Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos, 43922-43928 [2010-18424]

Agencies

• DEPARTMENT OF COMMERCE
• United States Patent and Trademark Office
• Patent and Trademark Office

[Federal Register Volume 75, Number 143 (Tuesday, July 27, 2010)]
[Notices]
[Pages 43922-43928]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18424]


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DEPARTMENT OF COMMERCE

United States Patent and Trademark Office

[Docket No. PTO-P-2010-0067]


Interim Guidance for Determining Subject Matter Eligibility for 
Process Claims in View of Bilski v. Kappos

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Notice; Request for comments.

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SUMMARY: The United States Patent and Trademark Office (USPTO or 
Office) has prepared Interim Guidance for Determining Subject Matter 
Eligibility for Process Claims in view of Bilski v. Kappos (Interim 
Bilski Guidance) for its personnel to use when determining subject 
matter eligibility under 35 U.S.C. 101 in view of the recent decision 
by the United States Supreme Court (Supreme Court) in Bilski v. Kappos, 
No. 08-964 (June 28, 2010). It is intended to be used by Office 
personnel as a supplement to the previously issued Interim Examination 
Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. 
101 dated August 24, 2009 (Interim Instructions) and the memorandum to 
the Patent Examining Corps on the Supreme Court Decision in Bilski v. 
Kappos dated June 28, 2010. This guidance supersedes previous guidance 
on subject matter eligibility that conflicts with the Interim Bilski 
Guidance. Any member of the public may submit written comments on the 
Interim Bilski Guidance. The Office is especially interested in 
receiving comments regarding the scope and extent of the holding in 
Bilski.

DATES: The Interim Bilski Guidance is effective July 27, 2010. This 
guidance applies to all applications filed before, on or after the 
effective date of July 27, 2010.
    Comment Deadline Date: To be ensured of consideration, written 
comments must be received on or before September 27, 2010. No public 
hearing will be held.

ADDRESSES: Comments concerning this Interim Bilski Guidance should be 
sent by electronic mail message over the Internet addressed to Bilski_Guidance@uspto.gov or facsimile transmitted to (571) 273-0125. Comments 
may also be submitted by mail addressed to: Mail Stop Comments--
Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-
1450. Although comments may be submitted by facsimile or mail, the 
Office prefers to receive comments via the Internet.

[[Page 43923]]

    The comments will be available for public inspection at the Office 
of the Commissioner for Patents, located in Madison East, Tenth Floor, 
600 Dulany Street, Alexandria, Virginia, and will be available via the 
USPTO Internet Web site, (address: https://www.uspto.gov). Because 
comments will be available for public inspection, information that is 
not desired to be made public, such as an address or phone number, 
should not be included in the comments.

FOR FURTHER INFORMATION CONTACT: Caroline D. Dennison, Legal Advisor, 
Office of Patent Legal Administration, Office of the Associate 
Commissioner for Patent Examination Policy, by telephone at (571) 272-
7729, or by mail addressed to: Mail Stop Comments--Patents, 
Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450, 
marked to the attention of Caroline D. Dennison.

SUPPLEMENTARY INFORMATION: The USPTO has prepared interim guidance 
(Interim Bilski Guidance) for its personnel to use when determining 
subject matter eligibility under 35 U.S.C. 101 in view of the recent 
decision by the United States Supreme Court (Supreme Court) in Bilski. 
It is intended to be used by Office personnel as a supplement to the 
previously issued Interim Examination Instructions for Evaluating 
Subject Matter Eligibility Under 35 U.S.C. 101 dated August 24, 2009 
(Interim Instructions) and the memorandum to the Patent Examining Corps 
on the Supreme Court Decision in Bilski v. Kappos dated June 28, 2010. 
The Interim Bilski Guidance is based on the USPTO's current 
understanding of the law and is believed to be fully consistent with 
the decision in Bilski, the binding precedent of the Supreme Court, the 
U.S. Court of Appeals for the Federal Circuit (Federal Circuit) and the 
Federal Circuit's predecessor courts. The USPTO has also posted the 
Interim Bilski Guidance on its Internet Web site (https://www.uspto.gov).

Request for Comments

    The Office has received and considered the comments regarding the 
Interim Instructions submitted in response to the Request for Comments 
on Interim Examination Instructions for Evaluating Patent Subject 
Matter Eligibility, 74 FR 47780 (Sept. 11, 2009), 1347 Off. Gaz. Pat. 
Office 110 (Oct. 13, 2009). See also Additional Period for Comments on 
Interim Examination Instructions for Evaluating Patent Subject Matter 
Eligibility, 74 FR 52184 (Oct. 9, 2009), 1348 Off. Gaz. Pat. Office 42 
(Nov. 3, 2009) (extending the comment period until November 9, 2009).
    Members of the public are invited to review the Interim Bilski 
Guidance (below) and provide comments. The Office is particularly 
interested in receiving comments in response to the following 
questions:
    1. What are examples of claims that do not meet the machine-or-
transformation test but nevertheless remain patent-eligible because 
they do not recite an abstract idea?
    2. What are examples of claims that meet the machine-or-
transformation test but nevertheless are not patent-eligible because 
they recite an abstract idea?
    3. The decision in Bilski suggested that it might be possible to 
``defin[e] a narrower category or class of patent applications that 
claim to instruct how business should be conducted,'' such that the 
category itself would be unpatentable as ``an attempt to patent 
abstract ideas.'' Bilski slip op. at 12. Do any such ``categories'' 
exist? If so, how does the category itself represent an ``attempt to 
patent abstract ideas?''

Interim Guidance for Determining Subject Matter Eligibility for Process 
Claims in view of Bilski v. Kappos (Interim Bilski Guidance)

    I. Overview: This Interim Bilski Guidance is for determining 
patent-eligibility of process claims under 35 U.S.C. 101 in view of the 
opinion by the Supreme Court in Bilski v. Kappos, 561 U.S. ------ 
(2010), which refined the abstract idea exception to subject matter 
that is eligible for patenting. A claim to an abstract idea is not a 
patent-eligible process.
    This Interim Bilski Guidance provides factors to consider in 
determining subject matter eligibility of method claims in view of the 
abstract idea exception. Although this guidance presents a change in 
existing examination practice, it is anticipated that subject matter 
eligibility determinations will not increase in complexity for the 
large majority of examiners, who do not routinely encounter claims that 
implicate the abstract idea exception.
    Under the principles of compact prosecution, each claim should be 
reviewed for compliance with every statutory requirement for 
patentability in the initial review of the application, even if one or 
more claims are found to be deficient with respect to the patent-
eligibility requirement of 35 U.S.C. 101. Thus, Office personnel should 
state all non-cumulative reasons and bases for rejecting claims in the 
first Office action.
    Section III of this Interim Bilski Guidance provides guidance on 
the abstract idea exception to subject matter eligibility as set forth 
in Bilski, and section IV of this Interim Bilski Guidance provides 
guidance on factors relevant to reviewing method claims for subject 
matter eligibility in view of Bilski. To aid examiners in implementing 
this guidance, a summary sheet of factors which may be useful for 
determining subject matter eligibility of a method claim is provided at 
the end of this Interim Bilski Guidance.
    Section V of this Interim Bilski Guidance discusses how to make the 
determination of eligibility. To summarize, in order for the examiner 
to make a proper prima facie case of ineligibility, the examiner will 
evaluate the claim as a whole and weigh the relevant factors set forth 
in Bilski and previous Supreme Court precedent and make a determination 
of compliance with the subject matter eligibility prong of Sec.  101. 
The Office will then consider rebuttal arguments and evidence 
supporting subject matter eligibility.
    II. Summary: The Bilski Court underscored that the text of Sec.  
101 is expansive, specifying four independent categories of inventions 
eligible for protection, including processes, machines, manufactures, 
and compositions of matter. See slip op. at 4 (``In choosing such 
expansive terms * * * modified by the comprehensive `any', Congress 
plainly contemplated that the patent laws would be given wide scope.'') 
(quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)). The Court 
also made clear that business methods are not ``categorically outside 
of Sec.  101's scope,'' stating that ``a business method is simply one 
kind of `method' that is, at least in some circumstances, eligible for 
patenting under Sec.  101.'' Id. at 10-11. Examiners are reminded that 
Sec.  101 is not the sole tool for determining patentability; where a 
claim encompasses an abstract idea, sections 102, 103, and 112 will 
provide additional tools for ensuring that the claim meets the 
conditions for patentability. As the Court made clear in Bilski:

    The Sec.  101 patent-eligibility inquiry is only a threshold 
test. Even if an invention qualifies as a process, machine, 
manufacture, or composition of matter, in order to receive the 
Patent Act's protection the claimed invention must also satisfy 
``the conditions and requirements of this title.'' Sec.  101. Those 
requirements include that the invention be novel, see Sec.  102, 
nonobvious, see Sec.  103, and fully and particularly described, see 
Sec.  112.

    Id. at 5.
    Therefore, examiners should avoid focusing on issues of patent-
eligibility

[[Page 43924]]

under Sec.  101 to the detriment of considering an application for 
compliance with the requirements of Sec. Sec.  102, 103, and 112, and 
should avoid treating an application solely on the basis of patent-
eligibility under Sec.  101 except in the most extreme cases.
    III. The Abstract Idea Exception to Subject Matter Eligibility: 
There are limits on the scope of patent-eligibility. In particular, the 
Supreme Court has identified three specific exceptions to Sec.  101's 
broad patent-eligibility principles: Laws of nature, physical 
phenomena, and abstract ideas. See id.
    The Office has been using the so-called ``machine-or-
transformation'' test used by the Federal Circuit to evaluate whether a 
method claim qualifies as a statutory patent-eligible process. See 
Interim Examination Instructions For Evaluating Subject Matter 
Eligibility Under 35 U.S.C. 101 dated August 24, 2009 (``2009 Interim 
Instructions''). The Supreme Court stated in Bilski that the machine-
or-transformation test is a ``useful and important clue'' and 
``investigative tool'' for determining whether some claimed methods are 
statutory processes, but it ``is not the sole test for deciding whether 
an invention is a patent-eligible `process.' '' Slip op. at 8. Its 
primary objection was to the elevation of the machine-or-transformation 
test--which it considered to be ``atextual''--as the ``sole test'' for 
patent-eligibility. Slip op. at 6-8, 16. To date, no court, presented 
with a subject matter eligibility issue, has ever ruled that a method 
claim that lacked a machine or a transformation was patent-eligible. 
However, Bilski held open the possibility that some claims that do not 
meet the machine-or-transformation test might nevertheless be patent-
eligible.
    Prior to adoption of the machine-or-transformation test, the Office 
had used the ``abstract idea'' exception in cases where a claimed 
``method'' did not sufficiently recite a physical instantiation. See, 
e.g., Ex parte Bilski, No. 2002-2257, slip op. at 46-49 (B.P.A.I. Sept. 
26, 2006) (informative), https://www.uspto.gov/ip/boards/bpai/decisions/inform/fd022257.pdf. Following Bilski, such an approach remains proper. 
A claim that attempts to patent an abstract idea is ineligible subject 
matter under 35 U.S.C. 101. See slip op. at 13 (``[A]ll members of the 
Court agree that the patent application at issue here falls outside of 
Sec.  101 because it claims an abstract idea.''). The abstract idea 
exception has deep roots in the Supreme Court's jurisprudence. See id. 
at 5 (citing Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174-175 (1853)).
    Bilski reaffirmed Diehr's holding that ``while an abstract idea, 
law of nature, or mathematical formula could not be patented, `an 
application of a law of nature or mathematical formula to a known 
structure or process may well be deserving of patent protection.' '' 
Id. at 14 (quoting Diamond v. Diehr, 450 U.S. 175, 187 (1981)) 
(emphasis in original). The recitation of some structure, such as a 
machine, or the recitation of some transformative component will in 
most cases limit the claim to such an application. However, not all 
such recitations necessarily save the claim: ``Flook established that 
limiting an abstract idea to one field of use or adding token 
postsolution components did not make the concept patentable.'' Id. at 
15. Moreover, the fact that the steps of a claim might occur in the 
``real world'' does not necessarily save it from a section 101 
rejection. Thus, the Bilski claims were said to be drawn to an 
``abstract idea'' despite the fact that they included steps drawn to 
initiating transactions. The ``abstractness'' is in the sense that 
there are no limitations as to the mechanism for entering into the 
transactions.
    Consistent with the foregoing, Bilski holds that the following 
claim is abstract:
    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.

    Specifically, the Court explains:

    The concept of hedging, described in claim 1 and reduced to a 
mathematical formula in claim 4, is an unpatentable abstract idea, 
just like the algorithms at issue in Benson and Flook. Allowing 
petitioners to patent risk hedging would preempt use of this 
approach in all fields, and would effectively grant a monopoly over 
an abstract idea.

    Slip op. at 15.
    Bilski also held that the additional, narrowing, limitations in the 
dependent claims were mere field of use limitations or insignificant 
postsolution components, and that adding these limitations did not make 
the claims patent-eligible. See id. Claims 1-9 in Bilski are attached 
as examples of claims that run afoul of the abstract idea exception.
    The day after deciding Bilski, the Supreme Court denied certiorari 
in Ferguson v. Kappos, U.S. Supreme Court No. 09-1501, while granting, 
vacating, and remanding two other Federal Circuit section 101 cases. 
The denial of certiorari left intact the rejection of all of Ferguson's 
claims. Although the Federal Circuit had applied the machine-or-
transformation test to reject Ferguson's process claims, the Supreme 
Court's disposition of Ferguson makes it likely that the Ferguson 
claims also run afoul of the abstract idea exception. A representative 
Ferguson claim is:
    1. A method of marketing a product, comprising:

    Developing a shared marketing force, said shared marketing force 
including at least marketing channels, which enable marketing a 
number of related products;
    Using said shared marketing force to market a plurality of 
different products that are made by a plurality of different 
autonomous producing company [sic], so that different autonomous 
companies, having different ownerships, respectively produce said 
related products;
    Obtaining a share of total profits from each of said plurality 
of different autonomous producing companies in return for said 
using; and
    Obtaining an exclusive right to market each of said plurality of 
products in return for said using.

    The following guidance presents factors that are to be considered 
when evaluating patent-eligibility of method claims. The factors 
include inquiries from the machine-or-transformation test, which 
remains a useful investigative tool, and inquiries gleaned from Supreme 
Court precedent. While the Supreme Court in Bilski did not set forth 
detailed guidance, there are many factors to be considered when 
determining whether there is sufficient evidence to support a 
determination that a method claim is directed to an abstract idea. The 
following factors are intended to be useful examples and are not 
intended to be exclusive or limiting. It is recognized that new factors 
may be developed, particularly for emerging technologies. It is 
anticipated that the factors will be modified and changed to take into 
account developments in precedential case law and to accommodate 
prosecution issues that may arise in implementing this new practice.

[[Page 43925]]

    Additional guidance in the form of expanded explanation and 
specific examples will follow in due course.
    IV. Evaluating Method Claims for Eligibility: Where the claim is 
written in the form of a method and is potentially a patentable 
process, as defined in 35 U.S.C. 100(b), the claim is patent-eligible 
so long as it is not disqualified as one of the exceptions to Sec.  
101's broad patent-eligibility principles; i.e., laws of nature, 
physical phenomena, and abstract ideas.
    Taking into account the following factors, the examiner should 
determine whether the claimed invention, viewed as a whole, is 
disqualified as being a claim to an abstract idea. Relevant factors--
both those in favor of patent-eligibility and those against such a 
finding--should be weighed in making the determination. Factors that 
weigh in favor of patent-eligibility satisfy the criteria of the 
machine-or-transformation test or provide evidence that the abstract 
idea has been practically applied. Factors that weigh against patent-
eligibility neither satisfy the criteria of the machine-or-
transformation test nor provide evidence that the abstract idea has 
been practically applied. Each case will present different factors, and 
it is likely that only some of the factors will be present in each 
application. It would be improper to make a conclusion based on one 
factor while ignoring other factors.
    This additional guidance, which builds upon the 2009 Interim 
Instructions, is a factor-based inquiry. Although the following 
approach is a change, it is anticipated that subject matter eligibility 
determinations will not increase in complexity, particularly for 
examiners who do not routinely encounter claims that implicate the 
abstract idea exception. Examiners will recognize that the machine-or-
transformation test set forth in Section II(B) of the 2009 Interim 
Instructions, although not the sole test for evaluating the subject 
matter eligibility of a method claim, is still pertinent in making 
determinations pursuant to the factors listed below. Examiners are 
referred to the summary sheet of factors provided at the end of this 
Interim Bilski Guidance which may be useful in determining subject 
matter eligibility of a method claim.

Factors To Be Considered in an Abstract Idea Determination of a Method 
Claim

    A. Whether the method involves or is executed by a particular 
machine or apparatus. If so, the claims are less likely to be drawn to 
an abstract idea; if not, they are more likely to be so drawn. Where a 
machine or apparatus is recited or inherent in a patent claim, the 
following factors are relevant:
    (1) The particularity or generality of the elements of the machine 
or apparatus; i.e., the degree to which the machine in the claim can be 
specifically identified (not any and all machines). Incorporation of a 
particular machine or apparatus into the claimed method steps weighs 
toward eligibility.
    (2) Whether the machine or apparatus implements the steps of the 
method. Integral use of a machine or apparatus to achieve performance 
of the method weighs toward eligibility, as compared to where the 
machine or apparatus is merely an object on which the method operates, 
which weighs against eligibility.
    (3) Whether its involvement is extrasolution activity or a field-
of-use, i.e., the extent to which (or how) the machine or apparatus 
imposes meaningful limits on the execution of the claimed method steps. 
Use of a machine or apparatus that contributes only nominally or 
insignificantly to the execution of the claimed method (e.g., in a data 
gathering step or in a field-of-use limitation) would weigh against 
eligibility.
    B. Whether performance of the claimed method results in or 
otherwise involves a transformation of a particular article. If such a 
transformation exists, the claims are less likely to be drawn to an 
abstract idea; if not, they are more likely to be so drawn. Where a 
transformation occurs, the following factors are relevant:
    (1) The particularity or generality of the transformation. A more 
particular transformation would weigh in favor of eligibility.
    (2) The degree to which the recited article is particular; i.e., 
can be specifically identified (not any and all articles). A 
transformation applied to a generically recited article would weigh 
against eligibility.
    (3) The nature of the transformation in terms of the type or extent 
of change in state or thing, for instance by having a different 
function or use, which would weigh toward eligibility, compared to 
merely having a different location, which would weigh against 
eligibility.
    (4) The nature of the article transformed, i.e., whether it is an 
object or substance, weighing toward eligibility, compared to a concept 
such as a contractual obligation or mental judgment, which would weigh 
against eligibility.
    (5) Whether its involvement is extrasolution activity or a field-
of-use, i.e., the extent to which (or how) the transformation imposes 
meaningful limits on the execution of the claimed method steps. A 
transformation that contributes only nominally or insignificantly to 
the execution of the claimed method (e.g., in a data gathering step or 
in a field-of-use limitation) would weigh against eligibility.
    C. Whether performance of the claimed method involves an 
application of a law of nature, even in the absence of a particular 
machine, apparatus, or transformation. If such an application exists, 
the claims are less likely to be drawn to an abstract idea; if not, 
they are more likely to be so drawn. Where such an application is 
present, the following factors are relevant:
    (1) The particularity or generality of the application. Application 
of a law of nature having broad applicability across many fields of 
endeavor weighs against eligibility, such as where the claim 
generically recites an effect of the law of nature or claims every mode 
of accomplishing that effect, such that the claim would monopolize a 
natural force or patent a scientific fact. (As an example, claiming 
``the use of electromagnetism for transmitting signals at a 
distance.'')
    (2) Whether the claimed method recites an application of a law of 
nature solely involving subjective determinations; e.g., ways to think 
about the law of nature. Application of a law of nature to a particular 
way of thinking about, or reacting to, a law of nature would weigh 
against eligibility.
    (3) Whether its involvement is extrasolution activity or a field-
of-use, i.e., the extent to which (or how) the application imposes 
meaningful limits on the execution of the claimed method steps. An 
application of the law of nature that contributes only nominally or 
insignificantly to the execution of the claimed method (e.g., in a data 
gathering step or in a field-of-use limitation) would weigh against 
eligibility.
    D. Whether a general concept (which could also be recognized in 
such terms as a principle, theory, plan or scheme) is involved in 
executing the steps of the method. The presence of such a general 
concept can be a clue that the claim is drawn to an abstract idea. 
Where a general concept is present, the following factors are relevant:
    (1) The extent to which use of the concept, as expressed in the 
method, would preempt its use in other fields; i.e., that the claim 
would effectively grant a monopoly over the concept.
    (2) The extent to which the claim is so abstract and sweeping as to 
cover both known and unknown uses of the concept, and be performed 
through any existing or future-devised machinery, or even without any 
apparatus.

[[Page 43926]]

    (3) The extent to which the claim would effectively cover all 
possible solutions to a particular problem; i.e., that the claim is a 
statement of the problem versus a description of a particular solution 
to the problem.
    (4) Whether the concept is disembodied or whether it is 
instantiated; i.e., implemented, in some tangible way. Note, however, 
that limiting an abstract idea to one field of use or adding token 
postsolution components does not make the concept patentable. A concept 
that is well-instantiated weighs in favor of eligibility.
    (5) The mechanism(s) by which the steps are implemented; e.g., 
whether the performance of the process is observable and verifiable 
rather than subjective or imperceptible. Steps that are observable and 
verifiable weigh in favor of eligibility.
    (6) Examples of general concepts include, but are not limited to:
     Basic economic practices or theories (e.g., hedging, 
insurance, financial transactions, marketing);
     Basic legal theories (e.g., contracts, dispute resolution, 
rules of law);
     Mathematical concepts (e.g., algorithms, spatial 
relationships, geometry);
     Mental activity (e.g., forming a judgment, observation, 
evaluation, or opinion);
     Interpersonal interactions or relationships (e.g., 
conversing, dating);
     Teaching concepts (e.g., memorization, repetition);
     Human behavior (e.g., exercising, wearing clothing, 
following rules or instructions);
     Instructing ``how business should be conducted,'' Bilski, 
slip op. at 12.
    V. Making the Determination of Eligibility: Each of the factors 
relevant to the particular patent application should be weighed to 
determine whether the method is claiming an abstract idea by covering a 
general concept, or combination of concepts, or whether the method is 
limited to a particular practical application of the concept. The 
presence or absence of a single factor will not be determinative as the 
relevant factors need to be considered and weighed to make a proper 
determination as to whether the claim as a whole is drawn to an 
abstract idea such that the claim would effectively grant a monopoly 
over an abstract idea and be ineligible for patent protection.
    If the factors indicate that the method claim is not merely 
covering an abstract idea, the claim is eligible for patent protection 
under Sec.  101 and must be further evaluated for patentability under 
all of the statutory requirements, including utility and double 
patenting (Sec.  101); novelty (Sec.  102); non-obviousness (Sec.  
103); and definiteness and adequate description, enablement, and best 
mode (Sec.  112). Section 101 is merely a coarse filter and thus a 
determination of eligibility under Sec.  101 is only a threshold 
question for patentability. Sections 102, 103, and 112 are typically 
the primary tools for evaluating patentability unless the claim is 
truly abstract, see, e.g., Bilski, slip op. at 12 (``[S]ome business 
method patents raise special problems in terms of vagueness and suspect 
validity.'').
    If the factors indicate that the method claim is attempting to 
cover an abstract idea, the examiner will reject the claim under Sec.  
101, providing clear rationale supporting the determination that an 
abstract idea has been claimed, such that the examiner establishes a 
prima facie case of patent-ineligibility. The conclusion made by the 
examiner must be based on the evidence as a whole. In making a 
rejection or if presenting reasons for allowance when appropriate, the 
examiner should specifically point out the factors that are relied upon 
in making the determination. If a claim is rejected under Sec.  101 on 
the basis that it is drawn to an abstract idea, the applicant then has 
the opportunity to explain why the claimed method is not drawn to an 
abstract idea. Specifically identifying the factors used in the 
analysis will allow the applicant to make specific arguments in 
response to the rejection if the applicant believes that the conclusion 
that the claim is directed to an abstract idea is in error.
    The Interim Bilski Guidance is for examination guidance in light of 
the recent decision in Bilski. This guidance does not constitute 
substantive rule making and hence does not have the force and effect of 
law. Rejections will continue to be based upon the substantive law, and 
it is these rejections that are appealable. Consequently, any perceived 
failure by Office personnel to follow this guidance is neither 
appealable nor petitionable.
    The Interim Bilski Guidance merely updates USPTO examination 
practice for consistency with the USPTO's current understanding of the 
case law regarding patent subject matter eligibility under 35 U.S.C. 
101 in light of Bilski. Therefore, the Interim Bilski Guidance relates 
only to interpretative rules, general statements of policy, or rules of 
agency organization, procedure, or practice. The USPTO is providing 
this opportunity for public comment because the USPTO desires the 
benefit of public comment on the Interim Bilski Guidance; however, 
notice and an opportunity for public comment are not required under 5 
U.S.C. 553(b) or any other law. See Cooper Techs. Co. v. Dudas, 536 
F.3d 1330, 1336-37, 87 U.S.P.Q.2d 1705, 1710 (Fed. Cir. 2008) (stating 
that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require 
notice and comment rule making for ```interpretative rules, general 
statements of policy, or rules of agency organization, procedure, or 
practice.''' (quoting 5 U.S.C. 553(b)(A))). Persons submitting written 
comments should note that the USPTO may not provide a ``comment and 
response'' analysis of such comments as notice and an opportunity for 
public comment are not required under 5 U.S.C. 553(b) or any other law.

    Dated: July 4, 2010.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.

Bilski Claims

    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 
consumers;
    (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.
    2. The method of claim 1 wherein said commodity is energy and 
said market participants are transmission distributors.
    3. The method of claim 2 wherein said consumption risk is a 
weather-related price risk.
    4. The method of claim 3 wherein the fixed price for the 
consumer transaction is determined by the relationship:

Fixed Bill Price = Fi + [(Ci + Ti+ 
LDi) x ([alpha] + [szlig]E(Wi)]

wherein,

Fi = fixed costs in period i;
Ci = variable costs in period i;
Ti = variable long distance transportation costs in 
period i;
LDi = variable local delivery costs in period i;
E(Wi) = estimated location-specific weather indicator in 
period i; and [alpha] and [beta] are constants.

    5. The method of claim 4 wherein said location-specific weather 
indicator is at least one of heating degree days and cooling degree 
days.
    6. The method of claim 4 wherein said energy provider seeks a 
swap receipt to cover the marginal weather-driven cost.

[[Page 43927]]

    7. The method of claim 4 wherein the energy price is determined 
by the steps of:
    (a) Evaluating the usage and all costs for a prospective 
transaction;
    (b) Performing a Monte Carlo simulation across all transactions 
at all locations for a predetermined plurality of years of weather 
patterns and establishing the payoffs from each transaction under 
each historical weather pattern;
    (c) Assuming that the summed payoffs are normally distributed;
    (d) Performing one-tail tests to determine the marginal 
likelihood of losing money on the deal and the marginal likelihood 
of retaining at least the design margin included in the initial 
evaluation of the fixed bill price; and
    (e) Adjusting the margin of the fixed bill price if the 
transaction as initially priced leads to a reduced expected margin 
or increases the likelihood of a loss until the expected portfolio 
margin and the likelihood of portfolio loss is acceptable.
    8. The method of claim 4 wherein a cap on the weather-influenced 
pricing is established by the steps of:
    (a) Evaluating the usage equation and all costs for a 
prospective transaction;
    (b) Performing a Monte Carlo simulation across all transactions 
at all locations for a predetermined plurality of years of weather 
patterns and establishing the payoffs from each transaction under 
each historical weather pattern assuming that the price in the 
transaction being priced floats down when the weather is below 
normal;
    (c) Assuming that the summed payoffs are normally distributed;
    (d) Performing one-tail tests to determine the marginal 
likelihood of losing money on the transaction and the marginal 
likelihood of retaining at least the design margin included in the 
initial evaluation of the fixed price bill;
    (e) Continuing to reprice the margin in the transaction until 
the expected portfolio margin and likelihood of portfolio loss is 
acceptable; and
    (f) Establishing the margin as a call option on weather at a 
predetermined location.
    9. The method of claim 1 wherein said commodity provider seeks a 
swap receipt to cover the price risk of the consumer transaction.

101 Method Eligibility Quick Reference Sheet

    The factors below should be considered when analyzing the claim 
as a whole to evaluate whether a method claim is directed to an 
abstract idea. However, not every factor will be relevant to every 
claim and, as such, need not be considered in every analysis. When 
it is determined that the claim is patent-eligible, the analysis may 
be concluded. In those instances where patent-eligibility cannot 
easily be identified, every relevant factor should be carefully 
weighed before making a conclusion. Additionally, no factor is 
conclusive by itself, and the weight accorded each factor will vary 
based upon the facts of the application. These factors are not 
intended to be exclusive or exhaustive as there may be more 
pertinent factors depending on the particular technology of the 
claim. For assistance in applying these factors, please consult the 
accompanying ``Interim Guidance'' memo and TC management.

Factors Weighing Toward Eligibility

     Recitation of a machine or transformation (either 
express or inherent).
    [cir] Machine or transformation is particular.
    [cir] Machine or transformation meaningfully limits the 
execution of the steps.
    [cir] Machine implements the claimed steps.
    [cir] The article being transformed is particular.
    [cir] The article undergoes a change in state or thing (e.g., 
objectively different function or use).
    [cir] The article being transformed is an object or substance.
     The claim is directed toward applying a law of nature.
    [cir] Law of nature is practically applied.
    [cir] The application of the law of nature meaningfully limits 
the execution of the steps.
     The claim is more than a mere statement of a concept.
    [cir] The claim describes a particular solution to a problem to 
be solved.
    [cir] The claim implements a concept in some tangible way.
    [cir] The performance of the steps is observable and verifiable.

Factors Weighing Against Eligibility

     No recitation of a machine or transformation (either 
express or inherent).
     Insufficient recitation of a machine or transformation.
    [cir] Involvement of machine, or transformation, with the steps 
is merely nominally, insignificantly, or tangentially related to the 
performance of the steps, e.g., data gathering, or merely recites a 
field in which the method is intended to be applied.
    [cir] Machine is generically recited such that it covers any 
machine capable of performing the claimed step(s).
    [cir] Machine is merely an object on which the method operates.
    [cir] Transformation involves only a change in position or 
location of article.
    [cir] ``Article'' is merely a general concept (see notes below).
     The claim is not directed to an application of a law of 
nature.
    [cir] The claim would monopolize a natural force or patent a 
scientific fact; e.g., by claiming every mode of producing an effect 
of that law of nature.
    [cir] Law of nature is applied in a merely subjective 
determination.
    [cir] Law of nature is merely nominally, insignificantly, or 
tangentially related to the performance of the steps.
     The claim is a mere statement of a general concept (see 
notes below for examples).
    [cir] Use of the concept, as expressed in the method, would 
effectively grant a monopoly over the concept.
    [cir] Both known and unknown uses of the concept are covered, 
and can be performed through any existing or future-devised 
machinery, or even without any apparatus.
    [cir] The claim only states a problem to be solved.
    [cir] The general concept is disembodied.
    [cir] The mechanism(s) by which the steps are implemented is 
subjective or imperceptible.

Notes

    (1) Examples of general concepts include, but are not limited, 
to:
     Basic economic practices or theories (e.g., hedging, 
insurance, financial transactions, marketing);
     Basic legal theories (e.g., contracts, dispute 
resolution, rules of law);
     Mathematical concepts (e.g., algorithms, spatial 
relationships, geometry);
     Mental activity (e.g., forming a judgment, observation, 
evaluation, or opinion);
     Interpersonal interactions or relationships (e.g., 
conversing, dating);
     Teaching concepts (e.g., memorization, repetition);
     Human behavior (e.g., exercising, wearing clothing, 
following rules or instructions);
     Instructing ``how business should be conducted.''
    (2) For a detailed explanation of the terms machine, 
transformation, article, particular, extrasolution activity, and 
field-of-use, please refer to the Interim Patent Subject Matter 
Eligibility Examination Instructions of August 24, 2009.
    (3) When making a subject matter eligibility determination, the 
relevant factors should be weighed with respect to the claim as a 
whole to evaluate whether the claim is patent-eligible or whether 
the abstract idea exception renders the claim ineligible. When it is 
determined that the claim is patent-eligible, the analysis may be 
concluded. In those instances where patent-eligibility cannot be 
easily identified, every relevant factor should be carefully weighed 
before making a conclusion. Not every factor will be relevant to 
every claim. While no factor is conclusive by itself, the weight 
accorded each factor will vary based upon the facts of the 
application. These factors are not intended to be exclusive or 
exhaustive as there may be more pertinent factors depending on the 
particular technology of the claim.
    (4) Sample Form Paragraphs:
    a. Based upon consideration of all of the relevant factors with 
respect to the claim as a whole, claim(s) [1] held to claim an 
abstract idea, and is therefore rejected as ineligible subject 
matter under 35 U.S.C. 101. The rationale for this finding is 
explained below: [2] 1. In bracket 2, identify the decisive factors 
weighing against patent-eligibility, and explain the manner in which 
these factors support a conclusion of ineligibility. The explanation 
needs to be sufficient to establish a prima facie case of 
ineligibility under 35 U.S.C. 101.
    b. Dependent claim(s) [1] when analyzed as a whole are held to 
be ineligible subject matter and are rejected under 35 U.S.C. 101 
because the additional recited limitation(s) fail(s) to establish 
that the claim is not directed to an abstract idea, as detailed 
below: [2] 1. In bracket 2, provide an explanation as to why the 
claim is directed to an abstract idea; for instance, that the 
additional limitations are no more than a

[[Page 43928]]

field of use or merely involve insignificant extrasolution activity; 
e.g., data gathering. The explanation needs to be sufficient to 
establish a prima facie case of ineligibility under 35 U.S.C. 101.

[FR Doc. 2010-18424 Filed 7-26-10; 8:45 am]
BILLING CODE 3510-16-P