1. Patent Eligible Subject Matter: Where Are We Now? A Presentation to CPTCLA September 23, 2011 Mike Connor Alston & Bird LLP Atlanta | Brussels | Charlotte | Dallas | Los Angeles | New York Research Triangle | Silicon Valley | Ventura County | Washington D.C.

2. -2- Presentation Outline  Patent Statutes  In re Bilski in the Federal Circuit  In re Bilski in the United States Supreme Court  Treatment of Process (and other) Claims After Bilski  Questions

3. What is Patentable?  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.  35 U.S.C. § 100(b) Definitions  The term “process” means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.  Statutory subject matter “may include anything under the sun that is made by man”  S.R. REP. NO. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2399.  Exceptions:  laws of nature, natural phenomena, and abstract ideas -3-

4. Federal Circuit- Bilski v. Kappos  Bernard Bilski and Rand Warsaw appealed PTO’s rejection of their claim for a method for handling energy hedge funds  Patent examiner held that invention was not patentable subject matter under § 101  B.P.A.I. affirms  In 2008, the Federal Circuit affirmed rejection of patent claims  Federal Circuit reiterated the machine-or-transformation test as the test for patent eligible subject matter  “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.”  The machine or transformation “must impose meaningful limits on the claim’s scope....”  The machine or transformation “must not merely be insignificant extra-solution activity.” -4-

5. Supreme Court – Bilski v. Kappos  In June 28, 2010 opinion, SCOTUS held:  Bilski’s claims are not patentable  “abstract ideas” are not patentable  “machine or transformation test” – while useful – is not the exclusive test for determining whether a business method is patentable  declined to adopt a test to determine patentability of a business method -5-

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15. Bilski-related Financial cases  Graff/Ross Holdings LLP v. Federal Home Loan Mort. Corp., (D.D.C. Aug. 27, 2010) (Process for generating a purchase price for at least one component of property using a computer)  Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada, (E.D.Mo. Feb. 14, 2011) (A system for administering and tracking the value of separate account life insurance policies)  CLS Bank Intern. v. Alice Corp. Pty. Ltd., (D.D.C. Mar. 9, 2011) (Patents directed to help reduce the settlement risk of trades of financial instruments using a computer system) -15-

16. Bilski-related Financial cases continued…  Accenture Global Services, GmbH v. Guidewire Software, Inc., (D.Del. May 31, 2011)(Software capable of performing tasks relating to insurance transactions)  CyberSource Corp. v. Retail Decisions, Inc., (Fed. Cir. (Cal.) Aug. 16, 2011) (Method and system for detecting fraud in credit card transaction between consumer and merchant over the Internet) -16-

17. Bilski-related Cases: Medical  The Ass'n For Molecular Pathology v. U.S. Patent and Trademark Office, (Fed.Cir.(N.Y.) Jul 29, 2011) (Patents for isolated DNA sequences, methods for identifying mutations)  Prometheus Laboratories, Inc. v. Mayo Collaborative Services, (Fed.Cir. (Ca.) Dec 17, 2010) (Methods for calibrating proper dosage of drugs)  Intervet Inc. v. Merial Ltd., (Fed.Cir.(Dist.Col.) Aug 04, 2010) (DNA encoding of a type of porcine circovirus)  King Pharmaceuticals, Inc. v. Eon Labs, Inc., (Fed.Cir.(N.Y.) Aug 02, 2010) (Methods of informing patients about and administering muscle relaxant)  Classen Immunotherapies Inc. v. Biogen Idec et al., (Fed. Cir. (Md.) Aug. 31, 2011) (Evaluating a vaccine immunization schedule) -17-

18. Bilski-related Computer cases  Research Corp. Technologies, Inc. v. Microsoft Corp., (Fed.Cir.(Ariz.) Dec 08, 2010) (Method/apparatus for rendering a half-tone digital image)  Ultramercial, LLC v. Hulu, LLC, (C.D.Cal. Aug 13, 2010) (Distributing copyrighted material over the Internet)  Glory Licensing LLC v. Toys R Us, (D.N.J. May 16, 2011) (A system for processing information from a template file to an application) -18-

19. Bilski Take Aways  M-O-T test is still the principal test for patent eligibility of processes  “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.”  The machine or transformation “must impose meaningful limits on the claim’s scope....”  The machine or transformation “must not merely be insignificant extra-solution activity.”  Courts then look at whether the claimed subject matter is drawn to unpatentable subject matter  “laws of nature, physical phenomena, and abstract ideas” are not patentable  Mental Processes are considered abstract ideas  Mental Processes, performed in the human mind or with pen and paper, are abstract ideas (Cybersource) -19-

20. Machine Prong  a machine “must play a significant part in permitting the claimed method to be performed”  CyberSource Corp. v. Retail Decisions, Inc., (Fed.Cir.(Cal.) Aug 16, 2011) (citing SiRF Tech., Inc. v. Int’l Trad. Comm’n)  A “facilitator” is too broad of a term; “Internet” is not a machine  Ultramercial, LLC v. Hulu, LLC, (C.D.Cal. Aug 13, 2010) (Distributing copyrighted material over the Internet)  If the machine is merely an object where the method operates, then that will weigh against patentability  Graff/Ross Holdings LLP v. Federal Home Loan Mortg. Corp., (D.D.C. Aug 27, 2010) (Process for generating a purchase price for at least one component of property using a computer) -20-

21. Machine Prong continued…  Simply reciting the use of a programmed computer does not satisfy the machine prong since it adds nothing more than a general purpose computer that has been programmed in an unspecified manner to implement functional steps in the claim  Glory Licensing LLC v. Toys R Us, (D.N.J. May 16, 2011) (A system for processing information from a template file to an application)  Coupling of an unpatentable mental process with a machine or manufacture does not make the invention patentable  CyberSource Corp. v. Retail Decisions, Inc., (Fed.Cir.(Cal.) Aug 16, 2011) (Method and system for detecting fraud in credit card transaction between consumer and merchant over the Internet) -21-

22. Transformation Prong  “analyzing” and “comparing” two gene sequences were abstract ideas; Steps of “growing cells” were deemed transformative  The Ass'n For Molecular Pathology v. U.S. Patent and Trademark Office (Fed.Cir.(N.Y.) Jul 29, 2011) (Patents for isolated DNA sequences, methods for identifying mutations)  “administering” drugs is a transformative; “determining” the levels of drugs in a subject also involves transformation since the step involves a manipulation of the bodily sample  Prometheus Laboratories, Inc. v. Mayo Collaborative Services, (Fed.Cir. (C.A.) Dec 17, 2010)  King Pharmaceuticals, Inc. v. Eon Labs, Inc., (Fed.Cir.(N.Y.) Aug 02, 2010) -22-

23. Transformation Prong continued…  Claim directed at variations in immunization schedules does not include a transformation, however including the subsequent act of immunization is a transformation  Classen Immunotherapies Inc. v. Biogen Idec et al., (Fed. Cir. (Md.) Aug. 31, 2011) (Evaluating a vaccine immunization schedule)  Transferring of data between computers is not transformative  Ultramercial, LLC v. Hulu, LLC, (C.D.Cal. Aug 13, 2010)  Glory Licensing LLC v. Toys R Us, (D.N.J. May 16, 2011)  Gathering data is not transformative  Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada, (E.D.Mo. Feb 14, 2011)  Collection and organization of data is not transformative  CyberSource Corp. v. Retail Decisions, Inc., (Fed.Cir.(Cal.) Aug 16, 2011) -23-

24. Abstract Ideas  Mental processes, processes that can be done without the aid of a machine and can be done in the human mind, are considered abstract ideas  Example from CyberSource  Mental processes include (1) obtaining information about transactions which can be done by a human reading records; (2) constructing a map of the records can be done by hand; and (3) using the map to determine whether the credit card is valid can also be done by a person (CyberSource Corp. v. Retail Decisions, Inc., (Fed.Cir.(Cal.) Aug 16, 2011) -24-

25. Abstract Ideas continued…  Method reciting “computing a price” was held to be abstract  Graff/Ross Holdings LLP v. Federal Home Loan Mortg. Corp., (D.D.C. Aug 27, 2010)  Inventions with specific applications or improvements in technology “are not likely to be so abstract…”  Research Corp. Technologies, Inc. v. Microsoft Corp., (Fed.Cir.(Ariz.) Dec 08, 2010) (stating the patent made it more efficient to render half- tone images using a computer) -25-

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