CAFC to Patent Applicant: "Read Our Lips – We Really Don't Like Business Method Patents"

by Lee Gesmer on March 14, 2009

In In re Lewis Ferguson, a March 6, 2009 decision from the Court of Appeals for the Federal Circuit, the applicant sought to patent “a marketing paradigm for bringing products to market.” After the application was denied by the various levels of the Patent Office bureaucracy for lack of patentable subject matter, the applicant appealed. The CAFC court quoted this claim from the application as an example:

A paradigm for marketing software, comprising:

a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy.

Novel and nonobvious? It may just be me, but if this isn’t a distribution system that’s been implemented a million times, I’ll be damned.

The CAFC didn’t like it either, but they didn’t even get that far. Relying on In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), the Court observed:

Applicants’ method claims are not tied to any particular machine or apparatus. Although Applicants argue that the method claims are tied to the use of a shared marketing force, a marketing force is not a machine or apparatus. As this court recently stated . . . a machine is a “‘concrete thing, consisting of parts, or of certain devices and combination of devices.’ This ‘includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.’” . . . . Applicants’ method claims are not tied to any concrete parts, devices, or combination of devices.

Nor do Applicants’ methods, as claimed, transform any article into a different state or thing. At best it can be said that Applicants’ methods are directed to organizing business or legal relationships in the structuring of a sales force (or marketing company). But as this court stated in Bilski, “[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”…

Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” . . . and as Applicants conceded during oral argument, “you cannot touch the company.”

Of course, Bilski is seeking to appeal the CAFC’s decision to the Supreme Court. If the appeal is accepted all bets are off on the “machine or transformation” test established by the CAFC in Bilski and applied here.

Here is a link to the case discussed above: In re Lewis Ferguson.

And here is a link to the Boston Patent Law Association’s (BPLA) brief urging certiorari and reversal in Bilski.

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