Recent Cases on Patentable Subject Matter and Patent Exhaustion

1. Recent Cases on Patentable Subject Matter and Patent Exhaustion Mojdeh Bahar, J.D., M.A. Chief, Cancer Branch Office of Technology Transfer National Institutes of Health U.S. Department of Health & Human Services FLC MAR

2. Curse or Challenge? “May You Live in Interesting Times”

3. 35 USC 101 • Inventions patentable 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.

4. Business Method Patents • Cases claiming a method of doing business, E-Commerce • State Street Bankv. Signature Fin. Group, Inc. stands for the proposition that patentability does not turn on whether the claimed subject matter does “business” instead of something else (149 F. 3d 1368, Fed. Cir 1998)

5. In re Stephen W. Comiskey • Applicant’s claims were rejected as obvious over the prior art. • Applicant appealed to the BPAI, and BPAI affirmed the Examiner’s rejection • Applicant appealed to Fed. Cir. • Federal Circuit held that the claims were not statutory subject matter and as such affirmed-in-part, vacated in part and remanded. (September 20, 2007)

6. In re Stephen W. Comiskey Claim 1 states in full: A method for mandatory arbitration resolution regarding one or more unilateral documents comprising the steps of: enrolling a person and one or more unilateral documents associated with the person in a mandatory arbitration system at a time prior to or as of the time of creation of or execution of the one or more unilateral documents; incorporating arbitration language, that is specific to the enrolled person, in the previously enrolled unilateral document wherein the arbitration language provides that any contested issue related to the unilateral document must be presented to the mandatory arbitration system, in which the person and the one or more unilateral documents are enrolled, for binding arbitration wherein the contested issue comprises one or more of a challenge to the documents, interpretation of the documents, interpretation or application of terms of the documents and execution of the documents or terms of the documents; requiring a complainant to submit a request for arbitration resolution to the mandatory arbitration system wherein the request is directed to the contested issue related to the unilateral document containing the arbitration language; conducting arbitration resolution for the contested issue related to the unilateral document in response to the request for arbitration resolution; providing support to the arbitration resolution; and determining an award or a decision for the contested issue related to the unilateral document in accordance with the incorporated arbitration language, wherein the award or the decision is final and binding with respect to the complainant

7. In re Stephen W. Comiskey • Claims drawn to a method of mandatory arbitration for unilateral and contractual documents • Fed. Cir. raised the 101 issue sua sponte • Fed. Cir. held that the claims are drawn to a mental process • Fed. Cir. held that the claims depend for their operation on human intelligence alone

8. In re Bilski (Fed. Cir. 2008 en banc) • Claims were rejected under 35 USC 101 by the Examiner • BPAI affirmed the rejection, but questioned and analyzed the basis • Case was heard by the Fed. Cir on May 8, 2008 • The Opinion has not yet been rendered

9. In re Bilski…cont’d 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.

10. In re Bilski…cont’d • Claims drawn to a method of managing the risk of bad whether through commodities trading • In its analysis BPAI held that the recited steps do not transform any physical subject matter into a different state or thing, i.e., the claims fail the “transformation” test. • BPAI further stated that the claims are “abstract ideas”, and as such non-statutory subject matter. • BPAI further stated that the claims do not recite a “practical application” or a “concrete and tangible result” under State Street, and as such are non-statutory subject matter. • BPAI turned to USPTO’s Intrim Guidelines on 101 analysis, and yet again stated that the claims were non-statutory subject matter.

11. Patent Exhaustion Doctrine • The right to vend is exhausted by a single, unconditional sale, the article sold being thereby carried outside the monopoly of the patent law and rendered free of every restriction which the vendor may attempt to put upon it. • First Sale Doctrine: Under the first sale doctrine, an authorized and unrestricted sale of a patented product exhausts the patent's power over that particular product.  Thus, a patentee cannot later sue a customer who uses the product in an infringing manner.

12. Quanta Computer, Inc., et al v. LG Electronics, Inc • Intel (chipmaker) licensed a set of patents from LG • LG sued manufacturers using the Intel chips in their products • Manufacturers asserted that the first sale doctrine of patent exhaustion applies • District Court held that patent exhaustion does not apply to method claims • Fed. Cir. Affirmed in part and reversed in part • Sup. Ct. reversed the Fed. Cir. Decision

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