent-seeking on a broad range of human thought and behavior. For example, because organizing a country into a democratic or socialist regime clearly involves a physical transformation, what is to prevent patents from issuing on forms of government?

Regardless of whether a claimed process involves a “physical transformation,” it should not be patent eligible unless it is directed to an advance in science or technology. See Benson, 409 U.S. at 64-71, 93 S.Ct. 253 (finding a process unpatentable even though it “transformed” binary-coded decimals into pure binary numbers using a general purpose computer). Although the Supreme Court has stated that a patentable process will usually involve a transformation of physical matter, see id. at 70, 93 S.Ct. 253, it has never found a process patent eligible which did not involve a scientific or technological innovation. See Diehr, 450 U.S. at 192-93, 101 S.Ct. 1048 (finding a process patentable where it involved new technology for curing rubber).

The majority refuses to inject a technology requirement into the section 101 analysis because it believes that the terms “technological arts” and “technology” are “ambiguous.” See ante at 960. To the contrary, however, the meaning of these terms is not particularly difficult to grasp. “The need to apply some sort of ‘technological arts' criterion has hardly led other countries' and regions' patent systems to grind to a halt; it is hard to see why it should be an insurmountable obstacle for ours.” Cotter, supra at 885. As discussed more fully in section III, a claimed process is technological to the extent it applies laws of nature to new ends. See Benson, 409 U.S. at 67, 93 S.Ct. 253 (“ ‘If there is to be invention from ... a discovery, it *1010 must come from the application of the law of nature to a new and useful end.’ ” (quoting Funk Bros., 333 U.S. at 130, 68 S.Ct. 440)). By contrast, a process is non-technological where its inventive concept is the application of principles drawn not from the natural sciences but from disciplines such as business, law, sociology, or psychology. See Thomas (1999), supra at 1168 (“[F]ew of us would suppose that inventions within the domain of business, law or fine arts constitute technology, much less patentable technology.”). The inventive aspect of Bilski's claimed process is the application of business principles, not laws of nature; it is therefore non-technological and ineligible for patent protection.

Unlike a technological standard for patentability, the majority's proposed test will be exceedingly difficult to apply. The standard that the majority proposes for inclusion in the patentability lexicon-“transformation of any physical object or substance, or an electronic signal representative of any physical object or substance,” ante at 964-is unnecessarily complex and will only lead to further uncertainty regarding the scope of patentable subject matter. As noted in In re Nuijten, 500 F.3d 1346, 1353 (Fed.Cir.2007), defining the term “physical” can be an “esoteric and metaphysical” inquiry. Indeed, although this court has struggled for years to set out what constitutes sufficient physical transformation to render a process patentable, we have yet to provide a consistent or satisfactory resolution of this issue.

We took this case en banc in a long-overdue effort to resolve primal questions on the metes and bounds of statutory subject matter. The patent system has run amok, and the USPTO, as well as the larger patent community, has actively sought guidance from this court in making sense of our section 101 jurisprudence. See Supplemental Br. of Appellee at 3 (“[The Federal Circuit] should clarify the meaning of State Street and AT & T, as they have been too often misunderstood.”); Br. of Fin. Serv. Indus. at 1 (“The rise of [business method patents] in recent years has ... led to uncertainty over the scope of the patents granted and, more fundamentally, the definition of patentable subject matter itself. [We] seek a workable standard defining the scope of patentable subject matter, one that ... provides clear guidance to the Patent and Trademark Office ... and the public.”); Br. of Samuelson Law, Tech. and Public Policy Clinic at 1 (“Ever since State Street, the [USPTO] has been flooded with applications for a wide variety of non-technological ‘inventions' such as arbitration methods, dating methods, tax-planning methods, legal methods, and novel-writing methods. These applications have eroded public confidence in the patent system and driven up the cost and decreased the return for applicants seeking legitimate technological patents.” (footnote omitted)); Br. of Assoc. of Am. Medical Colleges at 29 (arguing that “broad swaths of the public and certain industry sectors” have lost respect for the patent system and that “[the Federal Circuit] should act, even if its actions mean unsettling the settled expectations of some”). The majority, however, fails to enlighten three of the thorniest issues in the patentability thicket: (1) the continued viability of business method patents, (2) what constitutes sufficient physical transformation or machine-implementation to render a process patentable, and (3) the extent to which computer software and computer-implemented processes constitute statutory subject matter. The majority's “measured approach” to the section 101 analysis, see ante at 962, will do little to restore public confidence in the patent system or stem the growth of patents on *1011 business methods and other non-technological ideas.

VI.
Where the advance over the prior art on which the applicant relies to make his invention patentable is an advance in a field of endeavor such as law (like the arbitration method in Comiskey ), business (like the method claimed by Bilski) or other liberal-as opposed to technological-arts, the application falls outside the ambit of patentable subject matter. The time is ripe to repudiate State Street and to recalibrate the standards for patent eligibility, thereby ensuring that the patent system can fulfill its constitutional mandate to protect and promote truly useful innovations in science and technology. I dissent from the majority's failure to do so.

In Re Bilski, Newman dissenting opinion

2010-03-13T21:43:09Z

Cep503: Created page with ' NEWMAN, Circuit Judge, dissenting. The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the …'

NEWMAN, Circuit Judge, dissenting.

The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the patent system. The court achieves this result by redefining the word “process” in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today's electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today's Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.

This exclusion is imposed at the threshold, before it is determined whether the excluded process is new, non-obvious, enabled, described, particularly claimed, etc.; that is, before the new process is examined for patentability. For example, we do not know whether the Bilski process would be found patentable under the statutory criteria, for they were never applied.

The innovations of the “knowledge economy”-of “digital prosperity”-have been dominant contributors to today's economic *977 growth and societal change. Revision of the commercial structure affecting major aspects of today's industry should be approached with care, for there has been significant reliance on the law as it has existed, as many amici curiae pointed out. Indeed, the full reach of today's change of law is not clear, and the majority opinion states that many existing situations may require reassessment under the new criteria.

Uncertainty is the enemy of innovation. These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed. I respectfully dissent.

DISCUSSION
The court's exclusion of specified process inventions from access to the patent system is achieved by redefining the word “process” in the patent statute. However, the court's redefinition is contrary to statute and to explicit rulings of the Supreme Court and this court. I start with the statute:

Section 101 is the statement of statutory eligibility
From the first United States patent act in 1790, the subject matter of the “useful arts” has been stated broadly, lest advance restraints inhibit the unknown future. The nature of patent-eligible subject matter has received judicial attention over the years, as new issues arose with advances in science and technology. The Supreme Court has consistently confirmed the constitutional and legislative purpose of providing a broadly applicable incentive to commerce and creativity, through this system of limited exclusivity. Concurrently, the Court early explained the limits of patentable subject matter, in that “fundamental truths” were not intended to be included in a system of exclusive rights, for they are the general foundations of knowledge. Thus laws of nature, natural phenomena, and abstract ideas are not subject to patenting. Several rulings of the Court have reviewed patent eligibility in light of these fundamentals. However, the Court explicitly negated today's restrictions. My colleagues in the majority are mistaken in finding that decisions of the Court require the per se limits to patent eligibility that the Federal Circuit today imposes. The patent statute and the Court's decisions neither establish nor support the exclusionary criteria now adopted.

The court today holds that any process that does not transform physical matter or require performance by machine is not within the definition of “process” in any of the patent statutes since 1790. All of the statutes contained a broad definition of patent-eligible subject matter, like that in the current Patent Act of 1952:

35 U.S.C § 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.

In Diamond v. Diehr, 450 U.S. 175, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) the Court explained that Section 101 is not an independent condition of patentability, but a general statement of subject matter eligibility. The Court stated:

Section 101, however, is a general statement of the type of subject matter that is eligible for patent protection “subject to the conditions and requirements of this title.” Specific conditions for patentability follow and § 102 covers in detail the conditions relating to novelty. The question therefore of whether a particular invention is novel is “wholly apart *978 from whether the invention falls in a category of statutory subject matter.”

Id. at 189-90, 101 S.Ct. 1048 (footnote omitted) (quoting In re Bergy, 596 F.2d 952, 961 (C.C.P.A.1979)).

“Process” is defined in the 1952 statute as follows:

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.

The 1952 Patent Act replaced the word “art” in prior statutes with the word “process,” while the rest of Section 101 was unchanged from earlier statutes. The legislative history for the 1952 Act explained that “art” had been “interpreted by courts to be practically synonymous with process or method.” S.Rep. No. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2398, 2409-10. In Diehr the Court explained that a process “has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.” 450 U.S. at 182, 101 S.Ct. 1048.

The definition of “process” provided at 35 U.S.C. § 100(b) is not “unhelpful,” as this court now states, maj. op. at 951 n. 3, but rather points up the errors in the court's new statutory interpretation. Section 100(b) incorporates the prior usage “art” and the term “method,” and places no restriction on the definition. This court's redefinition of “process” as limiting access to the patent system to those processes that use specific machinery or that transform matter, is contrary to two centuries of statutory definition.

The breadth of Section 101 and its predecessor provisions reflects the legislative intention to accommodate not only known fields of creativity, but also the unknown future. The Court has consistently refrained from imposing unwarranted restrictions on statutory eligibility, and for computer-implemented processes the Court has explicitly rejected the direction now taken. Nonetheless, this court now adopts a redefinition of “process” in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities, stating that this result is required by the Court's computer-related cases, starting with Gottschalk v. Benson, 409 U.S. 63, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). However, the Court in Benson rejected the restriction that is imposed today:

This court's new definition of “process” was rejected in Gottschalk v. Benson
In Benson the claimed invention was a mathematical process for converting binary-coded decimal numerals into pure binary numbers. The Court explained that a mathematical formula unlimited to a specific use was simply an abstract idea of the nature of “fundamental truths,” “phenomena of nature,” and “abstract intellectual concepts,” as have traditionally been outside of patent systems. 409 U.S. at 67, 93 S.Ct. 253. However, the Court explicitly declined to limit patent-eligible processes in the manner now adopted by this court, stating:

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.

Id. at 71, 93 S.Ct. 253. The Court explained that “the requirements of our prior precedents” did not preclude patents on computer programs, despite the statement *979 drawn from Cochrane v. Deener, 94 U.S. 780, 787-88, 24 L.Ed. 139 (1876), that “[t]ransformation 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.” Benson, 409 U.S. at 70, 93 S.Ct. 253. Although this same statement is now relied upon by this court as requiring its present ruling, maj. op at 956 & n. 11, the Court in Benson was explicit that: “We do not hold that no process patent could ever qualify if it did not meet [the Court's] prior precedents.” The Court recognized that Cochrane's statement was made in the context of a mechanical process and a past era, and protested:

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.

Benson, 409 U.S. at 71, 93 S.Ct. 253. Instead, the Court made clear that it was not barring patents on computer programs, and rejected the “argu[ment] 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’ ” in order to satisfy Section 101. Id. Although my colleagues now describe these statements as “equivocal,” maj. op. at 956, there is nothing equivocal about “We do not so hold.” Benson, 409 U.S. at 71, 93 S.Ct. 253. Nonetheless, this court now so holds.

In Parker v. Flook the Court again rejected today's restrictions
The eligibility of mathematical processes next reached the Court in Parker v. Flook, 437 U.S. 584, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978), where the Court held that the “process” category of Section 101 was not met by a claim to a mathematical formula for calculation of alarm limits for use in connection with catalytic conversion of hydrocarbons and, as in Benson, the claim was essentially for the mathematical formula. The Court later summarized its Flook holding, stating in Diamond v. Diehr that:

The [Flook] application, however, did not purport to explain how these other variables were to be determined, nor did it purport “to contain any disclosure relating to the chemical processes at work, the monitoring of the process variables, nor the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit.”

Diehr, 450 U.S. at 186-87, 101 S.Ct. 1048 (quoting Flook, 437 U.S. at 586, 98 S.Ct. 2522).

The Court explained in Flook that a field-of-use restriction to catalytic conversion did not distinguish Flook's mathematical process from that in Benson. However, the Court reiterated that patent eligibility of computer-directed processes is not controlled by the “qualifications of our earlier precedents,” again negating any limiting effect of the usages of the past, on which this court now places heavy reliance. The Court stated:

The statutory definition of “process” is broad. An argument can be made, however, that this Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a “different state or thing.” As in Benson, we assume that a valid process patent may issue even if it does not meet one of these qualifications of our earlier precedents.[FN1]

FN1. My colleagues cite only part of this quotation as the Court's holding in Flook, maj. op. at 955, ignoring the qualifying words “[a]n argument can be made” as well as the next sentence clarifying that this argument was rejected by the Court in Benson and is now again rejected in Flook.

*980 Flook, 437 U.S. at 589 n. 9, 98 S.Ct. 2522 (quoting Cochrane, 94 U.S. at 787). This statement directly contravenes this court's new requirement that all processes must meet the court's “machine-or-transformation test” or be barred from access to the patent system.

The Court in Flook discussed that abstractions and fundamental principles have never been subject to patenting, but recognized the “unclear line” between an abstract principle and the application of such principle:

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.”

Flook, 437 U.S. at 589, 98 S.Ct. 2522 (alterations in original) (quoting Tilghman v. Proctor, 102 U.S. 707, 728, 26 L.Ed. 279 (1880)).

The decision in Flook has been recognized as a step in the evolution of the Court's thinking about computers. See Arrhythmia Res. Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1057 n. 4 (Fed.Cir.1992) (“it appears to be generally agreed that these decisions represent evolving views of the Court”) (citing R.L. Gable & J.B. Leaheey, The Strength of Patent Protection for Computer Products, 17 Rutgers Computer & Tech. L.J. 87 (1991); D. Chisum, The Patentability of Algorithms, 47 U. Pitt. L.Rev. 959 (1986)). That Flook does not support today's per se exclusion of forms of process inventions from access to the patent system is reinforced in the next Section 101 case decided by the Court:

In Diamond v. Chakrabarty the Court again rejected per se exclusions of subject matter from Section 101
In Diamond v. Chakrabarty, 447 U.S. 303, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980), the scope of Section 101 was challenged as applied to the new fields of biotechnology and genetic engineering, with respect to the patent eligibility of a new bacterial “life form.” The Court explained the reason for the broad terms of Section 101:

The subject-matter provisions of the patent law have been cast in broad terms to fulfill the constitutional and statutory goal of promoting “the Progress of Science and the useful Arts” with all that means for the social and economic benefits envisioned by Jefferson. Broad general language is not necessarily ambiguous when congressional objectives require broad terms.

Id. at 315, 100 S.Ct. 2204 (quoting U.S. Const., art. I, § 8). The Court referred to the use of “any” in Section 101 (“Whoever invents or discovers any new and useful process ... or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”), and reiterated that the statutory language shows that Congress “plainly contemplated that the patent laws would be given wide scope.” Id. at 308, 100 S.Ct. 2204. The Court referred to the legislative intent to include within the scope of Section 101 “anything under the sun that is made by man,” id. at 309, 100 S.Ct. 2204 (citing S. Rep. 82-1979, at 5, U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399; H.R. Rep. 82-1923, at 6 (1952)), and stated that the unforeseeable future should not be inhibited by judicial restriction of the “broad general language” of Section 101:

A rule that unanticipated inventions are without protection would conflict with the core concept of the patent law that anticipation undermines patentability. Mr. Justice Douglas reminded that the *981 inventions most benefiting mankind are those that push back the frontiers of chemistry, physics, and the like. Congress employed broad general language in drafting § 101 precisely because such inventions are often unforeseeable.

Id. at 315-16, 100 S.Ct. 2204 (citations and internal quotation marks omitted). The Court emphasized that its precedents did not alter this understanding of Section 101's breadth, stating that “ Flook did not announce a new principle that inventions in areas not contemplated by Congress when the patent laws were enacted are unpatentable per se.” Id. at 315, 100 S.Ct. 2204.

Whether the applications of physics and chemistry that are manifested in advances in computer hardware and software were more or less foreseeable than the advances in biology and biotechnology is debatable, but it is not debatable that these fields of endeavor have become primary contributors to today's economy and culture, as well as offering an untold potential for future advances. My colleagues offer no reason now to adopt a policy of exclusion of the unknown future from the subject matter now embraced in Section 101.

Soon after Chakrabarty was decided, the Court returned to patentability issues arising from computer capabilities:

In Diamond v. Diehr the Court directly held that computer-implemented processes are included in Section 101
The invention presented to the Court in Diehr was a “physical and chemical process for molding precision synthetic rubber products” where the process steps included using a mathematical formula. The Court held that the invention fit the “process” category of Section 101 although mathematical calculations were involved, and repeated its observation in Chakrabarty that “courts should not read into the patent laws limitations and conditions which the legislature has not expressed.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (internal quotation marks omitted) (citing Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204).

The Court distinguished a claim that would cover all uses of a mathematical formula and thus is an abstract construct, as in Benson, from a claim that applies a mathematical calculation for a specified purpose, as in Diehr. The Court stated that “a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer,” id. at 187, 101 S.Ct. 1048, and explained that the line between statutory and nonstatutory processes depends on whether the process is directed to a specific purpose, see id. (“It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” (emphasis in original)). The Court clarified that Flook did not hold that claims may be dissected into old and new parts to assess their patent eligibility. Id. at 189 n. 12, 101 S.Ct. 1048.

However, the Court did not propose the “machine-or-transformation” test that this court now insists was “enunciated” in Diehr as a specific limit to Section 101. Maj. op. at 953-54. In Diehr there was no issue of machine or transformation, for the Diehr process both employed a machine and produced a chemical transformation: the process was conducted in “an openable rubber molding press,” and it cured the rubber. In discussing the known mathematical formula used by Diehr to calculate the relation between temperature and the rate of a chemical reaction, the Court recited the traditional exceptions of “laws of nature, natural phenomena, and abstract ideas,” 450 U.S. at 185, 101 S.Ct. 1048, and explained that the entirety of the process *982 must be considered, not an individual mathematical step.

The Court characterized the holdings in Benson and Flook as standing for no more than the continued relevance of these “long-established” judicial exclusions, id., and repeated that a practical application of pure science or mathematics may be patentable, citing Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94, 59 S.Ct. 427, 83 L.Ed. 506 (1939) ( “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 and scientific truth may be.”). The Court explained that the presence of a mathematical formula does not preclude patentability when the structure or process is performing a function within the scope of the patent system, stating:

[W]hen a claim containing a mathematical 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 ( e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101.

450 U.S. at 192, 101 S.Ct. 1048. This statement's parenthetical “ e.g.” is relied on by the majority for its statement that Diehr requires today's “machine-or-transformation” test. However, this “ e.g.” does not purport to state the only “function which the patent laws were designed to protect.” Id. This “ e.g.” indeed describes the process in Diehr, but it does not exclude all other processes from access to patenting.

It cannot be inferred that the Court intended, by this “ e.g.” parenthetical, to require the far-reaching exclusions now attributed to it. To the contrary, the Court in Diehr was explicit that “an application of a law of nature or mathematical formula” may merit patent protection, 450 U.S. at 187, 101 S.Ct. 1048 (emphasis in original), and that the claimed process must be considered as a whole, id. at 188, 101 S.Ct. 1048. The Court recognized that a process claim may combine steps that were separately known, and that abstract ideas such as mathematical formulae may be combined with other steps to produce a patentable process. Id. at 187, 101 S.Ct. 1048. The steps are not to be “dissect[ed]” into new and old steps; it is the entire process that frames the Section 101 inquiry. Id. at 188, 101 S.Ct. 1048.

The Diehr Court did not hold, as the majority opinion states, that transformation of physical state is a requirement of eligibility set by Section 101 unless the process is performed by a machine. It cannot be inferred that the Court silently imposed such a rule. See maj. op. at 956 (relying on lack of repetition in Diehr of the Benson and Flook disclaimers of requiring machine or transformation, as an implicit rejection of these disclaimers and tacit adoption of the requirement). There was no issue in Diehr of the need for either machine or transformation, for both were undisputedly present in the process of curing rubber. It cannot be said that the Court “enunciated” today's “definitive test” in Diehr.FN2

FN2. Many amici curiae pointed out that the Supreme Court did not adopt the test that this court now attributes to it. See, e.g., Br. of Amicus Curiae Am. Intellectual Property Law Ass'n at 18 & n.16; Br. of Amicus Curiae Biotechnology Industry Org. at 17-21; Br. of Amicus Curiae Boston Patent Law Ass'n at 6-8; Br. of Amicus Curiae Business Software Alliance at 13; Br. of Amicus Curiae Federal Circuit Bar Ass'n at 21; Br. of Amicus Curiae Regulatory Datacorp, Inc. at 12-13; Br. of Amicus Curiae Accenture at 16-17; Br. of Amicus Curiae Washington State Patent Law Ass'n at 10-11.

*983 Subsequent Supreme Court authority reinforced the breadth of Section 101
In J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001), the Court described Section 101 as a “dynamic provision designed to encompass new and unforeseen inventions,” id. at 135, 122 S.Ct. 593, that case arising in the context of eligibility of newly developed plant varieties for patenting. The Court stated: “As in Chakrabarty, we decline to narrow the reach of § 101 where Congress has given us no indication that it intends this result.” Id. at 145-46, 122 S.Ct. 593. The Court reiterated that “Congress plainly contemplated that the patent laws would be given wide scope,” id. at 130, 122 S.Ct. 593 (quoting Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204), and that the language of Section 101 is “extremely broad,” id. This is not language of restriction, and it reflects the statutory policy and purpose of inclusion, not exclusion, in Section 101.

The Court's decisions of an earlier age do not support this court's restrictions of Section 101
My colleagues also find support for their restrictions on patent-eligible “process” inventions in the pre-Section 101 decisions O'Reilly v. Morse, 56 U.S. (15 How.) 62, 14 L.Ed. 601 (1853), Cochrane v. Deener, 94 U.S. 780, 24 L.Ed. 139 (1876), and Tilghman v. Proctor, 102 U.S. 707, 26 L.Ed. 279 (1880). Although the Court in Benson and in Flook took care to state that these early decisions do not require the restrictions that the Court was rejecting, this court now places heavy reliance on these early decisions, which this court describes as “consistent with the machine-or-transformation test later articulated in Benson and reaffirmed in Diehr.” Maj. op. at 955. As I have discussed, no such test was “articulated in Benson ” and “reaffirmed in Diehr.”

However, these early cases do show, contrary to the majority opinion, that a “process” has always been a distinct category of patentable invention, and not tied to either apparatus or transformation, as this court now holds. For example, in Tilghman v. Proctor the Court considered a patent on a process for separating fats and oils, and held that the process was not restricted to any particular apparatus. The Court held that a process is an independent category of invention, and stated:

That a patent can be granted for a process, there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture.

102 U.S. at 722; see also Corning v. Burden, 56 U.S. (15 How.) 252, 268, 14 L.Ed. 683 (1853) (“It is for the discovery or invention of some practical method or means of producing a beneficial result or effect, that a patent is granted, and not for the result or effect itself.”) The difference between a process and the other categories of patent-eligible subject matter does not deprive process inventions of the independent status accorded by statute, by precedent, and by logic, all of which negate the court's new rule that a process must be tied to a particular machine or must transform physical matter.

The majority also relies on O'Reilly v. Morse, citing the Court's rejection of Morse's Claim 8 for “the use of the motive power of the electro or galvanic current, which I call electromagnetism, however developed, for making or printing intelligible characters, signs or letters at any distances....” The Court explained:

In fine he claims an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent. The Court *984 is of the opinion that the claim is too broad, and not warranted by law.

56 U.S. (15 How.) at 113. However, the claims that were directed to the communication system that was described by Morse were held patentable, although no machine, transformation, or manufacture was required. See Morse's Claim 5 (“The system of signs, consisting of dots and spaces, and horizontal lines, for numerals, letters, words, or sentences, substantially as herein set forth and illustrated, for telegraphic purposes.”). I cannot discern how the Court's rejection of Morse's Claim 8 on what would now be Section 112 grounds, or the allowance of his other claims, supports this court's ruling today. Indeed, Morse's claim 5, to a system of signs, is no more “tangible” than the systems held patentable in Alappat and State Street Bank, discussed post and now cast into doubt, or the Bilski system here held ineligible for access to patenting.

The majority opinion also relies on Cochrane v. Deener, particularly on certain words quoted in subsequent opinions of the Court. In Cochrane the invention was a method for bolting flour, described as a series of mechanical steps in the processing of flour meal. The question before the Court was whether the patented process would be infringed if the same steps were performed using different machinery. The answer was “that a process may be patentable, irrespective of the particular form of the instrumentalities used.” 94 U.S. at 788. The Court stressed the independence of a process from the tools that perform it:

A process is a mode of treatment of certain materials to produce a given result. It is an act, or 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. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.

94 U.S. at 788. The Court did not restrict the kinds of patentable processes; the issue in Cochrane was whether the process must be tied to the machinery that the patentee used to perform it.

This court now cites Cochrane's description of a process as “acts performed upon subject-matter to be transformed and reduced to a different state or thing,” id., this court stating that unless there is transformation there is no patentable process. That is not what this passage means. In earlier opinions this court and its predecessor court stated the correct view of this passage, as has the Supreme Court. The Court of Customs and Patent Appeals observed:

[This Cochrane passage] has sometimes been misconstrued as a ‘rule’ or ‘definition’ requiring that all processes, to be patentable, must operate physically on substances. Such a result misapprehends the nature of the passage quoted as dictum, in its context, and the question being discussed by the author of the opinion. To deduce such a rule from the statement would be contrary to its intendment which was not to limit process patentability but to point out that a process is not limited to the means used in performing it.

In re Prater, 56 C.C.P.A. 1381, 415 F.2d 1393, 1403 (1969). Again in In re Schrader, 22 F.3d 290, 295 n. 12 (Fed.Cir.1994) this court noted that Cochrane did not limit patent eligible subject matter to *985 physical transformation, and that transformation of “intangibles” could qualify for patenting. In AT & T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358 (Fed.Cir.1999), this court described physical transformation as “merely one example of how a mathematical algorithm may bring about a useful application.”

The Court saw the Cochrane decision in its proper perspective. Both Flook and Benson rejected the idea that Cochrane imposed the requirement of either specific machinery or the transformation of matter, as discussed ante. See Flook, 437 U.S. at 588 n. 9, 98 S.Ct. 2522; Benson, 409 U.S. at 71, 93 S.Ct. 253. Non-transformative processes were not at issue in either Cochrane or Diehr, and there is no endorsement in Diehr of a “machine-or-transformation” requirement for patentable processes.

These early cases cannot be held now to require exclusion, from the Section 101 definition of “process,” of all processes that deal with data and information, whose only machinery is electrons, photons, or waves, or whose product is not a transformed physical substance.

The English Statute of Monopolies and English common law do not limit “process” in Section 101
I comment on this aspect in view of the proposal in the concurring opinion that this court's new two-prong test for Section 101 process inventions was implicit in United States law starting with the Act of 1790, because of Congress's knowledge of and importation of English common law and the English Statute of Monopolies of 1623. The full history of patent law in England is too ambitious to be achieved within the confines of Bilski's appeal,FN3 and the concurring opinion's selective treatment of this history may propagate misunderstanding.

FN3. Scholarly histories include M. Frumkin, The Origin of Patents, 27 J.P.O.S. 143 (1945); E. Wyndham Hulme, Privy Council Law and Practice of Letters Patent for Invention from the Restoration to 1794, 33 L.Q. Rev. 63 (Part I), 180 (Part II) (1917); Hulme, On the History of Patent Law in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280 (1902); Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. 141 (1896); Ramon A. Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S 615 (1959); Christine MacLeod, Inventing the Industrial Revolution: The English Patent System 1660-1800 (1988); Frank D. Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. 309 (1961); Brad Sherman & Lionel Bently, The Making of Modern Intellectual Property Law: The British Experience, 1760-1911 (1999); Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents, printed serially at J. Pat. & Trademark Off. Soc'y (“J.P.T.O.S.”) 76:697 (1994) (Part 1); 76:849 (1994) (Part 2); 77:771, 847 (1995) (Part 3); 78:77 (1996) (Part 4); 78:615 (1996) (Part 5, part I); and 78:665 (1996) (Part 5, part II) (hereinafter “ Early Evolution ”); and Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law and Administration, 1798-1836 (1998).

The concurrence places primary reliance on the Statute of Monopolies, which was enacted in response to the monarchy's grant of monopolies “to court favorites in goods or businesses which had long before been enjoyed by the public.” Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (citing Peter Meinhardt, Inventions, Patents and Monopoly 30-35 (1946)). The Statute of Monopolies outlawed these “odious monopolies” or favors of the Crown, but, contrary to the concurring opinion, the Statute had nothing whatever to do with narrowing or eliminating categories of inventive subject matter eligible for a British patent. See Prager, Historical Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 313 (“The statute [of Monopolies] said nothing about meritorious *986 functions of patents, nothing about patent disclosures, and nothing about patent procedures; it was only directed against patent abuses.”).

Patents for inventions had been granted by the Crown long before 1623. See Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. at 143 (the first patent grant to the “introducer of a newly-invented process” was in 1440); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 626-27 (discussing first patents for “invention” in England in the fifteenth century). That practice was unaffected by the terms of the Statute of Monopolies, which rendered “utterly void” all “Monopolies and all Commissions, Grants, Licenses, Charters and Letters Patent” that were directed to “the sole Buying, Selling, Making, Working or Using any Thing within this Realm,” 21 Jac. 1, c.3, § I (Eng.), but which specifically excepted Letters Patent for inventions from that exclusion, id. § VI. The only new limitation on patents for invention was a fourteen-year limit on the term of exclusivity. See Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 649.

The usage “Letters Patent” described one of the forms of document whereby the Crown granted various rights, whether the grant was for an odious monopoly that the Statute of Monopolies eliminated, or for rights to an invention new to England. That usage was not changed by the Statute of Monopolies. Nor were other aspects of the British practice which differed from that enacted in the United States, particularly the aspect whereby a British patent could be granted to a person who imported something that was new to England, whether or not the import was previously known or the importer was the inventor thereof. In England, “[t]he rights of the inventor are derived from those of the importer, and not vice versa as is commonly supposed.” Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q.R. at 152; see also MacLeod, Inventing the Industrial Revolution 13 (“The rights of the first inventor were understood to derive from those of the first importer of the invention.”).

In contrast, in the United States the patent right has never been predicated upon importation, and has never been limited to “manufactures.” See, e.g., Walterscheid, To Promote the Progress of Useful Arts 93, 137-38, 224; see also Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 309 (“The American Revolution destroyed many of the ancient customs; it brought a sweeping reorientation of patent law, with new forms, new rules, new concepts, and new ideals.”). The differences between the American and English patent law at this nation's founding were marked, and English judicial decisions interpreting the English statute are of limited use in interpreting the United States statute. In all events, no English decision supports this court's new restrictive definition of “process.”

The concurrence proposes that the Statute of Monopolies provides a binding definition of the terms “manufacture,” “machine,” “composition of matter,” and “process” in Section 101 of the U.S. Patent Act. See concurring op. at 968-70. The only one of these terms that appears in the Statute of Monopolies is “manufacture”, a broad term that reflects the usage of the period. Even at the time of this country's founding, the usage was broad, as set forth in Samuel Johnson's Dictionary of the English Language (3d. ed. 1768), which defines “manufacture” as “any thing made by art,” and defines *987 “art” as “the power of doing something not taught by nature and instinct”; “a science”; “a trade”; “artfulness”; “skill”; “dexterity.” Historians explain that England's primary motive for patenting was to promote “[a]cquisition of superior Continental technology” at a time when England lagged behind, see MacLeod, Inventing the Industrial Revolution 11; this cannot be interpreted to mean that England and perforce the United States intended to eliminate “processes” from this incentive system. It is inconceivable that on this background the Framers, and again the enactors of the first United States patent statutes in 1790 and 1793, intended sub silentio to impose the limitations on “process” now created by this court.

Congress' earliest known draft patent bill included the terms “art, manufacture, engine, machine, invention or device, or any improvement upon the same.” Walterscheid, To Promote the Progress of Useful Arts 92. The 1793 Act explicitly stated “any new and useful art,” § 1, 1 Stat. 318 (1793), a usage that was carried forward until “art” was replaced with “process” in 35 U.S.C. § 101 and defined in § 100(b). Historians discuss that Congress' inclusion of any “art” or “process” in the patent system was a deliberate clarification of the English practice. See Walterscheid, To Promote the Progress of Useful Arts 93 (“[The first patent bill] appears to be an obvious attempt to deal legislatively with issues that were beginning to be addressed by the English courts.... [I]t states unequivocally that improvement inventions are patentable and expands the definition of invention or discovery beyond simply ‘manufacture.’ ”); Karl B. Lutz, Patents and Science: A Clarification of the Patent Clause of the U.S. Constitution, 32 J.P.O.S. 83, 86 (1950) ( “By the year 1787 it was being recognized even in Great Britain that the phrase ‘new manufactures' was an unduly limited object for a patent system, since it seems to exclude new processes.... [This question was] resolved in the United States Constitution by broadening the field from ‘new manufactures' to ‘useful arts'....”).

In interpreting a statute, it is the language selected by Congress that occupies center stage: “[O]ur obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose.” Chakrabarty, 447 U.S. at 315, 100 S.Ct. 2204. The Court has “perceive[d] no ambiguity” in Section 101, leaving no need for foreign assistance. Id. The legislative choice to afford the patent system “wide scope,” id. at 308, 100 S.Ct. 2204, including “process” inventions, evolved in the United States independent of later developments of the common law in England.

The concurrence concludes that the Statute of Monopolies foreclosed the future patenting of anything that the concurrence calls a “business method”-the term is not defined-whether or not the method is new, inventive, and useful. But the Statute of Monopolies only foreclosed “odious” monopolies, illustrated by historical reports that Queen Elizabeth had granted monopolies on salt, ale, saltpeter, white soap, dredging machines, playing cards, and rape seed oil, and on processes and services such as Spanish leather-making, mining of various metals and ores, dying and dressing cloth, and iron tempering. See Walterscheid, Early Evolution (Part 2), 76 J.P.T.O.S. at 854 n.14; Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 634-35. These and other grants, many of which were implemented by Letters Patent, were the “odious monopolies” that were rendered illegal. They included several classes of known activity, product and process, and had nothing to do with new “inventions.” *988 The Statute of Monopolies cannot be held to have restricted the kinds of new processes that can today be eligible for patenting in the United States, merely because it outlawed patents on non-novel businesses in England. The presence or absence of “organizing human activity,” a vague term created by the concurrence, has no connection or relevance to Parliament's elimination of monopoly patronage grants for old, established arts. The Statute of Monopolies neither excluded nor included inventions that involve human activity, although the words “the sole working or making in any manner of new manufactures” presuppose human activity. 21 Jac. 1, c.3, § VI (emphases added). We are directed to no authority for the proposition that a new and inventive process involving “human activity” has historically been treated differently from other processes; indeed, most inventions involve human activity.

The concurrence has provided hints of the complexity of the evolution of patent law in England, as in the United States, as the Industrial Revolution took hold. Historians have recognized these complexities. See, e.g., Walterscheid, To Promote the Progress of Useful Arts 5 (“[T]he American patent law almost from its inception departed from its common law counterpart in the interpretation that would be given to the definition of novelty....”); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 638 (noting that in Elizabethan times, novelty only required a showing that “the industry had not been carried on within the realm within a reasonable period of time”, while today “the proof of a single public sale of an article” or a “printed publication” can negate patentability).

I caution against over-simplification, particularly in view of the uncertainties in English common law at the time of this country's founding. See Boulton v. Bull, 2 H. Bl. 463, 491 (C.P.1795) (Eyre, C.J.) (“Patent rights are no where that I can find accurately discussed in our books.”); MacLeod, Inventing the Industrial Revolution 61 (“It was only from the time when the Privy Council relinquished jurisdiction that a case law on patents began to develop.... But it was a slow process and even the spate of hard-fought patent cases at the end of the eighteenth century did little to establish a solid core of judicial wisdom.”). The English judicial opinions of the eighteenth century were not as limiting on the United States as my colleagues suggest. See Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 355 (2002) (“In the eighteenth century, patentees and those who gave advice concerning patents were certainly of the view that the Statute did not preclude the patenting of general principles of operation.”); see also MacLeod, Inventing the Industrial Revolution 63-64.

It is reported that in the century and a half following enactment of the Statute of Monopolies, the English patent registers were replete with inventions claimed as “processes.” See Walterscheid, Early Evolution (Part 3), 77 J.P.T.O.S. at 856 (“As one of the earliest texts on the patent law stated in 1806: “most of the patents now taken out, are by name, for the method of doing particular things....”). The concurrence agrees; but it is also reported that because patents were not litigated in the common law courts until the Privy Council authorized such suits in 1752, judicial interpretation of various aspects of patent law were essentially absent until about the time this country achieved independence, leading to the variety of views expressed in Boulton v. Bull. The legislators in the new United States cannot now be assigned the straightjacket of law not yet developed in England. Indeed, the *989 first patent granted by President Washington, upon examination by Secretary of State Jefferson, was for a method of “making Pot-ash and Pearl-ash,” a process patent granted during the period that the concurrence states was fraught with English uncertainty about process patents. See The First United States Patent, 36 J.P.O.S. 615, 616-17 (1954).

The concurrence lists some English process patents predating the United States' 1793 Patent Act, and argues that processes not sufficiently “like” these archaic inventions should not now be eligible for patenting. I refer simply to Flook, 437 U.S. at 588 n. 9, 98 S.Ct. 2522, where the Court stated: “As in Benson, we assume that a valid process patent may issue even if it does not meet one of the qualifications of our earlier precedents.” Similarly, the Chakrabarty Court stated: “[A] statute is not to be confined to the particular applications ... contemplated by the legislators. This is especially true in the field of patent law.” Chakrabarty, 447 U.S. at 315-16, 100 S.Ct. 2204 (citing Barr v. United States, 324 U.S. 83, 90, 65 S.Ct. 522, 89 L.Ed. 765 (1945); Browder v. United States, 312 U.S. 335, 339, 61 S.Ct. 599, 85 L.Ed. 862 (1941); Puerto Rico v. Shell Co., 302 U.S. 253, 257, 58 S.Ct. 167, 82 L.Ed. 235 (1937)). The meaning of the statutory term “process” is not limited by particular examples from more than two hundred years ago.

However, I cannot resist pointing to the “business method” patents on Woodcroft's list. See concurring op. at 973 (citing No. 1197 to John Knox (July 21, 1778) (“Plan for assurances on lives of persons from 10 to 80 years of age.”)). Several other process patents on Woodcroft's list appear to involve financial subject matter, and to require primarily human activity. See, e.g., No. 1170 to John Molesworth (Sept. 29, 1777) (“Securing to the purchasers of shares and chances of state-lottery tickets any prize drawn in their favor.”); No. 1159 to William Nicholson (July 14, 1777) (“Securing the property of persons purchasing shares of State-lottery tickets.”), cited in Bennet Woodcroft, Alphabetical Index of Patentees of Inventions 383, 410 (U.S. ed.1969). Other English process patents from the several decades following 1793 can aptly be described as “business methods,” although not performed with the aid of computers. E.g., No. 10,367 to George Robert D'Harcourt (Oct. 29, 1844) (“Ascertaining and checking the number of checks or tickets which have been used and marked, applicable for railway officers.”).

While most patents of an earlier era reflect the dominant mechanical and chemical technologies of that era, modern processes reflect the dramatic advances in telecommunications and computing that have occurred since the time of George III. See USPTO White Paper, Automated Financial or Management Data Processing Methods (Business Methods) 4 (2000), available at http:// www. uspto. gov/ web/ menu/ busmethp/ whitepaper. pdf (hereinafter USPTO White Paper) (“The full arrival of electricity as a component in business data processing system[s] was a watershed event.”). It is apparent that economic, or “business method,” or “human activity” patents were neither explicitly nor implicitly foreclosed from access to the English patent system.

Evolution of process patents in the United States
The United States' history of patenting establishes the same point. The PTO has located various patents predating modern computer usages that can be described as financial or business methods. The USPTO White Paper at 3-4 and appendix A describes the history of financial apparatus and method patents dating back to 1799, including patents on bank notes, bills of *990 credit, bills of exchange, check blanks, detecting and preventing counterfeiting, coin counting, interest calculation tables, and lotteries, all within the first fifty years of the United States patent system. It is a distortion of these patents to describe the processes as “tied to” another statutory category-that is, paper and pencil. Concurring op. at 974-75 & n. 18. Replacement of paper with a computer screen, and pencil with electrons, does not “untie” the process. Fairly considered, the many older financial and business-oriented patents that the PTO and many of the amici have identified are of the same type as the Bilski claims; they were surely not rendered patent-eligible solely because they used “paper” to instantiate the financial strategies and transactions that comprised their contribution.

I do not disagree with the general suggestion that statutes intended to codify the existing common law are to be interpreted in light of then-contemporary practice, including, if relevant, the English cases. See concurring op. at 972-73. However, the court must be scrupulous in assessing the relevance of decisions that were formulated on particularized facts involving the technology of the period. The United States Supreme Court has never held that “process” inventions suffered a second-class status under our statutes, achieving patent eligibility only derivatively through an explicit “tie” to another statutory category. The Court has repeatedly disparaged efforts to read in restrictions not based on statutory language. See Diehr, 450 U.S. at 182, 101 S.Ct. 1048; Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204. Yet second-class status is today engrafted on “process” inventions. There is plainly no basis for such restriction, which is a direct path to the “gloomy thought” that concerned Senator O.H. Platt in his Remarks in Congress at the Centennial Proceedings of the United States Patent System:

For one, I cannot entertain the gloomy thought that we have come to that century in the world's life in which new and grander achievements are impossible.... Invention is a prolific mother; every inventive triumph stimulates new effort. Man never is and never will be content with success, and the great secrets of nature are as yet largely undiscovered.

Invention and Advancement (1891), reprinted in United States Bicentennial Commemorative Edition of Proceedings and Addresses: Celebration of the Beginning of the Second Century of the American Patent System 75-76 (1990).

In sum, history does not support the retrogression sponsored by the concurrence.

This court now rejects its own CCPA and Federal Circuit precedent
The majority opinion holds that there is a Supreme Court restriction on process patents, “enunciated” in Benson, Flook, and Diehr; and that this restriction was improperly ignored by the Federal Circuit and the Court of Customs and Patent Appeals, leading us into error which we must now correct. Thus this court announces that our prior decisions may no longer be relied upon. Maj. op. at 959-60 & nn. 17, 19. The effect on the patents and businesses that did rely on them is not considered.

The Court's decisions in Benson, Flook, and Diehr all reached the Supreme Court by way of the CCPA, and the CCPA successively implemented the Court's guidance in establishing the Freeman/Walter/Abele test for eligibility under Section 101. The Federal Circuit continued to consider computer-facilitated processes, as in Arrhythmia Research Technology, 958 F.2d at 1059-60, where patent-eligibility was confirmed for a computer-assisted *991 mathematical analysis of electrocardiograph signals that determined the likelihood of recurrence of heart attack. This court now rules that this precedent “should no longer be relied on.” Maj. op. at 959 n. 17.

In In re Alappat, 33 F.3d 1526 (Fed.Cir.1994) ( en banc ) the question was the eligibility for patent of a rasterizer that mathematically transforms data to eliminate aliasing in a digital oscilloscope. The court held that a computer-implemented system that produces a “useful, concrete, and tangible result” is Section 101 subject matter. Id. at 1544. This court now rules that “a ‘useful, concrete and tangible result’ analysis should no longer be relied on.” Maj. op. at 960 n. 19.

The Alappat court stressed the intent, embodied in the language of the statute, that the patent system be broadly available to new and useful inventions:

The use of the expansive term “any” in § 101 represents Congress's intent not to place any restrictions on the subject matter for which a patent may be obtained beyond those specifically recited in § 101 and other parts of Title 35.

33 F.3d at 1542. This court looked to the Supreme Court's guidance in its Section 101 decisions, and explained:

A close analysis of Diehr, Flook, and Benson reveals that the Supreme Court never intended to create an overly broad, fourth category of [mathematical] subject matter excluded from § 101. Rather, at the core of the Court's analysis in each of these cases lies an attempt by the Court to explain a rather straightforward concept, namely, that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, and thus that subject matter is not, in and of itself, entitled to patent protection.

Id. at 1543 (emphasis in original). The court cited the Supreme Court's distinction between abstract ideas and their practical application, and stated of the claimed rasterizer: “This is not a disembodied mathematical concept which may be characterized as an ‘abstract idea,’ but rather a specific machine to produce a useful, concrete, and tangible result.” Id. at 1544.

This principle was applied to a computer-implemented data processing system for managing pooled mutual fund assets in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed.Cir.1998), and to a method for recording and processing telephone data in AT & T v. Excel. The court explained that processes that include mathematical calculations in a practical application can produce a useful, concrete, and tangible result, which in State Street Bank was “expressed in numbers, such as price, profit, percentage, cost, or loss.” 149 F.3d at 1375. In AT & T v. Excel the court applied State Street Bank and Diehr, and stated that “physical transformation ... is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application” and thus achieve a useful, concrete, and tangible result. 172 F.3d at 1358. This analysis, too, can no longer be relied on. Maj. op. at 960 n. 19.

The now-discarded criterion of a “useful, concrete, and tangible result” has proved to be of ready and comprehensible applicability in a large variety of processes of the information and digital ages. The court in State Street Bank reinforced the thesis that there is no reason, in statute or policy, to exclude computer-implemented and information-based inventions from access to patentability. The holdings and reasoning of Alappat and State Street Bank guided *992 the inventions of the electronic age into the patent system, while remaining faithful to the Diehr distinction between abstract ideas such as mathematical formulae and their application in a particular process for a specified purpose. And patentability has always required compliance with all of the requirements of the statute, including novelty, non-obviousness, utility, and the provisions of Section 112.

The public has relied on the rulings of this court and of the Supreme Court
The decisions in Alappat and State Street Bank confirmed the patent eligibility of many evolving areas of commerce, as inventors and investors explored new technological capabilities. The public and the economy have experienced extraordinary advances in information-based and computer-managed processes, supported by an enlarging patent base. The PTO reports that in Class 705, the examination classification associated with “business methods” and most likely to receive inventions that may not use machinery or transform physical matter, there were almost 10,000 patent applications filed in FY 2006 alone, and over 40,000 applications filed since FY 98 when State Street Bank was decided. See Wynn W. Coggins, USPTO, Update on Business Methods for the Business Methods Partnership Meeting 6 (2007) (hereinafter “ PTO Report ”), available at http:// www. uspto. gov/ web/ menu/ pbmethod/ partnership. pps. An amicus in the present case reports that over 15,000 patents classified in Class 705 have issued. See Br. of Amicus Curiae Accenture, at 22 n.20.FN4 The industries identified with information-based and data-handling processes, as several amici curiae explain and illustrate, include fields as diverse as banking and finance, insurance, data processing, industrial engineering, and medicine.

FN4. The PTO recognizes that patents on “business methods” have been eligible subject matter for two centuries. See USPTO White Paper 2 (“Financial patents in the paper-based technologies have been granted continuously for over two hundred years.”).

Stable law, on which industry can rely, is a foundation of commercial advance into new products and processes. Inventiveness in the computer and information services fields has placed the United States in a position of technological and commercial preeminence. The information technology industry is reported to be “the key factor responsible for reversing the 20-year productivity slow-down from the mid-1970s to the mid-1990s and in driving today's robust productivity growth.” R.D. Atkinson & A.S. McKay, Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution 10 (Info. Tech. & Innovation Found.2007), available at http:// www. itif. org/ files/ digital_ prosperity. pdf. By revenue estimates, in 2005 the software and information sectors constituted the fourth largest industry in the United States, with significantly faster growth than the overall U.S. economy. Software & Info. Indus. Ass'n, Software and Information: Driving the Knowledge Economy 7-8 (2008), http:// www. siia. net/ estore/ globecon- 08. pdf. A Congressional Report in 2006 stated:

As recently as 1978, intangible assets, such as intellectual property, accounted for 20 percent of corporate assets with the vast majority of value (80 percent) attributed to tangible assets such as facilities and equipment. By 1997, the trend reversed; 73 percent of corporate assets were intangible and only 27 percent were tangible.

H.R.Rep. No. 109-673 (accompanying a bill concerning judicial resources).

This powerful economic move toward “intangibles” is a challenge to the backward-looking change of this court's ruling *993 today. Until the shift represented by today's decision, statute and precedent have provided stability in the rapidly moving and commercially vibrant fields of the Information Age. Despite the economic importance of these interests, the consequences of our decision have not been considered. I don't know how much human creativity and commercial activity will be devalued by today's change in law; but neither do my colleagues.

The Section 101 interpretation that is now uprooted has the authority of years of reliance, and ought not be disturbed absent the most compelling reasons. “Considerations of stare decisis have special force in the area of statutory interpretation, for here, unlike in the context of constitutional interpretation, the legislative power is implicated, and Congress remains free to alter what [the courts] have done.” Shepard v. United States, 544 U.S. 13, 23, 125 S.Ct. 1254, 161 L.Ed.2d 205 (2005) (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 172-73, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989)); see also Hilton v. S.C. Pub. Railways Comm'n, 502 U.S. 197, 205, 112 S.Ct. 560, 116 L.Ed.2d 560 (1991) (in cases of statutory interpretation the importance of adhering to prior rulings is “most compelling”). Where, as here, Congress has not acted to modify the statute in the many years since Diehr and the decisions of this court, the force of stare decisis is even stronger. See Shepard, 544 U.S. at 23, 125 S.Ct. 1254.

Adherence to settled law, resulting in settled expectations, is of particular importance “in cases involving property and contract rights, where reliance interests are involved.” Payne v. Tennessee, 501 U.S. 808, 828, 111 S.Ct. 2597, 115 L.Ed.2d 720 (1991); see also United States v. Title Ins. & Trust Co., 265 U.S. 472, 486, 44 S.Ct. 621, 68 L.Ed. 1110 (1924) (declining to overrule precedent where prior ruling “has become a rule of property, and to disturb it now would be fraught with many injurious results”). This rationale is given no weight by my colleagues, as this court gratuitously disrupts decades of law underlying our own rulings. The only announced support for today's change appears to be the strained new reading of Supreme Court quotations. But this court has previously read these decades-old opinions differently, without objection by either Congress or the Court. My colleagues do not state a reason for their change of heart. See Benjamin N. Cardozo, The Nature of the Judicial Process 149 (1921) (“[T]he labor of judges would be increased almost to the breaking point if every past decision could be reopened in every case, and one could not lay one's own course of bricks on the secure foundation of the courses laid by others who had gone before him.”).

It is the legislature's role to change the law if the public interest so requires. In Chakrabarty the Court stated: “The choice we are urged to make is a matter of high policy for resolution within the legislative process after the kind of investigation, examination, and study that legislative bodies can provide and courts cannot.” 447 U.S. at 317, 100 S.Ct. 2204; see also Flook, 437 U.S. at 595, 98 S.Ct. 2522 (“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.”).

It is, however, the judicial obligation to assure a correct, just, and reliable judicial process, and particularly to respect the principles of stare decisis in an area in which prior and repeated statutory interpretations have been relied upon by others. See, e.g., *994 Shepard, 544 U.S. at 23, 125 S.Ct. 1254 (“[T]he claim to adhere to case law is generally powerful once a decision has settled statutory meaning.”); Hilton, 502 U.S. at 202, 112 S.Ct. 560 (“Adherence to precedent promotes stability, predictability, and respect for judicial authority.”); Payne, 501 U.S. at 827, 111 S.Ct. 2597 (“ Stare decisis is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process.”). These considerations appear to be abandoned.

Uncertain guidance for the future
Not only past expectations, but future hopes, are disrupted by uncertainty as to application of the new restrictions on patent eligibility. For example, the court states that even if a process is “tied to” a machine or transforms matter, the machine or transformation must impose “meaningful limits” and cannot constitute “insignificant extra-solution activity”. Maj. op. at 961-62. We are advised that transformation must be “central to the purpose of the claimed process,” id., although we are not told what kinds of transformations may qualify, id. at 962-63. These concepts raise new conflicts with precedent.

This court and the Supreme Court have stated that “there is no legally recognizable or protected ‘essential’ element, ‘gist’ or ‘heart’ of the invention in a combination patent.” Allen Eng'g Corp. v. Bartell Industries, Inc., 299 F.3d 1336, 1345 (Fed.Cir.2002) (quoting Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 345, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961)). This rule applies with equal force to process patents, see W.L. Gore & Associates, Inc. v. Garlock, Inc., 721 F.2d 1540, 1548 (Fed.Cir.1983) (there is no gist of the invention rule for process patents), and is in accord with the rule that the invention must be considered as a whole, rather than “dissected,” in assessing its patent eligibility under Section 101, see Diehr, 450 U.S. at 188, 101 S.Ct. 1048. It is difficult to predict an adjudicator's view of the “invention as a whole,” now that patent examiners and judges are instructed to weigh the different process components for their “centrality” and the “significance” of their “extra-solution activity” in a Section 101 inquiry.

As for whether machine implementation will impose “meaningful limits in a particular case,” the “meaningfulness” of computer usage in the great variety of technical and informational subject matter that is computer-facilitated is apparently now a flexible parameter of Section 101. Each patent examination center, each trial court, each panel of this court, will have a blank slate on which to uphold or invalidate claims based on whether there are sufficient “meaningful limits”, or whether a transformation is adequately “central,” or the “significance” of process steps. These qualifiers, appended to a novel test which itself is neither suggested nor supported by statutory text, legislative history, or judicial precedent, raise more questions than they answer. These new standards add delay, uncertainty, and cost, but do not add confidence in reliable standards for Section 101.

Other aspects of the changes of law also contribute uncertainty. We aren't told when, or if, software instructions implemented on a general purpose computer are deemed “tied” to a “particular machine,” for if Alappat's guidance that software converts a general purpose computer into a special purpose machine remains applicable, there is no need for the present ruling. For the thousands of inventors who obtained patents under the court's now-discarded*995 criteria, their property rights are now vulnerable.

The court also avoids saying whether the State Street Bank and AT & T v. Excel inventions would pass the new test. The drafting of claims in machine or process form was not determinative in those cases, for “we consider the scope of § 101 to be the same regardless of the form-machine or process-in which a particular claim is drafted.” AT & T v. Excel, 172 F.3d at 1357. From either the machine or the transformation viewpoint, the processing of data representing “price, profit, percentage, cost, or loss” in State Street Bank is not materially different from the processing of the Bilski data representing commodity purchase and sale prices, market transactions, and risk positions; yet Bilski is held to fail our new test, while State Street is left hanging. The uncertainty is illustrated in the contemporaneous decision of In re Comiskey, 499 F.3d 1365, 1378-79 (Fed.Cir.2007), where the court held that “systems that depend for their operation on human intelligence alone” to solve practical problems are not within the scope of Section 101; and In re Nuijten, 500 F.3d 1346, 1353-54 (Fed.Cir.2007), where the court held that claims to a signal with an embedded digital watermark encoded according to a given encoding process were not directed to statutory subject matter under Section 101, although the claims included “physical but transitory forms of signal transmission such as radio broadcasts, electrical signals through a wire, and light pluses through a fiber-optic cable.”

Although this uncertainty may invite some to try their luck in court, the wider effect will be a disincentive to innovation-based commerce. For inventors, investors, competitors, and the public, the most grievous consequence is the effect on inventions not made or not developed because of uncertainty as to patent protection. Only the successes need the patent right.

The Bilski invention has not been examined for patentability
To be patentable, Bilski's invention must be novel and non-obvious, and the specification and claims must meet the requirements of enablement, description, specificity, best mode, etc. See 35 U.S.C. § 101 (“Whoever invents or discovers a new and useful process ... may obtain a patent therefor, subject to the conditions and requirements of this title.”); Diehr, 450 U.S. at 190, 101 S.Ct. 1048 (the question of whether an invention is novel is distinct from whether the subject matter is statutory); State Street Bank, 149 F.3d at 1377 (“Whether the patent's claims are too broad to be patentable is not to be judged under § 101, but rather under §§ 102, 103, and 112.”). I don't know whether Bilski can meet these requirements-but neither does this court, for the claims have not been examined for patentability, and no rejections apart from Section 101 are included in this appeal.

Instead, the court states the “true issue before us” is “whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or mental process,” maj. op. at 952, and answers “yes.” With respect, that is the wrong question, and the wrong answer. Bilski's patent application describes his process of analyzing the effects of supply and demand on commodity prices and the use of a coupled transaction strategy to hedge against these risks; this is not a fundamental principle or an abstract idea; it is not a mental process or a law of nature. It is a “process,” set out in successive steps, for obtaining and analyzing information and carrying out a series of commercial transactions for the purpose of “managing the consumption risk costs of a commodity *996 sold by a commodity provider at a fixed price.” Claim 1, preamble.

Because the process Bilski describes employs complex mathematical calculations to assess various elements of risk, any practicable embodiment would be conducted with the aid of a machine-a programmed computer-but the court holds that since computer-implementation is not recited in claim 1, for that reason alone the process fails the “machine” part of the court's machine-or-transformation test. Maj. op. at 962. And the court holds that since Bilski's process involves the processing of data concerning commodity prices and supply and demand and other risk factors, the process fails the “transformation” test because no “physical objects or substances” are transformed. Maj. op. at 963-64. The court then concludes that because Bilski's Claim 1 fails the machine-or-transformation test it ipso facto preempts a “fundamental principle” and is thereby barred from the patent system under Section 101: an illogical leap that displays the flaws in the court's analysis.

If a claim is unduly broad, or if it fails to include sufficient specificity, the appropriate ground of rejection is Section 112, for claims must “particularly point out and distinctly claim[ ]” the invention. See In re Vaeck, 947 F.2d 488, 495-96 (Fed.Cir.1991) (affirming rejection under Section 112 where “[t]here is no reasonable correlation between the narrow disclosure in applicant's specification and the broad scope of protection sought in the claims”); In re Foster, 58 C.C.P.A. 1001, 438 F.2d 1011, 1016 (1971) (claims “not commensurate with appellants' own definition of what they are seeking to cover” are rejected under Section 112, rather than Section 101); In re Prater, 415 F.2d at 1403-04 (applying Section 112 to claims that included mental steps). The filing of a broader claim than is supported in the specification does not convert the invention into an abstraction and evict the application from eligibility for examination. A broad first claim in a patent application is routine; it is not the crisis event postulated in the court's opinion.

The role of examination is to determine the scope of the claims to which the applicant is entitled. See 37 C.F.R. § 1.104(a). The PTO's regulations provide:

On taking up an application for examination or a patent in a reexamination proceeding, the examiner shall make a thorough study thereof and shall make a thorough investigation of the available prior art relating to the subject matter of the claimed invention. The examination shall be complete with respect to both compliance of the application or patent under reexamination with the applicable statutes and rules and to the patentability of the invention as claimed, as well as with respect to matters of form, unless otherwise indicated.

Id. § 1.104(a)(1). The Manual of Patent Examining Procedure (MPEP) similarly instructs the examiners to conduct a “thorough search of the prior art” before evaluating the invention under Section 101. MPEP § 2106(III) (8th ed., rev.7, July.2008) (“Prior to evaluating the claimed invention under 35 U.S.C. § 101, USPTO personnel are expected to conduct a thorough search of the prior art.”). The MPEP also requires examiners to identify all grounds of rejection in the first official PTO action to avoid unnecessary delays in examination. Id. § 2106(II) (“Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to some statutory requirement.”). I note that this *997 requirement does not appear to have been here met.

Several amici curiae referred to the difficulties that the PTO has reported in examining patents in areas where the practice has been to preserve secrecy, for published prior art is sparse. The Federal Trade Commission recognized that the problem of “questionable” patents stems mostly from “the difficulty patent examiners can have in considering all the relevant prior art in the field and staying informed about the rapid advance of computer science.” FTC, To Promote Innovation: The Proper Balance of Competition & Patent Law and Policy at ch. 3, pp. 44 (Oct.2003), available at http:// www. ftc. gov/ os/ 2003/ 10/ innovationrpt. pdf. However, this problem seems to be remedied, for the PTO reported in 2007 that for Class 705, “[t]he cases the examiners are now working on have noticeably narrower claims” than the cases filed in or before FY 2000. PTO Report at 9. The PTO reports that its search fields have been enlarged, staff added, and supervision augmented. FTC Report at ch. 1, p. 30. (“Since the PTO introduced [these changes] the allowance rate for business method patents has decreased, and the PTO believes that this decreased allowance rate indicates improved PTO searches for prior art.”). If this court's purpose now is to improve the quality of issued patents by eliminating access to patenting for large classes of past, present, and future inventions, the remedy would appear to be excessive.

A straightforward, efficient, and ultimately fair approach to the evaluation of “new and useful” processes-quoting Section 101-is to recognize that a process invention that is not clearly a “fundamental truth, law of nature, or abstract idea” is eligible for examination for patentability. I do not suggest that basic scientific discoveries are a proper subject matter of patents (the Court in Chakrabarty mentioned E=mc 2 and the law of gravity), and I do not attempt an all-purpose definition of the boundary between scientific theory and technological application. But it is rare indeed that a question arises at the boundary of basic science; more usual is the situation illustrated by Samuel Morse's telegraph, in which the Court simply held that Morse's general claim was “too broad,” exceeding the scope of his practical application.

Bilski's process for determining risk in commodity transactions does not become an abstraction because it is broadly claimed in his first claim. It may be claimed so broadly that it reads on the prior art, but it is neither a fundamental truth nor an abstraction. Bilski's ten other claims contain further details and limitations, removing them farther from abstraction. Although claim 1 may have been deemed “representative” with respect to Section 101, the differences among the claims may be significant with respect to Sections 102, 103, and 112. Bilski's application, now pending for eleven years, has yet to be examined for patentability.

CONCLUSION
In sum, the text of Section 101, its statutory history, its interpretation by the Supreme Court, and its application by the courts, contravene this court's redefinition of the statutory term “process.” The court's decision affects present and future rights and incentives, and usurps the legislative role. The judicial role is to support stability and predictability in the law, with fidelity to statute and precedent, and respect for the principles of stare decisis.

Patents provide an incentive to invest in and work in new directions. In United States v. Line Material Co., 333 U.S. 287, 332, 68 S.Ct. 550, 92 L.Ed. 701 (1948), Justice Burton, joined by Chief Justice *998 Vinson and Justice Frankfurter, remarked that “the frontiers of science have expanded until civilization now depends largely upon discoveries on those frontiers to meet the infinite needs of the future. The United States, thus far, has taken a leading part in making those discoveries and in putting them to use.” This remains true today. It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future.

In Re Bilski, Dky concurring opinion

2010-03-13T21:42:00Z

Cep503: Created page with 'DYK, Circuit Judge, with whom LINN, Circuit Judge, joins, concurring. While I fully join the majority opinion, I write separately to respond to the claim in the two dissents tha…'

DYK, Circuit Judge, with whom LINN, Circuit Judge, joins, concurring.

While I fully join the majority opinion, I write separately to respond to the claim in the two dissents that the majority's opinion is not grounded in the statute, but rather “usurps the legislative role.” FN1 In fact, the unpatentability of processes not involving manufactures, machines, or compositions of matter has been firmly embedded in the statute since the time of the Patent Act of 1793, ch. 11, 1 Stat. 318 (1793). It is our dissenting colleagues who would legislate by expanding patentable subject matter far beyond what is allowed by the statute.

FN1. The dissents fault the majority for “ventur[ing] away from the statute,” Rader, J., dissenting op. at 1013, and “usurp[ing] the legislative role,” Newman, J., dissenting op. at 997.

I
Section 101 now provides:

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.

35 U.S.C. § 101 (emphases added).

The current version of § 101 can be traced back to the Patent Act of 1793. In relevant part, the 1793 Act stated that a patent may be granted to any person or persons who:

shall allege that he or they have invented any new and useful art, machine, manufacture or composition of matter, or any new and useful improvement on any art, machine, manufacture or composition of matter....

1 Stat. 318, 319 § 1 (1793) (emphases added). The criteria for patentability established by the 1793 Act remained essentially unchanged until 1952, when Congress amended § 101 by replacing the word “art” with “process” and providing in § 100(b) a definition of the term “process.” The Supreme Court has made clear that this change did not alter the substantive understanding of the statute; it did not broaden the scope of patentable subject matter.FN2 Thus, our interpretation of § 101 *967 must begin with a consideration of what the drafters of the early patent statutes understood the patentability standard to require in 1793. See Diehr, 450 U.S. at 182-83, 101 S.Ct. 1048 (looking to the 1793 Act).

FN2. See Diamond v. Diehr, 450 U.S. 175, 182, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (“[A] process has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.”); Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Rather, the 1952 Act simply affirmed the prior judicial understanding, as set forth in Corning v. Burden, 56 U.S. (15 How.) 252, 14 L.Ed. 683 (1853), that Congress in 1793 had provided for the patentability of a “process” under the term “art.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048.

A
The patentability criteria of the 1793 Act were to a significant extent the same in the 1790 Act.FN3 The 1790 “statute was largely based on and incorporated” features of the English system and reveals a sophisticated knowledge of the English patent law and practice.FN4 This is reflected in Senate committee report FN5 for the bill that became the 1790 Act, which expressly noted the drafters' reliance on the English practice:

FN3. In relevant part, the 1790 Act permitted patents upon “any useful art, manufacture, engine, machine, or device, or any improvement therein not before known or used.” Ch. 11, § 1, 1 Stat. 109, 110 (1790).

FN4. Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law & Administration, 1798-1836 109 (1998) (hereinafter To Promote the Progress ); see also Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents (Part 1), 76 J. Pat. & Trademark Off. Soc'y 697, 698 (1994) (“[T]he English common law relating to patents was what was best known in the infant United States.”).

FN5. Senate Committee Report Accompanying Proposed Amendments to H.R. 41, reprinted in Proceedings in Congress During the Years 1789 & 1790 Relating to the First Patent & Copyright Laws, 22 J. Pat. Off. Soc'y 352, 363 (1940).

The Bill depending before the House of Representatives for the Promotion of useful Arts is framed according to the Course of Practice in the English Patent Office except in two Instances-
22 J. Pat. Off. Soc'y at 363 (emphasis added).FN6 Likewise, the legislative history of the 1793 Patent Act reflects the same keen understanding of English patent practice. During a debate in the House over the creation of a Patent Office, for example, the Representative who introduced the bill noted that its principles were “an imitation of the Patent System of Great Britain.” 3 Annals of Congress 855 (1793).FN7

FN6. Neither of those two instances related to patentable subject matter or was adopted in the enacted statute. The first proposed departure from the English practice was a novelty provision protecting the inventor against those who derived their knowledge of the invention from the true inventor; the second was in a requirement that patentees make a “Public Advertisement” of their invention. Such a requirement was thought necessary “in so extensive a Country as the United States.” Senate Report, reprinted in 22 J. Pat. Off. Soc'y at 363-64.
The American statute ultimately differed in some other respects. For example, Congress rejected the English rule that the invention need only be novel in England. The American statute required novelty against the whole world and did not permit “patents of importation.” See To Promote the Progress, supra n. 4 at 95-97, 137-38.

FN7. Even the opposing view-urging departure from the English practice in particular respects-recognized that the English practice provided considerable guidance. See 3 Annals of Congress at 855-56 (“[Great Britain] had afforded, it was true, much experience on the subject; but regulations adopted there would not exactly comport in all respects either with the situation of this country, or with the rights of the citizen here. The minds of some members had taken a wrong direction, he conceived, from the view in which they had taken up the subject under its analogy with the doctrine of patents in England.”); see also To Promote the Progress, supra n. 4 at 216-17.

*968 Later, Justice Story, writing for the Supreme Court, recognized the profound influence of the English practice on these early patent laws, which in many respects codified the common law:

It is obvious to the careful inquirer, that many of the provisions of our patent act are derived from the principles and practice which have prevailed in the construction of that of England .... The language of [the patent clause of the Statute of Monopolies] is not, as we shall presently see, identical with ours; but the construction of it adopted by the English courts, and the principles and practice which have long regulated the grants of their patents, as they must have been known and are tacitly referred to in some of the provisions of our own statute, afford materials to illustrate it.

Pennock v. Dialogue, 27 U.S. 1, 18, 2 Pet. 1, 7 L.Ed. 327 (1829) (emphases added); see also Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (noting that first patent statute was written against the “backdrop” of English monopoly practices); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 n. 6, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964) (“Much American patent law derives from English patent law.”).

While Congress departed from the English practice in certain limited respects, in many respects Congress simply adopted the English practice without change. Both the 1790 and the 1793 Acts, for example, adopted the same 14-year patent term as in England. Both also required inventors to file a written specification-a requirement recognized by the English common law courts in the mid-eighteenth century.FN8 In addition, as discussed below, the categories of patentable subject matter closely tracked the English approach, and in certain respects reflected a deliberate choice between competing views prevalent in England at the time.

FN8. See Christine MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660-1800 48-49 (2002); To Promote the Progress, supra n. 4 at 400, 404.

B
The English practice in 1793, imported into the American statutes, explicitly recognized a limit on patentable subject matter. As the Supreme Court recounted in Graham v. John Deere, the English concern about limiting the allowable scope of patents arose from an aversion to the odious Crown practice of granting patents on particular types of businesses to court favorites. 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); see also MacLeod, supra n. 8 at 15 (“But most offensive of all was the granting of monopoly powers in established industries, as a form of patronage, to courtiers whom the crown could not otherwise afford to reward.”). Parliament responded to the Crown's abuses in 1623 by passing the Statute of Monopolies, prohibiting the Crown from granting these despised industry-type monopolies. Not all monopolies were prohibited, however: the Statute expressly exempted invention-type patent monopolies. Section 6 of the Statute exempted from its prohibitions “letters patent and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures....” 21 Jac. 1. c.3, s.6 (emphases added).

Each of the five categories of patentable subject matter recognized by the 1793 Patent Act-(1) “manufacture,” (2) “machine,” (3) “composition of matter,” (4) “any new and useful improvement,” and (5) “art”-*969 was drawn either from the Statute of Monopolies and the common law refinement of its interpretation or resolved competing views being debated in England at the time. See To Promote the Progress, supra n. 4 at 239.

“ Manufacture.” At the most basic level, the 1793 Act, like the Statute of Monopolies, expressly provided for the patentability of “manufactures.” This language was not accidental, but rather reflected a conscious adoption of that term as it was used in the English practice. Id. (“It is clear that the Congress sought to incorporate into the U.S. statutory scheme in 1793 at least as much of the common law interpretation of ‘new manufactures' as was understood at the time.”).

“ Machine.” Likewise, the category of “machines” in the 1793 Act had long been understood to be within the term “manufactures” as used in the English statute. See id.; see, e.g., Morris v. Bramson, 1 Carp. P.C. 30, 31 (K.B.1776) (sustaining a patent “for an engine or machine on which is fixed a set of working needles ... for the making of eyelet-holes”) (emphasis added); MacLeod, supra n. 8 at 101 (noting, among numerous other early machine patents, seven patents on “machinery to raise coal and ores” before 1750).

“ Composition of Matter.” Although the 1790 statute did not explicitly include “compositions of matter,” this was remedied in the 1793 statute. At the time, “compositions of matter” were already understood to be a type of manufacture patentable under the English statute. See To Promote the Progress, supra n. 4, at 224 n. 4. One example is found in Liardet v. Johnson, 1 Carp. P.C. 35 (K.B.1778), a case involving a patent on a “composition” of stucco (a composition of matter). Lord Mansfield's jury instructions noted that by the time of that trial he had decided “several cases” involving compositions: “But if ... the specification of the composition gives no proportions, there is an end of his patent.... I have determined, [in] several cases here, the specification must state, where there is a composition, the proportions....” FN9

FN9. Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 55 (2002) (quoting E. Wyndham Hulme, On the History of the Patent Laws in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280, 285 (1902)).

“ Any new and useful improvement.” The reference to “any new and useful improvement” in the 1793 Act also adopted a consensus recently reached by the English courts. The common law courts had first ruled in Bircot's Case in the early seventeenth century that an improvement to an existing machine could not be the proper subject of a patent under the Statute of Monopolies. See Boulton v. Bull, 2 H. Bl. 463, 488 (C.P.1795). In 1776 that line of cases was overruled in Morris v. Bramson, because such a reading of the statute “would go to repeal almost every patent that was ever granted.” FN10

FN10. Morris, 1 Carp. P.C. at 34; see also Boulton, 2 H.Bl. at 489 (“Since [ Morris v. Bramson ], it has been the generally received opinion in Westminster Hall, that a patent for an addition is good.”).

“ Art.” As the Supreme Court has recognized, a process “was considered a form of ‘art’ as that term was used in the 1793 Act.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (citing Corning v. Burden, 56 U.S. at 267-268). The language of the Statute of Monopolies permitted patents on that which could be characterized as the “working or making of any manner of new manufactures within this realm.” 21 Jac. 1. c.3, s.6. While this language plainly applied to tangible “new manufactures” (such as machines or compositions of matter), it *970 also appeared to allow patenting of manufacturing processes as the “ working or making of any manner of new manufactures.” Thus, under the Statute of Monopolies patents could be had on the “working or making of any manner of new manufactures.” Numerous method patents had issued by 1793, including James Watt's famous 1769 patent on a “ [m]ethod of diminishing the consumption of fuel in [steam]-engines.” FN11 However, the English courts in the mid-eighteenth century had not yet resolved whether processes for manufacturing were themselves patentable under the statute, and as discussed below, the issue was being actively litigated in the English courts. In the 1793 Act Congress resolved this question by including the term “art” in the statute, adopting the practice of the English law officers and the views of those in England who favored process patents.

FN11. Walterscheid, supra n. 9 at 355-56 (emphasis added); see also Boulton, 2 H. Bl. at 494-95 (1795) (noting that many method patents had issued).

II
The question remains as to what processes were considered to be patentable in England at the time of the 1793 Act. Examination of the relevant sources leads to the conclusion that the method Bilski seeks to claim would not have been considered patentable subject matter as a process under the English statute.

A
First, the language of the Statute of Monopolies-“ working or making of any manner of new manufactures ”-suggests that only processes that related to “manufactures” (including machines or compositions of matter) could be patented.

Second, the English patent practice before and contemporaneous with the 1793 Act confirms the notion that patentable subject matter was limited by the term “manufacture” in the Statute of Monopolies and required a relation to the other categories of patentable subject matter. The organization of human activity was not within its bounds. Rather, the patents registered in England under the Statute of Monopolies before 1793 were limited to articles of manufacture, machines for manufacturing, compositions of matter, and related processes. A complete list of such patents (with a few missing patents from the 17th century) was published in the mid-1800s by Bennet Woodcroft, the first head of the English Patent Office.FN12 Representative examples of patented processes at the time include: “Method of making a more easy and perfect division in stocking frame-work manufactures,” No. 1417 to John Webb (1784); “Making and preparing potashes and pearl-ashes of materials not before used for the purpose,” No. 1223 to Richard Shannon (1779); “Making salt from sea-water or brine, by steam,” No. 1006 to Daniel Scott (1772); “Milling raw hides and skins so as to be equally good for leather as if tanned,” No. 893 to George Merchant (1768); “Making salt, and removing the corrosive nature of the same, by a separate preparation of the brine,” No. 416 to George Campbell (1717); and “Making good and merchantable tough iron ... with one-fifth of the expense of charcoal as now used,” No. 113 to Sir Phillibert Vernatt (1637).

FN12. Bennet Woodcroft, Alphabetical Index of Patentees of Inventions, from March 2, 1617 (14 James I) to October 1, 1852 (16 Victoriae) (2d ed. 1857).

Nothing in Woodcroft's list suggests that any of these hundreds of patents was on a method for organizing human activity, save for one aberrational patent discussed *971 below. Rather, the established practice reflects the understanding that only processes related to manufacturing or “manufactures” were within the statute. The English cases before 1793 recognized that the practice followed in issuing patents was directly relevant to the construction of the statute. See, e.g., Morris, 1 Carp. P.C. at 34 (declining to read the statute in such a way that “would go to repeal almost every patent that was ever granted”).

Third, nearly contemporaneous English cases following shortly after the 1793 Act lend further insight into what processes were thought to be patentable under the English practice at the time the statute was enacted. Although the issue of the validity of process patents had not conclusively been settled in the English common law before 1793, the question was brought before the courts in the landmark case of Boulton v. Bull, 2 H. Bl. 463, 465 (C.P.1795), which involved James Watt's patent for a “method of lessening the consumption of steam, and consequently fuel in [steam] engines.” FN13 In 1795, the court rendered a split decision, with two judges on each side. Boulton, 2 H. Bl. at 463 (1795). Those who viewed process patents as invalid, as did Justice Buller, urged that a method was merely an unpatentable principle: “A patent must be for some new production from [elements of nature], and not for the elements themselves.” Id. at 485. He thought “it impossible to support a patent for a method only, without having carried it into effect and produced some new substance.” Id. at 486. Justice Health similarly found that the “new invented method for lessening the consumption of steam and fuel in [steam] engines” (i.e., the Watt patent), being neither “machinery” nor a “substance [ ] (such as medicine[ ] ) formed by chemical and other processes,” was not within the Statute of Monopolies. Id. at 481-82. In contrast, Lord Chief Justice Eyres, who believed processes had long been a valid subject of patents, urged that “two-thirds, I believe I might say three-fourths, of all patents granted since the statute [of Monopolies] passed, are for methods of operating and of manufacturing.... ” Id. at 494-95 (emphasis added). He agreed that “[u]ndoubtedly there can be no patent for a mere principle; but for a principle so far embodied and connected with corporeal substances ... I think there may be a patent.” Id. at 495 (emphasis added). Justice Rooke also noted that Watt's method was within the statute because it was connected with machinery: “What method can there be of saving steam or fuel in engines, but by some variation in the construction of them?” Id. at 478. The Justices who believed process patents were valid spoke in terms of manufacturing, machines, and compositions of matter, because the processes they believed fell within the statute were processes that “embodied and connected with corporeal substances.” Id. at 495.

FN13. The Supreme Court has in several opinions noted Boulton v. Bull in connection with its consideration of English patent practice. See, e.g., Markman v. Westview Instruments, Inc., 517 U.S. 370, 381 n. 6, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996); Evans v. Eaton, 20 U.S. (7 Wheat.) 356, 388 n. 2-3, 5 L.Ed. 472 (1822).

In 1799, on appeal from another case involving the same Watt patent, the validity of such process patents were upheld. Hornblower v. Boulton (K.B.1799), 8 T.R. 95. There, Chief Justice Lord Kenyon stated that “it evidently appears that the patentee claims a monopoly for an engine or machine, composed of material parts, which are to produce the effect described; and that the mode of producing this is so described, as to enable mechanics to produce it.... I have no doubt in saying, that this is a patent for a manufacture, which I *972 understand to be something made by the hands of man.” Id. at 99. Justice Grose agreed, finding that “Mr. Watt had invented a method of lessening the consumption of steam and fuel in [steam] engines”, and this was “not a patent for a mere principle, but for the working and making of a new manufacture within the words and meaning of the statute.” Id. at 101-02. He further noted, however, that “This method ... if not effected or accompanied by a manufacture, I should hardly consider as within the [statute].” Id. at 102-03 (emphasis added). Justice Lawrence similarly found such process patents to be permissible: “Engine and method mean the same thing, and may be the subject of a patent. ‘Method,’ properly speaking, is only placing several things and performing several operations in the most convenient order....” Id. at 106.

There is no suggestion in any of this early consideration of process patents that processes for organizing human activity were or ever had been patentable. Rather, the uniform assumption was that the only processes that were patentable were processes for using or creating manufactures, machines, and compositions of matter.

B
The dissenters here, by implication at least, appear to assume that this consistent English practice should somehow be ignored in interpreting the current statute because of technological change.FN14 There are several responses to this.

FN14. See, e.g., Rader, J., dissenting op. at 1011 (“[T]his court ties our patent system to dicta from an industrial age decades removed from the bleeding edge.”); id. (“[T]his court ... links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes....”); Newman, J., dissenting op. at 1011 (“[T]his court now adopts a redefinition of ‘process' in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities....”).

The first of these is that the Supreme Court has made clear that when Congress intends to codify existing law, as was the case with the 1793 statute, the law must be interpreted in light of the practice at the time of codification. In Schmuck v. United States, 489 U.S. 705, 718-19, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989), for example, the Court considered the proper interpretation of Rule 31(c) of the Federal Rules of Criminal Procedure. The rule, “which ha [d] not been amended since its adoption in 1944,” was a restatement of an 1872 Act “codif[ying] the common law for federal criminal trials.” Because of this fact, the Court found that the “prevailing practice at the time of the Rule's promulgation informs our understanding of its terms.” Id.; see also, e.g., Eldred v. Ashcroft, 537 U.S. 186, 200 n. 5, 123 S.Ct. 769, 154 L.Ed.2d 683 (2003) (considering the English practice at the time of the enactment of the 1790 copyright act); Tome v. United States, 513 U.S. 150, 159-60, 166, 115 S.Ct. 696, 130 L.Ed.2d 574 (1995) (looking to practice and noting that “a majority of common-law courts were performing [a task required by the common law] for well over a century” in interpreting a Federal Rule of Evidence that “was intended to carry over the common-law”); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549-554, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (relying on the history and practice of copyright fair-use when statutory provision reflected the “intent of Congress to codify the common-law doctrine”); Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 164-65, 59 S.Ct. 777, 83 L.Ed. 1184 (1939) (considering the English practice “which theretofore had been evolved in the English Court of Chancery” at the time of the 1789 Judiciary Act in *973 determining availability of costs under equity jurisdiction).

Second, the Supreme Court language upon which the dissents rely FN15 offers no warrant for rewriting the 1793 Act. To be sure, Congress intended the courts to have some latitude in interpreting § 101 to cover emerging technologies, Chakrabarty, 447 U.S. at 316, 100 S.Ct. 2204, and the categorical terms chosen are sufficiently broad to encompass a wide range of new technologies. But there is no evidence that Congress intended to confer upon the courts latitude to extend the categories of patentable subject matter in a significant way. To the contrary, the Supreme Court made clear that “Congress has performed its constitutional role in defining patentable subject matter in § 101; we perform ours in construing the language Congress has employed. In so doing, our obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose.” Id. at 315, 100 S.Ct. 2204. In Benson, the Court rejected the argument that its decision would “freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology.” Gottschalk v. Benson, 409 U.S. 63, 71, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). Instead, the Court explained that it “may be that the patent laws should be extended to cover [such onrushing technology], a policy matter to which we are not competent to speak” but that “considered action by the Congress is needed.” Id. at 72-73, 93 S.Ct. 253.

FN15. See, e.g., Newman, J., dissenting op. at 981 (“ ‘[C]ourts should not read into the patent laws limitations and conditions which the legislature has not expressed.’ ” (quoting Diehr, 450 U.S. at 182, 101 S.Ct. 1048)); Rader, J., dissenting op. at 1012 (same).

Third, we are not dealing here with a type of subject matter unknown in 1793. One commentator has noted:

The absence of business method patents cannot be explained by an absence of entrepreneurial creativity in Great Britain during the century before the American Revolution. On the contrary, 1720 is widely hailed as the beginning of a new era in English public finance and the beginning of major innovations in business organization.

Malla Pollack, The Multiple Unconstitutionality of Business Method Patents, 28 Rutgers Computer & Tech. L.J. 61, 96 (2002) (footnotes omitted). FN16 In the hundreds of patents in Woodcroft's exhaustive list of English patents granted from 1612 to 1793, there appears to be only a single patent akin to the type of method Bilski seeks to claim. That sole exception was a patent granted to John Knox in 1778 on a “Plan for assurances on lives of persons from 10 to 80 years of age.” FN17 Later commentators have viewed this single patent as clearly contrary to the Statute of Monopolies:

FN16. Similarly, another commentator states: “it might be wondered why none of the many ingenious schemes of insurance has ever been protected by patenting it.” D.F. Renn, John Knox's Plan for Insuring Lives: A Patent of Invention in 1778, 101 J. Inst. Actuaries 285 (1974), available at http:// www. actuaries. org. uk/ _data/assets/pdf_file/0006/25278/0285-0289.pdf (last visited Oct. 3, 2008).

FN17. Woodcroft, supra n. 12 at 324.

Such protection of an idea should be impossible.... It is difficult to understand how Knox's plan for insuring lives could be regarded as ‘a new manner of manufacture’; perhaps the Law Officer was in a very good humour that day, or perhaps he had forgotten the wording of the statute; most likely he was concerned only with the promised ‘very considerable Consumption of [Revenue] *974 Stamps' which, Knox declared, would ‘contribute to the increase of the Public Revenues.’
Renn, supra n. 16 at 285. There is no indication that Knox's patent was ever enforced or its validity tested, or that this example led to other patents or efforts to patent similar activities. But the existence of the Knox patent suggests that as of 1793 the potential advantage of patenting such activities was well-understood.
In short, the need to accommodate technological change in no way suggests that the judiciary is charged with rewriting the statute to include methods for organizing human activity that do not involve manufactures, machines, or compositions of matter.

C
Since the 1793 statute was reenacted in 1952, it is finally important also to inquire whether between 1793 and 1952 the U.S. Patent Office and the courts in this country had departed from the English practice and allowed patents such as those sought by Bilski. In fact, the U.S. Patent Office operating under the 1793 Act hewed closely to the original understanding of the statute. As in the English practice of the time, there is no evidence that patents were granted under the 1793 Act on methods of organizing human activity not involving manufactures, machines or the creation of compositions of matter. The amicus briefs have addressed the early American practice, and some of them claim that human activity patents were allowed in the early period. To the contrary, the patents cited in the briefs are plainly distinguishable.

The earliest claimed human activity patent cited in the briefs issued in 1840, entitled “Improvement in the Mathematical Operation of Drawing Lottery-Schemes.” Br. of Amicus Curiae Regulatory Datacorp 23 n.54. But that patent is fundamentally unlike the Bilski claim, since it does not claim a method of organizing human activity not involving manufactures, machines or the creation of compositions of matter. See U.S. Patent No. 1700 (issued July 18, 1840). Rather, it is directed to a scheme of combining different combinations of numbers onto a large number of physical lottery tickets (i.e., a method for manufacturing lottery tickets). Id. col.1. The other early-issued patents cited in the amicus briefs are similarly distinguishable.FN18

FN18. See, e.g., Complemental Accident Insurance Policy, U.S. Patent No. 389,818 (issued Sept. 18, 1888) (claiming a “complemental insurance policy” as an apparatus consisting of two separate cards secured together); Insurance System, U.S. Patent No. 853,852 (issued May 14, 1907) (claiming a “two-part insurance policy” as “an article of manufacture”).
A number of the amici also refer to the discussion and the patents cited in “A USPTO White Paper” (the “White Paper”) to establish the historical foundation of business method patents. See, e.g., Br. of Amicus Curiae Accenture 14-15 n. 11. As Judge Mayer notes, dissenting op. at 1001-02 n. 4, the White Paper does not show this proposition. As the White Paper itself recognizes, the early financial patents it discusses were largely mechanical products and methods related to financial paper, not methods for organizing human activity. White Paper at 2. Thus, while the White Paper shows that inventions in the business realm of finance and management historically enjoyed patent protection, it does little to establish that business methods directed to the organization of human activity not involving manufactures, machines or the creation of compositions of matter were similarly patentable.

Likewise, Supreme Court decisions before the 1952 Patent Act assumed that the only processes that were patentable were those involving other types of patentable subject matter. In later cases the Supreme Court has recognized that these cases set forth the standard for process *975 patents in the pre-1952 period. Diehr, 450 U.S. at 182-84, 101 S.Ct. 1048; Gottschalk, 409 U.S. at 69-70, 93 S.Ct. 253. The leading case is Corning v. Burden, 56 U.S. 252, 15 How. 252, 14 L.Ed. 683 (1853). There, the Supreme Court discussed the patentability of processes:

A process, eo nomine, is not made the subject of a patent in our act of Congress. It is included under the general term ‘useful art.’ An art may require one or more processes or machines in order to produce a certain result or manufacture. The term machine includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. But where the result or effect is produced by chemical action, by the operation or application of some element or power of nature, or of one substance to another, such modes, methods, or operations, are called ‘processes.’ A new process is usually the result of discovery; a machine, of invention. The arts of tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores, and numerous others are usually carried on by processes, as distinguished from machines.... It is for the discovery or invention of some practicable method or means of producing a beneficial result or effect that a patent is granted, and not for the result or effect itself. It is when the term process is used to represent the means or method of producing a result that it is patentable, and it will include all methods or means which are not effected by mechanism or mechanical combinations.

Id. at 267-68 (emphases added). In Cochrane v. Deener, the Court clarified its understanding of a patentable “process”:

That a process may be patentable, irrespective of the particular form of the instrumentalities used, cannot be disputed.... 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. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.

94 U.S. 780, 787-88, 24 L.Ed. 139 (1876) (emphases added). Finally, in Tilghman v. Proctor, 102 U.S. 707, 722, 26 L.Ed. 279 (1880), the Court noted:

That a patent can be granted for a process there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture. A manufacturing process is clearly an art, within the meaning of the law.

(Emphasis added). The Court's definition of a patentable process was well-accepted and consistently applied by the courts of appeals. See, e.g., P.E. Sharpless Co. v. Crawford Farms, 287 F. 655, 658-59 (2nd Cir.1923); Chicago Sugar-Refining Co. v. Charles Pope Glucose Co., 84 F. 977, 982 (7th Cir.1898).

Finally, nothing in the legislative history of the 1952 Act suggests that Congress intended to enlarge the category of patentable subject matter to include patents such as the method Bilski attempts to claim. As discussed above, the only change made by the 1952 Act was in replacing the word *976 “art” with the word “process.” The Supreme Court has already concluded that this change did not alter the substantive understanding of the statute. See Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (“[A] process has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.”).

The House Report accompanying the 1952 bill includes the now-famous reference to “anything under the sun made by man”:

A person may have “invented” a machine or a manufacture, which may include anything under the sun made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.

H.R.1923 at 7. Although this passage has been used by our court in past cases to justify a broad interpretation of patentable subject matter, I agree with Judge Mayer that, when read in context, the statement undercuts the notion that Congress intended to expand the scope of § 101. See Mayer, J., dissenting op. at 1000. It refers to things “made by man,” not to methods of organizing human activity. In this respect, the language is reminiscent of the 1799 use of the phrase “something made by the hands of man” by Chief Justice Lord Kenyon as a limitation on patentable subject matter under the Statute of Monopolies. The idea that an invention must be “made by man” was used to distinguish “a philosophical principle only, neither organized or capable of being organized” from a patentable manufacture. Hornblower, 8 T.R. at 98. Lord Kenyon held that the patent before him was not based on a mere principle, but was rather “a patent for a manufacture, which I understand to be something made by the hands of man.” Id. at 98 (emphases added); accord American Fruit Growers v. Brogdex Co., 283 U.S. 1, 11, 51 S.Ct. 328, 75 L.Ed. 801 (1931) (giving “anything made for use from raw or prepared materials” as one definition of “manufacture”).

In short, the history of § 101 fully supports the majority's holding that Bilski's claim does not recite patentable subject matter. Our decision does not reflect “legislative” work, but rather careful and respectful adherence to the Congressional purpose.

In Re Bilski

2010-03-13T21:40:58Z

Cep503:

In Re Bilski

2010-03-13T21:39:44Z

Cep503:

In Re Bilski

2010-03-13T21:39:22Z

Cep503:

In Re Bilski

2010-03-13T21:38:32Z

Cep503:

In Re Bilski

2010-03-13T21:32:51Z

Cep503:

United States Court of Appeals,
Federal Circuit.
In re Bernard L. BILSKI and Rand A. Warsaw.

No. 2007-1130.
Oct. 30, 2008.

Background: Patent applicants challenged denial of patent application for method of hedging risk in field of commodities trading based on lack of patent-eligible subject matter. The Patent and Trademark Office, Board of Patent Appeals and Interferences, 2006 WL 5738364, sustained rejection of all claims in application. Applicants appealed.

Holdings: Following sua sponte order of review en banc, the Court of Appeals, Michel, Chief Judge, held that:
(1) machine-or-transformation test, rather than test determining whether claim recited algorithm applied in any manner to physical elements or process steps, was applicable test for determining patent-eligibility of process claims, abrogating, In re Freeman, 573 F.2d 1237, In re Walter, 618 F.2d 758, and In re Abele, 684 F.2d 902;
(2) machine-or-transformation test, rather than “useful, concrete and tangible result” inquiry, was proper test to apply to determine patent-eligibility of process claims, abrogating In re Alappat, 33 F.3d 1526, State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352; and
(3) claim was not drawn to patent-eligible subject matter under transformation branch of machine-or-transformation test.

Affirmed.

Dyk, Circuit Judge, filed opinion concurring, in which Linn, Circuit Judge, joined.

Newman, Circuit Judge, filed opinion dissenting.

Mayer, Circuit Judge, filed opinion dissenting.

Rader, Circuit Judge, filed opinion dissenting.

Before MICHEL, Chief Judge, NEWMAN, MAYER, LOURIE, RADER, SCHALL, BRYSON, GAJARSA, LINN, DYK, PROST, and MOORE, Circuit Judges.

Opinion for the court filed by Chief Judge MICHEL, in which Circuit Judges LOURIE, SCHALL, BRYSON, GAJARSA, LINN, DYK, PROST, and MOORE join. Concurring opinion filed by Circuit Judge DYK, in which Circuit Judge LINN joins. Dissenting opinion filed by Circuit Judge NEWMAN. Dissenting opinion filed by Circuit Judge MAYER. Dissenting opinion filed by Circuit Judge RADER.

MICHEL, Chief Judge.

Bernard L. Bilski and Rand A. Warsaw (collectively, “Applicants”) appeal from the final decision of the Board of Patent Appeals and Interferences (“Board”) sustaining the rejection of all eleven claims of their U.S. Patent Application Serial No. 08/833,892 (“ ′892 application”). See Ex parte Bilski, No.2002-2257, 2006 WL 5738364 (B.P.A.I. Sept. 26, 2006) (“ Board Decision ”). Specifically, Applicants argue that the examiner erroneously rejected the claims as not directed to patent-eligible subject matter under 35 U.S.C. § 101, and that the Board erred in upholding that rejection. The appeal was originally argued before a panel of the court on October 1, 2007. Prior to disposition by the panel, however, we sua sponte ordered en banc review. Oral argument before the en banc court was held on May 8, 2008. We affirm the decision of the Board because we conclude that Applicants' claims are not directed to patent-eligible subject matter, and in doing so, we clarify the standards applicable in determining whether a claimed method constitutes a statutory “process” under § 101.

I.
Applicants filed their patent application on April 10, 1997. The application contains eleven claims, which Applicants argue together here. 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

′892 application cl.1. In essence, the claim is for a method of hedging risk in the field of commodities trading. For example, coal power plants (i.e., the “consumers”) purchase coal to produce electricity and are averse to the risk of a spike in demand for coal since such a spike would increase the price and their costs. Conversely, coal mining companies (i.e., the “market participants”) are averse to the risk of a sudden drop in demand for coal since such a drop would reduce their sales and depress prices. The claimed method envisions an *950 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. 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 the provider has thus hedged its risk; if demand and prices skyrocket, it has sold coal at a disadvantageous price but has bought coal at an advantageous price, and vice versa if demand and prices fall. Importantly, however, the claim is not limited to transactions involving actual commodities, and the application discloses that the recited transactions may simply involve options, i.e., rights to purchase or sell the commodity at a particular price within a particular timeframe. See J.A. at 86-87.

The examiner ultimately rejected claims 1-11 under 35 U.S.C. § 101, stating: “[r]egarding ... claims 1-11, 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.” See Board Decision, slip op. at 3. The examiner noted that Applicants had admitted their claims are not limited to operation on a computer, and he concluded that they were not limited by any specific apparatus. See id. at 4.

On appeal, 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. Id. at 41-42. Further, the Board held that 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.” Id. at 42. Elaborating further, the Board stated: “ ‘mixing’ two elements or compounds to produce a chemical substance or mixture is clearly a statutory transformation although no apparatus is claimed to perform the step and although the step could be performed manually.” Id. But the Board concluded that Applicants' claims do 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. Id. at 43. The Board also held that Applicants' claims “preempt[ ] 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 concluded that they only claim an abstract idea ineligible for patent protection. Id. at 46-47. 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. Id. at 49-50.

Applicants timely appealed to this court under 35 U.S.C. § 141. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

II.
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References[4] Headnote Citing References Whether a claim is drawn to patent-eligible subject matter under § 101 is a threshold inquiry, and any claim of an application failing the requirements of § 101 must be rejected even if it meets all of the other legal requirements of patentability. In re Comiskey, 499 F.3d 1365, 1371 (Fed.Cir.2007) FN1 (quoting *951 Parker v. Flook, 437 U.S. 584, 593, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978)); In re Bergy, 596 F.2d 952, 960 (CCPA 1979), vacated as moot sub nom. Diamond v. Chakrabarty, 444 U.S. 1028, 100 S.Ct. 696, 62 L.Ed.2d 664 (1980). Whether a claim is drawn to patent-eligible subject matter under § 101 is an issue of law that we review de novo. Comiskey, 499 F.3d at 1373; AT & T Corp. v. Excel Commc'ns, Inc., 172 F.3d 1352, 1355 (Fed.Cir.1999). Although claim construction, which we also review de novo, is an important first step in a § 101 analysis, see State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1370 (Fed.Cir.1998) (noting that whether a claim is invalid under § 101 “is a matter of both claim construction and statutory construction”), there is no claim construction dispute in this appeal. We review issues of statutory interpretation such as this one de novo as well. Id.

FN1. Although our decision in Comiskey may be misread by some as requiring in every case that the examiner conduct a § 101 analysis before assessing any other issue of patentability, we did not so hold. As with any other patentability requirement, an examiner may reject a claim solely on the basis of § 101. Or, if the examiner deems it appropriate, she may reject the claim on any other ground(s) without addressing § 101. But given that § 101 is a threshold requirement, claims that are clearly drawn to unpatentable subject matter should be identified and rejected on that basis. Thus, an examiner should generally first satisfy herself that the application's claims are drawn to patent-eligible subject matter.

A.
As this appeal turns on whether Applicants' invention as claimed meets the requirements set forth in § 101, we begin with the words of the statute:

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.

35 U.S.C. § 101. The statute thus recites four categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter. It is undisputed that Applicants' claims are not directed to a machine, manufacture, or composition of matter.FN2 Thus, the issue before us involves what the term “process” in § 101 means, and how to determine whether a given claim-and Applicants' claim 1 in particular-is a “new and useful process.” FN3

FN2. As a result, we decline to discuss In re Nuijten because that decision primarily concerned whether a claim to an electronic signal was drawn to a patent-eligible manufacture. 500 F.3d 1346, 1356-57 (Fed.Cir.2007). We note that the PTO did not dispute that the process claims in Nuijten were drawn to patent-eligible subject matter under § 101 and allowed those claims.

FN3. Congress provided a definition of “process” in 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.” However, this provision is unhelpful given that the definition itself uses the term “process.”

As several amici have argued, the term “process” is ordinarily broad in meaning, at least in general lay usage. In 1952, at the time Congress amended § 101 to include “process,” FN4 the ordinary meaning of *952 the term was: “[a] procedure ... [a] series of actions, motions, or operations definitely conducing to an end, whether voluntary or involuntary.” Webster's New International Dictionary of the English Language 1972 (2d ed.1952). There can be no dispute that Applicants' claim would meet this definition of “process.” But the Supreme Court has held that the meaning of “process” as used in § 101 is narrower than its ordinary meaning. See Flook, 437 U.S. at 588-89, 98 S.Ct. 2522 (“The holding [in Benson ] forecloses a purely literal reading of § 101.”). Specifically, the Court has held that a claim is not a patent-eligible “process” if it claims “laws of nature, natural phenomena, [or] abstract ideas.” Diamond v. Diehr, 450 U.S. 175, 185, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (citing Flook, 437 U.S. at 589, 98 S.Ct. 2522, and Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972)). Such fundamental principles FN5 are “part of the storehouse of knowledge of all men ... free to all men and reserved exclusively to none.” Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948); see also Le Roy v. Tatham, 55 U.S. (14 How.) 156, 175, 14 L.Ed. 367 (1852) (“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.” Benson, 409 U.S. at 67, 93 S.Ct. 253; see also Comiskey, 499 F.3d at 1378-79 (holding that “mental processes,” “processes of human thinking,” and “systems that depend for their operation on human intelligence alone” are not patent-eligible subject matter under Benson ).

FN4. The Patent Act of 1793 originally used the term “art” rather than “process,” which remained unchanged until Congress enacted the current version of § 101 in 1952. But the Supreme Court has held that this change did not alter the scope of patent eligibility over processes because “[i]n the language of the patent law, [a process] is an art.” Diamond v. Diehr, 450 U.S. 175, 182-84, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (quoting Cochrane v. Deener, 94 U.S. 780, 787-88, 24 L.Ed. 139 (1877)); see also Comiskey, 499 F.3d at 1375.

FN5. As used in this opinion, “fundamental principles” means “laws of nature, natural phenomena, and abstract ideas.”

The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process. And the underlying legal question thus presented is what test or set of criteria governs the determination by the Patent and Trademark Office (“PTO”) or courts as to whether a claim to a process is patentable under § 101 or, conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle.

The Supreme Court last addressed this issue in 1981 in Diehr, which concerned a patent application seeking to claim a process for producing cured synthetic rubber products. 450 U.S. at 177-79, 101 S.Ct. 1048. The claimed process took temperature readings during cure and used a mathematical algorithm, the Arrhenius equation, to calculate the time when curing would be complete. Id. Noting that a mathematical algorithm alone is unpatentable because mathematical relationships are akin to a law of nature, the Court nevertheless held that the claimed process was patent-eligible subject matter, stating:

[The inventors] do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic rubber. Their process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process.

*953 Id. at 187, 101 S.Ct. 1048 (emphasis added).FN6 The Court declared that while a claim drawn to a fundamental principle is unpatentable, “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” Id. (emphasis in original); see also Mackay Radio & Tel. Co. v. Radio Corp. of Am., 306 U.S. 86, 94, 59 S.Ct. 427, 83 L.Ed. 506 (1939) (“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.”).

FN6. Mathematical algorithms have, in other cases, been identified instead as abstract ideas rather than laws of nature. See, e.g., State St., 149 F.3d at 1373. Whether either or both views are correct is immaterial since both laws of nature and abstract ideas are unpatentable under § 101. Diehr, 450 U.S. at 185, 101 S.Ct. 1048.

The Court in Diehr thus drew a distinction between those claims that “seek to pre-empt the use of” a fundamental principle, on the one hand, and claims that seek only to foreclose others from using a particular “ application ” of that fundamental principle, on the other. 450 U.S. at 187, 101 S.Ct. 1048. Patents, by definition, grant the power to exclude others from practicing that which the patent claims. Diehr can be understood to suggest 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.

In Diehr, the Court held that the claims at issue did not pre-empt all uses of the Arrhenius equation but rather claimed only “a process for curing rubber ... which incorporates in it a more efficient solution of the equation.” 450 U.S. at 188, 101 S.Ct. 1048. The process as claimed included several specific steps to control the curing of rubber more precisely: “These include installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly recalculating the appropriate cure time through the use of the formula and a digital computer, and automatically opening the press at the proper time.” Id. at 187, 101 S.Ct. 1048. Thus, one would still be able to use the Arrhenius equation in any process not involving curing rubber, and more importantly, even in any process to cure rubber that did not include performing “all of the other steps in their claimed process.” See id.; see also Tilghman v. Proctor, 102 U.S. 707, 729, 26 L.Ed. 279 (1880) (holding patentable a process of breaking down fat molecules into fatty acids and glycerine in water specifically requiring both high heat and high pressure since other processes, known or as yet unknown, using the reaction of water and fat molecules were not claimed).

In contrast to Diehr, the earlier Benson case presented the Court with claims drawn to a process of converting data in binary-coded decimal (“BCD”) format to pure binary format via an algorithm programmed onto a digital computer. Benson, 409 U.S. at 65, 93 S.Ct. 253. The Court held the claims to be drawn to unpatentable subject matter:

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. 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 pre-empt the mathematical formula*954 and in practical effect would be a patent on the algorithm itself.

Id. at 71-72, 93 S.Ct. 253 (emphasis added). Because the algorithm had no uses other than those that would be covered by the claims (i.e., any conversion of BCD to pure binary on a digital computer), the claims pre-empted all uses of the algorithm and thus they were effectively drawn to the algorithm itself. See also O'Reilly v. Morse, 56 U.S. (15 How.) 62, 113, 14 L.Ed. 601 (1853) (holding ineligible a claim pre-empting all uses of electromagnetism to print characters at a distance).

The question before us then is whether Applicants' claim recites a fundamental principle and, if so, whether it would pre-empt substantially all uses of that fundamental principle if allowed. Unfortunately, this inquiry is hardly straightforward. How does one determine whether a given claim would pre-empt all uses of a fundamental principle? Analogizing to the facts of Diehr or Benson is of limited usefulness because the more challenging process claims of the twenty-first century are seldom so clearly limited in scope as the highly specific, plainly corporeal industrial manufacturing process of Diehr; nor are they typically as broadly claimed or purely abstract and mathematical as the algorithm of Benson.

[5] Headnote Citing References[6] Headnote Citing References The Supreme Court, however, 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 rather than to pre-empt the principle itself. 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. See Benson, 409 U.S. at 70, 93 S.Ct. 253 (“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.”); Diehr, 450 U.S. at 192, 101 S.Ct. 1048 (holding that use of mathematical formula in process “transforming or reducing an article to a different state or thing” constitutes patent-eligible subject matter); see also Flook, 437 U.S. at 589 n. 9, 98 S.Ct. 2522 (“An argument can be made [that the Supreme] Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a ‘different state or thing’ ”); Cochrane v. Deener, 94 U.S. 780, 788, 24 L.Ed. 139 (1876) (“A process is ... an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing.”).FN7 A claimed process involving a fundamental principle that uses a particular machine or apparatus would not pre-empt uses of the principle that do not also use the specified machine or apparatus in the manner claimed. And a claimed process that transforms a particular article to a specified different state or thing by applying a fundamental principle would not pre-empt the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.

FN7. While the Court did not give explicit definitions of terms such as “tied to,” “transforms,” or “article,” a careful analysis of its opinions and the subsequent jurisprudence of this court applying those decisions, discussed infra, informs our understanding of the Court's machine-or-transformation test.

The process claimed in Diehr, for example, clearly met both criteria. The process operated on a computerized rubber curing apparatus and transformed raw, uncured rubber into molded, cured rubber products. *955 Diehr, 450 U.S. at 184, 187, 101 S.Ct. 1048. The claim at issue in Flook, in contrast, was directed to using a particular mathematical formula to calculate an “alarm limit”-a value that would indicate an abnormal condition during an unspecified chemical reaction. 437 U.S. at 586, 98 S.Ct. 2522. The Court rejected the claim as drawn to the formula itself because the claim did not include any limitations specifying “how to select the appropriate margin of safety, the weighting factor, or any of the other variables ... the chemical processes at work, the [mechanism for] monitoring of process variables, or the means of setting off an alarm or adjusting an alarm system.” See id. at 586, 595, 98 S.Ct. 2522. The claim thus was not limited to any particular chemical (or other) transformation; nor was it tied to any specific machine or apparatus for any of its process steps, such as the selection or monitoring of variables or the setting off or adjusting of the alarm.FN8 See id.

FN8. To the extent it may be argued that Flook did not explicitly follow the machine-or-transformation test first articulated in Benson, we note that the more recent decision in Diehr reaffirmed the machine-or-transformation test. See Diehr, 450 U.S. at 191-92, 101 S.Ct. 1048. Moreover, the Diehr Court explained that Flook “presented a similar situation” to Benson and considered it consistent with the holdings of Diehr and Benson. Diehr at 186-87, 189, 191-92, 101 S.Ct. 1048. We thus follow the Diehr Court's understanding of Flook.

A canvas of earlier Supreme Court cases reveals that the results of those decisions were also consistent with the machine-or-transformation test later articulated in Benson and reaffirmed in Diehr. See Tilghman, 102 U.S. at 729 (particular process of transforming fats into constituent compounds held patentable); Cochrane, 94 U.S. at 785-88 (process transforming grain meal into purified flour held patentable); Morse, 56 U.S. (15 How.) at 113 (process of using electromagnetism to print characters at a distance that was not transformative or tied to any particular apparatus held unpatentable). Interestingly, Benson presents a difficult case under its own test in that the claimed process operated on a machine, a digital computer, but was still held to be ineligible subject matter.FN9 However, in Benson, the limitations tying the process to a computer were not actually limiting because the fundamental principle at issue, a particular algorithm, had no utility other than operating on a digital computer. Benson, 409 U.S. at 71-72, 93 S.Ct. 253. Thus, the claim's tie to a digital computer did not reduce the pre-emptive footprint of the claim since all uses of the algorithm were still covered by the claim.

FN9. We acknowledge that the Supreme Court in Benson stated that the claims at issue “were not limited ... to any particular apparatus or machinery.” 409 U.S. at 64, 93 S.Ct. 253. However, the Court immediately thereafter stated: “[The claims] purported to cover any use of the claimed method in a general-purpose digital computer of any type.” Id. And, as discussed herein, the Court relied for its holding on its understanding that the claimed process pre-empted all uses of the recited algorithm because its only possible use was on a digital computer. Id. at 71-72, 93 S.Ct. 253. The Diehr Court, in discussing Benson, relied only on this latter understanding of the Benson claims. See Diehr, 450 U.S. at 185-87, 101 S.Ct. 1048. We must do the same.

B.
Applicants and several amici FN10 have argued that the Supreme Court did not intend the machine-or-transformation test to be the sole test governing § 101 analyses. As already noted, however, the Court explicitly stated in Benson that “[t]ransformation and reduction of an article ‘to a *956 different state or thing’ is the clue to the patentability of a process claim that does not include particular machines.” FN11 409 U.S. at 70, 93 S.Ct. 253 (emphasis added). And the Court itself later noted in Flook that at least so far it had “only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a ‘different state or thing.’ ” 437 U.S. at 589 n. 9, 98 S.Ct. 2522. Finally, the Court in Diehr once again applied the machine-or-transformation test in its most recent decision regarding the patentability of processes under § 101. 450 U.S. at 184, 101 S.Ct. 1048.

FN10. See, e.g., Br. of Amicus Curiae Am. Intellectual Prop. Law Ass'n at 17-21; Br. of Amicus Curiae Regulatory Datacorp, Inc. at 10-15.

FN11. We believe that the Supreme Court spoke of the machine-or-transformation test as the “clue” to patent-eligibility because the test is the tool used to determine whether a claim is drawn to a statutory “process”-the statute does not itself explicitly mention machine implementation or transformation. We do not consider the word “clue” to indicate that the machine-or-implementation test is optional or merely advisory. Rather, the Court described it as the clue, not merely “a” clue. See Benson, 409 U.S. at 70, 93 S.Ct. 253.

We recognize, however, that the Court was initially equivocal in first putting forward this test in Benson. As the Applicants and several amici point out, the Court there stated:

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.

Benson, 409 U.S. at 71, 93 S.Ct. 253. In Flook, the Court took note that this statement had been made in Benson but merely stated: “As in Benson, we assume that a valid process patent may issue even if it does not meet [the machine-or-transformation test].” 437 U.S. at 589 n. 9, 98 S.Ct. 2522 (emphasis added). And this caveat was not repeated in Diehr when the Court reaffirmed the machine-or-transformation test. See Diehr, 450 U.S. at 184, 101 S.Ct. 1048 (quoting Benson, 409 U.S. at 70, 93 S.Ct. 253) (“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.”). Therefore, we believe our reliance on the Supreme Court's machine-or-transformation test as the applicable test for § 101 analyses of process claims is sound.

Nevertheless, we agree that future developments in technology and the sciences may present difficult challenges to the machine-or-transformation test, just as the widespread use of computers and the advent of the Internet has begun to challenge it in the past decade. Thus, we recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the test or how it is applied. At present, however, and certainly for the present case, we see no need for such a departure and reaffirm that the machine-or-transformation test, properly applied, is the governing test for determining patent eligibility of a process under § 101.FN12

FN12. The Diehr Court stated: “[W]hen a claim containing a mathematical 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 ( e.g., transforming or reducing an article to a different state or thing ), then the claim satisfies the requirements of § 101.” 450 U.S at 192, 101 S.Ct. 1048 (emphases added). When read together with Benson and Flook, on which the Diehr Court firmly relied, we believe this statement is consistent with the machine-or-transformation test. But as we noted in AT & T, language such as the use of “e.g.” may indicate the Supreme Court's recognition that the machine-or-transformation test might require modification in the future. See AT & T, 172 F.3d at 1358-59.

*957 C.
[7] Headnote Citing References[8] Headnote Citing References As a corollary, the Diehr Court also held that mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent-eligible. See 450 U.S. at 191-92, 101 S.Ct. 1048 (noting that ineligibility under § 101 “cannot be circumvented by attempting to limit the use of the formula to a particular technological environment”). We recognize that tension may be seen between this consideration and the Court's overall goal of preventing the wholesale pre-emption of fundamental principles. Why not permit patentees to avoid overbroad pre-emption by limiting claim scope to particular fields of use? This tension is resolved, however, by recalling the purpose behind the Supreme Court's discussion of pre-emption, namely that pre-emption is merely an indication that a claim seeks to cover a fundamental principle itself rather than only a specific application of that principle. See id. at 187, 101 S.Ct. 1048; Benson, 409 U.S. at 71-72, 93 S.Ct. 253. Pre-emption of all uses of a fundamental principle in all fields and pre-emption of all uses of the principle in only one field both indicate that the claim is not limited to a particular application of the principle. See Diehr, 450 U.S. at 193 n. 14, 101 S.Ct. 1048 (“A mathematical formula in the abstract is nonstatutory subject matter regardless of whether the patent is intended to cover all uses of the formula or only limited uses.”) (emphasis added). In contrast, a claim that is tied to a particular machine or brings about a particular transformation of a particular article does not pre-empt all uses of a fundamental principle in any field but rather is limited to a particular use, a specific application. Therefore, it is not drawn to the principle in the abstract.

[9] Headnote Citing References The Diehr Court also reaffirmed a second corollary to the machine-or-transformation test by stating that “insignificant postsolution activity will not transform an unpatentable principle into a patentable process.” Id. at 191-92, 101 S.Ct. 1048; see also Flook, 437 U.S. at 590, 98 S.Ct. 2522 (“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.”). The Court in Flook reasoned:

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.

437 U.S. at 590, 98 S.Ct. 2522.FN13 Therefore, even if a claim recites a specific machine or a particular transformation of a specific article, the recited machine or transformation must not constitute mere “insignificant postsolution activity.” FN14

FN13. The example of the Pythagorean theorem applied to surveying techniques could also be considered an example of a mere field-of-use limitation.

FN14. Although the Court spoke of “postsolution” activity, we have recognized that the Court's reasoning is equally applicable to any insignificant extra-solution activity regardless of where and when it appears in the claimed process. See In re Schrader, 22 F.3d 290, 294 (Fed.Cir.1994) (holding a simple recordation step in the middle of the claimed process incapable of imparting patent-eligibility under § 101); In re Grams, 888 F.2d 835, 839-40 (Fed.Cir.1989) (holding a pre-solution step of gathering data incapable of imparting patent-eligibility under § 101).

*958 D.
We discern two other important aspects of the Supreme Court's § 101 jurisprudence. First, the Court has held that whether a claimed process is novel or non-obvious is irrelevant to the § 101 analysis. Diehr, 450 U.S. at 188-91, 101 S.Ct. 1048. Rather, such considerations are governed by 35 U.S.C. § 102 (novelty) and § 103 (non-obviousness). Diehr, 450 U.S. at 188-91, 101 S.Ct. 1048. Although § 101 refers to “new and useful” processes, it is overall “a general statement of the type of subject matter that is eligible for patent protection ‘subject to the conditions and requirements of this title.’ ” Diehr, 450 U.S. at 189, 101 S.Ct. 1048 (quoting § 101). As the legislative history of § 101 indicates, Congress did not intend the “new and useful” language of § 101 to constitute an independent requirement of novelty or non-obviousness distinct from the more specific and detailed requirements of §§ 102 and 103, respectively. Diehr, 450 U.S. at 190-91, 101 S.Ct. 1048.FN15 So here, it is irrelevant to the § 101 analysis whether Applicants' claimed process is novel or non-obvious.

FN15. By the same token, considerations of adequate written description, enablement, best mode, etc., are also irrelevant to the § 101 analysis because they, too, are governed by other provisions of the Patent Act. Section 101 does, however, allow for patents only on useful inventions. Brenner v. Manson, 383 U.S. 519, 532-35, 86 S.Ct. 1033, 16 L.Ed.2d 69 (1966).

[10] Headnote Citing References[11] Headnote Citing References Second, the Court has made clear that it is inappropriate to determine the patent-eligibility of a claim as a whole based on whether selected limitations constitute patent-eligible subject matter. Flook, 437 U.S. at 594, 98 S.Ct. 2522 (“Our approach to respondent's application is, however, not at all inconsistent with the view that a patent claim must be considered as a whole.”); Diehr, 450 U.S. at 188, 101 S.Ct. 1048 (“It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis.”). After all, even though a fundamental principle itself is not patent-eligible, processes incorporating a fundamental principle may be patent-eligible. Thus, it is irrelevant that any individual step or limitation of such processes by itself would be unpatentable under § 101. See In re Alappat, 33 F.3d 1526, 1543-44 (Fed.Cir.1994) (en banc) (citing Diehr, 450 U.S. at 187, 101 S.Ct. 1048).

III.
In the years following the Supreme Court's decisions in Benson, Flook, and Diehr, our predecessor court and this court have reviewed numerous cases presenting a wide variety of process claims, some in technology areas unimaginable when those seminal Supreme Court cases were heard. FN16 Looking to these precedents, we find a wealth of detailed guidance and helpful examples on how to determine the patent-eligibility of process claims.

FN16. We note that the PTO, too, has been active in analyzing § 101 law. See, e.g., Ex parte Lundgren, 76 U.S.P.Q.2d 1385 (B.P.A.I.2004); Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility, Off. Gaz. Pat. & Trademark Office, Nov. 22, 2005.

A.
[12] Headnote Citing References Before we turn to our precedents, however, we first address the issue of whether several other purported articulations of § 101 tests are valid and useful. The first of these is known as the Freeman-Walter-Abele test after the three decisions*959 of our predecessor court that formulated and then refined the test: In re Freeman, 573 F.2d 1237 (CCPA 1978); In re Walter, 618 F.2d 758 (CCPA 1980); and In re Abele, 684 F.2d 902 (CCPA 1982). This test, in its final form, had two steps: (1) determining whether the claim recites an “algorithm” within the meaning of Benson, then (2) determining whether that algorithm is “applied in any manner to physical elements or process steps.” Abele, 684 F.2d at 905-07.

Some may question the continued viability of this test, arguing that it appears to conflict with the Supreme Court's proscription against dissecting a claim and evaluating patent-eligibility on the basis of individual limitations. See Flook, 437 U.S. at 594, 98 S.Ct. 2522 (requiring analysis of claim as a whole in § 101 analysis); see also AT & T, 172 F.3d at 1359; State St., 149 F.3d at 1374. In light of the present opinion, we conclude that the Freeman-Walter-Abele test is inadequate. Indeed, we have already recognized that a claim failing that test may nonetheless be patent-eligible. See In re Grams, 888 F.2d 835, 838-39 (Fed.Cir.1989). Rather, the machine-or-transformation test is the applicable test for patent-eligible subject matter.FN17

FN17. Therefore, in Abele, Meyer, Grams, Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (Fed.Cir.1992), and other decisions, those portions relying solely on the Freeman-Walter-Abele test should no longer be relied on.

[13] Headnote Citing References The second articulation we now revisit is the “useful, concrete, and tangible result” language associated with State Street, although first set forth in Alappat. State St., 149 F.3d at 1373 (“Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a [patent-eligible invention] because it produces ‘a useful, concrete and tangible result’....”); FN18 Alappat, 33 F.3d at 1544 (“This is not a disembodied mathematical concept which may be characterized as an ‘abstract idea,’ but rather a specific machine to produce a useful, concrete, and tangible result.”); see also AT & T, 172 F.3d at 1357 (“Because the claimed process applies the Boolean principle to produce a useful, concrete, tangible result without pre-empting other uses of the mathematical principle, on its face the claimed process comfortably falls within the scope of § 101.”). The basis for this language in State Street and Alappat was that the Supreme Court has explained that “certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application.” Alappat, 33 F.3d at 1543; see also State St., 149 F.3d at 1373. To be sure, a process tied to a particular machine, or transforming or reducing a particular article into a different state or thing, will generally produce a “concrete” and “tangible” result as those terms were used in our prior decisions. But while looking for “a useful, concrete and tangible result” may in many instances provide useful indications of whether a claim is drawn to a fundamental principle or a practical application of such a principle, that inquiry is insufficient to determine whether a claim is patent-eligible under § 101. And it was certainly never intended to supplant the Supreme Court's test. Therefore, we also conclude that the “useful, concrete and tangible result” inquiry*960 is inadequate and reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply. FN19

FN18. In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine. 149 F.3d at 1371-72 (holding that the means-plus-function elements of the claims on appeal all corresponded to supporting structures disclosed in the written description).

FN19. As a result, those portions of our opinions in State Street and AT & T relying solely on a “useful, concrete and tangible result” analysis should no longer be relied on.

We next turn to the so-called “technological arts test” that some amici FN20 urge us to adopt. We perceive that the contours of such a test, however, would be unclear because the meanings of the terms “technological arts” and “technology” are both ambiguous and ever-changing. FN21 And no such test has ever been explicitly adopted by the Supreme Court, this court, or our predecessor court, as the Board correctly observed here. Therefore, we decline to do so and continue to rely on the machine-or-transformation test as articulated by the Supreme Court.

FN20. See, e.g., Br. of Amicus Curiae Consumers Union et al. at 6-10; Br. of Amicus Curiae William Mitchell Coll. of Law Intellectual Prop. Inst. at 14-15.

FN21. Compare Appellee's Br. at 24-28 (arguing that patents should be reserved only for “technological” inventions that “involve[ ] the application of science or mathematics,” thereby excluding “non-technological inventions” such as “activities whose ability to achieve their claimed goals depended solely on contract formation”), with Br. of Amicus Curiae Regulatory Datacorp, Inc. at 19-24 (arguing that “innovations in business, finance, and other applied economic fields plainly qualify as ‘technological’ ” since “a fair definition of technological is ‘characterized by the practical application of knowledge in a particular field’ ” and because modern economics has “a closer affinity to physics and engineering than to liberal arts like English literature”).

We further reject calls for categorical exclusions beyond those for fundamental principles already identified by the Supreme Court.FN22 We rejected just such an exclusion in State Street, noting that the so-called “business method exception” was unlawful and that business method claims (and indeed all process claims) are “subject to the same legal requirements for patentability as applied to any other process or method.” 149 F.3d at 1375-76. We reaffirm this conclusion.FN23

FN22. See, e.g., Br. of Amicus Curiae Fin. Servs. Indus. at 20 (“[E]xtending patent protection to pure methods of doing business ... is contrary to the constitutional and statutory basis for granting patent monopolies....”).

FN23. Therefore, although invited to do so by several amici, we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court. See, e.g., Br. of Amicus Curiae End Software Patents; Br. of Amicus Curiae Red Hat, Inc. at 4-7. We also note that the process claim at issue in this appeal is not, in any event, a software claim. Thus, the facts here would be largely unhelpful in illuminating the distinctions between those software claims that are patent-eligible and those that are not.

Lastly, we address a possible misunderstanding of our decision in Comiskey. Some may suggest that Comiskey implicitly applied a new § 101 test that bars any claim reciting a mental process that lacks significant “physical steps.” We did not so hold, nor did we announce any new test at all in Comiskey. Rather, we simply recognized that the Supreme Court has held that mental processes, like fundamental principles, are excluded by § 101 because “ ‘[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts ... are the basic tools of scientific and technological work.’ ” Comiskey, 499 F.3d at 1377 (quoting Benson, 409 U.S. at 67, 93 S.Ct. 253) (emphasis added). And we actually applied the machine-or-transformation test to determine whether various claims at issue were *961 drawn to patent-eligible subject matter.FN24 Id. at 1379 (“Comiskey has conceded that these claims do not require a machine, and these claims evidently do not describe a process of manufacture or a process for the alteration of a composition of matter.”). Because those claims failed the machine-or-transformation test, we held that they were drawn solely to a fundamental principle, the mental process of arbitrating a dispute, and were thus not patent-eligible under § 101. Id.

FN24. Our statement in Comiskey that “a claim reciting an algorithm or abstract idea can state statutory subject matter only if, as employed in the process, it is embodied in, operates on, transforms, or otherwise involves another class of statutory subject matter, i.e., a machine, manufacture, or composition of matter,” 499 F.3d at 1376, was simply a summarization of the Supreme Court's machine-or-transformation test and should not be understood as altering that test.

[14] Headnote Citing References[15] Headnote Citing References Further, not only did we not rely on a “physical steps” test in Comiskey, but we have criticized such an approach to the § 101 analysis in earlier decisions. In AT & T, we rejected a “physical limitations” test and noted that “the mere fact that a claimed invention involves inputting numbers, calculating numbers, outputting numbers, and storing numbers, in and of itself, would not render it nonstatutory subject matter.” 172 F.3d at 1359 (quoting State St., 149 F.3d at 1374). The same reasoning applies when the claim at issue recites fundamental principles other than mathematical algorithms. Thus, the proper inquiry under § 101 is not whether the process claim recites sufficient “physical steps,” but rather whether the claim meets the machine-or-transformation test.FN25 As a result, even a claim that recites “physical steps” but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter. Conversely, a claim that purportedly lacks any “physical steps” but is still tied to a machine or achieves an eligible transformation passes muster under § 101. FN26

FN25. Thus, it is simply inapposite to the § 101 analysis whether process steps performed by software on a computer are sufficiently “physical.”

FN26. Of course, a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing. As a result, it would not be patent-eligible under § 101.

B.
With these preliminary issues resolved, we now turn to how our case law elaborates on the § 101 analysis set forth by the Supreme Court. To the extent that some of the reasoning in these decisions relied on considerations or tests, such as “useful, concrete and tangible result,” that are no longer valid as explained above, those aspects of the decisions should no longer be relied on. Thus, we reexamine the facts of certain cases under the correct test to glean greater guidance as to how to perform the § 101 analysis using the machine-or-transformation test.

[16] Headnote Citing References[17] Headnote Citing References[18] Headnote Citing References The machine-or-transformation test is a two-branched inquiry; an applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article. See Benson, 409 U.S. at 70, 93 S.Ct. 253. Certain considerations are applicable to analysis under either branch. First, as illustrated by Benson and discussed below, the use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility. See *962 Benson, 409 U.S. at 71-72, 93 S.Ct. 253. Second, the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity. See Flook, 437 U.S. at 590, 98 S.Ct. 2522.

As to machine implementation, Applicants themselves admit that the language of claim 1 does not limit any process step to any specific machine or apparatus. See Appellants' Br. at 11. As a result, issues specific to the machine implementation part of the test are not before us today. 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.

[19] Headnote Citing References[20] Headnote Citing References We will, however, consider some of our past cases to gain insight into the transformation part of the test. A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process. But the main aspect of the transformation test that requires clarification here is what sorts of things constitute “articles” such that their transformation is sufficient to impart patent-eligibility under § 101. It is virtually self-evident that a process for a chemical or physical transformation of physical objects or substances is patent-eligible subject matter. As the Supreme Court stated in Benson:

[T]he arts of tanning, dyeing, making waterproof cloth, vulcanizing India rubber, smelting ores ... 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.

409 U.S. at 70, 93 S.Ct. 253 (quoting Corning v. Burden, 56 U.S. (15 How.) 252, 267-68, 14 L.Ed. 683 (1854)); see also Diehr, 450 U.S. at 184, 101 S.Ct. 1048 (process of curing rubber); Tilghman, 102 U.S. at 729 (process of reducing fats into constituent acids and glycerine).

The raw materials of many information-age processes, however, are electronic signals and electronically-manipulated data. And some so-called business methods, such as that claimed in the present case, involve the manipulation of even more abstract constructs such as legal obligations, organizational relationships, and business risks. Which, if any, of these processes qualify as a transformation or reduction of an article into a different state or thing constituting patent-eligible subject matter?

Our case law has taken a measured approach to this question, and we see no reason here to expand the boundaries of what constitutes patent-eligible transformations of articles.

Our predecessor court's mixed result in Abele illustrates this point. There, we held unpatentable a broad independent claim reciting a process of graphically displaying variances of data from average values. Abele, 684 F.2d at 909. That claim did not specify any particular type or nature of data; nor did it specify how or from where the data was obtained or what the data represented. Id.; see also In re Meyer, 688 F.2d 789, 792-93 (CCPA 1982) (process claim involving undefined “complex system” and indeterminate “factors” drawn from unspecified “testing” not patent-eligible). In contrast, we held one of Abele's dependent claims to be drawn to patent-eligible subject matter where it specified that “said data is X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.” Abele, 684 F.2d at 908-09. This data *963 clearly represented physical and tangible objects, namely the structure of bones, organs, and other body tissues. Thus, the transformation of that raw data into a particular visual depiction of a physical object on a display was sufficient to render that more narrowly-claimed process patent-eligible.

We further note for clarity that the electronic transformation of the data itself into a visual depiction in Abele was sufficient; the claim was not required to involve any transformation of the underlying physical object that the data represented. We believe this is faithful to the concern the Supreme Court articulated as the basis for the machine-or-transformation test, namely the prevention of pre-emption of fundamental principles. So long as the claimed process is limited to a practical application of a fundamental principle to transform specific data, and the claim is limited to a visual depiction that represents specific physical objects or substances, there is no danger that the scope of the claim would wholly pre-empt all uses of the principle.

This court and our predecessor court have frequently stated that adding a data-gathering step to an algorithm is insufficient to convert that algorithm into a patent-eligible process. E.g., Grams, 888 F.2d at 840 (step of “deriv[ing] data for the algorithm will not render the claim statutory”); Meyer, 688 F.2d at 794 (“[data-gathering] step[s] cannot make an otherwise nonstatutory claim statutory”). For example, in Grams we held unpatentable a process of performing a clinical test and, based on the data from that test, determining if an abnormality existed and possible causes of any abnormality. 888 F.2d at 837, 841. We rejected the claim because it was merely an algorithm combined with a data-gathering step. Id. at 839-41. We note that, at least in most cases, gathering data would not constitute a transformation of any article. A requirement simply that data inputs be gathered-without specifying how-is a meaningless limit on a claim to an algorithm because every algorithm inherently requires the gathering of data inputs. Grams, 888 F.2d at 839-40. Further, the inherent step of gathering data can also fairly be characterized as insignificant extra-solution activity. See Flook, 437 U.S. at 590, 98 S.Ct. 2522.

Similarly, In re Schrader presented claims directed to a method of conducting an auction of multiple items in which the winning bids were selected in a manner that maximized the total price of all the items (rather than to the highest individual bid for each item separately). 22 F.3d 290, 291 (Fed.Cir.1994). We held the claims to be drawn to unpatentable subject matter, namely a mathematical optimization algorithm. Id. at 293-94. No specific machine or apparatus was recited. The claimed method did require a step of recording the bids on each item, though no particular manner of recording (e.g., on paper, on a computer) was specified. Id. But, relying on Flook, we held that this step constituted insignificant extra-solution activity. Id. at 294.

IV.
We now turn to the facts of this case. As outlined above, the operative question before this court is whether Applicants' claim 1 satisfies the transformation branch of the machine-or-transformation test.

[21] Headnote Citing References[22] Headnote Citing References We hold that the Applicants' process as claimed does not transform any article 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'*964 process at most incorporates only such ineligible transformations. See Appellants' Br. at 11 (“[The claimed process] transforms the relationships between the commodity provider, the consumers and market participants ....”) As discussed earlier, 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. See J.A. at 86-87. The claim only refers to “transactions” involving the exchange of these legal rights at a “fixed rate corresponding to a risk position.” See ′892 application cl.1. 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.

Applicants' arguments are unavailing because they rely on incorrect or insufficient considerations and do not address their claim's failure to meet the requirements of the Supreme Court's machine-or-transformation test. First, they argue that claim 1 produces “useful, concrete and tangible results.” But as already discussed, this is insufficient to establish patent-eligibility under § 101. Applicants 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 have [sic] a tangible result.” Appellants' Br. at 9. But as previously discussed, the correct analysis is whether the claim meets the machine-or-transformation test, not whether it recites “physical steps.” Even if it is true that Applicant's claim “can only be practiced by a series of physical acts” as they argue, see id. at 9, its clear failure to satisfy the machine-or-transformation test is fatal. 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. Applied here, Applicants' claim fails that test so it is not drawn to a “process” under § 101 as that term has been interpreted.

On the other hand, while we agree with the PTO that the machine-or-transformation test is the correct test to apply in determining whether a process claim is patent-eligible under § 101, we do not agree, as discussed earlier, that this amounts to a “technological arts” test. See Appellee's Br. at 24-28. Neither the PTO nor the courts may pay short shrift to the machine-or-transformation test by using purported equivalents or shortcuts such as a “technological arts” requirement. 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. When we do so here, however, we must conclude, as the PTO did, that Applicants' claim fails the test.

Applicants' claim is similar to the claims we held unpatentable under § 101 in Comiskey. There, the applicant claimed a process for mandatory arbitration of disputes regarding unilateral documents and bilateral “contractual” documents in which arbitration was required by the language of the document, a dispute regarding the document was arbitrated, and a binding decision resulted from the arbitration. Comiskey, 499 F.3d at 1368-69. We held the broadest process claims unpatentable under § 101 because “these claims do not require a machine, and these claims evidently do not describe a process of manufacture*965 or a process for the alteration of a composition of matter.” Id. at 1379. We concluded that the claims were instead drawn to the “mental process” of arbitrating disputes, and that claims to such an “application of [only] human intelligence to the solution of practical problems” is no more than a claim to a fundamental principle. Id. at 1377-79 (quoting Benson, 409 U.S. at 67, 93 S.Ct. 253 (“[M]ental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.”)).

Just as the Comiskey claims as a whole were directed to the mental process of arbitrating a dispute to decide its resolution, the claimed process here as a whole is directed to the mental and mathematical process of identifying transactions that would hedge risk. The fact that the claim requires the identified transactions actually to be made does no more to alter the character of the claim as a whole than the fact that the claims in Comiskey required a decision to actually be rendered in the arbitration-i.e., in neither case do the claims require the use of any particular machine or achieve any eligible transformation.

We have in fact consistently rejected claims like those in the present appeal and in Comiskey. For example, in Meyer, the applicant sought to patent a method of diagnosing the location of a malfunction in an unspecified multi-component system that assigned a numerical value, a “factor,” to each component and updated that value based on diagnostic tests of each component. 688 F.2d at 792-93. The locations of any malfunctions could thus be deduced from reviewing these “factors.” The diagnostic tests were not identified, and the “factors” were not tied to any particular measurement; indeed they could be arbitrary. Id. at 790. We held that the claim was effectively drawn only to “a mathematical algorithm representing a mental process,” and we affirmed the PTO's rejection on § 101 grounds. Id. at 796. No machine was recited in the claim, and the only potential “transformation” was of the disembodied “factors” from one number to another. Thus, the claim effectively sought to pre-empt the fundamental mental process of diagnosing the location of a malfunction in a system by noticing that the condition of a particular component had changed. And as discussed earlier, a similar claim was rejected in Grams.FN27 See 888 F.2d at 839-40 (rejecting claim to process of diagnosing “abnormal condition” in person by identifying and noticing discrepancies in results of unspecified clinical tests of different parts of body).

FN27. We note that several Justices of the Supreme Court, in a dissent to a dismissal of a writ of certiorari, expressed their view that a similar claim in Laboratory Corp. of America Holdings v. Metabolite Laboratories, Inc. was drawn to unpatentable subject matter. 548 U.S. 124, 126 S.Ct. 2921, 2927-28, 165 L.Ed.2d 399 (2006) (Breyer, J., dissenting; joined by Stevens, J., and Souter, J.). There, the claimed process only comprised the steps of: (1) “assaying a body fluid for an elevated level of total homocysteine,” and (2) “correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.” Id. at 2924.

Similarly to the situations in Meyer and Grams, Applicants here seek to claim a non-transformative process that encompasses a purely mental process of performing requisite mathematical calculations without the aid of a computer or any other device, mentally identifying those transactions that the calculations have revealed would hedge each other's risks, and performing the post-solution step of consummating those transactions. Therefore, claim 1 would effectively pre-empt any application of the fundamental concept of hedging and mathematical calculations inherent*966 in hedging (not even limited to any particular mathematical formula). And while Applicants argue that the scope of this pre-emption is limited to hedging as applied in the area of consumable commodities, the Supreme Court's reasoning has made clear that effective pre-emption of all applications of hedging even just within the area of consumable commodities is impermissible. See Diehr, 450 U.S. at 191-92, 101 S.Ct. 1048 (holding that field-of-use limitations are insufficient to impart patent-eligibility to otherwise unpatentable claims drawn to fundamental principles). Moreover, while the claimed process contains physical steps (initiating, identifying), it does not involve transforming an article into a different state or thing. Therefore, Applicants' claim is not drawn to patent-eligible subject matter under § 101.

CONCLUSION
Because the applicable test to determine whether a claim is drawn to a patent-eligible process under § 101 is the machine-or-transformation test set forth by the Supreme Court and clarified herein, and Applicants' claim here plainly fails that test, the decision of the Board is

AFFIRMED.

DYK, Circuit Judge, with whom LINN, Circuit Judge, joins, concurring.

While I fully join the majority opinion, I write separately to respond to the claim in the two dissents that the majority's opinion is not grounded in the statute, but rather “usurps the legislative role.” FN1 In fact, the unpatentability of processes not involving manufactures, machines, or compositions of matter has been firmly embedded in the statute since the time of the Patent Act of 1793, ch. 11, 1 Stat. 318 (1793). It is our dissenting colleagues who would legislate by expanding patentable subject matter far beyond what is allowed by the statute.

FN1. The dissents fault the majority for “ventur[ing] away from the statute,” Rader, J., dissenting op. at 1013, and “usurp[ing] the legislative role,” Newman, J., dissenting op. at 997.

I
Section 101 now provides:

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.

35 U.S.C. § 101 (emphases added).

The current version of § 101 can be traced back to the Patent Act of 1793. In relevant part, the 1793 Act stated that a patent may be granted to any person or persons who:

shall allege that he or they have invented any new and useful art, machine, manufacture or composition of matter, or any new and useful improvement on any art, machine, manufacture or composition of matter....

1 Stat. 318, 319 § 1 (1793) (emphases added). The criteria for patentability established by the 1793 Act remained essentially unchanged until 1952, when Congress amended § 101 by replacing the word “art” with “process” and providing in § 100(b) a definition of the term “process.” The Supreme Court has made clear that this change did not alter the substantive understanding of the statute; it did not broaden the scope of patentable subject matter.FN2 Thus, our interpretation of § 101 *967 must begin with a consideration of what the drafters of the early patent statutes understood the patentability standard to require in 1793. See Diehr, 450 U.S. at 182-83, 101 S.Ct. 1048 (looking to the 1793 Act).

FN2. See Diamond v. Diehr, 450 U.S. 175, 182, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (“[A] process has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.”); Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Rather, the 1952 Act simply affirmed the prior judicial understanding, as set forth in Corning v. Burden, 56 U.S. (15 How.) 252, 14 L.Ed. 683 (1853), that Congress in 1793 had provided for the patentability of a “process” under the term “art.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048.

A
The patentability criteria of the 1793 Act were to a significant extent the same in the 1790 Act.FN3 The 1790 “statute was largely based on and incorporated” features of the English system and reveals a sophisticated knowledge of the English patent law and practice.FN4 This is reflected in Senate committee report FN5 for the bill that became the 1790 Act, which expressly noted the drafters' reliance on the English practice:

FN3. In relevant part, the 1790 Act permitted patents upon “any useful art, manufacture, engine, machine, or device, or any improvement therein not before known or used.” Ch. 11, § 1, 1 Stat. 109, 110 (1790).

FN4. Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law & Administration, 1798-1836 109 (1998) (hereinafter To Promote the Progress ); see also Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents (Part 1), 76 J. Pat. & Trademark Off. Soc'y 697, 698 (1994) (“[T]he English common law relating to patents was what was best known in the infant United States.”).

FN5. Senate Committee Report Accompanying Proposed Amendments to H.R. 41, reprinted in Proceedings in Congress During the Years 1789 & 1790 Relating to the First Patent & Copyright Laws, 22 J. Pat. Off. Soc'y 352, 363 (1940).

The Bill depending before the House of Representatives for the Promotion of useful Arts is framed according to the Course of Practice in the English Patent Office except in two Instances-
22 J. Pat. Off. Soc'y at 363 (emphasis added).FN6 Likewise, the legislative history of the 1793 Patent Act reflects the same keen understanding of English patent practice. During a debate in the House over the creation of a Patent Office, for example, the Representative who introduced the bill noted that its principles were “an imitation of the Patent System of Great Britain.” 3 Annals of Congress 855 (1793).FN7

FN6. Neither of those two instances related to patentable subject matter or was adopted in the enacted statute. The first proposed departure from the English practice was a novelty provision protecting the inventor against those who derived their knowledge of the invention from the true inventor; the second was in a requirement that patentees make a “Public Advertisement” of their invention. Such a requirement was thought necessary “in so extensive a Country as the United States.” Senate Report, reprinted in 22 J. Pat. Off. Soc'y at 363-64.
The American statute ultimately differed in some other respects. For example, Congress rejected the English rule that the invention need only be novel in England. The American statute required novelty against the whole world and did not permit “patents of importation.” See To Promote the Progress, supra n. 4 at 95-97, 137-38.

FN7. Even the opposing view-urging departure from the English practice in particular respects-recognized that the English practice provided considerable guidance. See 3 Annals of Congress at 855-56 (“[Great Britain] had afforded, it was true, much experience on the subject; but regulations adopted there would not exactly comport in all respects either with the situation of this country, or with the rights of the citizen here. The minds of some members had taken a wrong direction, he conceived, from the view in which they had taken up the subject under its analogy with the doctrine of patents in England.”); see also To Promote the Progress, supra n. 4 at 216-17.

*968 Later, Justice Story, writing for the Supreme Court, recognized the profound influence of the English practice on these early patent laws, which in many respects codified the common law:

It is obvious to the careful inquirer, that many of the provisions of our patent act are derived from the principles and practice which have prevailed in the construction of that of England .... The language of [the patent clause of the Statute of Monopolies] is not, as we shall presently see, identical with ours; but the construction of it adopted by the English courts, and the principles and practice which have long regulated the grants of their patents, as they must have been known and are tacitly referred to in some of the provisions of our own statute, afford materials to illustrate it.

Pennock v. Dialogue, 27 U.S. 1, 18, 2 Pet. 1, 7 L.Ed. 327 (1829) (emphases added); see also Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (noting that first patent statute was written against the “backdrop” of English monopoly practices); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 n. 6, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964) (“Much American patent law derives from English patent law.”).

While Congress departed from the English practice in certain limited respects, in many respects Congress simply adopted the English practice without change. Both the 1790 and the 1793 Acts, for example, adopted the same 14-year patent term as in England. Both also required inventors to file a written specification-a requirement recognized by the English common law courts in the mid-eighteenth century.FN8 In addition, as discussed below, the categories of patentable subject matter closely tracked the English approach, and in certain respects reflected a deliberate choice between competing views prevalent in England at the time.

FN8. See Christine MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660-1800 48-49 (2002); To Promote the Progress, supra n. 4 at 400, 404.

B
The English practice in 1793, imported into the American statutes, explicitly recognized a limit on patentable subject matter. As the Supreme Court recounted in Graham v. John Deere, the English concern about limiting the allowable scope of patents arose from an aversion to the odious Crown practice of granting patents on particular types of businesses to court favorites. 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); see also MacLeod, supra n. 8 at 15 (“But most offensive of all was the granting of monopoly powers in established industries, as a form of patronage, to courtiers whom the crown could not otherwise afford to reward.”). Parliament responded to the Crown's abuses in 1623 by passing the Statute of Monopolies, prohibiting the Crown from granting these despised industry-type monopolies. Not all monopolies were prohibited, however: the Statute expressly exempted invention-type patent monopolies. Section 6 of the Statute exempted from its prohibitions “letters patent and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures....” 21 Jac. 1. c.3, s.6 (emphases added).

Each of the five categories of patentable subject matter recognized by the 1793 Patent Act-(1) “manufacture,” (2) “machine,” (3) “composition of matter,” (4) “any new and useful improvement,” and (5) “art”-*969 was drawn either from the Statute of Monopolies and the common law refinement of its interpretation or resolved competing views being debated in England at the time. See To Promote the Progress, supra n. 4 at 239.

“ Manufacture.” At the most basic level, the 1793 Act, like the Statute of Monopolies, expressly provided for the patentability of “manufactures.” This language was not accidental, but rather reflected a conscious adoption of that term as it was used in the English practice. Id. (“It is clear that the Congress sought to incorporate into the U.S. statutory scheme in 1793 at least as much of the common law interpretation of ‘new manufactures' as was understood at the time.”).

“ Machine.” Likewise, the category of “machines” in the 1793 Act had long been understood to be within the term “manufactures” as used in the English statute. See id.; see, e.g., Morris v. Bramson, 1 Carp. P.C. 30, 31 (K.B.1776) (sustaining a patent “for an engine or machine on which is fixed a set of working needles ... for the making of eyelet-holes”) (emphasis added); MacLeod, supra n. 8 at 101 (noting, among numerous other early machine patents, seven patents on “machinery to raise coal and ores” before 1750).

“ Composition of Matter.” Although the 1790 statute did not explicitly include “compositions of matter,” this was remedied in the 1793 statute. At the time, “compositions of matter” were already understood to be a type of manufacture patentable under the English statute. See To Promote the Progress, supra n. 4, at 224 n. 4. One example is found in Liardet v. Johnson, 1 Carp. P.C. 35 (K.B.1778), a case involving a patent on a “composition” of stucco (a composition of matter). Lord Mansfield's jury instructions noted that by the time of that trial he had decided “several cases” involving compositions: “But if ... the specification of the composition gives no proportions, there is an end of his patent.... I have determined, [in] several cases here, the specification must state, where there is a composition, the proportions....” FN9

FN9. Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 55 (2002) (quoting E. Wyndham Hulme, On the History of the Patent Laws in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280, 285 (1902)).

“ Any new and useful improvement.” The reference to “any new and useful improvement” in the 1793 Act also adopted a consensus recently reached by the English courts. The common law courts had first ruled in Bircot's Case in the early seventeenth century that an improvement to an existing machine could not be the proper subject of a patent under the Statute of Monopolies. See Boulton v. Bull, 2 H. Bl. 463, 488 (C.P.1795). In 1776 that line of cases was overruled in Morris v. Bramson, because such a reading of the statute “would go to repeal almost every patent that was ever granted.” FN10

FN10. Morris, 1 Carp. P.C. at 34; see also Boulton, 2 H.Bl. at 489 (“Since [ Morris v. Bramson ], it has been the generally received opinion in Westminster Hall, that a patent for an addition is good.”).

“ Art.” As the Supreme Court has recognized, a process “was considered a form of ‘art’ as that term was used in the 1793 Act.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (citing Corning v. Burden, 56 U.S. at 267-268). The language of the Statute of Monopolies permitted patents on that which could be characterized as the “working or making of any manner of new manufactures within this realm.” 21 Jac. 1. c.3, s.6. While this language plainly applied to tangible “new manufactures” (such as machines or compositions of matter), it *970 also appeared to allow patenting of manufacturing processes as the “ working or making of any manner of new manufactures.” Thus, under the Statute of Monopolies patents could be had on the “working or making of any manner of new manufactures.” Numerous method patents had issued by 1793, including James Watt's famous 1769 patent on a “ [m]ethod of diminishing the consumption of fuel in [steam]-engines.” FN11 However, the English courts in the mid-eighteenth century had not yet resolved whether processes for manufacturing were themselves patentable under the statute, and as discussed below, the issue was being actively litigated in the English courts. In the 1793 Act Congress resolved this question by including the term “art” in the statute, adopting the practice of the English law officers and the views of those in England who favored process patents.

FN11. Walterscheid, supra n. 9 at 355-56 (emphasis added); see also Boulton, 2 H. Bl. at 494-95 (1795) (noting that many method patents had issued).

II
The question remains as to what processes were considered to be patentable in England at the time of the 1793 Act. Examination of the relevant sources leads to the conclusion that the method Bilski seeks to claim would not have been considered patentable subject matter as a process under the English statute.

A
First, the language of the Statute of Monopolies-“ working or making of any manner of new manufactures ”-suggests that only processes that related to “manufactures” (including machines or compositions of matter) could be patented.

Second, the English patent practice before and contemporaneous with the 1793 Act confirms the notion that patentable subject matter was limited by the term “manufacture” in the Statute of Monopolies and required a relation to the other categories of patentable subject matter. The organization of human activity was not within its bounds. Rather, the patents registered in England under the Statute of Monopolies before 1793 were limited to articles of manufacture, machines for manufacturing, compositions of matter, and related processes. A complete list of such patents (with a few missing patents from the 17th century) was published in the mid-1800s by Bennet Woodcroft, the first head of the English Patent Office.FN12 Representative examples of patented processes at the time include: “Method of making a more easy and perfect division in stocking frame-work manufactures,” No. 1417 to John Webb (1784); “Making and preparing potashes and pearl-ashes of materials not before used for the purpose,” No. 1223 to Richard Shannon (1779); “Making salt from sea-water or brine, by steam,” No. 1006 to Daniel Scott (1772); “Milling raw hides and skins so as to be equally good for leather as if tanned,” No. 893 to George Merchant (1768); “Making salt, and removing the corrosive nature of the same, by a separate preparation of the brine,” No. 416 to George Campbell (1717); and “Making good and merchantable tough iron ... with one-fifth of the expense of charcoal as now used,” No. 113 to Sir Phillibert Vernatt (1637).

FN12. Bennet Woodcroft, Alphabetical Index of Patentees of Inventions, from March 2, 1617 (14 James I) to October 1, 1852 (16 Victoriae) (2d ed. 1857).

Nothing in Woodcroft's list suggests that any of these hundreds of patents was on a method for organizing human activity, save for one aberrational patent discussed *971 below. Rather, the established practice reflects the understanding that only processes related to manufacturing or “manufactures” were within the statute. The English cases before 1793 recognized that the practice followed in issuing patents was directly relevant to the construction of the statute. See, e.g., Morris, 1 Carp. P.C. at 34 (declining to read the statute in such a way that “would go to repeal almost every patent that was ever granted”).

Third, nearly contemporaneous English cases following shortly after the 1793 Act lend further insight into what processes were thought to be patentable under the English practice at the time the statute was enacted. Although the issue of the validity of process patents had not conclusively been settled in the English common law before 1793, the question was brought before the courts in the landmark case of Boulton v. Bull, 2 H. Bl. 463, 465 (C.P.1795), which involved James Watt's patent for a “method of lessening the consumption of steam, and consequently fuel in [steam] engines.” FN13 In 1795, the court rendered a split decision, with two judges on each side. Boulton, 2 H. Bl. at 463 (1795). Those who viewed process patents as invalid, as did Justice Buller, urged that a method was merely an unpatentable principle: “A patent must be for some new production from [elements of nature], and not for the elements themselves.” Id. at 485. He thought “it impossible to support a patent for a method only, without having carried it into effect and produced some new substance.” Id. at 486. Justice Health similarly found that the “new invented method for lessening the consumption of steam and fuel in [steam] engines” (i.e., the Watt patent), being neither “machinery” nor a “substance [ ] (such as medicine[ ] ) formed by chemical and other processes,” was not within the Statute of Monopolies. Id. at 481-82. In contrast, Lord Chief Justice Eyres, who believed processes had long been a valid subject of patents, urged that “two-thirds, I believe I might say three-fourths, of all patents granted since the statute [of Monopolies] passed, are for methods of operating and of manufacturing.... ” Id. at 494-95 (emphasis added). He agreed that “[u]ndoubtedly there can be no patent for a mere principle; but for a principle so far embodied and connected with corporeal substances ... I think there may be a patent.” Id. at 495 (emphasis added). Justice Rooke also noted that Watt's method was within the statute because it was connected with machinery: “What method can there be of saving steam or fuel in engines, but by some variation in the construction of them?” Id. at 478. The Justices who believed process patents were valid spoke in terms of manufacturing, machines, and compositions of matter, because the processes they believed fell within the statute were processes that “embodied and connected with corporeal substances.” Id. at 495.

FN13. The Supreme Court has in several opinions noted Boulton v. Bull in connection with its consideration of English patent practice. See, e.g., Markman v. Westview Instruments, Inc., 517 U.S. 370, 381 n. 6, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996); Evans v. Eaton, 20 U.S. (7 Wheat.) 356, 388 n. 2-3, 5 L.Ed. 472 (1822).

In 1799, on appeal from another case involving the same Watt patent, the validity of such process patents were upheld. Hornblower v. Boulton (K.B.1799), 8 T.R. 95. There, Chief Justice Lord Kenyon stated that “it evidently appears that the patentee claims a monopoly for an engine or machine, composed of material parts, which are to produce the effect described; and that the mode of producing this is so described, as to enable mechanics to produce it.... I have no doubt in saying, that this is a patent for a manufacture, which I *972 understand to be something made by the hands of man.” Id. at 99. Justice Grose agreed, finding that “Mr. Watt had invented a method of lessening the consumption of steam and fuel in [steam] engines”, and this was “not a patent for a mere principle, but for the working and making of a new manufacture within the words and meaning of the statute.” Id. at 101-02. He further noted, however, that “This method ... if not effected or accompanied by a manufacture, I should hardly consider as within the [statute].” Id. at 102-03 (emphasis added). Justice Lawrence similarly found such process patents to be permissible: “Engine and method mean the same thing, and may be the subject of a patent. ‘Method,’ properly speaking, is only placing several things and performing several operations in the most convenient order....” Id. at 106.

There is no suggestion in any of this early consideration of process patents that processes for organizing human activity were or ever had been patentable. Rather, the uniform assumption was that the only processes that were patentable were processes for using or creating manufactures, machines, and compositions of matter.

B
The dissenters here, by implication at least, appear to assume that this consistent English practice should somehow be ignored in interpreting the current statute because of technological change.FN14 There are several responses to this.

FN14. See, e.g., Rader, J., dissenting op. at 1011 (“[T]his court ties our patent system to dicta from an industrial age decades removed from the bleeding edge.”); id. (“[T]his court ... links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes....”); Newman, J., dissenting op. at 1011 (“[T]his court now adopts a redefinition of ‘process' in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities....”).

The first of these is that the Supreme Court has made clear that when Congress intends to codify existing law, as was the case with the 1793 statute, the law must be interpreted in light of the practice at the time of codification. In Schmuck v. United States, 489 U.S. 705, 718-19, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989), for example, the Court considered the proper interpretation of Rule 31(c) of the Federal Rules of Criminal Procedure. The rule, “which ha [d] not been amended since its adoption in 1944,” was a restatement of an 1872 Act “codif[ying] the common law for federal criminal trials.” Because of this fact, the Court found that the “prevailing practice at the time of the Rule's promulgation informs our understanding of its terms.” Id.; see also, e.g., Eldred v. Ashcroft, 537 U.S. 186, 200 n. 5, 123 S.Ct. 769, 154 L.Ed.2d 683 (2003) (considering the English practice at the time of the enactment of the 1790 copyright act); Tome v. United States, 513 U.S. 150, 159-60, 166, 115 S.Ct. 696, 130 L.Ed.2d 574 (1995) (looking to practice and noting that “a majority of common-law courts were performing [a task required by the common law] for well over a century” in interpreting a Federal Rule of Evidence that “was intended to carry over the common-law”); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549-554, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (relying on the history and practice of copyright fair-use when statutory provision reflected the “intent of Congress to codify the common-law doctrine”); Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 164-65, 59 S.Ct. 777, 83 L.Ed. 1184 (1939) (considering the English practice “which theretofore had been evolved in the English Court of Chancery” at the time of the 1789 Judiciary Act in *973 determining availability of costs under equity jurisdiction).

Second, the Supreme Court language upon which the dissents rely FN15 offers no warrant for rewriting the 1793 Act. To be sure, Congress intended the courts to have some latitude in interpreting § 101 to cover emerging technologies, Chakrabarty, 447 U.S. at 316, 100 S.Ct. 2204, and the categorical terms chosen are sufficiently broad to encompass a wide range of new technologies. But there is no evidence that Congress intended to confer upon the courts latitude to extend the categories of patentable subject matter in a significant way. To the contrary, the Supreme Court made clear that “Congress has performed its constitutional role in defining patentable subject matter in § 101; we perform ours in construing the language Congress has employed. In so doing, our obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose.” Id. at 315, 100 S.Ct. 2204. In Benson, the Court rejected the argument that its decision would “freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology.” Gottschalk v. Benson, 409 U.S. 63, 71, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). Instead, the Court explained that it “may be that the patent laws should be extended to cover [such onrushing technology], a policy matter to which we are not competent to speak” but that “considered action by the Congress is needed.” Id. at 72-73, 93 S.Ct. 253.

FN15. See, e.g., Newman, J., dissenting op. at 981 (“ ‘[C]ourts should not read into the patent laws limitations and conditions which the legislature has not expressed.’ ” (quoting Diehr, 450 U.S. at 182, 101 S.Ct. 1048)); Rader, J., dissenting op. at 1012 (same).

Third, we are not dealing here with a type of subject matter unknown in 1793. One commentator has noted:

The absence of business method patents cannot be explained by an absence of entrepreneurial creativity in Great Britain during the century before the American Revolution. On the contrary, 1720 is widely hailed as the beginning of a new era in English public finance and the beginning of major innovations in business organization.

Malla Pollack, The Multiple Unconstitutionality of Business Method Patents, 28 Rutgers Computer & Tech. L.J. 61, 96 (2002) (footnotes omitted). FN16 In the hundreds of patents in Woodcroft's exhaustive list of English patents granted from 1612 to 1793, there appears to be only a single patent akin to the type of method Bilski seeks to claim. That sole exception was a patent granted to John Knox in 1778 on a “Plan for assurances on lives of persons from 10 to 80 years of age.” FN17 Later commentators have viewed this single patent as clearly contrary to the Statute of Monopolies:

FN16. Similarly, another commentator states: “it might be wondered why none of the many ingenious schemes of insurance has ever been protected by patenting it.” D.F. Renn, John Knox's Plan for Insuring Lives: A Patent of Invention in 1778, 101 J. Inst. Actuaries 285 (1974), available at http:// www. actuaries. org. uk/ _data/assets/pdf_file/0006/25278/0285-0289.pdf (last visited Oct. 3, 2008).

FN17. Woodcroft, supra n. 12 at 324.

Such protection of an idea should be impossible.... It is difficult to understand how Knox's plan for insuring lives could be regarded as ‘a new manner of manufacture’; perhaps the Law Officer was in a very good humour that day, or perhaps he had forgotten the wording of the statute; most likely he was concerned only with the promised ‘very considerable Consumption of [Revenue] *974 Stamps' which, Knox declared, would ‘contribute to the increase of the Public Revenues.’
Renn, supra n. 16 at 285. There is no indication that Knox's patent was ever enforced or its validity tested, or that this example led to other patents or efforts to patent similar activities. But the existence of the Knox patent suggests that as of 1793 the potential advantage of patenting such activities was well-understood.
In short, the need to accommodate technological change in no way suggests that the judiciary is charged with rewriting the statute to include methods for organizing human activity that do not involve manufactures, machines, or compositions of matter.

C
Since the 1793 statute was reenacted in 1952, it is finally important also to inquire whether between 1793 and 1952 the U.S. Patent Office and the courts in this country had departed from the English practice and allowed patents such as those sought by Bilski. In fact, the U.S. Patent Office operating under the 1793 Act hewed closely to the original understanding of the statute. As in the English practice of the time, there is no evidence that patents were granted under the 1793 Act on methods of organizing human activity not involving manufactures, machines or the creation of compositions of matter. The amicus briefs have addressed the early American practice, and some of them claim that human activity patents were allowed in the early period. To the contrary, the patents cited in the briefs are plainly distinguishable.

The earliest claimed human activity patent cited in the briefs issued in 1840, entitled “Improvement in the Mathematical Operation of Drawing Lottery-Schemes.” Br. of Amicus Curiae Regulatory Datacorp 23 n.54. But that patent is fundamentally unlike the Bilski claim, since it does not claim a method of organizing human activity not involving manufactures, machines or the creation of compositions of matter. See U.S. Patent No. 1700 (issued July 18, 1840). Rather, it is directed to a scheme of combining different combinations of numbers onto a large number of physical lottery tickets (i.e., a method for manufacturing lottery tickets). Id. col.1. The other early-issued patents cited in the amicus briefs are similarly distinguishable.FN18

FN18. See, e.g., Complemental Accident Insurance Policy, U.S. Patent No. 389,818 (issued Sept. 18, 1888) (claiming a “complemental insurance policy” as an apparatus consisting of two separate cards secured together); Insurance System, U.S. Patent No. 853,852 (issued May 14, 1907) (claiming a “two-part insurance policy” as “an article of manufacture”).
A number of the amici also refer to the discussion and the patents cited in “A USPTO White Paper” (the “White Paper”) to establish the historical foundation of business method patents. See, e.g., Br. of Amicus Curiae Accenture 14-15 n. 11. As Judge Mayer notes, dissenting op. at 1001-02 n. 4, the White Paper does not show this proposition. As the White Paper itself recognizes, the early financial patents it discusses were largely mechanical products and methods related to financial paper, not methods for organizing human activity. White Paper at 2. Thus, while the White Paper shows that inventions in the business realm of finance and management historically enjoyed patent protection, it does little to establish that business methods directed to the organization of human activity not involving manufactures, machines or the creation of compositions of matter were similarly patentable.

Likewise, Supreme Court decisions before the 1952 Patent Act assumed that the only processes that were patentable were those involving other types of patentable subject matter. In later cases the Supreme Court has recognized that these cases set forth the standard for process *975 patents in the pre-1952 period. Diehr, 450 U.S. at 182-84, 101 S.Ct. 1048; Gottschalk, 409 U.S. at 69-70, 93 S.Ct. 253. The leading case is Corning v. Burden, 56 U.S. 252, 15 How. 252, 14 L.Ed. 683 (1853). There, the Supreme Court discussed the patentability of processes:

A process, eo nomine, is not made the subject of a patent in our act of Congress. It is included under the general term ‘useful art.’ An art may require one or more processes or machines in order to produce a certain result or manufacture. The term machine includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. But where the result or effect is produced by chemical action, by the operation or application of some element or power of nature, or of one substance to another, such modes, methods, or operations, are called ‘processes.’ A new process is usually the result of discovery; a machine, of invention. The arts of tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores, and numerous others are usually carried on by processes, as distinguished from machines.... It is for the discovery or invention of some practicable method or means of producing a beneficial result or effect that a patent is granted, and not for the result or effect itself. It is when the term process is used to represent the means or method of producing a result that it is patentable, and it will include all methods or means which are not effected by mechanism or mechanical combinations.

Id. at 267-68 (emphases added). In Cochrane v. Deener, the Court clarified its understanding of a patentable “process”:

That a process may be patentable, irrespective of the particular form of the instrumentalities used, cannot be disputed.... 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. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.

94 U.S. 780, 787-88, 24 L.Ed. 139 (1876) (emphases added). Finally, in Tilghman v. Proctor, 102 U.S. 707, 722, 26 L.Ed. 279 (1880), the Court noted:

That a patent can be granted for a process there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture. A manufacturing process is clearly an art, within the meaning of the law.

(Emphasis added). The Court's definition of a patentable process was well-accepted and consistently applied by the courts of appeals. See, e.g., P.E. Sharpless Co. v. Crawford Farms, 287 F. 655, 658-59 (2nd Cir.1923); Chicago Sugar-Refining Co. v. Charles Pope Glucose Co., 84 F. 977, 982 (7th Cir.1898).

Finally, nothing in the legislative history of the 1952 Act suggests that Congress intended to enlarge the category of patentable subject matter to include patents such as the method Bilski attempts to claim. As discussed above, the only change made by the 1952 Act was in replacing the word *976 “art” with the word “process.” The Supreme Court has already concluded that this change did not alter the substantive understanding of the statute. See Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (“[A] process has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.”).

The House Report accompanying the 1952 bill includes the now-famous reference to “anything under the sun made by man”:

A person may have “invented” a machine or a manufacture, which may include anything under the sun made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.

H.R.1923 at 7. Although this passage has been used by our court in past cases to justify a broad interpretation of patentable subject matter, I agree with Judge Mayer that, when read in context, the statement undercuts the notion that Congress intended to expand the scope of § 101. See Mayer, J., dissenting op. at 1000. It refers to things “made by man,” not to methods of organizing human activity. In this respect, the language is reminiscent of the 1799 use of the phrase “something made by the hands of man” by Chief Justice Lord Kenyon as a limitation on patentable subject matter under the Statute of Monopolies. The idea that an invention must be “made by man” was used to distinguish “a philosophical principle only, neither organized or capable of being organized” from a patentable manufacture. Hornblower, 8 T.R. at 98. Lord Kenyon held that the patent before him was not based on a mere principle, but was rather “a patent for a manufacture, which I understand to be something made by the hands of man.” Id. at 98 (emphases added); accord American Fruit Growers v. Brogdex Co., 283 U.S. 1, 11, 51 S.Ct. 328, 75 L.Ed. 801 (1931) (giving “anything made for use from raw or prepared materials” as one definition of “manufacture”).

In short, the history of § 101 fully supports the majority's holding that Bilski's claim does not recite patentable subject matter. Our decision does not reflect “legislative” work, but rather careful and respectful adherence to the Congressional purpose.

NEWMAN, Circuit Judge, dissenting.

The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the patent system. The court achieves this result by redefining the word “process” in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today's electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today's Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.

This exclusion is imposed at the threshold, before it is determined whether the excluded process is new, non-obvious, enabled, described, particularly claimed, etc.; that is, before the new process is examined for patentability. For example, we do not know whether the Bilski process would be found patentable under the statutory criteria, for they were never applied.

The innovations of the “knowledge economy”-of “digital prosperity”-have been dominant contributors to today's economic *977 growth and societal change. Revision of the commercial structure affecting major aspects of today's industry should be approached with care, for there has been significant reliance on the law as it has existed, as many amici curiae pointed out. Indeed, the full reach of today's change of law is not clear, and the majority opinion states that many existing situations may require reassessment under the new criteria.

Uncertainty is the enemy of innovation. These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed. I respectfully dissent.

DISCUSSION
The court's exclusion of specified process inventions from access to the patent system is achieved by redefining the word “process” in the patent statute. However, the court's redefinition is contrary to statute and to explicit rulings of the Supreme Court and this court. I start with the statute:

Section 101 is the statement of statutory eligibility
From the first United States patent act in 1790, the subject matter of the “useful arts” has been stated broadly, lest advance restraints inhibit the unknown future. The nature of patent-eligible subject matter has received judicial attention over the years, as new issues arose with advances in science and technology. The Supreme Court has consistently confirmed the constitutional and legislative purpose of providing a broadly applicable incentive to commerce and creativity, through this system of limited exclusivity. Concurrently, the Court early explained the limits of patentable subject matter, in that “fundamental truths” were not intended to be included in a system of exclusive rights, for they are the general foundations of knowledge. Thus laws of nature, natural phenomena, and abstract ideas are not subject to patenting. Several rulings of the Court have reviewed patent eligibility in light of these fundamentals. However, the Court explicitly negated today's restrictions. My colleagues in the majority are mistaken in finding that decisions of the Court require the per se limits to patent eligibility that the Federal Circuit today imposes. The patent statute and the Court's decisions neither establish nor support the exclusionary criteria now adopted.

The court today holds that any process that does not transform physical matter or require performance by machine is not within the definition of “process” in any of the patent statutes since 1790. All of the statutes contained a broad definition of patent-eligible subject matter, like that in the current Patent Act of 1952:

35 U.S.C § 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.

In Diamond v. Diehr, 450 U.S. 175, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) the Court explained that Section 101 is not an independent condition of patentability, but a general statement of subject matter eligibility. The Court stated:

Section 101, however, is a general statement of the type of subject matter that is eligible for patent protection “subject to the conditions and requirements of this title.” Specific conditions for patentability follow and § 102 covers in detail the conditions relating to novelty. The question therefore of whether a particular invention is novel is “wholly apart *978 from whether the invention falls in a category of statutory subject matter.”

Id. at 189-90, 101 S.Ct. 1048 (footnote omitted) (quoting In re Bergy, 596 F.2d 952, 961 (C.C.P.A.1979)).

“Process” is defined in the 1952 statute as follows:

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.

The 1952 Patent Act replaced the word “art” in prior statutes with the word “process,” while the rest of Section 101 was unchanged from earlier statutes. The legislative history for the 1952 Act explained that “art” had been “interpreted by courts to be practically synonymous with process or method.” S.Rep. No. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2398, 2409-10. In Diehr the Court explained that a process “has historically enjoyed patent protection because it was considered a form of ‘art’ as that term was used in the 1793 Act.” 450 U.S. at 182, 101 S.Ct. 1048.

The definition of “process” provided at 35 U.S.C. § 100(b) is not “unhelpful,” as this court now states, maj. op. at 951 n. 3, but rather points up the errors in the court's new statutory interpretation. Section 100(b) incorporates the prior usage “art” and the term “method,” and places no restriction on the definition. This court's redefinition of “process” as limiting access to the patent system to those processes that use specific machinery or that transform matter, is contrary to two centuries of statutory definition.

The breadth of Section 101 and its predecessor provisions reflects the legislative intention to accommodate not only known fields of creativity, but also the unknown future. The Court has consistently refrained from imposing unwarranted restrictions on statutory eligibility, and for computer-implemented processes the Court has explicitly rejected the direction now taken. Nonetheless, this court now adopts a redefinition of “process” in Section 101 that excludes forms of information-based and software-implemented inventions arising from new technological capabilities, stating that this result is required by the Court's computer-related cases, starting with Gottschalk v. Benson, 409 U.S. 63, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). However, the Court in Benson rejected the restriction that is imposed today:

This court's new definition of “process” was rejected in Gottschalk v. Benson
In Benson the claimed invention was a mathematical process for converting binary-coded decimal numerals into pure binary numbers. The Court explained that a mathematical formula unlimited to a specific use was simply an abstract idea of the nature of “fundamental truths,” “phenomena of nature,” and “abstract intellectual concepts,” as have traditionally been outside of patent systems. 409 U.S. at 67, 93 S.Ct. 253. However, the Court explicitly declined to limit patent-eligible processes in the manner now adopted by this court, stating:

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.

Id. at 71, 93 S.Ct. 253. The Court explained that “the requirements of our prior precedents” did not preclude patents on computer programs, despite the statement *979 drawn from Cochrane v. Deener, 94 U.S. 780, 787-88, 24 L.Ed. 139 (1876), that “[t]ransformation 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.” Benson, 409 U.S. at 70, 93 S.Ct. 253. Although this same statement is now relied upon by this court as requiring its present ruling, maj. op at 956 & n. 11, the Court in Benson was explicit that: “We do not hold that no process patent could ever qualify if it did not meet [the Court's] prior precedents.” The Court recognized that Cochrane's statement was made in the context of a mechanical process and a past era, and protested:

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.

Benson, 409 U.S. at 71, 93 S.Ct. 253. Instead, the Court made clear that it was not barring patents on computer programs, and rejected the “argu[ment] 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’ ” in order to satisfy Section 101. Id. Although my colleagues now describe these statements as “equivocal,” maj. op. at 956, there is nothing equivocal about “We do not so hold.” Benson, 409 U.S. at 71, 93 S.Ct. 253. Nonetheless, this court now so holds.

In Parker v. Flook the Court again rejected today's restrictions
The eligibility of mathematical processes next reached the Court in Parker v. Flook, 437 U.S. 584, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978), where the Court held that the “process” category of Section 101 was not met by a claim to a mathematical formula for calculation of alarm limits for use in connection with catalytic conversion of hydrocarbons and, as in Benson, the claim was essentially for the mathematical formula. The Court later summarized its Flook holding, stating in Diamond v. Diehr that:

The [Flook] application, however, did not purport to explain how these other variables were to be determined, nor did it purport “to contain any disclosure relating to the chemical processes at work, the monitoring of the process variables, nor the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit.”

Diehr, 450 U.S. at 186-87, 101 S.Ct. 1048 (quoting Flook, 437 U.S. at 586, 98 S.Ct. 2522).

The Court explained in Flook that a field-of-use restriction to catalytic conversion did not distinguish Flook's mathematical process from that in Benson. However, the Court reiterated that patent eligibility of computer-directed processes is not controlled by the “qualifications of our earlier precedents,” again negating any limiting effect of the usages of the past, on which this court now places heavy reliance. The Court stated:

The statutory definition of “process” is broad. An argument can be made, however, that this Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a “different state or thing.” As in Benson, we assume that a valid process patent may issue even if it does not meet one of these qualifications of our earlier precedents.[FN1]

FN1. My colleagues cite only part of this quotation as the Court's holding in Flook, maj. op. at 955, ignoring the qualifying words “[a]n argument can be made” as well as the next sentence clarifying that this argument was rejected by the Court in Benson and is now again rejected in Flook.

*980 Flook, 437 U.S. at 589 n. 9, 98 S.Ct. 2522 (quoting Cochrane, 94 U.S. at 787). This statement directly contravenes this court's new requirement that all processes must meet the court's “machine-or-transformation test” or be barred from access to the patent system.

The Court in Flook discussed that abstractions and fundamental principles have never been subject to patenting, but recognized the “unclear line” between an abstract principle and the application of such principle:

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.”

Flook, 437 U.S. at 589, 98 S.Ct. 2522 (alterations in original) (quoting Tilghman v. Proctor, 102 U.S. 707, 728, 26 L.Ed. 279 (1880)).

The decision in Flook has been recognized as a step in the evolution of the Court's thinking about computers. See Arrhythmia Res. Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1057 n. 4 (Fed.Cir.1992) (“it appears to be generally agreed that these decisions represent evolving views of the Court”) (citing R.L. Gable & J.B. Leaheey, The Strength of Patent Protection for Computer Products, 17 Rutgers Computer & Tech. L.J. 87 (1991); D. Chisum, The Patentability of Algorithms, 47 U. Pitt. L.Rev. 959 (1986)). That Flook does not support today's per se exclusion of forms of process inventions from access to the patent system is reinforced in the next Section 101 case decided by the Court:

In Diamond v. Chakrabarty the Court again rejected per se exclusions of subject matter from Section 101
In Diamond v. Chakrabarty, 447 U.S. 303, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980), the scope of Section 101 was challenged as applied to the new fields of biotechnology and genetic engineering, with respect to the patent eligibility of a new bacterial “life form.” The Court explained the reason for the broad terms of Section 101:

The subject-matter provisions of the patent law have been cast in broad terms to fulfill the constitutional and statutory goal of promoting “the Progress of Science and the useful Arts” with all that means for the social and economic benefits envisioned by Jefferson. Broad general language is not necessarily ambiguous when congressional objectives require broad terms.

Id. at 315, 100 S.Ct. 2204 (quoting U.S. Const., art. I, § 8). The Court referred to the use of “any” in Section 101 (“Whoever invents or discovers any new and useful process ... or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”), and reiterated that the statutory language shows that Congress “plainly contemplated that the patent laws would be given wide scope.” Id. at 308, 100 S.Ct. 2204. The Court referred to the legislative intent to include within the scope of Section 101 “anything under the sun that is made by man,” id. at 309, 100 S.Ct. 2204 (citing S. Rep. 82-1979, at 5, U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399; H.R. Rep. 82-1923, at 6 (1952)), and stated that the unforeseeable future should not be inhibited by judicial restriction of the “broad general language” of Section 101:

A rule that unanticipated inventions are without protection would conflict with the core concept of the patent law that anticipation undermines patentability. Mr. Justice Douglas reminded that the *981 inventions most benefiting mankind are those that push back the frontiers of chemistry, physics, and the like. Congress employed broad general language in drafting § 101 precisely because such inventions are often unforeseeable.

Id. at 315-16, 100 S.Ct. 2204 (citations and internal quotation marks omitted). The Court emphasized that its precedents did not alter this understanding of Section 101's breadth, stating that “ Flook did not announce a new principle that inventions in areas not contemplated by Congress when the patent laws were enacted are unpatentable per se.” Id. at 315, 100 S.Ct. 2204.

Whether the applications of physics and chemistry that are manifested in advances in computer hardware and software were more or less foreseeable than the advances in biology and biotechnology is debatable, but it is not debatable that these fields of endeavor have become primary contributors to today's economy and culture, as well as offering an untold potential for future advances. My colleagues offer no reason now to adopt a policy of exclusion of the unknown future from the subject matter now embraced in Section 101.

Soon after Chakrabarty was decided, the Court returned to patentability issues arising from computer capabilities:

In Diamond v. Diehr the Court directly held that computer-implemented processes are included in Section 101
The invention presented to the Court in Diehr was a “physical and chemical process for molding precision synthetic rubber products” where the process steps included using a mathematical formula. The Court held that the invention fit the “process” category of Section 101 although mathematical calculations were involved, and repeated its observation in Chakrabarty that “courts should not read into the patent laws limitations and conditions which the legislature has not expressed.” Diehr, 450 U.S. at 182, 101 S.Ct. 1048 (internal quotation marks omitted) (citing Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204).

The Court distinguished a claim that would cover all uses of a mathematical formula and thus is an abstract construct, as in Benson, from a claim that applies a mathematical calculation for a specified purpose, as in Diehr. The Court stated that “a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer,” id. at 187, 101 S.Ct. 1048, and explained that the line between statutory and nonstatutory processes depends on whether the process is directed to a specific purpose, see id. (“It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” (emphasis in original)). The Court clarified that Flook did not hold that claims may be dissected into old and new parts to assess their patent eligibility. Id. at 189 n. 12, 101 S.Ct. 1048.

However, the Court did not propose the “machine-or-transformation” test that this court now insists was “enunciated” in Diehr as a specific limit to Section 101. Maj. op. at 953-54. In Diehr there was no issue of machine or transformation, for the Diehr process both employed a machine and produced a chemical transformation: the process was conducted in “an openable rubber molding press,” and it cured the rubber. In discussing the known mathematical formula used by Diehr to calculate the relation between temperature and the rate of a chemical reaction, the Court recited the traditional exceptions of “laws of nature, natural phenomena, and abstract ideas,” 450 U.S. at 185, 101 S.Ct. 1048, and explained that the entirety of the process *982 must be considered, not an individual mathematical step.

The Court characterized the holdings in Benson and Flook as standing for no more than the continued relevance of these “long-established” judicial exclusions, id., and repeated that a practical application of pure science or mathematics may be patentable, citing Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94, 59 S.Ct. 427, 83 L.Ed. 506 (1939) ( “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 and scientific truth may be.”). The Court explained that the presence of a mathematical formula does not preclude patentability when the structure or process is performing a function within the scope of the patent system, stating:

[W]hen a claim containing a mathematical 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 ( e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101.

450 U.S. at 192, 101 S.Ct. 1048. This statement's parenthetical “ e.g.” is relied on by the majority for its statement that Diehr requires today's “machine-or-transformation” test. However, this “ e.g.” does not purport to state the only “function which the patent laws were designed to protect.” Id. This “ e.g.” indeed describes the process in Diehr, but it does not exclude all other processes from access to patenting.

It cannot be inferred that the Court intended, by this “ e.g.” parenthetical, to require the far-reaching exclusions now attributed to it. To the contrary, the Court in Diehr was explicit that “an application of a law of nature or mathematical formula” may merit patent protection, 450 U.S. at 187, 101 S.Ct. 1048 (emphasis in original), and that the claimed process must be considered as a whole, id. at 188, 101 S.Ct. 1048. The Court recognized that a process claim may combine steps that were separately known, and that abstract ideas such as mathematical formulae may be combined with other steps to produce a patentable process. Id. at 187, 101 S.Ct. 1048. The steps are not to be “dissect[ed]” into new and old steps; it is the entire process that frames the Section 101 inquiry. Id. at 188, 101 S.Ct. 1048.

The Diehr Court did not hold, as the majority opinion states, that transformation of physical state is a requirement of eligibility set by Section 101 unless the process is performed by a machine. It cannot be inferred that the Court silently imposed such a rule. See maj. op. at 956 (relying on lack of repetition in Diehr of the Benson and Flook disclaimers of requiring machine or transformation, as an implicit rejection of these disclaimers and tacit adoption of the requirement). There was no issue in Diehr of the need for either machine or transformation, for both were undisputedly present in the process of curing rubber. It cannot be said that the Court “enunciated” today's “definitive test” in Diehr.FN2

FN2. Many amici curiae pointed out that the Supreme Court did not adopt the test that this court now attributes to it. See, e.g., Br. of Amicus Curiae Am. Intellectual Property Law Ass'n at 18 & n.16; Br. of Amicus Curiae Biotechnology Industry Org. at 17-21; Br. of Amicus Curiae Boston Patent Law Ass'n at 6-8; Br. of Amicus Curiae Business Software Alliance at 13; Br. of Amicus Curiae Federal Circuit Bar Ass'n at 21; Br. of Amicus Curiae Regulatory Datacorp, Inc. at 12-13; Br. of Amicus Curiae Accenture at 16-17; Br. of Amicus Curiae Washington State Patent Law Ass'n at 10-11.

*983 Subsequent Supreme Court authority reinforced the breadth of Section 101
In J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001), the Court described Section 101 as a “dynamic provision designed to encompass new and unforeseen inventions,” id. at 135, 122 S.Ct. 593, that case arising in the context of eligibility of newly developed plant varieties for patenting. The Court stated: “As in Chakrabarty, we decline to narrow the reach of § 101 where Congress has given us no indication that it intends this result.” Id. at 145-46, 122 S.Ct. 593. The Court reiterated that “Congress plainly contemplated that the patent laws would be given wide scope,” id. at 130, 122 S.Ct. 593 (quoting Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204), and that the language of Section 101 is “extremely broad,” id. This is not language of restriction, and it reflects the statutory policy and purpose of inclusion, not exclusion, in Section 101.

The Court's decisions of an earlier age do not support this court's restrictions of Section 101
My colleagues also find support for their restrictions on patent-eligible “process” inventions in the pre-Section 101 decisions O'Reilly v. Morse, 56 U.S. (15 How.) 62, 14 L.Ed. 601 (1853), Cochrane v. Deener, 94 U.S. 780, 24 L.Ed. 139 (1876), and Tilghman v. Proctor, 102 U.S. 707, 26 L.Ed. 279 (1880). Although the Court in Benson and in Flook took care to state that these early decisions do not require the restrictions that the Court was rejecting, this court now places heavy reliance on these early decisions, which this court describes as “consistent with the machine-or-transformation test later articulated in Benson and reaffirmed in Diehr.” Maj. op. at 955. As I have discussed, no such test was “articulated in Benson ” and “reaffirmed in Diehr.”

However, these early cases do show, contrary to the majority opinion, that a “process” has always been a distinct category of patentable invention, and not tied to either apparatus or transformation, as this court now holds. For example, in Tilghman v. Proctor the Court considered a patent on a process for separating fats and oils, and held that the process was not restricted to any particular apparatus. The Court held that a process is an independent category of invention, and stated:

That a patent can be granted for a process, there can be no doubt. The patent law is not confined to new machines and new compositions of matter, but extends to any new and useful art or manufacture.

102 U.S. at 722; see also Corning v. Burden, 56 U.S. (15 How.) 252, 268, 14 L.Ed. 683 (1853) (“It is for the discovery or invention of some practical method or means of producing a beneficial result or effect, that a patent is granted, and not for the result or effect itself.”) The difference between a process and the other categories of patent-eligible subject matter does not deprive process inventions of the independent status accorded by statute, by precedent, and by logic, all of which negate the court's new rule that a process must be tied to a particular machine or must transform physical matter.

The majority also relies on O'Reilly v. Morse, citing the Court's rejection of Morse's Claim 8 for “the use of the motive power of the electro or galvanic current, which I call electromagnetism, however developed, for making or printing intelligible characters, signs or letters at any distances....” The Court explained:

In fine he claims an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent. The Court *984 is of the opinion that the claim is too broad, and not warranted by law.

56 U.S. (15 How.) at 113. However, the claims that were directed to the communication system that was described by Morse were held patentable, although no machine, transformation, or manufacture was required. See Morse's Claim 5 (“The system of signs, consisting of dots and spaces, and horizontal lines, for numerals, letters, words, or sentences, substantially as herein set forth and illustrated, for telegraphic purposes.”). I cannot discern how the Court's rejection of Morse's Claim 8 on what would now be Section 112 grounds, or the allowance of his other claims, supports this court's ruling today. Indeed, Morse's claim 5, to a system of signs, is no more “tangible” than the systems held patentable in Alappat and State Street Bank, discussed post and now cast into doubt, or the Bilski system here held ineligible for access to patenting.

The majority opinion also relies on Cochrane v. Deener, particularly on certain words quoted in subsequent opinions of the Court. In Cochrane the invention was a method for bolting flour, described as a series of mechanical steps in the processing of flour meal. The question before the Court was whether the patented process would be infringed if the same steps were performed using different machinery. The answer was “that a process may be patentable, irrespective of the particular form of the instrumentalities used.” 94 U.S. at 788. The Court stressed the independence of a process from the tools that perform it:

A process is a mode of treatment of certain materials to produce a given result. It is an act, or 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. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of secondary consequence.

94 U.S. at 788. The Court did not restrict the kinds of patentable processes; the issue in Cochrane was whether the process must be tied to the machinery that the patentee used to perform it.

This court now cites Cochrane's description of a process as “acts performed upon subject-matter to be transformed and reduced to a different state or thing,” id., this court stating that unless there is transformation there is no patentable process. That is not what this passage means. In earlier opinions this court and its predecessor court stated the correct view of this passage, as has the Supreme Court. The Court of Customs and Patent Appeals observed:

[This Cochrane passage] has sometimes been misconstrued as a ‘rule’ or ‘definition’ requiring that all processes, to be patentable, must operate physically on substances. Such a result misapprehends the nature of the passage quoted as dictum, in its context, and the question being discussed by the author of the opinion. To deduce such a rule from the statement would be contrary to its intendment which was not to limit process patentability but to point out that a process is not limited to the means used in performing it.

In re Prater, 56 C.C.P.A. 1381, 415 F.2d 1393, 1403 (1969). Again in In re Schrader, 22 F.3d 290, 295 n. 12 (Fed.Cir.1994) this court noted that Cochrane did not limit patent eligible subject matter to *985 physical transformation, and that transformation of “intangibles” could qualify for patenting. In AT & T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358 (Fed.Cir.1999), this court described physical transformation as “merely one example of how a mathematical algorithm may bring about a useful application.”

The Court saw the Cochrane decision in its proper perspective. Both Flook and Benson rejected the idea that Cochrane imposed the requirement of either specific machinery or the transformation of matter, as discussed ante. See Flook, 437 U.S. at 588 n. 9, 98 S.Ct. 2522; Benson, 409 U.S. at 71, 93 S.Ct. 253. Non-transformative processes were not at issue in either Cochrane or Diehr, and there is no endorsement in Diehr of a “machine-or-transformation” requirement for patentable processes.

These early cases cannot be held now to require exclusion, from the Section 101 definition of “process,” of all processes that deal with data and information, whose only machinery is electrons, photons, or waves, or whose product is not a transformed physical substance.

The English Statute of Monopolies and English common law do not limit “process” in Section 101
I comment on this aspect in view of the proposal in the concurring opinion that this court's new two-prong test for Section 101 process inventions was implicit in United States law starting with the Act of 1790, because of Congress's knowledge of and importation of English common law and the English Statute of Monopolies of 1623. The full history of patent law in England is too ambitious to be achieved within the confines of Bilski's appeal,FN3 and the concurring opinion's selective treatment of this history may propagate misunderstanding.

FN3. Scholarly histories include M. Frumkin, The Origin of Patents, 27 J.P.O.S. 143 (1945); E. Wyndham Hulme, Privy Council Law and Practice of Letters Patent for Invention from the Restoration to 1794, 33 L.Q. Rev. 63 (Part I), 180 (Part II) (1917); Hulme, On the History of Patent Law in the Seventeenth and Eighteenth Centuries, 18 L.Q. Rev. 280 (1902); Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. 141 (1896); Ramon A. Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S 615 (1959); Christine MacLeod, Inventing the Industrial Revolution: The English Patent System 1660-1800 (1988); Frank D. Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. 309 (1961); Brad Sherman & Lionel Bently, The Making of Modern Intellectual Property Law: The British Experience, 1760-1911 (1999); Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents, printed serially at J. Pat. & Trademark Off. Soc'y (“J.P.T.O.S.”) 76:697 (1994) (Part 1); 76:849 (1994) (Part 2); 77:771, 847 (1995) (Part 3); 78:77 (1996) (Part 4); 78:615 (1996) (Part 5, part I); and 78:665 (1996) (Part 5, part II) (hereinafter “ Early Evolution ”); and Edward C. Walterscheid, To Promote the Progress of Useful Arts: American Patent Law and Administration, 1798-1836 (1998).

The concurrence places primary reliance on the Statute of Monopolies, which was enacted in response to the monarchy's grant of monopolies “to court favorites in goods or businesses which had long before been enjoyed by the public.” Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (citing Peter Meinhardt, Inventions, Patents and Monopoly 30-35 (1946)). The Statute of Monopolies outlawed these “odious monopolies” or favors of the Crown, but, contrary to the concurring opinion, the Statute had nothing whatever to do with narrowing or eliminating categories of inventive subject matter eligible for a British patent. See Prager, Historical Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 313 (“The statute [of Monopolies] said nothing about meritorious *986 functions of patents, nothing about patent disclosures, and nothing about patent procedures; it was only directed against patent abuses.”).

Patents for inventions had been granted by the Crown long before 1623. See Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q. Rev. at 143 (the first patent grant to the “introducer of a newly-invented process” was in 1440); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 626-27 (discussing first patents for “invention” in England in the fifteenth century). That practice was unaffected by the terms of the Statute of Monopolies, which rendered “utterly void” all “Monopolies and all Commissions, Grants, Licenses, Charters and Letters Patent” that were directed to “the sole Buying, Selling, Making, Working or Using any Thing within this Realm,” 21 Jac. 1, c.3, § I (Eng.), but which specifically excepted Letters Patent for inventions from that exclusion, id. § VI. The only new limitation on patents for invention was a fourteen-year limit on the term of exclusivity. See Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 649.

The usage “Letters Patent” described one of the forms of document whereby the Crown granted various rights, whether the grant was for an odious monopoly that the Statute of Monopolies eliminated, or for rights to an invention new to England. That usage was not changed by the Statute of Monopolies. Nor were other aspects of the British practice which differed from that enacted in the United States, particularly the aspect whereby a British patent could be granted to a person who imported something that was new to England, whether or not the import was previously known or the importer was the inventor thereof. In England, “[t]he rights of the inventor are derived from those of the importer, and not vice versa as is commonly supposed.” Hulme, The History of the Patent System Under the Prerogative and at Common Law, 12 L.Q.R. at 152; see also MacLeod, Inventing the Industrial Revolution 13 (“The rights of the first inventor were understood to derive from those of the first importer of the invention.”).

In contrast, in the United States the patent right has never been predicated upon importation, and has never been limited to “manufactures.” See, e.g., Walterscheid, To Promote the Progress of Useful Arts 93, 137-38, 224; see also Prager, Historic Background and Foundation of American Patent Law, 5 Am. J. Legal Hist. at 309 (“The American Revolution destroyed many of the ancient customs; it brought a sweeping reorientation of patent law, with new forms, new rules, new concepts, and new ideals.”). The differences between the American and English patent law at this nation's founding were marked, and English judicial decisions interpreting the English statute are of limited use in interpreting the United States statute. In all events, no English decision supports this court's new restrictive definition of “process.”

The concurrence proposes that the Statute of Monopolies provides a binding definition of the terms “manufacture,” “machine,” “composition of matter,” and “process” in Section 101 of the U.S. Patent Act. See concurring op. at 968-70. The only one of these terms that appears in the Statute of Monopolies is “manufacture”, a broad term that reflects the usage of the period. Even at the time of this country's founding, the usage was broad, as set forth in Samuel Johnson's Dictionary of the English Language (3d. ed. 1768), which defines “manufacture” as “any thing made by art,” and defines *987 “art” as “the power of doing something not taught by nature and instinct”; “a science”; “a trade”; “artfulness”; “skill”; “dexterity.” Historians explain that England's primary motive for patenting was to promote “[a]cquisition of superior Continental technology” at a time when England lagged behind, see MacLeod, Inventing the Industrial Revolution 11; this cannot be interpreted to mean that England and perforce the United States intended to eliminate “processes” from this incentive system. It is inconceivable that on this background the Framers, and again the enactors of the first United States patent statutes in 1790 and 1793, intended sub silentio to impose the limitations on “process” now created by this court.

Congress' earliest known draft patent bill included the terms “art, manufacture, engine, machine, invention or device, or any improvement upon the same.” Walterscheid, To Promote the Progress of Useful Arts 92. The 1793 Act explicitly stated “any new and useful art,” § 1, 1 Stat. 318 (1793), a usage that was carried forward until “art” was replaced with “process” in 35 U.S.C. § 101 and defined in § 100(b). Historians discuss that Congress' inclusion of any “art” or “process” in the patent system was a deliberate clarification of the English practice. See Walterscheid, To Promote the Progress of Useful Arts 93 (“[The first patent bill] appears to be an obvious attempt to deal legislatively with issues that were beginning to be addressed by the English courts.... [I]t states unequivocally that improvement inventions are patentable and expands the definition of invention or discovery beyond simply ‘manufacture.’ ”); Karl B. Lutz, Patents and Science: A Clarification of the Patent Clause of the U.S. Constitution, 32 J.P.O.S. 83, 86 (1950) ( “By the year 1787 it was being recognized even in Great Britain that the phrase ‘new manufactures' was an unduly limited object for a patent system, since it seems to exclude new processes.... [This question was] resolved in the United States Constitution by broadening the field from ‘new manufactures' to ‘useful arts'....”).

In interpreting a statute, it is the language selected by Congress that occupies center stage: “[O]ur obligation is to take statutes as we find them, guided, if ambiguity appears, by the legislative history and statutory purpose.” Chakrabarty, 447 U.S. at 315, 100 S.Ct. 2204. The Court has “perceive[d] no ambiguity” in Section 101, leaving no need for foreign assistance. Id. The legislative choice to afford the patent system “wide scope,” id. at 308, 100 S.Ct. 2204, including “process” inventions, evolved in the United States independent of later developments of the common law in England.

The concurrence concludes that the Statute of Monopolies foreclosed the future patenting of anything that the concurrence calls a “business method”-the term is not defined-whether or not the method is new, inventive, and useful. But the Statute of Monopolies only foreclosed “odious” monopolies, illustrated by historical reports that Queen Elizabeth had granted monopolies on salt, ale, saltpeter, white soap, dredging machines, playing cards, and rape seed oil, and on processes and services such as Spanish leather-making, mining of various metals and ores, dying and dressing cloth, and iron tempering. See Walterscheid, Early Evolution (Part 2), 76 J.P.T.O.S. at 854 n.14; Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 634-35. These and other grants, many of which were implemented by Letters Patent, were the “odious monopolies” that were rendered illegal. They included several classes of known activity, product and process, and had nothing to do with new “inventions.” *988 The Statute of Monopolies cannot be held to have restricted the kinds of new processes that can today be eligible for patenting in the United States, merely because it outlawed patents on non-novel businesses in England. The presence or absence of “organizing human activity,” a vague term created by the concurrence, has no connection or relevance to Parliament's elimination of monopoly patronage grants for old, established arts. The Statute of Monopolies neither excluded nor included inventions that involve human activity, although the words “the sole working or making in any manner of new manufactures” presuppose human activity. 21 Jac. 1, c.3, § VI (emphases added). We are directed to no authority for the proposition that a new and inventive process involving “human activity” has historically been treated differently from other processes; indeed, most inventions involve human activity.

The concurrence has provided hints of the complexity of the evolution of patent law in England, as in the United States, as the Industrial Revolution took hold. Historians have recognized these complexities. See, e.g., Walterscheid, To Promote the Progress of Useful Arts 5 (“[T]he American patent law almost from its inception departed from its common law counterpart in the interpretation that would be given to the definition of novelty....”); Klitzke, Historical Background of the English Patent Law, 41 J.P.O.S. at 638 (noting that in Elizabethan times, novelty only required a showing that “the industry had not been carried on within the realm within a reasonable period of time”, while today “the proof of a single public sale of an article” or a “printed publication” can negate patentability).

I caution against over-simplification, particularly in view of the uncertainties in English common law at the time of this country's founding. See Boulton v. Bull, 2 H. Bl. 463, 491 (C.P.1795) (Eyre, C.J.) (“Patent rights are no where that I can find accurately discussed in our books.”); MacLeod, Inventing the Industrial Revolution 61 (“It was only from the time when the Privy Council relinquished jurisdiction that a case law on patents began to develop.... But it was a slow process and even the spate of hard-fought patent cases at the end of the eighteenth century did little to establish a solid core of judicial wisdom.”). The English judicial opinions of the eighteenth century were not as limiting on the United States as my colleagues suggest. See Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective 355 (2002) (“In the eighteenth century, patentees and those who gave advice concerning patents were certainly of the view that the Statute did not preclude the patenting of general principles of operation.”); see also MacLeod, Inventing the Industrial Revolution 63-64.

It is reported that in the century and a half following enactment of the Statute of Monopolies, the English patent registers were replete with inventions claimed as “processes.” See Walterscheid, Early Evolution (Part 3), 77 J.P.T.O.S. at 856 (“As one of the earliest texts on the patent law stated in 1806: “most of the patents now taken out, are by name, for the method of doing particular things....”). The concurrence agrees; but it is also reported that because patents were not litigated in the common law courts until the Privy Council authorized such suits in 1752, judicial interpretation of various aspects of patent law were essentially absent until about the time this country achieved independence, leading to the variety of views expressed in Boulton v. Bull. The legislators in the new United States cannot now be assigned the straightjacket of law not yet developed in England. Indeed, the *989 first patent granted by President Washington, upon examination by Secretary of State Jefferson, was for a method of “making Pot-ash and Pearl-ash,” a process patent granted during the period that the concurrence states was fraught with English uncertainty about process patents. See The First United States Patent, 36 J.P.O.S. 615, 616-17 (1954).

The concurrence lists some English process patents predating the United States' 1793 Patent Act, and argues that processes not sufficiently “like” these archaic inventions should not now be eligible for patenting. I refer simply to Flook, 437 U.S. at 588 n. 9, 98 S.Ct. 2522, where the Court stated: “As in Benson, we assume that a valid process patent may issue even if it does not meet one of the qualifications of our earlier precedents.” Similarly, the Chakrabarty Court stated: “[A] statute is not to be confined to the particular applications ... contemplated by the legislators. This is especially true in the field of patent law.” Chakrabarty, 447 U.S. at 315-16, 100 S.Ct. 2204 (citing Barr v. United States, 324 U.S. 83, 90, 65 S.Ct. 522, 89 L.Ed. 765 (1945); Browder v. United States, 312 U.S. 335, 339, 61 S.Ct. 599, 85 L.Ed. 862 (1941); Puerto Rico v. Shell Co., 302 U.S. 253, 257, 58 S.Ct. 167, 82 L.Ed. 235 (1937)). The meaning of the statutory term “process” is not limited by particular examples from more than two hundred years ago.

However, I cannot resist pointing to the “business method” patents on Woodcroft's list. See concurring op. at 973 (citing No. 1197 to John Knox (July 21, 1778) (“Plan for assurances on lives of persons from 10 to 80 years of age.”)). Several other process patents on Woodcroft's list appear to involve financial subject matter, and to require primarily human activity. See, e.g., No. 1170 to John Molesworth (Sept. 29, 1777) (“Securing to the purchasers of shares and chances of state-lottery tickets any prize drawn in their favor.”); No. 1159 to William Nicholson (July 14, 1777) (“Securing the property of persons purchasing shares of State-lottery tickets.”), cited in Bennet Woodcroft, Alphabetical Index of Patentees of Inventions 383, 410 (U.S. ed.1969). Other English process patents from the several decades following 1793 can aptly be described as “business methods,” although not performed with the aid of computers. E.g., No. 10,367 to George Robert D'Harcourt (Oct. 29, 1844) (“Ascertaining and checking the number of checks or tickets which have been used and marked, applicable for railway officers.”).

While most patents of an earlier era reflect the dominant mechanical and chemical technologies of that era, modern processes reflect the dramatic advances in telecommunications and computing that have occurred since the time of George III. See USPTO White Paper, Automated Financial or Management Data Processing Methods (Business Methods) 4 (2000), available at http:// www. uspto. gov/ web/ menu/ busmethp/ whitepaper. pdf (hereinafter USPTO White Paper) (“The full arrival of electricity as a component in business data processing system[s] was a watershed event.”). It is apparent that economic, or “business method,” or “human activity” patents were neither explicitly nor implicitly foreclosed from access to the English patent system.

Evolution of process patents in the United States
The United States' history of patenting establishes the same point. The PTO has located various patents predating modern computer usages that can be described as financial or business methods. The USPTO White Paper at 3-4 and appendix A describes the history of financial apparatus and method patents dating back to 1799, including patents on bank notes, bills of *990 credit, bills of exchange, check blanks, detecting and preventing counterfeiting, coin counting, interest calculation tables, and lotteries, all within the first fifty years of the United States patent system. It is a distortion of these patents to describe the processes as “tied to” another statutory category-that is, paper and pencil. Concurring op. at 974-75 & n. 18. Replacement of paper with a computer screen, and pencil with electrons, does not “untie” the process. Fairly considered, the many older financial and business-oriented patents that the PTO and many of the amici have identified are of the same type as the Bilski claims; they were surely not rendered patent-eligible solely because they used “paper” to instantiate the financial strategies and transactions that comprised their contribution.

I do not disagree with the general suggestion that statutes intended to codify the existing common law are to be interpreted in light of then-contemporary practice, including, if relevant, the English cases. See concurring op. at 972-73. However, the court must be scrupulous in assessing the relevance of decisions that were formulated on particularized facts involving the technology of the period. The United States Supreme Court has never held that “process” inventions suffered a second-class status under our statutes, achieving patent eligibility only derivatively through an explicit “tie” to another statutory category. The Court has repeatedly disparaged efforts to read in restrictions not based on statutory language. See Diehr, 450 U.S. at 182, 101 S.Ct. 1048; Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204. Yet second-class status is today engrafted on “process” inventions. There is plainly no basis for such restriction, which is a direct path to the “gloomy thought” that concerned Senator O.H. Platt in his Remarks in Congress at the Centennial Proceedings of the United States Patent System:

For one, I cannot entertain the gloomy thought that we have come to that century in the world's life in which new and grander achievements are impossible.... Invention is a prolific mother; every inventive triumph stimulates new effort. Man never is and never will be content with success, and the great secrets of nature are as yet largely undiscovered.

Invention and Advancement (1891), reprinted in United States Bicentennial Commemorative Edition of Proceedings and Addresses: Celebration of the Beginning of the Second Century of the American Patent System 75-76 (1990).

In sum, history does not support the retrogression sponsored by the concurrence.

This court now rejects its own CCPA and Federal Circuit precedent
The majority opinion holds that there is a Supreme Court restriction on process patents, “enunciated” in Benson, Flook, and Diehr; and that this restriction was improperly ignored by the Federal Circuit and the Court of Customs and Patent Appeals, leading us into error which we must now correct. Thus this court announces that our prior decisions may no longer be relied upon. Maj. op. at 959-60 & nn. 17, 19. The effect on the patents and businesses that did rely on them is not considered.

The Court's decisions in Benson, Flook, and Diehr all reached the Supreme Court by way of the CCPA, and the CCPA successively implemented the Court's guidance in establishing the Freeman/Walter/Abele test for eligibility under Section 101. The Federal Circuit continued to consider computer-facilitated processes, as in Arrhythmia Research Technology, 958 F.2d at 1059-60, where patent-eligibility was confirmed for a computer-assisted *991 mathematical analysis of electrocardiograph signals that determined the likelihood of recurrence of heart attack. This court now rules that this precedent “should no longer be relied on.” Maj. op. at 959 n. 17.

In In re Alappat, 33 F.3d 1526 (Fed.Cir.1994) ( en banc ) the question was the eligibility for patent of a rasterizer that mathematically transforms data to eliminate aliasing in a digital oscilloscope. The court held that a computer-implemented system that produces a “useful, concrete, and tangible result” is Section 101 subject matter. Id. at 1544. This court now rules that “a ‘useful, concrete and tangible result’ analysis should no longer be relied on.” Maj. op. at 960 n. 19.

The Alappat court stressed the intent, embodied in the language of the statute, that the patent system be broadly available to new and useful inventions:

The use of the expansive term “any” in § 101 represents Congress's intent not to place any restrictions on the subject matter for which a patent may be obtained beyond those specifically recited in § 101 and other parts of Title 35.

33 F.3d at 1542. This court looked to the Supreme Court's guidance in its Section 101 decisions, and explained:

A close analysis of Diehr, Flook, and Benson reveals that the Supreme Court never intended to create an overly broad, fourth category of [mathematical] subject matter excluded from § 101. Rather, at the core of the Court's analysis in each of these cases lies an attempt by the Court to explain a rather straightforward concept, namely, that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, and thus that subject matter is not, in and of itself, entitled to patent protection.

Id. at 1543 (emphasis in original). The court cited the Supreme Court's distinction between abstract ideas and their practical application, and stated of the claimed rasterizer: “This is not a disembodied mathematical concept which may be characterized as an ‘abstract idea,’ but rather a specific machine to produce a useful, concrete, and tangible result.” Id. at 1544.

This principle was applied to a computer-implemented data processing system for managing pooled mutual fund assets in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed.Cir.1998), and to a method for recording and processing telephone data in AT & T v. Excel. The court explained that processes that include mathematical calculations in a practical application can produce a useful, concrete, and tangible result, which in State Street Bank was “expressed in numbers, such as price, profit, percentage, cost, or loss.” 149 F.3d at 1375. In AT & T v. Excel the court applied State Street Bank and Diehr, and stated that “physical transformation ... is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application” and thus achieve a useful, concrete, and tangible result. 172 F.3d at 1358. This analysis, too, can no longer be relied on. Maj. op. at 960 n. 19.

The now-discarded criterion of a “useful, concrete, and tangible result” has proved to be of ready and comprehensible applicability in a large variety of processes of the information and digital ages. The court in State Street Bank reinforced the thesis that there is no reason, in statute or policy, to exclude computer-implemented and information-based inventions from access to patentability. The holdings and reasoning of Alappat and State Street Bank guided *992 the inventions of the electronic age into the patent system, while remaining faithful to the Diehr distinction between abstract ideas such as mathematical formulae and their application in a particular process for a specified purpose. And patentability has always required compliance with all of the requirements of the statute, including novelty, non-obviousness, utility, and the provisions of Section 112.

The public has relied on the rulings of this court and of the Supreme Court
The decisions in Alappat and State Street Bank confirmed the patent eligibility of many evolving areas of commerce, as inventors and investors explored new technological capabilities. The public and the economy have experienced extraordinary advances in information-based and computer-managed processes, supported by an enlarging patent base. The PTO reports that in Class 705, the examination classification associated with “business methods” and most likely to receive inventions that may not use machinery or transform physical matter, there were almost 10,000 patent applications filed in FY 2006 alone, and over 40,000 applications filed since FY 98 when State Street Bank was decided. See Wynn W. Coggins, USPTO, Update on Business Methods for the Business Methods Partnership Meeting 6 (2007) (hereinafter “ PTO Report ”), available at http:// www. uspto. gov/ web/ menu/ pbmethod/ partnership. pps. An amicus in the present case reports that over 15,000 patents classified in Class 705 have issued. See Br. of Amicus Curiae Accenture, at 22 n.20.FN4 The industries identified with information-based and data-handling processes, as several amici curiae explain and illustrate, include fields as diverse as banking and finance, insurance, data processing, industrial engineering, and medicine.

FN4. The PTO recognizes that patents on “business methods” have been eligible subject matter for two centuries. See USPTO White Paper 2 (“Financial patents in the paper-based technologies have been granted continuously for over two hundred years.”).

Stable law, on which industry can rely, is a foundation of commercial advance into new products and processes. Inventiveness in the computer and information services fields has placed the United States in a position of technological and commercial preeminence. The information technology industry is reported to be “the key factor responsible for reversing the 20-year productivity slow-down from the mid-1970s to the mid-1990s and in driving today's robust productivity growth.” R.D. Atkinson & A.S. McKay, Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution 10 (Info. Tech. & Innovation Found.2007), available at http:// www. itif. org/ files/ digital_ prosperity. pdf. By revenue estimates, in 2005 the software and information sectors constituted the fourth largest industry in the United States, with significantly faster growth than the overall U.S. economy. Software & Info. Indus. Ass'n, Software and Information: Driving the Knowledge Economy 7-8 (2008), http:// www. siia. net/ estore/ globecon- 08. pdf. A Congressional Report in 2006 stated:

As recently as 1978, intangible assets, such as intellectual property, accounted for 20 percent of corporate assets with the vast majority of value (80 percent) attributed to tangible assets such as facilities and equipment. By 1997, the trend reversed; 73 percent of corporate assets were intangible and only 27 percent were tangible.

H.R.Rep. No. 109-673 (accompanying a bill concerning judicial resources).

This powerful economic move toward “intangibles” is a challenge to the backward-looking change of this court's ruling *993 today. Until the shift represented by today's decision, statute and precedent have provided stability in the rapidly moving and commercially vibrant fields of the Information Age. Despite the economic importance of these interests, the consequences of our decision have not been considered. I don't know how much human creativity and commercial activity will be devalued by today's change in law; but neither do my colleagues.

The Section 101 interpretation that is now uprooted has the authority of years of reliance, and ought not be disturbed absent the most compelling reasons. “Considerations of stare decisis have special force in the area of statutory interpretation, for here, unlike in the context of constitutional interpretation, the legislative power is implicated, and Congress remains free to alter what [the courts] have done.” Shepard v. United States, 544 U.S. 13, 23, 125 S.Ct. 1254, 161 L.Ed.2d 205 (2005) (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 172-73, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989)); see also Hilton v. S.C. Pub. Railways Comm'n, 502 U.S. 197, 205, 112 S.Ct. 560, 116 L.Ed.2d 560 (1991) (in cases of statutory interpretation the importance of adhering to prior rulings is “most compelling”). Where, as here, Congress has not acted to modify the statute in the many years since Diehr and the decisions of this court, the force of stare decisis is even stronger. See Shepard, 544 U.S. at 23, 125 S.Ct. 1254.

Adherence to settled law, resulting in settled expectations, is of particular importance “in cases involving property and contract rights, where reliance interests are involved.” Payne v. Tennessee, 501 U.S. 808, 828, 111 S.Ct. 2597, 115 L.Ed.2d 720 (1991); see also United States v. Title Ins. & Trust Co., 265 U.S. 472, 486, 44 S.Ct. 621, 68 L.Ed. 1110 (1924) (declining to overrule precedent where prior ruling “has become a rule of property, and to disturb it now would be fraught with many injurious results”). This rationale is given no weight by my colleagues, as this court gratuitously disrupts decades of law underlying our own rulings. The only announced support for today's change appears to be the strained new reading of Supreme Court quotations. But this court has previously read these decades-old opinions differently, without objection by either Congress or the Court. My colleagues do not state a reason for their change of heart. See Benjamin N. Cardozo, The Nature of the Judicial Process 149 (1921) (“[T]he labor of judges would be increased almost to the breaking point if every past decision could be reopened in every case, and one could not lay one's own course of bricks on the secure foundation of the courses laid by others who had gone before him.”).

It is the legislature's role to change the law if the public interest so requires. In Chakrabarty the Court stated: “The choice we are urged to make is a matter of high policy for resolution within the legislative process after the kind of investigation, examination, and study that legislative bodies can provide and courts cannot.” 447 U.S. at 317, 100 S.Ct. 2204; see also Flook, 437 U.S. at 595, 98 S.Ct. 2522 (“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.”).

It is, however, the judicial obligation to assure a correct, just, and reliable judicial process, and particularly to respect the principles of stare decisis in an area in which prior and repeated statutory interpretations have been relied upon by others. See, e.g., *994 Shepard, 544 U.S. at 23, 125 S.Ct. 1254 (“[T]he claim to adhere to case law is generally powerful once a decision has settled statutory meaning.”); Hilton, 502 U.S. at 202, 112 S.Ct. 560 (“Adherence to precedent promotes stability, predictability, and respect for judicial authority.”); Payne, 501 U.S. at 827, 111 S.Ct. 2597 (“ Stare decisis is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process.”). These considerations appear to be abandoned.

Uncertain guidance for the future
Not only past expectations, but future hopes, are disrupted by uncertainty as to application of the new restrictions on patent eligibility. For example, the court states that even if a process is “tied to” a machine or transforms matter, the machine or transformation must impose “meaningful limits” and cannot constitute “insignificant extra-solution activity”. Maj. op. at 961-62. We are advised that transformation must be “central to the purpose of the claimed process,” id., although we are not told what kinds of transformations may qualify, id. at 962-63. These concepts raise new conflicts with precedent.

This court and the Supreme Court have stated that “there is no legally recognizable or protected ‘essential’ element, ‘gist’ or ‘heart’ of the invention in a combination patent.” Allen Eng'g Corp. v. Bartell Industries, Inc., 299 F.3d 1336, 1345 (Fed.Cir.2002) (quoting Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 345, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961)). This rule applies with equal force to process patents, see W.L. Gore & Associates, Inc. v. Garlock, Inc., 721 F.2d 1540, 1548 (Fed.Cir.1983) (there is no gist of the invention rule for process patents), and is in accord with the rule that the invention must be considered as a whole, rather than “dissected,” in assessing its patent eligibility under Section 101, see Diehr, 450 U.S. at 188, 101 S.Ct. 1048. It is difficult to predict an adjudicator's view of the “invention as a whole,” now that patent examiners and judges are instructed to weigh the different process components for their “centrality” and the “significance” of their “extra-solution activity” in a Section 101 inquiry.

As for whether machine implementation will impose “meaningful limits in a particular case,” the “meaningfulness” of computer usage in the great variety of technical and informational subject matter that is computer-facilitated is apparently now a flexible parameter of Section 101. Each patent examination center, each trial court, each panel of this court, will have a blank slate on which to uphold or invalidate claims based on whether there are sufficient “meaningful limits”, or whether a transformation is adequately “central,” or the “significance” of process steps. These qualifiers, appended to a novel test which itself is neither suggested nor supported by statutory text, legislative history, or judicial precedent, raise more questions than they answer. These new standards add delay, uncertainty, and cost, but do not add confidence in reliable standards for Section 101.

Other aspects of the changes of law also contribute uncertainty. We aren't told when, or if, software instructions implemented on a general purpose computer are deemed “tied” to a “particular machine,” for if Alappat's guidance that software converts a general purpose computer into a special purpose machine remains applicable, there is no need for the present ruling. For the thousands of inventors who obtained patents under the court's now-discarded*995 criteria, their property rights are now vulnerable.

The court also avoids saying whether the State Street Bank and AT & T v. Excel inventions would pass the new test. The drafting of claims in machine or process form was not determinative in those cases, for “we consider the scope of § 101 to be the same regardless of the form-machine or process-in which a particular claim is drafted.” AT & T v. Excel, 172 F.3d at 1357. From either the machine or the transformation viewpoint, the processing of data representing “price, profit, percentage, cost, or loss” in State Street Bank is not materially different from the processing of the Bilski data representing commodity purchase and sale prices, market transactions, and risk positions; yet Bilski is held to fail our new test, while State Street is left hanging. The uncertainty is illustrated in the contemporaneous decision of In re Comiskey, 499 F.3d 1365, 1378-79 (Fed.Cir.2007), where the court held that “systems that depend for their operation on human intelligence alone” to solve practical problems are not within the scope of Section 101; and In re Nuijten, 500 F.3d 1346, 1353-54 (Fed.Cir.2007), where the court held that claims to a signal with an embedded digital watermark encoded according to a given encoding process were not directed to statutory subject matter under Section 101, although the claims included “physical but transitory forms of signal transmission such as radio broadcasts, electrical signals through a wire, and light pluses through a fiber-optic cable.”

Although this uncertainty may invite some to try their luck in court, the wider effect will be a disincentive to innovation-based commerce. For inventors, investors, competitors, and the public, the most grievous consequence is the effect on inventions not made or not developed because of uncertainty as to patent protection. Only the successes need the patent right.

The Bilski invention has not been examined for patentability
To be patentable, Bilski's invention must be novel and non-obvious, and the specification and claims must meet the requirements of enablement, description, specificity, best mode, etc. See 35 U.S.C. § 101 (“Whoever invents or discovers a new and useful process ... may obtain a patent therefor, subject to the conditions and requirements of this title.”); Diehr, 450 U.S. at 190, 101 S.Ct. 1048 (the question of whether an invention is novel is distinct from whether the subject matter is statutory); State Street Bank, 149 F.3d at 1377 (“Whether the patent's claims are too broad to be patentable is not to be judged under § 101, but rather under §§ 102, 103, and 112.”). I don't know whether Bilski can meet these requirements-but neither does this court, for the claims have not been examined for patentability, and no rejections apart from Section 101 are included in this appeal.

Instead, the court states the “true issue before us” is “whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or mental process,” maj. op. at 952, and answers “yes.” With respect, that is the wrong question, and the wrong answer. Bilski's patent application describes his process of analyzing the effects of supply and demand on commodity prices and the use of a coupled transaction strategy to hedge against these risks; this is not a fundamental principle or an abstract idea; it is not a mental process or a law of nature. It is a “process,” set out in successive steps, for obtaining and analyzing information and carrying out a series of commercial transactions for the purpose of “managing the consumption risk costs of a commodity *996 sold by a commodity provider at a fixed price.” Claim 1, preamble.

Because the process Bilski describes employs complex mathematical calculations to assess various elements of risk, any practicable embodiment would be conducted with the aid of a machine-a programmed computer-but the court holds that since computer-implementation is not recited in claim 1, for that reason alone the process fails the “machine” part of the court's machine-or-transformation test. Maj. op. at 962. And the court holds that since Bilski's process involves the processing of data concerning commodity prices and supply and demand and other risk factors, the process fails the “transformation” test because no “physical objects or substances” are transformed. Maj. op. at 963-64. The court then concludes that because Bilski's Claim 1 fails the machine-or-transformation test it ipso facto preempts a “fundamental principle” and is thereby barred from the patent system under Section 101: an illogical leap that displays the flaws in the court's analysis.

If a claim is unduly broad, or if it fails to include sufficient specificity, the appropriate ground of rejection is Section 112, for claims must “particularly point out and distinctly claim[ ]” the invention. See In re Vaeck, 947 F.2d 488, 495-96 (Fed.Cir.1991) (affirming rejection under Section 112 where “[t]here is no reasonable correlation between the narrow disclosure in applicant's specification and the broad scope of protection sought in the claims”); In re Foster, 58 C.C.P.A. 1001, 438 F.2d 1011, 1016 (1971) (claims “not commensurate with appellants' own definition of what they are seeking to cover” are rejected under Section 112, rather than Section 101); In re Prater, 415 F.2d at 1403-04 (applying Section 112 to claims that included mental steps). The filing of a broader claim than is supported in the specification does not convert the invention into an abstraction and evict the application from eligibility for examination. A broad first claim in a patent application is routine; it is not the crisis event postulated in the court's opinion.

The role of examination is to determine the scope of the claims to which the applicant is entitled. See 37 C.F.R. § 1.104(a). The PTO's regulations provide:

On taking up an application for examination or a patent in a reexamination proceeding, the examiner shall make a thorough study thereof and shall make a thorough investigation of the available prior art relating to the subject matter of the claimed invention. The examination shall be complete with respect to both compliance of the application or patent under reexamination with the applicable statutes and rules and to the patentability of the invention as claimed, as well as with respect to matters of form, unless otherwise indicated.

Id. § 1.104(a)(1). The Manual of Patent Examining Procedure (MPEP) similarly instructs the examiners to conduct a “thorough search of the prior art” before evaluating the invention under Section 101. MPEP § 2106(III) (8th ed., rev.7, July.2008) (“Prior to evaluating the claimed invention under 35 U.S.C. § 101, USPTO personnel are expected to conduct a thorough search of the prior art.”). The MPEP also requires examiners to identify all grounds of rejection in the first official PTO action to avoid unnecessary delays in examination. Id. § 2106(II) (“Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to some statutory requirement.”). I note that this *997 requirement does not appear to have been here met.

Several amici curiae referred to the difficulties that the PTO has reported in examining patents in areas where the practice has been to preserve secrecy, for published prior art is sparse. The Federal Trade Commission recognized that the problem of “questionable” patents stems mostly from “the difficulty patent examiners can have in considering all the relevant prior art in the field and staying informed about the rapid advance of computer science.” FTC, To Promote Innovation: The Proper Balance of Competition & Patent Law and Policy at ch. 3, pp. 44 (Oct.2003), available at http:// www. ftc. gov/ os/ 2003/ 10/ innovationrpt. pdf. However, this problem seems to be remedied, for the PTO reported in 2007 that for Class 705, “[t]he cases the examiners are now working on have noticeably narrower claims” than the cases filed in or before FY 2000. PTO Report at 9. The PTO reports that its search fields have been enlarged, staff added, and supervision augmented. FTC Report at ch. 1, p. 30. (“Since the PTO introduced [these changes] the allowance rate for business method patents has decreased, and the PTO believes that this decreased allowance rate indicates improved PTO searches for prior art.”). If this court's purpose now is to improve the quality of issued patents by eliminating access to patenting for large classes of past, present, and future inventions, the remedy would appear to be excessive.

A straightforward, efficient, and ultimately fair approach to the evaluation of “new and useful” processes-quoting Section 101-is to recognize that a process invention that is not clearly a “fundamental truth, law of nature, or abstract idea” is eligible for examination for patentability. I do not suggest that basic scientific discoveries are a proper subject matter of patents (the Court in Chakrabarty mentioned E=mc 2 and the law of gravity), and I do not attempt an all-purpose definition of the boundary between scientific theory and technological application. But it is rare indeed that a question arises at the boundary of basic science; more usual is the situation illustrated by Samuel Morse's telegraph, in which the Court simply held that Morse's general claim was “too broad,” exceeding the scope of his practical application.

Bilski's process for determining risk in commodity transactions does not become an abstraction because it is broadly claimed in his first claim. It may be claimed so broadly that it reads on the prior art, but it is neither a fundamental truth nor an abstraction. Bilski's ten other claims contain further details and limitations, removing them farther from abstraction. Although claim 1 may have been deemed “representative” with respect to Section 101, the differences among the claims may be significant with respect to Sections 102, 103, and 112. Bilski's application, now pending for eleven years, has yet to be examined for patentability.

CONCLUSION
In sum, the text of Section 101, its statutory history, its interpretation by the Supreme Court, and its application by the courts, contravene this court's redefinition of the statutory term “process.” The court's decision affects present and future rights and incentives, and usurps the legislative role. The judicial role is to support stability and predictability in the law, with fidelity to statute and precedent, and respect for the principles of stare decisis.

Patents provide an incentive to invest in and work in new directions. In United States v. Line Material Co., 333 U.S. 287, 332, 68 S.Ct. 550, 92 L.Ed. 701 (1948), Justice Burton, joined by Chief Justice *998 Vinson and Justice Frankfurter, remarked that “the frontiers of science have expanded until civilization now depends largely upon discoveries on those frontiers to meet the infinite needs of the future. The United States, thus far, has taken a leading part in making those discoveries and in putting them to use.” This remains true today. It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future.

MAYER, Circuit Judge, dissenting.

The en banc order in this case asked: “Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed.Cir.1998), and AT & T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed.Cir.1999), in this case and, if so, whether those cases should be overruled in any respect?” I would answer that question with an emphatic “yes.” The patent system is intended to protect and promote advances in science and technology, not ideas about how to structure commercial transactions. Claim 1 of the application of Bernard L. Bilski and Rand A. Warsaw (“Bilski”) is not eligible for patent protection because it is directed to a method of conducting business. Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain. State Street and AT & T should be overruled.

I.
In discussing the scope of copyright protection, the Supreme Court has noted that “ ‘a page of history is worth a volume of logic.’ ” Eldred v. Ashcroft, 537 U.S. 186, 200, 123 S.Ct. 769, 154 L.Ed.2d 683 (2003) (quoting New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921)). The same holds true with respect to patent protection. From a historical perspective, it is highly unlikely that the framers of the Constitution's intellectual property clause intended to grant patent protection to methods of conducting business. To the contrary, “those who formulated the Constitution were familiar with the long struggle over monopolies so prominent in English history, where exclusive rights to engage even in ordinary business activities were granted so frequently by the Crown for the financial benefits accruing to the Crown only.” In re Yuan, 38 C.C.P.A. 967, 188 F.2d 377, 380 (1951). The Statute of Monopolies,FN1 enacted in 1624, curtailed the Crown's ability to grant “monopolies to court favorites in goods or businesses which had long before been enjoyed by the public.” Graham v. John Deere Co., 383 U.S. 1, 5, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). When drafting the Constitution, the framers were well aware of the abuses that led to the English Statute of Monopolies and therefore “consciously acted to bar Congress from granting letters patent in particular types of business.” In re Comiskey, 499 F.3d 1365, 1375 (Fed.Cir.2007); see also Malla Pollack, The Multiple Unconstitutionality of Business Method Patents: Common Sense, Congressional Consideration, and Constitutional History, 28 Rutgers Computer & Tech. L.J. 61, 90 (2002) (“[T]he ratifying generation did not agree to invention patents on advances in *999 trade itself, because trade monopolies were odious.”).

FN1. The Statute of Monopolies “grew out of abuses in the grant of exclusive franchises in various lines of business such as trading cards, alehouses and various staple products.” Robert P. Merges, As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform, 14 Berkeley Tech. L.J. 577, 585 (1999).

There is nothing in the early patent statutes to indicate that Congress intended business methods to constitute patentable subject matter. See Patent Act of 1790 § 4, 1 Stat. 109, 111 (1790); Patent Act of 1793 § 1, 1 Stat. 318, 319 (1793); Pollack, supra at 106 (“[I]f any nation was ripe for invention patents on business methods, it was the newly freed colonies of British North America.... [H]owever, no business method patents seem to have been granted.”). As early as 1869, the Commissioner of Patents said that “[i]t is contrary ... to the spirit of the law, as construed by the office for many years, to grant patents for methods of book-keeping,” Ex parte Abraham, 1869 Dec. Comm'r Pat. 59, 59 (1869), and by 1893 the courts had concluded that “a method of transacting common business ... does not seem to be patentable as an art,” United States Credit Sys. Co. v. Am. Credit Indem. Co., 53 F. 818, 819 (C.C.S.D.N.Y.1893), aff'd on other grounds, 59 F. 139 (2d Cir.1893). By 1952, when Congress enacted the current Patent Act, it was widely acknowledged that methods of doing business were ineligible for patent protection. See, e.g., Loew's Drive-In Theatres, Inc. v. Park-In Theatres, Inc., 174 F.2d 547, 552 (1st Cir.1949) (“[A] system for the transaction of business ... however novel, useful, or commercially successful is not patentable apart from the means for making the system practically useful, or carrying it out.”); In re Patton, 29 C.C.P.A. 982, 127 F.2d 324 (1942) (noting that “a system of transacting business, apart from the means for carrying out such system” is not patentable); Hotel Sec. Checking Co. v. Lorraine Co., 160 F. 467, 469 (2d Cir.1908) (“A system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art.”); In re Moeser, 27 App. D.C. 307, 310 (1906) (holding that a system for burial insurance contracts was not patentable because “contracts or proposals for contracts, devised or adopted as a method of transacting a particular class of ... business, [are] not patentable as an art”); see also 145 Cong. Rec. H6,947 (Aug. 3, 1999) (statement of Rep. Manzullo) (“Before the State Street Bank and Trust case ... it was universally thought that methods of doing or conducting business were not patentable items.”).

In passing the 1952 Act, Congress re-enacted statutory language that had long existed,FN2 thus signaling its intent to carry forward the body of case law that had developed under prior versions of the statute. Because there is nothing in the language of the 1952 Act, or its legislative history, to indicate that Congress intended to modify the rule against patenting business methods, we must presume that no change in the rule was intended. See, e.g., Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) (“[W]here a common-law principle is well established ... the courts may take it as given that Congress has legislated with an expectation that the principle will apply except when a statutory purpose to the contrary is evident.” (citations and internal quotation marks omitted)); Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783, 72 S.Ct. 1011, 96 L.Ed. 1294 (1952) (“Statutes which invade the common law ... are to be read with a presumption favoring the retention of long-established *1000 and familiar principles, except when a statutory purpose to the contrary is evident.”); see also In re Schrader, 22 F.3d 290, 295 (Fed.Cir.1994) (“When Congress approved the addition of the term ‘process' to the categories of patentable subject matter in 1952, it incorporated the definition of ‘process' that had evolved in the courts.” (footnote omitted)). If Congress had wished to change the established practice of disallowing patents on business methods, it was quite capable of doing so explicitly. See Parker v. Flook, 437 U.S. 584, 596, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (stressing that courts “must proceed cautiously when ... asked to extend patent rights into areas wholly unforeseen by Congress”).

FN2. Congress did substitute the word “process” for “art” in the 1952 Act, but “[a]nalysis of the eligibility of a claim of patent protection for a ‘process' did not change with the addition of that term to § 101.” Diamond v. Diehr, 450 U.S. 175, 184, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981).

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

II.
Business method patents have been justified, in significant measure, by a misapprehension of the legislative history of the 1952 Patent Act. In particular, proponents of such patents have asserted that the Act's legislative history states that Congress intended statutory subject matter to “include anything under the sun that is made by man.” AT & T, 172 F.3d at 1355 (Fed.Cir.1999) (citations and internal quotation marks omitted); see also Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Read in context, however, the legislative history says no such thing. The full statement from the committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” S.Rep. No.1979, 82d Cong., 2d Sess. 5 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399 (emphasis added); H.R.Rep. No.1923, 82d Cong., 2d Sess. 6 (1952) (emphasis added).

This statement does not support the contention that Congress intended “anything under the sun” to be patentable. To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Moreover, the cited legislative history is not discussing process claims at all. The quoted language is discussing “machines” and “manufactures;” it is therefore surprising that it has been thought a fit basis for allowing patents on business processes.

III.
The Constitution does not grant Congress unfettered authority to issue patents. See U.S. Const. art. I, § 8.FN3 Instead, the *1001 patent power is a “qualified authority ... [which] is limited to the promotion of advances in the ‘useful arts.’ ” Graham, 383 U.S. at 5, 86 S.Ct. 684; see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct. 1727, 1746, 167 L.Ed.2d 705 (2007) (reaffirming that patents are designed to promote “the progress of useful arts”). What the framers described as “useful arts,” we in modern times call “technology.” Paulik v. Rizkalla, 760 F.2d 1270, 1276 (Fed.Cir.1985) (en banc). Therefore, by mandating that patents advance the useful arts, “[t]he Constitution explicitly limited patentability to ... ‘the process today called technological innovation.’ ” Comiskey, 499 F.3d at 1375 (quoting Paulik, 760 F.2d at 1276); see also In re Foster, 58 C.C.P.A. 1001, 438 F.2d 1011 (1971) (“All that is necessary ... to make a sequence of operational steps a statutory ‘process' within 35 U.S.C. § 101 is that it be in the technological arts.”); Karl B. Lutz, Patents and Science: A Clarification of the Patent Clause of the U.S. Constitution, 18 Geo. Wash. L.Rev. 50, 54 (1949) (“The term ‘useful arts' as used in the Constitution ... is best represented in modern language by the word ‘technology.’ ”); James S. Sfekas, Controlling Business Method Patents: How the Japanese Standard for Patenting Software Could Bring Reasonable Limitations to Business Method Patents in the United States, 16 Pac. Rim. L. & Pol'y J. 197, 214 (2007) (At the time the Patent Clause was adopted, “the term ‘useful arts' was commonly used in contrast to the ideas of the ‘liberal arts' and the ‘fine arts,’ which were well-known ideas in the eighteenth century.”).

FN3. Article I, § 8 provides that “The Congress shall have Power ... To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The patent power “is the only one of the several powers conferred upon the Congress which is accompanied by a specific statement of the reason for it.” Yuan, 188 F.2d at 380.

Before State Street led us down the wrong path, this court had rightly concluded that patents were designed to protect technological innovations, not ideas about the best way to run a business.FN4 We had *1002 thus rejected as unpatentable a method for coordinating firefighting efforts, Patton, 127 F.2d at 326-27, a method for deciding how salesmen should best handle customers, In re Maucorps, 609 F.2d 481 (CCPA 1979), and a computerized method for aiding a neurologist in diagnosing patients, In re Meyer, 688 F.2d 789 (CCPA 1982).FN5 We stated that patentable processes must “be in the technological arts so as to be in consonance with the Constitutional purpose to promote the progress of ‘useful arts.’ ” In re Musgrave, 57 C.C.P.A. 1352, 431 F.2d 882, 893 (CCPA 1970) (emphasis added).

FN4. “[D]espite the assertions in State Street and Schrader, very few in the patent community believe that business methods have always been patentable. To the contrary, the dominant view is that the law has changed, and that the definition of patentable subject matter is now wider than it once was.” R. Carl Moy, Subjecting Rembrandt to the Rule of Law: Rule-Based Solutions for Determining the Patentability of Business Methods, 28 Wm. Mitchell L.Rev. 1047, 1060 (2002) (footnotes omitted); see also Rochelle Cooper Dreyfuss, Are Business Method Patents Bad for Business?, 16 Santa Clara Computer & High Tech. L.J. 263, 265-66 (2000) ( State Street gave “judicial recognition to business method patents.”). Over the course of two centuries, a few patents issued on what could arguably be deemed methods of doing business, see, e.g., U.S. Patent No. 5,664,115 (“Interactive Computer System to Match Buyers and Sellers of Real Estate, Businesses and Other Property Using the Internet”), but these patents were aberrations and the general rule, prior to State Street, was that methods of engaging in business were ineligible for patent protection. See Comiskey, 499 F.3d at 1374 (noting that “[a]t one time, ‘[t]hough seemingly within the category of process or method, a method of doing business [was] rejected as not being within the statutory classes.’ ” (quoting State Street, 149 F.3d at 1377)). One commentator has noted that although the United States Patent and Trademark Office (“USPTO”) “in an attempt to deflect criticism [has] issued an apologia ... asserting that business method patents are as old as the United States patent system,” this document is fundamentally flawed. See Pollack, supra at 73-75. She explains:
The USPTO wants us to believe that it found no records of patents whose points of invention were business methods, because no one had time to invent any new business methods until the human race had run its mechanical ingenuity to the peak of computer software; seemingly we were all too busy inventing the computer to think about anything else-especially new ways of doing business. I thought that we granted patents because, otherwise, people would be too busy making money by running businesses to take time out to invent anything except business methods. The USPTO [document], furthermore, is eliding the printed matter exception to patentable subject matter with the business method exception.
Id. at 75 (footnote omitted).

FN5. The claims in Patton were explicitly rejected on the basis that they were directed to a business method, while the claims in Maucorps and Meyer were rejected as attempts to patent mathematical algorithms. Subsequently, however, this court stated that the claimed processes in Maucorps and Meyer were directed toward business systems and should therefore not be considered patent eligible. In re Alappat, 33 F.3d 1526, 1541 (Fed.Cir.1994) (en banc). We noted that “ Maucorps dealt with a business methodology for deciding how salesmen should best handle respective customers and Meyer involved a ‘system’ for aiding a neurologist in diagnosing patients. Clearly, neither of the alleged ‘inventions' in those cases falls within any § 101 category.” Id.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable. See Diehr, 450 U.S. at 192 n. 14, 101 S.Ct. 1048 (Patentability cannot be established by the “token” use of technology.); Gottschalk v. Benson, 409 U.S. 63, 64-66, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) (finding unpatentable a method of programming a general purpose digital computer to convert signals from binary-coded decimal to pure binary form). Where a claimed business method simply uses a known machine to do what it was designed to do, such as using a computer to gather data or perform calculations, use of that machine will not bring otherwise unpatentable subject matter within the ambit of section 101. See Benson, 409 U.S. at 67, 93 S.Ct. 253 (finding a process unpatentable where “[t]he mathematical procedures [could] be carried out in existing computers long in use, no new machinery being necessary”).

Although the Supreme Court has not directly addressed the patentability of business methods, several of its decisions implicitly tether patentability to technological innovation. See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998) (“[T]he patent system represents a carefully crafted bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time.” (emphasis added)); Markman v. Westview Instruments, Inc., 517 U.S. 370, 390, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996) (“Congress created the Court of Appeals for the Federal Circuit as an exclusive appellate court for patent cases ... observing that increased uniformity would strengthen the United States patent system in such a way as to foster technological growth and industrial innovation.” (citations and internal quotation marks omitted) (emphasis added)); Benson, 409 U.S. at 71, 93 S.Ct. 253 (refusing to “freeze [the patentability *1003 of] process patents to old technologies, leaving no room for the revelations of the new, onrushing technology ” (emphases added)). Indeed, the Supreme Court has repeatedly emphasized that what renders subject matter patentable is “the application of the law of nature to a new and useful end.” Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948); see Diehr, 450 U.S. at 188 n. 11, 101 S.Ct. 1048; Benson, 409 U.S. at 67, 93 S.Ct. 253.FN6Applying laws of nature to new and useful ends is nothing other than “technology.” FN7 See, e.g., Microsoft Computer Dictionary 513 (5th ed. 2002) (The definition of “technology” is the “application of science and engineering to the development of machines and procedures in order to enhance or improve human conditions.”); American Heritage Dictionary of the English Language 1777 (4th ed. 2000) (“Technology” is the “application of science, especially to industrial or commercial objectives.”); see also Sfekas, supra at 214-15 (“The [Supreme] Court's holdings in Benson and Diehr are really stating a requirement that inventions must be technological.”); Schwartz, supra at 357 (The “clear and consistent body of Supreme Court case law establishes that the term ‘invention’ encompasses anything made by man that utilizes or harnesses one or more ‘laws of nature’ for human benefit.”). As the Supreme Court has made clear, “the act of invention ... consists neither in finding out the laws of nature, nor in fruitful research as to the operation of natural laws, but in discovering how those laws may be utilized or applied for some beneficial purpose, by a process, a device or a machine.” United States v. Dubilier Condenser Corp., 289 U.S. 178, 188, 53 S.Ct. 554, 77 L.Ed. 1114 (1933).

FN6. Laws of nature are those laws pertaining to the “natural sciences,” such as biology, chemistry, or physics. See, e.g., Webster's New International Dictionary 1507 (3d ed. 2002) (“Natural sciences” are the “branches of science ( [such] as physics, chemistry, [or] biology) that deal with matter, energy, and their interrelations and transformations or with objectively measured phenomena.”). They must be distinguished from other types of law, such as laws of economics or statutory enactments. Laws of nature do not involve “judgments on human conduct, ethics, morals, economics, politics, law, aesthetics, etc.” Musgrave, 431 F.2d at 890; see also Joy Y. Xiang, How Wide Should the Gate of “Technology” Be? Patentability of Business Methods in China, 11 Pac. Rim L. & Pol'y J. 795, 807 (2002) (noting that State Street's “ ‘useful, concrete and tangible result’ test is inconsistent with the ‘application of the law of nature’ patent eligibility scope outlined by the U.S. Supreme Court and [the Federal Circuit prior to State Street ].”).

FN7. One commentator notes that both Japan and the Republic of Korea explicitly define an “invention” as the application of a law of nature, and argues that the United States should follow a similar approach to patentability. See Andrew A. Schwartz, The Patent Office Meets the Poison Pill: Why Legal Methods Cannot be Patented, 20 Harv. J. Law & Tech. 333, 357 (2007).

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection. See, e.g., John R. Thomas, The Patenting of the Liberal Professions, 40 B.C. L.Rev. 1139 (1999) (arguing that affording patentability to business methods opens the door to obtaining patent protection for all aspects of human thought and behavior, and that patents should remain grounded in science and technology) (hereinafter “Thomas (1999)”). “[T]he primary purpose of our patent laws is not the creation of private fortunes for the owners of patents but is ‘to promote the progress of science and useful arts.’ ” *1004 Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511, 37 S.Ct. 416, 61 L.Ed. 871 (1917). Although business method patents may do much to enrich their owners, they do little to promote scientific research and technological innovation.

IV.
State Street has launched a legal tsunami, inundating the patent office with applications seeking protection for common business practices.FN8 Applications for Class 705 (business method) patents increased from fewer than 1,000 applications in 1997 to more than 11,000 applications in 2007. See United States Patent and Trademark Office, Class 705 Application Filings and Patents Issued Data, available at http:// www. uspto. gov/ web/ menu/ pbmethod/ application filing. htm (information available as of Jan. 2008); see Douglas L. Price, Assessing the Patentability of Financial Services and Products, 3 J. High Tech. L. 141, 153 (2004) (“The State Street case has opened the floodgates on business method patents.”).

FN8. Congress has acted to ameliorate some of the negative effects of granting patents on methods of doing business. It passed the American Inventors Protection Act (commonly referred to as the First Inventor Defense Act) which provides an affirmative defense against a business method patent infringement action if the defendant “acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.” See 35 U.S.C. § 273. Even where a defendant may qualify for this defense, however, he “still must engage in expensive litigation where [he] bears the burden of affirmatively raising and proving the defense.” See Nicholas A. Smith, Business Method Patents and Their Limits: Justifications, History, and the Emergence of A Claim Construction Jurisprudence, 9 Mich. Telecomm. & Tech. L.Rev. 171, 199 (2002).

Patents granted in the wake of State Street have ranged from the somewhat ridiculous to the truly absurd. See, e.g., U.S. Patent No. 5,851,117 (method of training janitors to dust and vacuum using video displays); U.S. Patent No. 5,862,223 (method for selling expert advice); U.S. Patent No. 6,014,643 (method for trading securities); U.S. Patent No. 6,119,099 (method of enticing customers to order additional food at a fast food restaurant); U.S. Patent No. 6,329,919 (system for toilet reservations); U.S. Patent No. 7,255,277 (method of using color-coded bracelets to designate dating status in order to limit “the embarrassment of rejection”). There has even been a patent issued on a method for obtaining a patent. See U.S. Patent No. 6,049,811. Not surprisingly, State Street and its progeny have generated a thundering chorus of criticism. See Leo J. Raskind, The State Street Bank Decision: The Bad Business of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L.J. 61, 61 (1999) (“The Federal Circuit's recent endorsement of patent protection for methods of doing business marks so sweeping a departure from precedent as to invite a search for its justification.”); Pollack, supra at 119-20 (arguing that State Street was based upon a misinterpretation of both the legislative history and the language of section 101 and that “business method patents are problematical both socially and constitutionally”); Price, supra at 155 (“The fall out from State Street has created a gold-rush mentality toward patents and litigation in which companies .... gobble up patents on anything and everything.... It is a mad rush to get as many dumb patents as possible.” (citations and internal quotation marks omitted)); Thomas (1999), supra at 1160 (“After State Street, it is hardly an exaggeration to say that if you can name it, you can claim it.”); Sfekas, supra at 226 (“[T]he U.S. courts *1005 have set too broad a standard for patenting business methods.... These business method patents tend to be of lower quality and are unnecessary to achieve the goal of encouraging innovation in business.”); William Krause, Sweeping the E-Commerce Patent Minefield: The Need for a Workable Business Method Exception, 24 Seattle U.L.Rev. 79, 101 (2000) ( State Street “opened up a world of unlimited possession to anyone quick enough to take a business method and put it to use via computer software before anyone else.”); Moy, supra at 1051 (“To call [the situation following State Street ] distressing is an understatement. The consensus ... appears to be that patents should not be issuing for new business methods.”).

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

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<big>'''Intellectual Property for Engineers: ESTEEM Reading Course, Spring 2010'''</big>

=ALPHABETICAL LISTING OF CASES=

*[[A. & P. Tea Co. v. Supermarket Corp., 340 U.S. 147 (1950)]]
*[[Anderson's Black Rock, Inc. v. Pavement Co., 396 U.S. 57 (1969)]]
*[[Arrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (1992)]]
*[[Atlas Powder v. E.I. du Pont de Nemours, 750 F2d 1569 (1984)]]
*[[Bonito Boats. v. Thunder Craft, 489 U.S. 141 (1989)]]
*[[Chester v. Miller, 906 F.2d 1574 (1990)]]
*[[Diamond v. Diehr, 450 U.S. 175 (1981)]]
*[[Gottschalk v. Benson, 409 U.S. 63 (1972)]]
*[[Gould v. Hellwarth, 472 F2d 1383 (1973)]]
*[[Graham v. John Deere, 383 U.S. 1 (1966)]]
*[[Graver Tank & Mfg. Co. v. Linde Air Products Co. 339 US 605 (1950)]]
*[[Hotchkiss v. Greenwood, 52 U.S. 11 (1850) ]]
*[[Hybritech v. Monoclonal Antiboties, 802 F.2d 1375 (1986)]]
*[[In Re Rouffet]]
*[[In Re Bilski]]
*[[In re Brana, 51 F.3d 1560 (1995)]]
*[[In re Hall (full text)]]
*[[J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001)]]
*[[Juicy Whip v. Orange Bang, 185 F.3d 1364 (1999)]]
*[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]
*[[Lyon v. Bausch & Lomb, 224 F.2d 530 (1955)]]
*[[Metabolit Laboratories, Inc. and Competitive Technologies, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354 (2004)]]
*[[Monsanto v. Good F.Supp.2d, WL 1664013 (D.N.J.) (2003)]]
*[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]
*[[Pfaff v. Wells Electronics: full text]]
*[[Pfaff vs. Wells Electronics]]
*[[Philips Electric Co. v. Thermal Industries, Inc. (full text)]]
*[[Reiner v. I. Leon Co. (full text)]]
*[[South Corp. v. US]]
*[[South Corp. v. US (full text)]]
*[[South Corp. v. US 690 F.2d 1368 (1982)]]
*[[State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (1998)]]
*[[US v. Adams, 383 U.S. 39 (1966)]]
*[[US v. Adams (full text)]]
*[[Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corporation, Inc. (full text)]]
*[[Warner-Jenkinson Company v. Hilton Davis Chemical Co., 520 US 17 (1997)]]
*[[Warner-Jenkinson v. Hilton Davis Petitioner Brief]]
*[[Warner-Jenkinson v. Hilton Davis Respondent Brief]]

=[[INTRODUCTION]]=
This is a summary. Click on the title for the full chapter: [[INTRODUCTION]]

Outline:
*The main purpose for obtaining a patent is ''economic''.
*It grants the exclusive right to ''make, use or sell'' the invention for a limited period of time.
*The governing law is Title 35 of the United States Code (35 USC).
*The governing regulations are from Title 37 of the Code of Federal Regulations (37 CFR).
*The law is federal, so patent cases are resolved in the federal court system:
**district courts;
**circuit courts;
**the Court of Appeals for the Federal Circuit (CAFC), a special court for patent cases; and,
**the Supreme Court.
*The US Patent and Trademark Office (PTO) processes patent applications.
*Patents last for 20 years from the date the application is filed with the PTO.
*Patents have the attributes of personal property.
*The foundation of the federal government's authority to create a patent system is in the constitution. The purposes is explicitly economic, "to promote the progress of science and useful arts..."
*Other forms of intellectual property
**copyright;
**trademarks; and,
**trade secrets.

=[[NONOBVIOUSNESS]]=
This is a summary. Click on the title for the full chapter: [[NONOBVIOUSNESS]]

Outline:

*This is perhaps the most difficult factual patent issue. In addition to meeting the novelty requirements of 35 USC 102, 35 USC 103 requires that the claimed invention as a whole must have been nonobvious "at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
*There is a lot of historical confusion regarding this standard. Basically, it is a notion of something being meeting some type of sufficient inventive standard or nontriviality.
*To determine this, there are three fundamental lines of inquiry:
**the scope and content of the prior art;
**the differences between the prior art and claims at issue; and,
**the level of ordinary skill in the art.
*Secondary considerations include:
**a long-felt but unsatisfied need met by the invention;
**appreciation by those versed in the art that the need existed;
**substantial attempts to meet this need;
**commercial success of the invention;
**replacement in the industry by the claimed invention;
**acquiescence by the industry;
**''teaching away'' by those skilled in the art;
**unexpectedness of the results; and,
**disbelief or incredulity on the part of industry with respect to the new invention.

=[[INFRINGEMENT]]=
This is a summary. Click on the title for the full chapter: [[INFRINGEMENT]]

=[[THE PATENT DOCUMENT]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT DOCUMENT]]

Outline:
*A patent has several parts:
**specification: describes the invention;
**claims: delineates the ownership rights;
**drawings: not required, but if they are included then any element included in the claims must be shown in the drawings; and,
**other miscellaneous parts.
*Interpreting claims: claims are said to ''read on'' another device.
*The doctrine of equivalence, prevents something from being patented that only has minor alterations from the prior art.
*The date of the invention
**''reduction to practice'';
**''diligence'' requirement.
*The ''file wrapper''.

=[[NOVELTY]]=
This is a summary. Click on the title for the full chapter: [[NOVELTY]]

Outline:
*Specified in 35 USC 102.
*Fundamentally: an invention must be ''new''.
*Section 102 basically defines in a technical way what it means to not be new:
**Events prior to invention
***known or used by others in the US
***patented or in a printed publication in another country
**Events one year before filing the patent application
***patented or in a printed publication anywhere (''in this or a foreign country'')
***in public use or on sale in the US
**Other bars
*The applicant must be the inventor (not the employer)

Outline:
*Literal Infringement
*The Doctrine of Equivalents

=[[UTILITY]]=
This is a summary. Click on the title for the full chapter: [[UTILITY]]

=[[PATENTABLE SUBJECT MATTER]]=
This is a summary. Click on the title for the full chapter: [[PATENTABLE SUBJECT MATTER]]

Can computer programs, algorithms, laws of nature, life forms, plants, ''etc.'' be patented. In particular, are the following patentable:

* Plants
* Algorithms and Computer Programs
* Scientific Facts?

In a recent case
* State Street (1998)
the CAFC substantially broadened the subject matter of section 101 to include such things as methods of doing business, etc.

=[[FOREIGN AND DOMESTIC PRIORITY]]=
This is a summary. Click on the title for the full chapter: [[FOREIGN AND DOMESTIC PRIORITY]]

Outline:
*Priority in general
*Foreign priority
*International applications
*Domestic priority
*Provisional applications

=[[THE PATENT APPLICATION]]=
This is a summary. Click on the title for the full chapter: [[THE PATENT APPLICATION]]

Outline:
*The Disclosure
*The Claims
*Other Sections
*New Matter
*The Examination Process

=[[INVENTOR ELIGIBILITY]]=
This is a summary. Click on the title for the full chapter: [[INVENTOR ELIGIBILITY]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972): full text]]

[[GOTTSCHALK v. BENSON, 409 U.S. 63 (1972)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981): (full text)]]

[[Diamond v. Diehr, 450 U.S. 175 (1981)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005): (full text)]]

[[Laboratory Corporation of America vs. Metabolite Laboratories, 548 U.S. 124 (2005)]]

[[METABOLITE LABORATORIES, INC. and Competitive Technologies, Inc. v. LABORATORY CORPORATION OF AMERICA HOLDINGS (doing business as LabCorp): the CAFC case (full text)]]

=[[ANTICIPATION]]=
This is a summary. Click on the title for the full chapter: [[ANTICIPATION]]

=[[PRIOR ART]]=
This is a summary. Click on the title for the full chapter: [[PRIOR ART]]

[[Pfaff v. Wells Electronics: full text]]

[[Perkin-Elmer Corporation v. Computervision Corporation (full text)]]

[[Perkin-Elmer Corporation v. Computervision Corporation]]

Justice clipart, copyright [http://etc.usf.edu/clipart/ FCIT.]