In re Bilski (Fed. Cir. 2008 en Banc )

Taking sua sponte action, the Federal Circuit has ordered an en banc rehearing of the In re Bilski case asking the following five questions:

1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. 101?
2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?
3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?
5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc.. 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc.. 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

The Patent Application and Patent Applicants. Bilski involves claims to a method of managing the risk of bad weather through commodities trading. The claims are not tied to any particular form of technology thus, they do not require a computer or particular storage media. In some quarters, this process lacking a technological tie-in is termed a mental method.

Bernie Bilski apparently was the CEO and owner of a small company called WeatherWise. At least some WeatherWise patents were purchased in 2007 by the Pittsburgh Technology Licensing Corp According to court documents, PTL is a wholly owned subsidiary of WeatherWise holdings. (See WeatherWise v. WeatherBill ).

Although we dont have the text of the application yet, this case looks problematic because of serious obviousness problems and lack of specificity in the claims. Thus, the court will have no sympathy for Bilski making this the perfect test case for someone wanting to strink Section 101 coverage and eliminate business method patents. Representative Claim 1 reads as follows:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

Procedure. This cases arises out of a rejection from the Patent Board of Appeals (BPAI). In its opinion, the Board asked for assistance from the CAFC in addressing Subject Matter Patentability of non-technological method claims: The Federal Circuit cannot address rejections that it does not see. It would be helpful if the Federal Circuit would address this question directly. BPAI Decision. Bilski then apealed directly from the BPAI to the CAFC and oral arguments were held in October 2007. Rather than issuing an opinion, the court convened and voted to rehear the case en banc.

Timing and Amicus. The parties (Bilski & PTO) have already fully briefed the case. Thus, the CAFC is only allowing one supplimental brief each to be filed simultaneously on March 6, 2008. Amicus briefs discussing the five questions are requested by the court and may be filed without specific permission. Amicus briefs will be due 30 days later and must otherwise comply with FRAP and FCR 29. (Thanks Joe. Amicus should be due April 5th, but because that falls on a Saturday, they will be due April 7). The hearing is scheduled for May 8 at 2:00 pm.

• This en banc decision comes on the heels of the CAFCs denial of an en banc rehearing in Nujten . Obviously, some horsetraiding occurred here. This method of preemptive en banc hearing is an interesting tactic because it avoids the problem of judges being locked-into their prior opinion on the case. Thus, this is likely the only way that an en banc request will be unanimously affirmed.
• The CAFC requested briefs addressing, inter alia. the issues set forth above. In my mind, this leaves the door open for briefs addressing related issues that are not strictly within the five questions. In particular, it would be useful for briefs to address related issues found in Comiskey . Ferguson . & Lundgren .
• Bilski BPAI Decision [Patently-O Commentary ] [StepBacks Discussion ]
• Patently-O: Discussing the Section 101 Squad of Cases .
• Bilski was, of course, part of Hal Wegners Top Ten for 2008 .
• Briefs:

• AIPLA Amicus Brief in Original Filing (pre-en-banc). AIPLA suggests the following points: (1) Section 101 should be broadly construed; (2) An invention should be patentable if it offers a practical application of a process with a useful result; (3) Although relevant, no physical transformation is required to avoid being classified as an abstract idea; (4) Here, Bilskis method is patentable subject matter because it allows commodity suppliers and consumers to engage in commodities transactions while minimizing the risks associated with fluctuations in demand for such commodities and providing investment opportunities for market participants an endeaver quite practical and useful.
• USPTO Position. In its opposition brief, the PTO argues that there are several Section 101 reasons to eliminate the Bilski application. First, according to the PTO, the claimed method does not qualify as a statutory process. Rather, statutory processes have always been associated with physical transformation or machine implementation details missing from Bilskis claims. In addition, the PTO argues that Bilskis claim is an abstract idea because it is merely a disembodied concept that would preempt an entire field of commodities trading. Regarding State Street. the PTO would limit the the requirement of a useful, concrete, and tangible result to computer implemented inventions that employ a mathematical algorithm.
• Many of the briefs filed in the Supreme Court case of LabCorp v. Metabolite will be applicable here.