Articles

Responding To "Unpatentable Subject Matter" Rejections Of Algorithm Patent Claims Citing Ex Parte Bowman

Travis Thomas

After years of official hostility toward attempts to gain patents for business method and software algorithms, it seemed by the late 1990s that the United States Patent Office and the American courts had fully embraced the patentability of such claims following the widely-publicized decisions of the U.S. Court of Appeals for the Federal Circuit in State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998) and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999).

These decisions ushered in an era of high-stakes litigation over software and business method algorithm patents, and made the United States the first major jurisdiction to accept a liberal view of patent protection for algorithms. Historically, the U.S. and other jurisdictions had viewed algorithms as unpatentable subject matter because they were viewed as mere ideas or collections of mathematical relationships. While other jurisdictions, notably Europe and Japan, still retain significant suspicion of, and erect regulatory barriers to patenting of, “pure” algorithm methods, it seemed following State Street and AT&T that the U.S. had done away with the distinctions it had previously drawn between computer-assisted inventions having a “tangible” implementation or output, and those that were claimed as “mere algorithm methods.”

Nonetheless, U.S. Patent Examiners have recently begun relying on an unpublished decision of the Board of Patent Appeals and Interferences in Ex Parte Bowman to reject, under 35 U.S.C. § 101, claims that recite algorithms. See 61 U.S.P.Q.2d 1669, 1669-1670 (U.S. Patent and Trademark Office Board of Patent Appeals and Interferences, 2001). Such a rejection typically asserts that one or more claims at issue “lack technical solution” or “do not fall within the technological arts” and are therefore directed to non-statutory subject matter. The following paragraphs provide an analysis of Ex Parte Bowman and its recent application and lays out a few practical responses to such a rejection.

Notably, Ex Parte Bowman represents a decision on appeal from the primary patent Examiner by the Board of Patent Appeals and Interferences, which has initial jurisdiction over such appeals. The Federal Circuit has, in turn, jurisdiction over appeals from the Board, although apparently no such appeal was taken in Ex Parte Bowman, so that the Board’s decision is of limited authoritative value, as the unpublished finding of an intermediate, administrative agency tribunal. In Ex Parte Bowman, the Board sustained a rejection under 35 U.S.C. § 101 because “the invention before us is nothing more than an abstract idea which is not tied to any technological art, environment, or machine.” Id. at 1671. The representative claim at issue recited the following:

A method of evaluating an intangible asset of interest, comprising the steps of:
establishing first and second variables related to the value of said intangible asset of interest;
establishing a series of performance criteria statements probative of the value of said first and second variables;
scoring each of said performance criteria statements;
summing scores to generate first and second total scores based upon the extent to which individual statements accurately describe said intangible asset of interest;
transforming physical media into a chart having a first axis relating to said first variable and a second axis relating to said second variable;
physically plotting a point on said chart, said point being located at coordinates corresponding to said first and second total scores, respectively, and,
using said chart in making at least one decision regarding the value of said intangible asset of interest.

Id. at 1670.

The rejection on appeal asserted that “the claimed invention does not fall within the technological arts because no form of technology is disclosed or claimed.” Id. at 1671. The appellant argued that the representative claim was directed to statutory subject matter because, under The Examination Guidelines for Computer-Related Inventions published by the U.S. Patent and Trademark Office (“The Guidelines”), “creating a chart and plotting a point thereon is ‘physical and has clear real-world value’” and “the claimed process clearly results in a physical transformation outside of a computer for which a practical application in the technological arts is either disclosed in the specification or would have been known to a skilled artisan.” Id. The Board rejected the appellant’s reliance on The Guidelines “because there is absolutely no indication on this record that the invention is connected to a computer in any manner.” Id.

The Board then concluded that the appellant’s real argument was that “the physical (even manual) creation of a chart and the plotting of a point on this chart places the invention within the technological arts,” which contention the Board also rejected. Id. According to the Board, “[t]he abstract idea which forms the heart of the invention before us does not become a technological art merely by the recitation in the claim of ‘transforming physical media into a chart’ [sic, drawing or creating a chart] and ‘physically plotting a point on said chart.’” Id. The Board continued, “The physical aspects of [the representative claim], which are disclosed to be nothing more than a human manually drawing a chart and plotting points on this chart, do not automatically bring the claimed invention within the technological arts.” Id.

In a concurring opinion, Judge Dixon attempted to reconcile the board’s decision with the Federal Circuit’s decision in AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999). See Ex Parte Bowman, 61 U.S.P.Q.2d at 1674-75. Judge Dixon noted that “[i]n the present application, the specification is silent as to the need for any apparatus to carry out the claimed process or to make the ultimate decision regarding the value of the intangible asset.” Judge Dixon then turned to the Federal Circuit’s decision in AT&T:

While AT&T clarifies that structure need not be present in the claim language for process claims to be directed to statutory subject matter, the Court appears to impliedly weigh that the process is carried out by a network of computers and telephone switches being used in the flow of communications, but here we do not have a similar factual situation.
. . . .
In AT&T, the Court stated that: “[t]his court recently pointed out that any step-by-step process, be it electronic, chemical, or mechanical, involves an ‘algorithm’ in the broad sense of the term.” While I agree with the Court’s analysis of an algorithm, the Court assumes that the algorithm is in an “electronic, chemical, or mechanical” based invention which I would find to be more than a mere recordation of the culmination of an abstract idea separate from the “electronic, chemical, or mechanical” technologies as in the present disclosed and claimed invention.

Id. at 1674-75.

Thus, Ex Parte Bowman seems to indicate that, according to the U.S. Patent and Trademark Office, a claim that recites an algorithm is directed to statutory subject matter only if the claim also recites one or more “physical aspects” that are “within the technological arts,” regardless of whether the algorithm generates a useful, concrete, and tangible result. Although the Board’s decision does not shed much useful light on what qualifies as a “physical aspect” or where the boundaries of “the technological arts” lie for purposes of determining statutory subject matter under 35 U.S.C. § 101, Judge Dixon’s concurrence suggests that a claim that recites an algorithm would be directed to statutory subject matter if the claim recited that the algorithm was, at least in part, executed electronically, chemically, or mechanically.

This rationale arguably would return the United States law for the patentability of business method and other computer algorithms to where it stood ten years ago following the Federal Circuit’s pre-State Street en banc ruling in In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994), which made tangible physical or mechanical output or steps a de facto requirement for patenting computer software -- a ‘requirement’ that was not mentioned in either the later State Street or AT&T decisions. Perhaps just as cogently, the language of the Board strongly echoes requirements of “technical effect” or “technological nature” that are currently being applied in the European Patent Office and other jurisdictions to deny patent protection to “pure” software algorithm inventions. The Board may believe that adopting, sub silentio, the foreign-law-style limitations on algorithm claims is advisable or necessary in the interests of harmonizing U.S. patent practice with that of other major patent-granting jurisdictions.

Despite Judge Dixon’s attempt to reconcile the Board’s decision in Ex Parte Bowman with AT&T, it is highly debatable whether the Board’s decision can be readily reconciled with the broad endorsement of the patentable subject matter nature of software algorithm claims as set forth in both AT&T and State Street. In AT&T, the Federal Circuit held that the following claim “comfortably falls within the scope of § 101”:

A method for use in a telecommunications system in which interexchange calls initiated by each subscriber are automatically routed over the facilities of a particular one of a plurality of interexchange carriers associated with that subscriber, said method comprising the steps of:
generating a message record for an interexchange call between an originating subscriber and a terminating subscriber, and
including, in said message record, a primary interexchange carrier (PIC) indicator having a value which is a function of whether or not the interexchange carrier associated with said terminating subscriber is a predetermined one of said interexchange carriers.

172 F.3d 1352, 1354, 1358 (Fed. Cir. 1999). According to the Federal Circuit, the “claimed process employs subscribers’ and call recipients’ PIC [indicators] as data, applies Boolean algebra to those data to determine the value of the PIC indicator, and applies that value through switching and recording mechanisms to create a signal useful for billing purposes.” Id. at 1358. The Federal Circuit then went on to hold that the claim at issue was directed to statutory subject matter because “the claimed process applies the Boolean principle to produce a useful, concrete, tangible result without pre-empting other uses of the mathematical principle.” Id. According to the Federal Circuit, the “useful, concrete, tangible result” of the claimed process was the claimed PIC indicator, which “represents information about the call recipient’s PIC, a useful, non-abstract result that facilitates differential billing of long-distance calls made by an IXC’s subscriber.” Id.

As Judge Dixon pointed out in his concurring opinion in Ex Parte Bowman, the Federal Circuit seemed to acknowledge that at least some of the steps recited in the claim at issue in AT&T were executed electronically.1 However, the Federal Circuit’s decision in AT&T clearly focused on the result of the computer processing steps recited in the claim -- and not on the physical structures recited in the claim -- to determine whether the claim was directed to statutory subject matter.2 Moreover, the Federal Circuit’s AT&T decision included several statements indicating that a claim that recites an algorithm need only recite a useful application of the algorithm, which seems to undercut any requirement that such a claim recite one or more “physical aspects” that are “within the technological arts.”3

The representative claim in Ex Parte Bowman, by comparison, recited “using said chart in making at least one decision regarding the value of said intangible asset of interest,” which sets out a useful application of the algorithm recited in the representative claim resulting in “said chart.” Because of the useful application recited in the representative claim, the representative claim arguably satisfies the requirements that the Federal Circuit set down in AT&T. Nonetheless, the board’s decision in Ex Parte Bowman was silent with respect to any effect that the useful application recited in the representative claim had on whether the representative claim was directed to statutory subject matter under 35 U.S.C. § 101.

It seems likely, therefore, that the Federal Circuit will eventually be called upon to reconcile the seemingly broad subject-matter patentability of software algorithm patents that seems implicit in AT&T, and the narrower scope of patentable subject matter suggested by the Board’s decision in Ex Parte Bowman, and the Patent Office’s enthusiastic application of this narrower, apparatus-centric principle, which comports with current European and other foreign patent policy, but not with the more liberal U.S. regime that seemed to have been emerging following AT&T and State Street.

Pending such a Federal Circuit resolution of this apparent inconsistency, if a U.S. Examiner relies on Ex Parte Bowman to reject, under 35 U.S.C. § 101, a claim that recites an algorithm, how should a prosecuting attorney respond to the rejection? If the claim were a system claim, the prosecuting attorney could point out one or more structural limitations recited in the claim and argue that the structural limitations are within the technological arts under Ex Parte Bowman. If the claim were a logic claim, the prosecuting attorney might amend the claim to recite that the logic is “encoded in one or more media for execution using one or more processors” and argue that the recited media are a physical aspect within the technological arts under Ex Parte Bowman.

If the claim were a method claim, the prosecuting attorney could, if appropriate, amend the claim to recite that one or more steps of the method are executed electronically, chemically, or mechanically and argue that the electronic, chemical, or mechanical execution of the one or more steps of the method is a physical aspect within the technological arts under Ex Parte Bowman. For example, the prosecuting attorney could, if such an amendment were appropriate, amend the claim to recite that one or more processors execute one or more steps of the method and argue that executing one or more of the steps of the method using one or more processors is a physical aspect within the technological arts. At least one Board decision after Ex Parte Bowman indicates that such an amendment would lend the claim statutory subject matter. In Ex Parte Bradley, the Board held that a method claim that recited a “method of estimating the value of a real estate entity” that had steps “performed by a data processor” was “directed to more than a mere abstract invention disassociated from an application in the technological arts.” 2001 WL 34373629, 1-2 (Board of Patent Appeals and Interferences, 2001).

If the prosecuting attorney did not wish to amend the claim and the specification disclosed that “the invention is connected to a computer,” the prosecuting attorney could argue that, because of such disclosure, The Guidelines published by the U.S. Patent and Trademark Office apply to the claim and that therefore, reliance on Ex Parte Bowman to reject the claim is improper. 61 U.S.P.Q.2d at 1671. The prosecuting attorney could then, if appropriate, argue that the claim is directed to statutory subject matter under The Guidelines. However, the prosecuting attorney should keep in mind that arguing that “the invention is connected to a computer” and that The Guidelines apply to the claim could arguably be alleged to give rise to prosecution history estoppel if a patent holder later attempted to assert the claim against a method not directly linked or incorporated in, or not integrally connected with, a computer system.

Further, if the prosecuting attorney did not wish to amend the claim and the claim recited a useful application of the algorithm, but not any apparatus, the prosecuting attorney could argue that, because Ex Parte Bowman is an unpublished decision, reliance on Ex Parte Bowman to reject the claim is improper. The prosecuting attorney could then argue that, under AT&T, because the claim recites a useful application of the algorithm, the claim is directed to statutory subject matter. While as a legal matter based on weight-of-authority principles, such a position is probably correct, the possibility remains that, absent Federal Circuit intervention, the Patent Office will remain steadfast in its application of Ex Parte Bowman and the quasi-European policy it has created in retrenching the lines of patentability for algorithms and re-erecting per se subject matter barriers against patentability of certain forms of algorithm.

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1“AT&T’s claimed process employs subscribers’ and call recipients’ PIC [indicators] as data, applies Boolean algebra to those data to determine the value of the PIC indicator, and applies that value through switching and recording mechanisms to create a signal useful for billing purposes.” AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358 (Fed. Cir. 1999) (emphasis added).

2“Because the claimed process applies the Boolean principle to produce a useful, concrete, tangible result without pre-empting other uses of the mathematical principle, on its face the claimed process comfortably falls within the scope of § 101.” Id. (emphasis added).

3One such statement is that, “even though a mathematical algorithm is not patentable in isolation, a process that applies an equation to a new and useful end ‘is at the very least not barred at the threshold by § 101.’” Id. at 1357 (quoting Diamond v. Diehr, 450 U.S. 175, 187 (1981)) (emphasis added). Another such statement is that “a mathematical algorithm may be an integral part of patentable subject matter such as a machine or process if the claimed invention as a whole is applied in a ‘useful’ manner.” Id. (emphasis added). Yet another such statement is that “the Alappat inquiry simply requires an examination of the contested claims to see if the claimed subject matter as a whole is a disembodied mathematical concept . . . or if the mathematical concept has been reduced to some practical application rendering it ‘useful.’” Id. (emphasis added).