Bilski and Its Expansion of the Abstract Idea Exception: A Failure to Define

“The problem, in our view, is that the ‘hedging’ or ‘fundamental economic practice’ addressed in Bilski is not ‘just like’ a math equation. Putting aside whatever math-like ‘reduction’ a particular Bilski claim may have done, ‘hedging’ and other such human ‘economic’ activities do not resemble a mathematical equation, formula, or other such concepts that intuitively fall within the category of an ‘abstract idea.’”

Editors note: Judge Paul Michel authored the Federal Circuit’s en banc opinion in In re Bilski, as the Court’s Chief Judge at the time.

The Supreme Court’s Bilski v. Kappos decision—which celebrated its 10th birthday this past weekend—still matters, even in the age of Mayo-Alice. For one thing, the case marked the end of the patent-eligibility peace. For another, Bilski stands for the well-known principle that the “machine-or-transformation” test offers a “useful and important clue” as to whether the process claimed by a patent will qualify as patent-eligible under 35 U.S.C. §101. And at the same time, it stands for the fact that the machine-or-transformation test has been far more trivia than principle, the case law not having applied or considered that Bilski “clue” much beyond the Bilski case itself.

But Bilski represents something more dire to the U.S. patent system than trivia or end-dates on Section101 peace. It represents an obligation that the Supreme Court had to define an “abstract idea,” per its holding in Bilski that the “hedging” activity there was such an abstract idea and thus was ineligible for Section 101 patent protection. Or to provide some discernable limits about what the “abstract idea” exception covers beyond mathematical algorithms. But Bilski provided neither a definition nor limits. In that way, the Court’s decision has only contributed to the confusion and unpredictability that have resulted from its Mayo-Alice framework on patent eligibility—i.e., the framework the Court fashioned in the wake of Bilski. At year 10, either the Court, the Federal Circuit, or the Congress should do what Bilski itself didn’t do in year one: Define the “abstract idea” exception to patent eligibility and begin to lessen the harms to the patent system that these ineligibility shortcomings have wrought.

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That is the long and short of what Bilski represents, in our view. The fuller explanation merits additional discussion on the Section 101 case law. Bilski began as the first of four mostly pivotal cases that the Supreme Court addressed within a four-year period on the law of patent eligibility, culminating with the above-mentioned cases in Mayo (2012) and Alice (2014). Before Bilski, though, the Court had not addressed the issue of statutory patent eligibility for decades, or more specifically, had not addressed the three “implied” exceptions to the eligibility provision, 35 U.S.C. §101, that the Court has recognized for some 150 years; namely, the exceptions for a natural law (e.g., Newton’s law of gravity or Einstein’s famous theorem, E = [mc]2); a natural phenomenon (e.g., a newly discovered mineral or plant); or most pertinent here, an abstract idea. Indeed, the Court had last addressed Section 101 in another run of four mostly pivotal cases within another similarly shortened timeframe, from 1972-1981.

The Court’s Prior Quartet of 101 Cases and Their Clear Examples of Mathematical Formulas, Algorithms, and Lab-Made Organisms

In the hindsight of time, some or even all of those cases may seem straightforward now, though they surely did not when decided. But at least as described therein, those cases did present examples of mathematical formulas, computer algorithms, and other subject matter that, on one side or the other, neatly illustrated an “implied” Section 101 exception—be it for an abstract idea (such as a mathematical formula), a natural law, or a natural phenomenon (or its converse, such as a non-natural, lab-created bacteria).

Briefly, the Court’s quartet of cases held as follows. In Gottschalk v. Benson, the Court held that a patent claim on a computer algorithm was “in practical effect” a claim on that “mathematical formula” or “algorithm itself”—meaning it was “conceded[ly]” a claim on an ineligible “abstract idea.” 409 U.S. 63, 67, 71-72 (1972) (all emphasis added unless otherwise noted). Similarly, in Parker v. Flook, the patent examiner found that the claimed method for updating an alarm limit or “number” via an algorithm was “in practical effect” a claim “on the formula or mathematics itself,” rendering it ineligible as a law of nature or abstract idea. 437 U.S. 584, 586-87 (1978). The Court ultimately agreed with that “undisputed” finding and further held that the only “point of novelty” or “inventive concept” in the Flook claim over the prior art lay merely with Flook’s claimed mathematical algorithm. Id. at 586. And in Diamond v. Chakrabarty, while emphasizing that the country’s Founders had a vision for “liberal[ly]” encouraging “ingenuity” via the patent laws, the Court concluded that the non-naturally occurring, lab-created bacterium claimed in the patent there was indeed patent-eligible. 447 U.S. 303, 308-09 (1980).

Last, in Diamond v. Diehr, the Court upheld the eligibility of a multi-step patent claim that, as the Court described it, did “not seek to patent a mathematical formula or other patent-ineligible concept. Instead, they [sought patent] protection for a [multi-step] process of curing rubber,” the claim text for which recited multiple steps for using a mathematical “equation in conjunction with all of the other steps in their claimed process [for curing rubber].” 450 U.S. 175, 187-88 (1981). In reaching that eligibility conclusion, the Court held that (1) in determining eligibility, courts must view a patent claim “as whole,” including all its recited steps or elements, id. at 187; and (2) considerations of what claim elements “were well known and in common use” before the claimed invention—or whether those claims were “novel” or “non-obvious”—had “no relevance in determining whether the subject matter of a claim” was Section 101-eligible, id. at 189-90.

Diehr book-ended the start of a 30-year period in which Section 101-eligiblity challenges were rare. Some issues, to be sure, carried back-and-forth in the Federal Circuit as to whether software and business-method claims should qualify as patent-eligible, see State Street Bank & Trust v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).

The Supreme Court’s Bilski Majority Newly Applies its “Abstract Idea” Precedents to “Hedging” and Other “Fundamental Economic Practice[s]”

Then along came Bilski. See 561 U.S. 593 (2010). In 2010, the Supreme Court overruled the Federal Circuit’s en-banc holding that the “machine-or-transformation” test was the “sole” test for determining whether a claimed process qualified as patent-eligible. Id. at 602. Under that test, a process claim was patent-eligible under Section 101 if “(1) it was tied to a particular machine or apparatus, or (2) it transform[ed] a particular article into a different state or thing.” 545 F.3d 943, 954 (Fed. Cir. 2008) (en banc). As the Court held, the machine-or-transformation test provides a “useful and important clue” as to the patent-eligibility of the claimed subject matter, but it was and is not the sole eligibility test. 561 U.S. at 602.

Further, the majority chose not to apply that test to the Bilski method claims for managing the risks with buying and selling commodities—i.e., with “hedging risk in the field of commodities.” E.g., 561 U.S. at 611. As the Bilski majority saw it, those claims were rather like the claims that its “abstract idea” precedents had addressed in Flook and Benson, supra. See Bilski, 561 U.S. at 611. The Court reasoned that “just like the algorithms at issue in Benson and Flook,” the “concept of hedging” in the Bilski claims was “an unpatentable abstract idea.” Id. That concept, it explained, was merely a “fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.” Id.

Bilski did not otherwise provide or elaborate on any definition of an “abstract idea.” See id. at 611. Instead, in a single sentence, the Court declared it need not do as much, citing the clear application of its Flook and Benson “abstract idea” case law. See id. And indeed, the Court since that time has steadfastly declined to provide such a definition or even specific “contours” on what its own “implied” exception for an “abstract idea” may mean. E.g., Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2357 (2014).

Bilski’s Failure to Define an “Abstract Idea” has Only Made the Mayo-Alice Eligibility Framework More Inconsistent and Unpredictable

Needless to say, this ongoing judicial failure to define or even corral the scope of the “abstract idea” exception to Section101 has made the ineligibility analysis today all the more uncertain. And that uncertainty has surely undermined only more the attractiveness of the U.S. patent system and the technology investments it should otherwise promote.

The problem, in our view, is that the “hedging” or “fundamental economic practice” addressed in Bilski is not “just like” a math equation. Putting aside whatever math-like “reduction” a particular Bilski claim may have done, “hedging” and other such human “economic” activities do not resemble a mathematical equation, formula, or other such concepts that intuitively fall within the category of an “abstract idea.” To coin a phrase, these are indeed things that we know ‘em when we see ‘em. They usually involve an “equal” sign—e.g., E = [mc]2, or A2 + B2 = C2, or an algebraic expression requiring inputs, or something far more advanced (or simpler) but that, in any event, presents an objective test of one sort or another.

The Court, to be sure, has rejected the notion that an “abstract idea” for Section 101 purposes is limited to mathematical formulas and the like. But unless the courts are willing to reconsider that aspect of an “abstract idea,” its unheralded expansion in Bilski to cover “fundamental economic activities” itself fundamentally demands a definition or guideposts as to its meaning.

Otherwise, that harmful omission—that failure to define—will stand as Bilski’s mark.

 

The Author

Judge Paul Michel (Ret.)

Judge Paul Michel (Ret.) became a private citizen on June 1, 2010 for the first time since he graduated from law school at the University of Virginia in 1966. Upon graduating from law school he became an Assistant District Attorney in Philadelphia, thus embarking upon the career of a public servant from 1966 to his retirement from the United States Court of Appeals for the Federal Circuit in 2010. Michel served on the Federal Circuit, which is the main patent appeals court in the United States, from 1988 to 2010, serving as Chief Judge from 2004 to 2010.

Judge Paul Michel (Ret.)

John Battaglia s an accomplished first-chair trial lawyer, appellate lawyer, and former US Justice Department lawyer who has successfully tried to verdict a broad array of civil and criminal cases. While the subject matter of his cases over the past 22-plus years has ranged from immigration to intellectual property, from guns, drugs, and violence to advanced electrical engineering, pharmaceuticals, and ice-hockey equipment, Mr. Battaglia's area of particular interest and expertise is patent litigation. Mr. Battaglia has successfully argued cases before the U.S. Courts of Appeal for the Federal, Second, Sixth, Seventh, and Ninth Circuits. He argued and prevailed in In re Papst Licensing Digital Camera Patent Litig. (Fed. Cir. 2015), a case involving numerous adverse issues and the first Federal Circuit case to address the impact of the Supreme Court's decision in Teva v. Sandoz. For that victory, the legal press dubbed Mr. Battaglia and his team a "Legal Lion."

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 9 Comments comments.

  1. Ternary July 1, 2020 11:09 pm

    The whole idea of:
    “a mathematical equation, formula, or other such concepts that intuitively fall within the category of an “abstract idea.” To coin a phrase, these are indeed things that we know ‘em when we see ‘em”…
    is completely outdated and pretty much useless in this age of cryptography, cellular phones, medical images and artificial intelligence. And it has been outdated for quite a while now.

    This confusion of representing a computer operation by a mathematical expression with being a “mental” and “abstract” idea rather than a machine operation continues to this day. Shannon, in his MIT master’s thesis in 1938 (yes really, 1938!) clearly explains how Boolean algebra can represent computer operations. However, switching circuits do not perform Boolean algebra. This is a fundamental scientific fact.

    To say that “an algebraic expression requiring inputs, or something far more advanced (or simpler) but that, in any event, presents an objective test” is wrong. Well, it presents an objective test that it is math, but not that it is abstract, or more or less abstract than other language to be found in a dictionary.

    The use of a formula, an equation or a mathematical expression is not an objective test of a claimed device being an abstract idea or directed to an abstract idea. These are outdated notions, which are demonstrated by a smart-phone, wherein any communication, sound or image production is described in its technical specification by mathematical expressions.

    The Courts should have said, again and again, that it was unfit to determine patent eligibility. That the judicial exceptions were no longer of this time. That narrower definitions of what is abstract or not would not have helped. And that Congress should have moved off from its butt to do its job.

    From Benson onward, the Courts have worsened the problem, and not clarified it. To believe that narrowing down the “abstract idea” criterion to “mathematical formulas” so we know it when we see it, is outdated and does not help. Further definition of what “abstract idea” or “directed to an abstract idea” is also useless at this stage. When people (presumably “serious” people) proclaim that wireless communication is directed to an abstract idea, we have entered the unscientific and metaphysical realm where words no longer mean what they are supposed to mean.

    The term “abstract” and “abstract idea” should be removed from any patent eligibility decision.

  2. Pro Say July 1, 2020 11:19 pm

    Bilski, Mayo, Alice, and innovation stroll into this patent bar together . . .

    . . . only innovation never comes out.

  3. MaxDrei July 2, 2020 5:49 am

    From where I write, Europe, the litmus test is not “abstract” but “technical”. There is an echo here of the GATT-TRIPS definition of eligibility namely “field of technology”. Nevertheless, the complaint from the USA is that “technical” (like “invention” or “obvious”) is not defined and that a definition is essential for legal certainty.

    I disagree.

    We now have thousands of decisions at the EPO, issued over the last 40 years, that render it ever clearer and more definite, what is “technical” and what is not. Patent drafters know, with ever-greater certainty, what claims they write are eligible and which are not. Because of infinite human creativity though, technology (and therefore eligibility) is an ever-expanding field, unconstrained by any definition dreamed up by a Supreme Court 20 years ago.

    Every claim is an attempt to define an inventive “concept”. What else is a concept but an “abstract idea”? I regret therefore that the USA has chosen the notion of an abstract idea as the test of patent eligibility.

    But defining that abstract idea of patent eligibility will, I say, only make things worse.

  4. concerned July 2, 2020 7:07 am

    That concept, it explained, was merely a “fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.”

    And the USPTO has their own definition of the above statement. Say it, then not substantiate the rejection even when the official record proves the examiner’s statement as false. In what universe is my process taught or practiced?

    Last, in Diamond v. Diehr, the Court upheld the eligibility of a multi-step patent claim that, as the Court described it, did “not seek to patent a mathematical formula or other patent-ineligible concept. Instead, they [sought patent] protection for a [multi-step] process of curing rubber,” the claim text for which recited multiple steps for using a mathematical “equation in conjunction with all of the other steps in their claimed process [for curing rubber].”

    The claim text recited multiple steps [Diehl-for curing rubber] [My-process-for curing oversights by working professionals and experts in the field of Social Security administration].” I do not see any difference.

    Night Writer has frequently wrote that Bilski allows any outcome the decision wants to make. It sure seems that way to me.

  5. Anon July 2, 2020 7:50 am

    MaxDrei,

    I call B$ on your ‘disagreement.’

    I have asked you in the past — and you have steadfastly refused – to give an actual (and non-circular) definition of ‘technical.’

    You have refused, along the lines tha the term is an ever-evolving one.

    Your view here and now that the EPO decisions “render it ever clearer and more definite” is likewise a fallacy. You crow that the same mechanism is very much different from stare decisis, but refuse to accept the natural consequence of that position — that there is NO ‘ever clearer and more definite’ precisely because tomorrow’s judge may radically ‘re-interpret’ the word to mean something different than yesterday’s judge.

    And here and now — yet again — you disrespect the difference in Sovereign choices, proselytizing your Sovereign’s choice of ‘technical’ while refusing to acknowledge our Sovereign’s WIDER choice of Useful Arts.

    Polite and disrespectful is still disrespectful.

  6. MaxDrei July 2, 2020 8:55 am

    Concerned, seriously, you “do not see any difference” between curing rubber and curing oversights? The first step towards winning an argument is to put yourself in the shoes of your adversary, and look out at the world through their eyes. Only when you see their point of view do you have any hope of explaining their misconception to them. Wilful blindness never helped anybody to win an argument.

    Here, curing rubber as a technological process, is it not. Curing oversights involves no technology. Rather it is something best done with a Checklist (pre-op, pre-flight, pre-contract signing, or whatever, not excluding social security payment administrators). Even better, use as your Check List a mnemonic because then all you need is your own brain, not even a pencil and paper, never mind a computer or the internet. By contrast, if you want to harden rubber then, unless you are Uri Geller, something “different” and better than a mnemonic, a computer and the internet is what you’re going to need.

    For the relevance to eligibility of “technical”, see here:

    https://www.ipwatchdog.com/2020/07/02/lessons-patent-subject-matter-eligibility-dropbox-v-synchronoss/id=123009/

    Good luck with the exploitation of your new, useful and inventive contribution to the art of social security administration. An art field of growing economic importance, I would think.

  7. Concerned July 2, 2020 10:13 am

    Max @6: What I see is two groups of experts trying to solve a problem, one rubber and one oversights.

    Since 1956, there have been a million working professionals and experts in my field. My oversight cause great financial hardship and non-compliance to law.

    A simple checklist is your solution? You are in the wrong field because we could have used you in ours. We are all incredibly incompetent not to see the obvious apparently.

  8. Pro Say July 2, 2020 11:05 am

    “We now have thousands of decisions at the EPO . . .”

    Max: Justice by analogy . . . is no justice at all.

    Is there an actual, explicit EPO’s definition of, “technical?”

    I’m U.S. only.

    Thanks.

  9. Anon July 2, 2020 11:27 am

    MaxDrei,

    Insisting on NOT applying US Sovereign law (and our Sovereign’s choices) is not only NOT helpful, it is disrespectful, as it purposefully obfuscates the different choices made by different Sovereigns. It coddles and amplifies harmful misperceptions.

    Please stop being disrespectful.