Double standards for Business method patents? Drug dosage calibration v. Hedging risks in commodities trading

Double standards for Business method patents? Drug dosage calibration v. Hedging risks in commodities trading

Nirav Bhatt is an LLM candidate at Osgoode Hall Law School.

Recently the US Court of Appeals for the Federal Circuit (CAFC) in Prometheus Laboratories, Inc. v. Mayo Collaborative Services held that Prometheus’ patent claim methods for calibrating the proper dosage of thiopurine drugs, which are used for treating both gastrointestinal and non-gastrointestinal autoimmune diseases, was “transformative,” and therefore statutory subject matter under 35 U.S.C §101. It was the “machine or transformation” test of In re Bilski which the court relied upon, reversing the US Southern District Court of California’s decision.

The CAFC held that: (a) The administering and determining steps are transformative, (b) these steps are not merely data-gathering and (c) the presence of a mental step does not detract from patentability. Therefore, the claimed methods satisfy all necessities under Bilski’s transformation point for patent-eligible subject matter under § 101.

However it is interesting to note that in In re Bilski the CAFC affirmed the rejection of the patent claims involving business methods and at the same time established the machine-or-transformation test as the applicable test for patent-eligible subject matter.  In re Bilski (an en banc decision of the CAFC on the patenting of business method claims) will be heard by the US Supreme Court as certiorari has been granted in this case. This case is being closely watched within the legal and business communities, on both sides of the Atlantic.  It has the potential to change once again the landscape for business method patents in the US.

In this case the applicants (Bernard L. Bilski and Rand A. Warsaw) filed a patent application for a method of hedging risks in commodities trading. The patent examiner rejected all eleven claims on the grounds that the invention was not implemented on a specific apparatus and solves a purely mathematical problem without any limitation to a practical application. The applicants appealed the rejection to the Board of Patent Appeals and Interferences, which affirmed the rejection. The applicants then appealed the rejection to the Federal Circuit, which upheld the rejection. The court concluded that prior decisions of the Supreme Court were of limited usefulness as guides because they represented polar cases on the concept and concreteness spectrum. 

The reports have been widespread that the Bilski decision will call into question the validity of many already issued business method patents. If you have read reports in the news or comments in the blogs, this issue has received global news coverage with a generally favorable assessment of the judgment. According to The Associated Press, the decision "could reshape the way banks and high-tech firms protect their intellectual property." Moreover, as a result of the decision, according to the Washington Post and others, many business method patents, possibly thousands, may now be invalid. This case will be closely watched by the Silicon Valley business community, since any decision could have a far-reaching impact on the patentability of intellectual property developed by Silicon Valley businesses. So, the importance of the Supreme Court taking Bilski is that the Supreme Court is expected to clarify what the test should be for the patentability of method claims. This clarification will inevitably have widespread implications for the technology industry, since it may affect the validity of existing method patents as well as the future patentability of method inventions.

Considering the above,, the Prometheus case makes it a likely contender for Supreme Court review especially if the Court is not fully satisfied with the Bilski decision. The US Supreme Court has regularly used case clustering in the past when considering patent issues: non obviousness (Anderson's Black Rock, Inc. v. Pavement Co., 396 US 57 (1969)) or patentable subject matter (Chakrabarty, 447 U.S. 303 (1980)).