Center for Advanced Study & Research on Intellectual Property

 

CASRIP Newsletter - Fall/Winter 2009, Volume 16, Issue 1

Question the Power of the Appellate Court and the Patent Eligibility of Machine: In re Comiskey

Masako Kikuchi1

I. OVERVIEW

About one and a half years ago, the Federal Circuit decided In re Comiskey2 . The case related to the patentable subject matter (§101) of business method patents. However, on 13 January 2009, after an en banc rehearing, the court vacated its original judgment in Comiskey and reassigned the opinion to the original panel for revision.3 To this decision, two concurring from the original panel and Judge Lourie, and two dissenting opinions from Judge Moore, Newman and Rader were issued and these opinions have highlighted split among the Federal Circuit judges with respect to the power of the appellate court and the patentable subject matter (§101) of machine.4 On the same day, the revised opinion was also issued by Judge Jky5 , which eliminated the phrases of the original opinion linking stating patentable subject matter (§101) and obviousness (§103) of the machine (system) claims; “[t]he routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness”.6

II. BACKGROUND

Stephan Comiskey filed patent application on December 16, 1999 with the United States Patent and Trademark Office (USPTO), claiming a method and system for mandatory arbitration involving legal documents, such as wills or contracts.7 In the course of prosecution, the patent examiner issued five office actions rejecting both his system and process claims as obvious under §103.8 Comiskey appealed the obviousness rejections to the Board of Patent Appeals and Interferences (hereinafter “Board”).9 On November 30, 2005, the Board affirmed the examiner's rejections of both the process and system claims as obvious.10 Comiskey then brought his dispute with the USPTO to the Federal Circuit, seeking relief from what he considered inappropriate obviousness rejections.11

The Board’s decision was solely based on the obviousness rejection of the examiner, nonetheless, the Federal Circuit reviewed the case for patentable subject matter under §101. Therefore, the court first decided whether it lacked the power to consider a statutory ground for rejection that was never raised during the agency proceeding. Relying on Chenery12 , the court held that it was “permit[ted] [] to supply a new legal ground for affirmance,” especially in case “where, as here, ‘[i]t would be wasteful to send’ the case back to the agency for a determination as to patentable subject matter.”13 The court then considered the patentable subject matter of the mental process claims and system claims. First of all, the court confirmed that Mr. Comiskey's application might be viewed as falling within the general category of "business method" patents,14 and as the holding in State Street Bank indicates, business methods were "subject to the same legal requirements for patentability as applied to any other process or method."15 Next, the court has ruled that when an abstract concept has no claimed practical application, it is not patentable.16 Furthermore, although the abstract concept may have a practical application17 , the mental processes standing alone are not patentable even if they have practical application.18 They may be patentable “if they (1) are tied to a machine or (2) create or involve a composition of matter or manufacture.”19 Finally, about machine claims, the court has held that “[w]hen an unpatentable mental process is combined with a machine, the combination may produce patentable subject matter,” but “the routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness.”20

Applying these standards, the Federal Circuit has ruled that Mr. Comiskey's process claims sought to patent the use of human intelligence in and of itself, and consequently they were unpatentable. Regarding his system claims, the court found that they at most merely add a modern general purpose computer to an otherwise unpatentable mental process or merely add modern communication devices. However, the court remanded to the USPTO to determine whether these system claims would have been nonobvious, even though the court considered that they might be obvious under §103.21 After this decision of Comiskey on September 20, 2007, Mr. Comiskey filed a petition for rehearing en banc was filed. On January 13, 2009 the Federal Circuit granted a very limited rehearing en banc, and two concurring and two dissenting opinions were issued.22 On the same day, the revised opinion was issued by the original panel, and the "misunderstood" phrases23 relating to the patentability of system claims were removed from the opinion.24 Furthermore, the panel remanded for consideration whether these system claims recite patentable subject matter (§101).25

III. ANALYSIS

A. Two Concurring Opinions

One concurring opinion by the original panel has become one of the dissenting opinions. The panel has emphasized that although “the dissent appears to contend that under Chenery our court lacks power to uphold the Board's rejection on alternative legal grounds without first deciding that the original ground was erroneous,” “there is no authority cited in support of this view.”26 The original panel then stated “it is well established that an appellate court has the power to decide a case on alternative legal grounds without addressing the original ground for decision”27 and cites the Supreme Court decision in Schenck28 and the Federal Circuit decision in Koyo Seiko.29 With respect to the remand, the panel has also asserted the appellate court has power to remand a case for consideration of alternative issue that might obviate the need to decide the ground of the trial tribunal’s decision, and then cited the Supreme Court’s decision in Dretke v. Haley (2004)30 and the circuit court decision in the administrative context.31 The concurring opinion also pointed out that the purpose of §706 of the Administrative Procedure Act (“APA”) (5 U.S.C. §706)32 is to ensure that the reviewing court does not affirm the agency decision without first considering all bases for challenging an agency decision.33 That is, unlike the dissenting opinion (required to decide every issue presented on review), it does not require the decision of every issue for affirming the agency –review need not extend beyond “the extent necessary to decision” (5 U.S.C. §706).34 Finally, regarding the §101 issue, the panel asserted that “addressing the issue was both desirable and appropriate,” because this case present unusual circumstances, such as no adverse party in the USPTO’s ex parte procedure, and because the USPTO noted that a “precedential decision of this Court would give the Office needed guidance in this area” in response to the request of supplemental briefing directed at the patentable subject matter in the original Comiskey case.35

The other opinion was from Judge Lourie. He has expressed sympathy to Judge Moore’s dissent, but still concurred in the panel decision that “the method claims do not pass muster under [] §101” without vacating which might engender more uncertainty in the law.36 With respect to the system claims, he also concurred removing the original opinion linking the statements “otherwise unpatentable mental process,” because the phrase was used as if it were prior art, which is defined in §102, not in §101.37

B. Two Dissenting Opinions

One dissenting opinion written by Judge Moore joined by Judge Newman and Judge Rader has cast doubt on the revised decision based on Chenery that “an appellate court can affirm an agency determination on a ground not considered by the agency.” The dissent emphasized that there must be some limit to appellate court authority to review agency actions, and it seems this court in Comiskey crossed the line.38 To support this argument, the dissent presented three reasons. First, in Chenery, the Supreme Court has held that “an appellate court can reach an alternative legal ground [] in order to affirm an agency [] when the agency ground was erroneous because it would be wasteful to remand the case under these circumstances.”39 In other words, the affirmance of the result is required. Therefore, the dissent reasoned that the Comiskey court without consideration whether the USPTO’s obviousness rejection was correct erred and could not be justified.40 The dissent pointed out that “[p]erhaps most troubling, the court refused to consider whether the system claims were obvious but instead remanded for the USPTO to consider whether these claims are directed to patentable subject matter.”41 If the USPTO’s original obviousness rejection of the system claims is still not an error, the revised panel judgment would result in the wasteful remand that Chenery tried to avoid.42 Second, because obviousness is the only question of law presented by the agency, the obviousness of the system claims is a “relevant question of law” which the reviewing court shall decide.43 The dissent insisted that “[o]ur task is to review a USPTO decision, not to direct its examination.”44 Finally, the dissent argued that there was no trigger to remand to consider whether system claims were directed to patentable subject matter, because the Supreme Court and Federal Circuit precedent, cited by the original judgment which held these system claims directed to patentable subject matter, stated that machine claims are patentable subject matter.45

The other dissenting opinion was from Judge Newman. She stressed the economic importance related to business method patents in the Information Age, and strongly objected to the present broad exclusion of business methods from patentable subject matter.46 First, in determining patentable subject matter, she cast doubt on splitting method and system claims, which arise from the same specification and would be infringed by identical acts.47 She then insisted that the court should have cleared the uncertainty as to whether the replacement of “process” with “system” claims suffices the patentable subject matter requirement.48 This uncertainty would be the barrier to generate economic value.49

Second, to promote the progress of science and the useful arts, she asserted that the incentive should not turn on whether the method is performed in the mind or by a machine, but should turn on the novelty and nonobviousness of the method.50 Comiskey’s process is neither a “law of nature, natural phenomenon or abstract idea,” nor a “mental process” because the specification states the system “may be established through the Internet, intranet….”51 Therefore, she criticized the panel for enlarging the ineligibility category by deciding Comiskey’s process claims do not direct patentable subject matter (§101) just because a computer is not used, and stated “[r]ather, the Court signaled restraint, at the dawn of the computer age” by citing Flook52 , which the panel has relied on.53

Finally, although the panel relied on the British Statute of Monopolies of 1623 for support to show Congress’s intent to eliminate the business method inventions from patentable subject matter, she concluded that the Statute did not eliminate patents for any kind of inventions, but was directed to eliminating "odious monopolies.”54 As mentioned in Bilski, the Statute of Monopolies did not discuss the categories of inventive patentable subject matter for a British patent, and emulated the business method patents listed in British patents of the era.55

IV. CONCLUSIONS

Although the Federal Circuit has reacted to the “misunderstanding” opinion in Bilski related to the patentability of Comiskey’s system claims, the standard of whether the Comiskey’s system claims are directed to patentable subject matter remains unclear. More importantly, by granting a very limited rehearing en banc, the Federal Circuit seems to be faced with the awkward question raised by Moore’s dissent: whether or not the appellate court has the power to decide a case on alternative grounds which the court sua sponte raise without addressing the original ground for decision. Behind the issue, the unique relationship between patentable subject matter (§101) and obviousness (§103) was pointed out by the dissent.56 That is, if the claimed invention is unpatentable due to obviousness, the result does not depend on whether the invention meets the patentable subject matter requirement.57 Another factor was mentioned by the panel: USPTO’s ex parte procedure, there is no adverse party who could have raised the new issues other than already presented.58 Therefore this dissent might have a great influence not only on the appellate courts, but also on the USPTO’s practices.

End Notes

  1. Masako Kikuchi is an IP LL.M. student at the University of Washington School of Law.
  2. In re Comiskey 499 F.3d 1365 (Fed. Cir. 2007).
  3. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400 (Fed. Cir. Jan. 13, 2009).
  4. Id.
  5. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 913 (Fed. Cir. Jan. 13, 2009).
  6. In re Comiskey 499 F.3d, at 1380.
  7. Id. at 1368.
  8. Id. at 1368-1370.
  9. Id. at 1370.
  10. Id. at 1370-1371.
  11. Id. at 1371.
  12. Securities & Exchange Commission v. Chenery Corp., 318 U.S. 80 (1943).
  13. In re Comiskey 499 F.3d, at 1373.
  14. Id. at 1374.
  15. State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1375 (Fed. Cir. 1998); see also MPEP §2106(I) (Rev. 4, Oct. 2005) ("Claims should not be categorized as methods of doing business. Instead, such claims should be treated like any other process claims").
  16. In re Comiskey 499 F.3d, at 1376.
  17. Id.
  18. Id. at 1378.
  19. Id. at 1376-1377.
  20. Id. at 1379-1380.
  21. Id. at 1380-1381.
  22. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400 (Fed. Cir. Jan. 13, 2009).
  23. See In re Bilski 545 F.3d 943, 960 (Fed. Cir. 2008) (“Lastly, we address a possible misunderstanding of our decision in Comiskey. Some may suggest that Comiskey implicitly applied a new §101 test that bars any claim reciting a mental process that lacks significant "physical steps." We did not so hold, nor did we announce any new test at all in Comiskey. Rather, we simply recognized that the Supreme Court has held that mental processes, like fundamental principles, are excluded by §101 because "'[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts . . . are the basic tools of scientific and technological work.'").
  24. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 913, at *38 (Fed. Cir. Jan. 13, 2009).
  25. Id.
  26. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400, at *3 (Fed. Cir. Jan. 13, 2009).
  27. Id.
  28. Schenck v. Pro-Choice Network of Western New York, 519 U.S. 357 (1997).
  29. Koyo Seiko Co. v. United States, 95 F.3d 1094 (Fed. Cir. 1996).
  30. Dretke v. Haley, 541 U.S. 386, 388-89 (2004).
  31. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400, at *7-8 (Fed. Cir. Jan. 13, 2009).
  32. 5 U.S.C. §706 (2007) (“To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”).
  33. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400, at *8-9 (Fed. Cir. Jan. 13, 2009); see also Charlton v. United States, 412 F.2d 390, 391-393 (3d Cir. 1969) (“reversing district court's decision because it violated §706 by dismissing challenge to agency action without considering the basis for challenge”).
  34. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400, at *9 (Fed. Cir. Jan. 13, 2009).
  35. Id. at *9-10; see also [US]PTO Supp. Br. 15.
  36. Id. at *10.
  37. Id. at *10-12.
  38. Id. at *39.
  39. Id. at *18.
  40. Id. at *19-20, 29-35.
  41. Id. at *22.
  42. Id.
  43. Id. at *25-26; see also 5 U.S.C. §706.
  44. Id. at *26.
  45. Id. at *36-38.
  46. Id. at *40-57.
  47. Id. at *44-45.
  48. Id.
  49. Id. at *57.
  50. Id. at *45-47.
  51. Id. at *48.
  52. Parker v. Flook, 437 U.S. 584, 589 (1978) (“As in Benson, we assume that a valid process patent may issue even if it does not meet one of these qualifications [machine implementation or transformation] of our earlier precedents.").
  53. In re Comiskey, No. 2006-1286, 2009 U.S. App. LEXIS 400, at *48-49 (Fed. Cir. Jan. 13, 2009).
  54. Id. at *49-50.
  55. Id. at *53-55.
  56. Id. at *27.
  57. Id.
  58. Id. at *9-10.

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