July 27, 2010

Bilski and Medtech: Federal Circuit to Revisit Patent Eligibility of Medical Treatment Claims

On June 28, 2010, the U.S. Supreme Court issued its highly anticipated decision in Bilski et al. v. Kappos. The Court affirmed the U.S. Court of Appeals for the Federal Circuit's en banc decision holding that Bilski's claimed method of hedging against the risk of price changes in commodities transactions was ineligible for patent protection under 35 U.S.C. § 101. Although it upheld the Federal Circuit's decision, the Court rejected the Federal Circuit's establishment of an exclusive, "definitive test" for determining whether a "process," including a medical diagnostic or treatment method, is eligible for patent protection.

The Bilski Decisions

The Federal Circuit's en banc Bilski decision established the so-called "machine-or-transformation test" as the exclusive test for patent eligibility under § 101. The court reasoned that a patent should not "pre-empt substantially all uses of a fundamental principle" such as a law of nature or a mathematical formula, and determined that the Supreme Court had "enunciated a definitive test," under which a claimed process "is surely patent-eligible under § 101." To satisfy this test—the machine-or-transformation test—a claimed process must (1) be tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing, but cannot be a mere "data gathering step" or involve "insignificant extra-solution activity."

The Supreme Court, however, stated that the Federal Circuit incorrectly adopted the machine-or-transformation test as the exclusive test for patent eligibility. The Court reasoned that while the machine-or-transformation test is a "useful and important clue" and an "investigational tool" for determining whether certain claimed inventions are eligible for patent protection under § 101, it is not the sole test for making this determination. The Court stated that its precedents "provide three exceptions to § 101's broad patent-eligibility principles: laws of nature, physical phenomena, and abstract ideas." Thus, the Court's reasoning suggests that it viewed the machine-or-transformation test as being overly restrictive. Nevertheless, the Court concluded that Bilski's claims are not patent eligible processes because they cover abstract ideas.

Bilski's Effect on Medical Technology Claims

The day after issuing its Bilski decision, the Supreme Court granted certiorari in, vacated, and remanded two Federal Circuit decisions in which the Federal Circuit had applied the machine-or-transformation test to claims directed to medical diagnostic methods. Those two cases are Prometheus Laboratories, Inc. v. Mayo Collaborative Services, and Classen Immunotherapies, Inc. v. Biogen Idec.

In Prometheus, a Federal Circuit panel had decided that claims directed to methods for calibrating the proper dosage of thiopurine drugs, which are used for treating autoimmune diseases, satisfied the machine-or-transformation test and thus defined patent-eligible subject matter. First, the court explained that a step of "administering" a drug is transformative: "The transformation is of the human body following administration of a drug and the various chemical and physical changes of the drug's metabolites that enable their concentrations to be determined." The court reasoned that such claims are to methods of treatment, "which are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition." Second, the court explained that a step of "determining" a metabolite level, which "cannot be determined by mere inspection," is also transformative and "central to the claimed methods." According to the court, "[s]ome form of manipulation . . . is necessary to extract the metabolites from a bodily sample and determine their concentration." Indeed, the court cited testimony by Prometheus' expert that "at the end of the process, the human blood sample is no longer human blood; human tissue is no longer human tissue," and stated that this is "clearly a transformation."

The Supreme Court's Bilski decision may have little impact on Prometheus on remand. The Court did not reject the machine-or-transformation test entirely, and in fact, stated that it is a "useful and important clue" in assessing patent eligibility. Nothing in the Supreme Court majority's decision appears to suggest that a claimed method that satisfies the machine-or-transformation test would not be eligible for patent protection under § 101. And since a majority of the Federal Circuit, sitting en banc, previously determined that Prometheus's claims satisfied the machine-or-transformation test, it seems likely that the court will again conclude that the claims define patent eligible subject matter.

Classen is perhaps more interesting. There, the Federal Circuit had concluded that the claimed a "method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals" was not patent-eligible under § 101. The claim at issue recited two steps: (1) "immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to [an] immunization schedule"; and (2) "comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group." In a one-paragraph, non-precedential opinion, the Federal Circuit found that the Classen claims were not directed to patent eligible subject matter, as they were "neither tied to a particular machine or apparatus," nor did they "transform[] a particular article into a different state or thing."

The Federal Circuit thus decided Classen solely on the basis that it did not satisfy the machine-or-transformation test. Since this is no longer the sole test for patent eligibility under § 101, the Federal Circuit must now determine whether Classen's claims are an attempt to patent "laws of nature, physical phenomena, or abstract ideas," as set forth in Bilski.

The Federal Circuit's original Classen and Prometheus decisions are arguably in conflict. For example, in Classen, the Federal Circuit panel ostensibly found the claimed "immunizing" step to not be transformative, whereas the Prometheus court found the "administering" step in Prometheus's claim to be sufficiently transformative. Similarly, if the "determining" step in Prometheus is transformative, it is unclear why the "comparing" step in Classen's claim is not transformative.

In light of this apparent conflict, if the Federal Circuit upholds Prometheus's claims and at the same time rejects Classen's claims, the decisions may set the table for further en banc and/or Supreme Court review. On the other hand, if the Federal Circuit determines that the Classen claims are patent eligible despite not satisfying the machine-or-transformation test, the decision should provide helpful guidance for assessing whether a medical diagnostic method claim attempts to patent "laws of nature, physical phenomena, or abstract ideas."

Bilski's Effect on Patent Examination

The same day the Supreme Court decided Bilski, the USPTO issued a memorandum to its Patent Examining Corps stating that patent examiners should continue to examine patent applications for compliance with § 101 "using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101." Notably, the memorandum states that if a claimed method meets the machine-or-transformation test, it is "likely patent eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea." Conversely, if a claimed method does not meet the machine-or-transformation test, "the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea."

Thus, the USPTO is, at least for the time being, still relying on the machine-or-transformation test as the primary test for compliance with § 101. As such, Bilski likely will have minimal immediate impact on the examination of pending applications.

Conclusions

While Bilski is unlikely to significantly impact the patent eligibility of claims to medical diagnostic and treatment methods, the Federal Circuit's decisions in Prometheus and Classen on remand may provide helpful guidance as to the application of § 101. Although the exact timeline for the Federal Circuit's reconsideration of those cases has not yet been set, the court should decide them in the next few months.

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