1. The Subject Matter of Patents II Class Notes: April 8, 2003 Law 677 | Patent Law | Spring 2003 Professor Wagner

2. 04/08/032Law 677 | Spring 2003 Today’s Agenda 1.The Subject Matter of Patents: The Supreme Court’s most recent statements 2.The Federal Circuit’s Response

3. 04/08/033Law 677 | Spring 2003 Statutory Subject Matter Diamond v Chakrabarty (1980) Claims: [1] process of producing a bacterial organism [2] method of using a bacterial organism [3] the bacterial organism itself Why does the examiner allow [1] and [2] but not [3]? (Does this make practical sense?) As a matter of statutory construction, is a bacterial organism a ‘composition of matter’ or ‘manufacture’? oWhat does the Court suggest is the ‘real’ issue here? So what is the ‘rule’ of Chakrabarty? (What living things are patentable? Which are not?)

4. 04/08/034Law 677 | Spring 2003 Statutory Subject Matter Diamond v Diehr (1981) Claim: process for curing synthetic rubber (includes the use of a formula) What is the ‘rule’ of Diehr? a)Cannot patent mathematical formulas ‘in the abstract”? b)“When 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 are designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101.” a)After Diehr, is software patentable? Business models?

5. 04/08/035Law 677 | Spring 2003 Statutory Subject Matter The Supreme Court’s Approach Two categories of impermissible subject matter: 1.Living things What does the court mean by ‘living things’? See, e.g., Diamond v Chakrabarty 2.Abstract ideas What does the court mean by ‘abstract ideas’? See, e.g., Diamond v Diehr What, if anything, do these categories have in common? Is § 101 the right place to hang such a concern?

6. 04/08/036Law 677 | Spring 2003 The Federal Circuit’s Response In re Alappat (Fed Cir. 1994) What is the claimed invention? Is it an algorithm? (A ‘mathematical algorithm’? ) oWhat does the court say about the ‘mathematical algorithm exception? Why does the court suggest this claim is patentable? oIs this consistent with the rule of Diamond v Diehr? oWhy do you think the court places weight on the machine vs process distinction? The court suggests that software is easily patentable on pp 798- 99. Do you agree with the reasoning? (Again, is this consistent with Diehr?) Consider the Archer dissent: after Alappat, can you patent music? (How? Any problem with this?)

7. 04/08/037Law 677 | Spring 2003 The Federal Circuit’s Response State Street Bank (Fed. Cir. 1998) What is the claimed invention? What is the claim format? (Is this important?) The court considers two “exceptions” to statutory subject matter: oThe ‘business’ method exception oThe ‘mathematical algorithm’ exception –What is the ‘test’ for this exception? (How does the calculation of share prices meet that test?) –How does this differ from the analysis in Alappat? Is it closer -- or further -- from Diehr? What does the court say about ‘transformations’? oDoes the focus on whether the claim does something “useful” suggest anything about the scope of the § 101 subject matter requirement?

8. 04/08/038Law 677 | Spring 2003 The Federal Circuit’s Response AT&T v Excel (Fed. Cir. 1999) What is the claimed invention? (What is the claim format?) Why is this claim not subject to the § 101 exceptions? What was the AT&T court trying to do in its lengthy discussion of the caselaw? (Do you agree with its conclusion?)

9. 04/08/039Law 677 | Spring 2003 Overview of Subject Matter Exceptions Two basic categories of exceptions: 1.Natural phenomena 1.Living things: e.g., natural organisms But see Chakrabarty, allowing non-natural (isolated, purified) living organisms to be patented 2.Laws of nature: e.g., Einstein’s theory of relativity Basic theory of exclusion: lack of novelty, concerns about overbreadth 2.Abstract ideas 1.Mathematical algorithms But see AT&T/State Street, allowing “useful” algorithms to be patented 2.Basic theory of exclusion: concerns about lack of utility, overbreadth

10. 04/08/0310Law 677 | Spring 2003 Why have Subject Matter Exceptions? Is there an affirmative case for more robust subject matter exceptions? 1.Norms-based objections 2.Industry custom (e.g., financial industry) 3.Economic concerns: “certain technologies are better innovated without patents”

11. 04/08/0311Law 677 | Spring 2003 Next Class Patent Economics II Approaches to the Patent System