DYK, Circuit Judge.
Acting en banc, the court today vacated the September 20, 2007, judgment in this case, and the panel's original opinion, which is reported at 499 F.3d 1365 (Fed. Cir.2007), was withdrawn. The en banc court reassigned the opinion to the panel for revision. The panel's original opinion is revised as follows:
Appellant Stephen W. Comiskey ("Comiskey") appeals the decision of the Board of Patent Appeals and Interferences ("Board") affirming the examiner's rejection of claims 1-59 of his patent application as obvious in view of the prior art and therefore unpatentable under 35 U.S.C. § 103. We do not reach the Board's obviousness rejection of the independent claims under § 103. We conclude that Comiskey's independent claims 1 and 32 and most of their dependent claims are unpatentable subject matter under 35 U.S.C. § 101. With respect to independent claims 17 and 46 (and dependent claims 18-29, 31, 47-57, and 59) and dependent
Comiskey's patent application No. 09/461,742 claims a method and system for mandatory arbitration involving legal documents, such as wills or contracts. According to the application, the claimed "program ... requires resolution by binding arbitration of any challenge or complaint concerning any unilateral document... [or] contractual document."
Independent claim 1 recites a "method for mandatory arbitration resolution regarding one or more unilateral documents" involving the following steps. First, the unilateral document and its author are enrolled. Second, arbitration language is incorporated in the unilateral document requiring that any contested issue related to the document be presented to the pre-chosen arbitration program for binding arbitration. Third, the method "requir[es] a complainant [sic] to submit a request for arbitration resolution." Fourth, the method conducts arbitration resolution. Fifth, the method provides "support to the arbitration." Finally, the method determines "an award or decision ... [that] is final and binding."
Comiskey filed his patent application with the United States Patent and Trademark Office ("PTO") on December 16, 1999. On March 28, 2001, the examiner issued a first office action rejecting claims 1-9, 11-24, 26-38, 40-52, and 54-59 under 35 U.S.C. § 103(a) as unpatentable over Ginter, U.S. Patent No. 6,185,683 ('683 patent), in view of Perry, U.S. Patent No. 5,241,466 ('466 patent), and Walker, U.S. Patent No. 5,794,207 ('207 patent). Ginter discloses an electronic system for securely
Comiskey filed an amendment after final rejection on August 29, 2001, "to more distinctly claim and particularly point out" the aspects of his invention that he believed were novel, namely pre-enrolling the person in a mandatory arbitration system, including language in the document requiring submission of disputes to this pre-chosen system, and enabling a person to submit a dispute pertaining to the document to this pre-chosen system for binding arbitration. On December 31, 2001, the examiner mailed a final rejection of the amended claims, which rejected the claims on the same basis. After Comiskey filed a request for continued examination, the finality of the prior office action was withdrawn, and the examiner mailed another non-final rejection on July 9, 2002, based again on the same grounds. In response, Comiskey submitted a "declaration of long felt need" on October 1, 2002, claiming that based on his experience representing clients involved in family disputes concerning unilateral documents, he believed his invention addressed an area of long felt need. On November 6, 2002, the examiner mailed a final rejection based on the same reasons as the prior office actions and rejected Comiskey's assertion of long felt need on the ground that the cited prior art references had recognized and addressed the problem prior to Comiskey.
Comiskey appealed, and on November 30, 2005, the Board affirmed the examiner's rejection. The Board concluded that because all of the independent claims were argued together they stood or fell together, and it chose claim 32 as representative. It concluded that the combination of Ginter and Walker rendered this claim obvious. Despite concluding that all of the independent claims stood or fell together, the Board proceeded to consider claims 1 and 17, directed to unilateral documents, separately. It concluded that the addition of Perry to Ginter and Walker rendered these claims obvious. Finally, the Board considered and affirmed the examiner's rejection of claims 10, 25, 39, and 53 as obvious in light of Ginter, Perry, Walker, and the "Arbitration Fee Schedule."
Comiskey timely appealed to this court. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A) (2000). After oral argument, we requested supplemental briefing directed at the patentability of the subject matter of Comiskey's application under 35 U.S.C. § 101. In the supplemental briefing, Comiskey argued for the first time that we lacked the power to consider a ground for rejection not relied on below. Alternatively, Comiskey argued that his application was patentable under § 101,
The PTO urged that this court could properly consider the § 101 issue. Indeed, the PTO urged that this court resolve the case on this ground to "give the Office needed guidance in this area." PTO Supp. Br. 15. The PTO argued that Comiskey's independent claims were directed at an unpatentable abstract idea, and not a patentable process, because they neither were tied to a particular machine nor operated to change materials to a different state or thing. Rather the claims impermissibly "encompasse[d] a method of controlling how humans interact with each other to resolve a dispute, based on a human arbitrator's perception of the dispute." PTO Supp. Br. 12.
We do not reach the ground relied on by the Board below—that the claims were unpatentable as obvious over Ginter in view of Walker, Perry, and "Arbitration Fee Schedule"—because we conclude that many of the claims are "barred at the threshold by § 101." Diamond v. Diehr, 450 U.S. 175, 188, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). It is well-established that "[t]he first door which must be opened on the difficult path to patentability is § 101." State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1372 n. 2 (Fed.Cir.1998) (quoting In re Bergy, 596 F.2d 952, 960 (CCPA 1979)). Only if the requirements of § 101 are satisfied is the inventor "allowed to pass through to" the other requirements for patentability, such as novelty under § 102 and, of pertinence to this case, non-obviousness under § 103. See id. As the Supreme Court stated in Parker v. Flook, "[t]he obligation to determine what type of discovery is sought to be patented [so as to determine whether it is `the kind of "discoveries" that the statute was enacted to protect'] must precede the determination of whether that discovery is, in fact, new or obvious." 437 U.S. 584, 593, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (emphases added).
The PTO acknowledges that the examiner, consistent with his obligation under the cases, must have addressed the predicate issue of patentable subject matter and implicitly concluded that the claims met the requirements of § 101. See Oral Arg. Tr. 18:40. For the reasons discussed below, we disagree that § 101 is satisfied. See also Manual of Patent Examining Procedures ("MPEP") § 2106 "Guidelines Flowchart" (Rev.5, Aug. 2006) (listing the steps an examiner should follow in determining patentability, with "determine whether the claimed invention complies with ... 101" listed before "determine whether the claimed invention complies with 35 U.S.C. 102 and 103").
We first address Comiskey's argument that we cannot properly address the issue of patentable subject matter. At oral argument, Comiskey admitted that the court "could affirm on [the § 101] ground if in fact [we] came to the conclusion that ... the subject matter of this claim does not address the statutory subject matter." In his supplemental briefing, Comiskey attempts to "withdraw any statement made at oral argument which would infer that this Court could even consider a new statutory grounds for rejecti[on]." Appellant's Supp. Br. 19. Comiskey now asserts that "[t]his Court lacks the power to sua sponte raise and thereafter decide a statutory ground of patentability never raised during the agency proceeding below" because our review
Over sixty years ago in Securities & Exchange Commission v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943), the Supreme Court made clear that a reviewing court can (and should) affirm an agency decision on a legal ground not relied on by the agency if there is no issue of fact, policy, or agency expertise. The Court said:
Id. at 88, 63 S.Ct. 454 (emphases added; internal citations and quotation marks omitted). We have repeatedly applied Chenery and have said that "[w]e may, however, where appropriate, affirm the [agency] on grounds other than those relied upon in rendering its decision, when upholding the [agency's] decision does not depend upon making a determination of fact not previously made by the [agency]." Killip v. Office of Pers. Mgmt., 991 F.2d 1564, 1568-69 (Fed.Cir.1993) (emphases added); see also Newhouse v. Nicholson, 497 F.3d 1298, 1301 (Fed.Cir.2007) ("[T]he Chenery doctrine is not implicated when the new ground for affirmance is not one that calls for a determination or judgment which an administrative agency alone is authorized to make." (internal quotation marks omitted)); Spears v. Merit Sys. Prot. Bd., 766 F.2d 520, 523 (Fed.Cir.1985). We note that the APA specifically states that "the reviewing court shall decide all relevant questions of law." 5 U.S.C. § 706. The Supreme Court has emphasized that in general the PTO should be treated like other administrative agencies, and that patent cases are subject to the same general administrative law legal principles. Dickinson v. Zurko, 527 U.S. 150, 154-55, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999). Thus, the same rules governing affirmance of agency action on a ground not relied on below necessarily apply in the PTO context as in the administrative context generally.
As Comiskey points out, some of our cases have concluded that "it is inappropriate for this court to consider rejections that had not been considered by or relied upon by the Board." In re Margolis, 785 F.2d 1029, 1032 (Fed.Cir.1986). But these statements referred to situations that required factual determinations not made by the agency. For example, in Margolis and other cases the new grounds for decision would require this court to make factual determinations involving "the scope and content of the prior art [and] differences between the prior art and the claims at issue," Dippin' Dots, Inc. v. Mosey, 476 F.3d 1337,
It is well-established that "whether the asserted claims ... are invalid for failure to claim statutory subject matter under 35 U.S.C. § 101, is a question of law which we review without deference." AT & T Corp. v. Excel Commc'ns, Inc., 172 F.3d 1352, 1355 (Fed.Cir.1999). As a question of law, lack of statutory subject matter is a "ground [for affirmance] within the power of the appellate court to formulate." Chenery, 318 U.S. at 88, 63 S.Ct. 454. While there may be cases in which the legal question as to patentable subject matter may turn on subsidiary factual issues, Comiskey has not identified any relevant fact issues that must be resolved in order to address the patentability of the subject matter of Comiskey's application. Moreover, since we would review a Board decision on the issue of patentability without deference, see AT & T, 172 F.3d at 1355, the legal issue concerning patentability is not "a determination of policy or judgment which the agency alone is authorized to make." Chenery, 318 U.S. at 88, 63 S.Ct. 454.
In these circumstances, Chenery not only permits us to supply a new legal ground for affirmance, but encourages such a resolution where, as here, "[i]t would be wasteful to send" the case back to the agency for a determination as to patentable subject matter. 318 U.S. at 88, 63 S.Ct. 454.
Comiskey's application may be viewed as falling within the general category of
Although it has been suggested that State Street Bank supports the patentability of business methods generally,
The very constitutional provision that authorized Congress to create a patent system, Article I, § 8, also limited the subject matter eligible for patent protection to the "useful Arts."
Beginning with the first patent act, the Patent Act of 1790, "Congress [ ] responded to the bidding of the Constitution," Graham, 383 U.S. at 6, 86 S.Ct. 684, by including provisions limiting patentable subject matter. See An Act to Promote the Progress of Useful Arts, Ch. 7, 1 Stat. 109, 110 (1790). The standard used by the Patent Act of 1793, which limited patentability to "any new and useful art, machine, manufacture, or composition of matter, or any new or useful improvement [thereof]," is essentially the same as that used today. An Act to Promote the Progress of Useful Arts; and to Repeal the Act Heretofore Made for that Purpose, Ch. 11, 1 Stat. 318, 319 (1793). The Patent Act of 1952 did replace the word "art" with the word "process" so that current § 101 states:
However, the Supreme Court has made clear that the 1952 language change had no substantive effect, stating that "[a]nalysis of the eligibility of a claim of patent protection for a `process' did not change with the addition of that term to § 101." Diehr, 450 U.S. at 184, 101 S.Ct. 1048.
Patentable subject matter under the 1952 Act is extremely broad. Given the breadth of the categories listed in § 101, it is not surprising that the legislative history of the 1952 Act noted that "Congress intended statutory subject matter to include anything under the sun that is made by man." Chakrabarty, 447 U.S. at 309, 100 S.Ct. 2204 (quoting S.Rep. No.1979, 82d Cong., 2d Sess., 5 (1952); H.R.Rep. No.1923, 82d Cong., 2d Sess., 6 (1952) (internal quotation marks omitted)). On the other hand, the Supreme Court has made clear that this statement does "not ... suggest that § 101 has no limits or that it embraces every discovery." Id.
Specifically, Supreme Court decisions after the 1952 Patent Act have rejected a "purely literal reading" of the process provision and emphasized that not every "process" is patentable. Flook, 437 U.S. at 589, 98 S.Ct. 2522. Instead "[t]he question is whether the method described and claimed is a `process' within the meaning of the Patent Act." Gottschalk v. Benson, 409 U.S. 63, 64, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972); see also Flook, 437 U.S. at 593, 98 S.Ct. 2522 ("[R]espondent incorrectly assumes that if a process application implements a principle in some specific fashion, it automatically falls within the patentable subject matter of § 101."). "Abstract ideas" are one type of subject matter that the Supreme Court has consistently held fall beyond the broad reaches of patentable subject matter under § 101. As early as Le Roy v. Tatham, 55 U.S. 156, 175, 14 How. 156, 14 L.Ed. 367 (1852), the Supreme Court explained that "[a] principle, in the abstract, is a fundamental truth; an
The prohibition against the patenting of abstract ideas has two distinct (though related) aspects. First, when an abstract concept has no claimed practical application, it is not patentable. The Supreme Court has held that "[a]n idea of itself is not patentable." Rubber-Tip Pencil, 87 U.S. at 507 (emphasis added). In Benson, the claim was for a method of converting binary-coded decimal numerals into pure binary numerals that was "not limited to any particular art or technology, to any particular apparatus or machinery, or to any particular end use." 409 U.S. at 64. Since the claim would therefore "wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself," the claim was unpatentable because its "practical effect" was to "patent an idea" in the abstract. Id. at 71-72.
Second, the abstract concept may have a practical application. The Supreme Court has reviewed process patents reciting algorithms or abstract concepts in claims directed to industrial processes. In that context, the Supreme Court has held that a claim reciting an algorithm or abstract idea can state statutory subject matter only if, as employed in the process, it is embodied in, operates on, transforms, or otherwise involves another class of statutory subject matter, i.e., a machine, manufacture, or composition of matter. 35 U.S.C. § 101. As the PTO notes, "[t]he Supreme Court has recognized only two instances in which such a method may qualify as a section 101 process: when the process `either  was tied to a particular apparatus or  operated to change materials to a "different state or thing."'" See PTO Supp. Br. 4 (quoting Flook, 437 U.S. at 588 n. 9, 98 S.Ct. 2522). In Diehr, the Supreme Court confirmed that a process claim reciting an algorithm could state statutory subject matter if it: (1) is tied to a machine or (2) creates or involves a composition of matter or manufacture.
However, mental processes—or processes of human thinking—standing alone are not patentable even if they have practical application. The Supreme Court has stated that "[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." Benson, 409 U.S. at 67, 93 S.Ct. 253 (emphasis added). In Flook the patentee argued that his claims did not seek to patent an abstract idea (an algorithm) because they were limited to a practical application of that idea—updating "alarm limits" for catalytic chemical conversion of hydrocarbons. 437 U.S. at 586, 589-90, 98 S.Ct. 2522. The Court rejected the notion that mere recitation of a practical application of an abstract idea makes it patentable, concluding that "[a] competent draftsman could attach some form of post-solution activity to almost any mathematical formula." Id. at 590, 98 S.Ct. 2522. Since all other features of the process were well-known, including "the use of computers for `automatic monitoring-alarming,'" the Court construed the application as "simply provid[ing] a new and presumably better method for calculating alarm limit values." Id. at 594-95, 98 S.Ct. 2522. The Court held the application unpatentable because "if a claim [as a whole] is directed essentially
Following the lead of the Supreme Court, this court and our predecessor court have refused to find processes patentable when they merely claimed a mental process standing alone and untied to another category of statutory subject matter even when a practical application was claimed. In Schrader we held unpatentable a "method constitut[ing] a novel way of conducting auctions" by allowing competitive bidding on a plurality of related items. 22 F.3d at 291. In doing so, we rejected the patentee's argument that the process used a machine. Two of the alleged machines—a "display" in the front of the auction room and "a closed-circuit television system" for bidders in different cities—were not claimed by the patent, and the third—a "record" in which bids could be entered—could be "a piece of paper or a chalkboard." Id. at 293-94. We therefore concluded that the patent impermissibly claimed unpatentable subject matter. Similarly, in In re Warmerdam, 33 F.3d 1354, 1359-60 (Fed.Cir.1994), we held unpatentable a process for controlling objects so as to avoid collisions because the key steps of "`locating' a medial axis" and "`creating' a bubble hierarchy" described "nothing more than the manipulation of basic mathematical constructs, the paradigmatic `abstract idea.'" A machine was not required, id. at 1358, nor was there any indication that the process operated on a manufacture or composition of matter.
Decisions of our predecessor court are in accord. In re Meyer, 688 F.2d 789, 795-96 (CCPA 1982), held that "a mental process that a neurologist should follow" was not patentable because it was "not limited to any otherwise statutory process, machine, manufacture, or composition of matter." Similarly, In re Maucorps held that an invention "[u]ltimately ... directed toward optimizing the organization of sales representatives in a business" was unpatentable. 609 F.2d 481, 482, 486 (CCPA 1979); see also Alappat, 33 F.3d at 1541 ("Maucorps dealt with a business methodology for deciding how salesmen should best handle respective customers and Meyer involved a `system' for aiding a neurologist in diagnosing patients. Clearly, neither of the alleged `inventions' in those cases falls within any § 101 category.").
It is thus clear that the present statute does not allow patents to be issued on particular business systems— such as a particular type of arbitration— that depend entirely on the use of mental processes. In other words, the patent statute does not allow patents on particular systems that depend for their operation on human intelligence alone, a field of endeavor that both the framers and Congress intended to be beyond the reach of patentable subject matter. Thus, it is established that the application of human intelligence to the solution of practical problems is not in and of itself patentable.
Having considered the governing legal principles, we now turn to Comiskey's application and begin with independent
We consider independent claims 17 and 46 separately. They recite the use of "module[s]," including "a registration module for enrolling" a person, "an arbitration module for incorporating arbitration language," and "an arbitration resolution module for requiring a complainant [or party] to submit a request for arbitration resolution to the mandatory arbitration system." Claim 17 also recites "a means for selecting an arbitrator from an arbitrator database." These claims, under the broadest reasonable interpretation, could require the use of a machine as part of Comiskey's arbitration system. See Alan Freedman, The Computer Glossary 268 (8th ed.1998) (defining module as "[a] self-contained hardware or software component that interacts with a larger system"); id. at 90 (defining database as "any electronically-stored collection of data"). Similarly, even though Comiskey did not separately argue his dependent claims, our decision is based on a different ground than the Board's, and we think it is appropriate to separately consider dependent claims 15, 30, 44, and 58. Each of these claims adds the following limitation to its corresponding independent claim: "wherein access to the mandatory arbitration is established through the Internet, intranet, World Wide Web, software applications, telephone, television, cable, video [or radio], magnetic, electronic communication, or other communications means."
As to all of these claims, which under the broadest reasonable interpretation recite the use of a machine, we think that the § 101 question should be addressed in the first instance by the PTO. We therefore remand to the PTO to consider whether independent claims 17 and 46 (with dependent claims 18-29, 31, 47-57, and 59) and dependent claims 15, 30, 44, and 58 recite patentable subject matter under § 101.
We conclude that Comiskey's independent claims 1 and 32 and dependent claims 2-14, 16, 33-43, and 45 do not claim patentable subject matter. With respect to independent claims 17 and 46 (with dependent claims 18-29, 31, 47-57, and 59) and dependent claims 15, 30, 44, and 58, we remand to the PTO to determine in the first instance whether § 101 is satisfied. If the Board had relied on the new § 101 ground for rejection in the first instance,
AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED.