Another US district court has made a ruling based on Bilski – rejecting three patents, although giving ambiguous comments about one of them. Together with two previous rulings based on Bilski, we can look at how it might be used, and what are its shortcomings.
Under the Bilski test, established by the October 2008 ruling of the CAFC, ideas must require use of a “particular machine”, or must transform one thing into another thing or state.
On December 19th, 2008, the CAFC agreed with a USPTO rejection with the simple explanation, which I quote in it’s entirety:
In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court’s grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen’s claims are neither “tied to a particular machine or apparatus” nor do they “transform a particular article into a different state or thing.” Bilski, 545 F.3d at 954. Therefore we affirm.
Nothing too informative, but it does confirm that they intended those two tests are the essential part of their Bilski ruling.
On July 8th, in the US District Court for the Central District of California, Judge Andrew Gilford cited Bilski to reject US7,181,427. The judge’s order doens’t seem to be online, and all I’ve found online is these two excerpts which are lacking in context: (patentlawinsights)
[t]he Court finds that none of these devices constitutes a ‘particular machine’ within the meaning of Bilski.
Under Bilski and the recent decisions interpreting it, the central processor in this case cannot constitute a “particular machine.” Further, this Court’s claim construction order defined both the “remote application entry and data device” and “remote funding source terminal device” to include “any device,” such as a personal computer or dumb terminal, and these devices clearly cannot constitute particular machines.
The Nov 17th, 2009 ruling
This is the newest and also the most interesting ruling based on Bilski. The patent holder argues that the Bilski test doesn’t apply here, and that their idea would pass the Bilski test anyway. The judge disagrees.
Defendant argues that any recitations of a machine in the ‘862, ‘829, and ‘425 patents are directed toward data-gathering steps and therefore fail to tie the invention to a particular machine or to impose any meaningful limits on the scope of the claims.
862 fails particular machine test
In light of the specification, it is clear that these “components” are individuals and organizations. Thus, the ‘862 claims describe a “system” consisting of a computer and certain financial relationships between entities. A financial relationship is simply an abstract intellectual concept.
The computer component is not a particular, special purpose machine; it is capable of no more than storing and retrieving data memorializing associations. The computer is an insignificant, extra-solution component of the claimed system. Cf. Bilski, 545 F.3d at 961-963 (concluding that data gathering steps are insignificant extra-solution activity). If an extra-solution step is insufficient to render an otherwise unpatentable process claim valid, then by analogy an extra-solution component is insufficient to render an otherwise unpatentable “system” claim valid. Thus, the addition of a generic computer, capable only of storing and retrieving data associating payments with spending vehicles, to the claimed system fails to impose meaningful limits on these claims. Therefore, the Court finds the claims of the ‘862 patent invalid for claiming unpatentable subject matter.
425 fails particular machine test
Independent claims 1, 5, 9, and 13 of the ‘425 patent all claim “computerized system[s] for providing a loan to a taxpayer prior to the end of the current tax year . . . .” Claim 1 is representative of the other independent claims. […] Plaintiff argues, however, that the computer is a critical component of the invention. The Court disagrees. The computer component is not a particular, special-purpose machine; it is capable of no more than storing data and estimating a tax refund amount.
425 and 829 fail transformation test
Plaintiff argues that the ‘829 claims transform “tax return data into an anticipated tax refund amount which is transformed into a spending vehicle issued by a third party provider” and that the ‘425 method claims transform “an individual’s income and expense data into an estimated income tax return amount which is transformed into a loan distributed to a tax payer.” PL.’S RESP. at 24. Plaintiff argues the data “represent real world items (e.g., money).” Id. at 25. It argues that income and expense data do not represent hypothetical income and expenses but rather “actual money which has been earned and spent.” Id. The final transformation, it urges, is from data to a loan for a specific amount of money. Id.
At all steps in the claimed processes, the manipulated data represent legal obligations and relationships. See Bilski, 545 F.3d at 963. However described, the data and resulting loan represent money. Although tangible in some forms, money is simply a representation of a legal obligation or abstract concept. Therefore, the Court finds that the claims of the ‘829 patent and the method claims of the ‘425 patent fail the transformation prong of the machine-or-transformation test.
But, 829 passes the particular machine test
To be valid, a patent just has to pass one of the Bilski tests, so although the ‘829 patent failed the transformation test, the judge held it valid because it passed the particular machine test:
However, the computer is also used to execute an agreement between a taxpayer and a third party spending vehicle provider. The execution of such an agreement is an essential part of the claimed invention because the reallocation of some or all of a tax refund into a spending vehicle is dependent upon the execution. Thus, the computer’s involvement is not insignificant extra-solution activity. The use of the computer also imposes meaningful limits on the claim because the claim does not preempt all methods of executing agreements between a taxpayer and a third party spending vehicle provider. It only preempts those methods that utilize a computer that has been specially programmed to operate as an electronic tax preparation system. See In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994) (“a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions”) abrogated by Bilski, 545 F.3d 943; In re Prater, 415 F.2d 1393, 1404 n. 29 (CCPA 1969). The Court finds the claims of the ‘829 patent are sufficiently tied to a particular machine and therefore pass the machine-or-transformation test. Accordingly, the claims are directed to patentable subject matter.
Although I have to say I’m puzzled by the use of an “abrogated” part of Alappat. I might be misreading something. Explanations welcome.