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Nov 16, 2011 / Insight

Back To Patent Law 101

The Federal Circuit Reaffirms That Mental Processes Are Not Patentable, Even When Performed On A Computer

In Cybersource Corporation v. Retail Decisions, Inc., — F.3d — (Fed. Cir. August 16, 2011), 2011 WL 3584472, the Federal Circuit recently invalidated a patent that recited a “method and system for detecting fraud in that credit card transaction between[a] consumer and a merchant over the Internet.” Cybersource, supra, 2011 WL 3584472 at *1. The Federal Circuit Court affirmed Judge Marilyn H. Patel’s finding that the claim in the patent did not meet the machine-or-transformation test. What makes this decision of particular interest is that the Court, citing the Supreme Court’s recent reasoning in In re Biliski that the machine-or-transformation test is not dispositive of the Section 101 test for patentability, held that the patent in suit failed to recite patent-eligible subject matter in the first instance since the claim was “drawn to an unpatentable mental process – a subcategory of unpatentable abstract ideas.” Id., supra, at *3. Stated another way, Cybersource is another example of the courts reaffirming the fundamental principle that “human intelligence alone, [is] a field of endeavor that both the framers [of the U.S. Constitution] and Congress intended to be beyond the reach of patentable subject matter.” Id., supra, at *5.

The Court affirmed the District Court’s rejection of Cybersource’s attempt to save its patent by arguing that the process was tethered to a computer, thus rendering it a “manufacture” rather than a “process,” under the statutory language of Section 101. Id., supra, at *7-8. In rejecting the argument, the Cybersource District Court said that “simply appending ‘A computer readable media including program instructions . . .’ to an otherwise non-statutory process claim is insufficient to make it statutory.” Id., supra, at *1. The Federal Circuit Court agreed. In short, purely mental processes are unpatentable even when performed by a computer.

The Cybersource Court’s holding reminds us that we often overlook the most fundamental question of what constitutes a patentable invention in the first instance. Following Thomas Jefferson’s directive that “[ingenuity] should receive a liberal encouragement,” the Courts have, for the most part, broadly construed the scope of what can be patented. Cybersource certainly tries to reign in that liberality with a stiff reminder that “abstract ideas” do not qualify as patentable. Rather, you need a specific “process, machine, manufacture, or composition of matter,” or an improvement on one of these, to constitute patentable subject matter. 35 U.S.C. § 101.

The Cybersource Court’s decision is not exactly novel in its attempt to limit the scope of patentable inventions, as the discussion of cases in theCybersource opinion illustrate. The courts have long recognized that products of nature, such as chemical elements or biological substances found in their natural state are not patentable. Gen’l Elec. Co. v. De Forest Radio Co. 28 F.2d 641, 642 (3d Cir. 1928). While a mathematical formula might be a “process” within the literal meaning of Section 101, the Supreme Court in Parker v. Flook, 437 U.S. 584, 589 (1978), said such a mathematical formula is not within the statutory subject matter requirement of a “useful art.” A mathematical expression that represents a scientific fact, or an abstract principle, is viewed as outside the reach of the “useful arts” purpose of patent law. Compare that to a mathematical calculation used in an industrial process to mold uncured rubber into a final, cured product, which the Supreme Court said was patentable.Diamond v. Diehr, 450 U.S. 175 (1981). That is because the process accomplished the transformation of an article into a different state, something the Cybersource Court found lacking in the patent in suit.

It can be said that the Cybersource Court has gone back to the roots of patent law, and gives patentees and patent practitioners a strong reminder that, while the Supreme Court is on record as saying that the statutory subject matter of the patent laws has been said to cover “anything under the sun that is made by man,” Diamond v. Chakrabarty, 447 U.S. 303 (1980), to be patentable an invention still must pass Section 101 muster before any other energy (i.e., money) need be spent on whether a patent is unenforceable or has been infringed. This is the difficult question that our clients often do not like to face, perhaps because they are enticed by the prospects of huge rewards that patent monopolies can offer, and many practitioners do not like to raise with the clients, perhaps because there is strong incentive to earn huge fees that patent suits can offer.

While we will not know whether and to what extent the district courts will follow suit once the dust settles, the Cybersource Court’s decision is part of a Federal Circuit trend curtailing what are perceived as abuses in patent litigation as well as the patent application process itself, as discussed in our previous article on the Federal Circuit Court’s recent decision in Therasense.