545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`
`
`
`Page 1
`
`
`
`
`
`
`
`United States Court of Appeals,
`Federal Circuit.
`In re Bernard L. BILSKI and Rand A. Warsaw.
`
`No. 2007–1130.
`Oct. 30, 2008.
`
`
`Background: Patent applicants challenged denial of
`patent application for method of hedging risk in field
`of commodities
`trading based on
`lack of pa-
`tent-eligible subject matter. The Patent and Trademark
`Office, Board of Patent Appeals and Interferences,
`2006 WL 5738364, sustained rejection of all claims in
`application. Applicants appealed.
`
`Holdings: Following sua sponte order of review en
`banc, the Court of Appeals, Michel, Chief Judge, held
`that:
`(1) machine-or-transformation test, rather than test
`determining whether claim recited algorithm applied
`in any manner to physical elements or process steps,
`was applicable test for determining patent-eligibility
`of process claims, abrogating, In re Freeman, 573
`F.2d 1237, In re Walter, 618 F.2d 758, and In re Abele,
`684 F.2d 902;
`(2) machine-or-transformation test, rather than “use-
`ful, concrete and tangible result” inquiry, was proper
`test to apply to determine patent-eligibility of process
`claims, abrogating In re Alappat, 33 F.3d 1526, State
`Street Bank & Trust Co. v. Signature Financial
`Group, Inc., 149 F.3d 1368, and AT&T Corp. v. Excel
`Communications, Inc., 172 F.3d 1352; and
`(3) claim was not drawn to patent-eligible subject
`matter under
`transformation branch of ma-
`chine-or-transformation test.
`
`
`Affirmed.
`
`
`
`
`
`
`
`
`
` Dyk, Circuit Judge, filed opinion concurring, in
`which Linn, Circuit Judge, joined.
`
`
` Newman, Circuit Judge, filed opinion dissenting.
`
` Mayer, Circuit Judge, filed opinion dissenting.
`
` Rader, Circuit Judge, filed opinion dissenting.
`
`West Headnotes
`
`5
`
`
`[1] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`Whether a patent claim is drawn to patent-eligible
`subject matter is a threshold inquiry, and any claim of
`an application failing the statutory requirements must
`be rejected even if it meets all of the other legal re-
`quirements of patentability. 35 U.S.C.A. § 101.
`
`[2] Patents 291
`
`291 Patents
` 291IV Applications and Proceedings Thereon
` 291k104 k. Examination and proceedings on
`application in general. Most Cited Cases
`
`
`104
`
`When determining patentability, a Patent and
`Trademark Office (PTO) examiner should generally
`first satisfy herself that the application's claims are
`drawn to patent-eligible subject matter. 35 U.S.C.A. §
`101.
`
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`1
`
`SAMSUNG-1037
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`324.5
`[3] Patents 291
`
`291 Patents
` 291XII Infringement
` 291XII(B) Actions
` 291k324 Appeal
` 291k324.5 k. Scope and extent of review
`in general. Most Cited Cases
`
`
`3574
`
`Whether a patent claim is drawn to patent-eligible
`subject matter is an issue of law that the Court of
`Appeals reviews de novo. 35 U.S.C.A. § 101.
`
`[4] Federal Courts 170B
`
`170B Federal Courts
` 170BXVII Courts of Appeals
` 170BXVII(K) Scope and Extent of Review
` 170BXVII(K)2 Standard of Review
` 170Bk3574 k. Statutes, regulations, and
`ordinances, questions concerning in general. Most
`Cited Cases
` (Formerly 170Bk776)
`
`
`7.11
`
`Court of Appeals reviews issues of statutory in-
`terpretation de novo. 35 U.S.C.A. § 101.
`
`[5] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`For purposes of determining whether process
`claim is tailored narrowly enough to encompass only a
`particular application of a fundamental principle ra-
`ther than to pre-empt the principle itself, a claimed
`process involving a fundamental principle that uses a
`particular machine or apparatus would not pre-empt
`
`Page 2
`
`7
`
`uses of the principle that do not also use the specified
`machine or apparatus in the manner claimed. 35
`U.S.C.A. § 101.
`
`[6] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7 k. Process or methods in general.
`Most Cited Cases
`
`
`For purposes of determining whether process
`claim is tailored narrowly enough to encompass only a
`particular application of a fundamental principle ra-
`ther than to pre-empt the principle itself, a claimed
`process that transforms a particular article to a speci-
`fied different state or thing by applying a fundamental
`principle would not pre-empt the use of the principle
`to transform any other article, to transform the same
`article but in a manner not covered by the claim, or to
`do anything other than transform the specified article.
`35 U.S.C.A. § 101.
`
`[7] Patents 291
`
`291 Patents
` 291IV Applications and Proceedings Thereon
` 291k101 Claims
` 291k101(3) k. Limitations in general. Most
`Cited Cases
`
`
`101(3)
`
`Pre-emption of all uses of a fundamental principle
`in all fields and pre-emption of all uses of the principle
`in only one field both indicate that the patent claim is
`not limited to a particular application of the principle.
`35 U.S.C.A. § 101.
`
`[8] Patents 291
`
`291 Patents
`
`7.11
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`2
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`A patent claim that is tied to a particular machine
`or brings about a particular transformation of a par-
`ticular article does not pre-empt all uses of a funda-
`mental principle in any field but rather is limited to a
`particular use, a specific application; therefore, it is
`not drawn to the principle in the abstract. 35 U.S.C.A.
`§ 101.
`
`[9] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.11
`
`Even if a patent claim recites a specific machine
`or a particular transformation of a specific article, the
`recited machine or transformation must not constitute
`mere insignificant postsolution activity, for purposes
`of determining whether process claim is tailored nar-
`rowly enough to encompass only a particular applica-
`tion of a fundamental principle rather than to pre-empt
`the principle itself. 35 U.S.C.A. § 101.
`
`[10] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.12 k. Law of nature. Most Cited
`Cases
`
`
`7.12
`
`Even though a fundamental principle itself is not
`patent-eligible, processes incorporating a fundamental
`principle may be patent-eligible. 35 U.S.C.A. § 101.
`
`
`Page 3
`
`7
`
`[11] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7 k. Process or methods in general.
`Most Cited Cases
`
`
`7.14
`
`When determining patent-eligibility of a patent
`claim as a whole, it is irrelevant that any individual
`step or limitation of such processes by itself would be
`unpatentable. 35 U.S.C.A. § 101.
`
`[12] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`Machine-or-transformation test, rather than test
`determining whether claim recited algorithm applied
`in any manner to physical elements or process steps,
`was applicable test for determining patent-eligibility
`of process claims, in action challenging denial of
`patent application for method of hedging risk in field
`of commodities trading; abrogating, In re Freeman,
`573 F.2d 1237, In re Walter, 618 F.2d 758, and In re
`Abele, 684 F.2d 902. 35 U.S.C.A. § 101.
`
`[13] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`7.14
`
`than
`rather
`test,
`Machine-or-transformation
`“useful, concrete and tangible result” inquiry, was
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`3
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`proper test to apply to determine patent-eligibility of
`process claims, in action challenging denial of patent
`application for method of hedging risk in field of
`commodities trading; abrogating In re Alappat, 33
`F.3d 1526, State Street Bank & Trust Co. v. Signature
`Financial Group, Inc., 149 F.3d 1368, and AT&T
`Corp. v. Excel Communications, Inc., 172 F.3d 1352.
`35 U.S.C.A. § 101.
`
`[14] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.11
`
`The proper inquiry to determine patent-eligibility
`of process claims is not whether the process claim
`recites sufficient physical steps, but rather whether the
`claim meets the machine-or-transformation test; thus,
`it is simply inapposite to the analysis whether process
`steps performed by software on a computer are suffi-
`ciently physical. 35 U.S.C.A. § 101.
`
`[15] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.11
`
`Even a process claim that recites physical steps
`but neither recites a particular machine or apparatus,
`nor transforms any article into a different state or
`thing, is not drawn to patent-eligible subject matter;
`conversely, a claim that purportedly lacks any physi-
`cal steps but is still tied to a machine or achieves an
`eligible transformation passes muster under patent
`law. 35 U.S.C.A. § 101.
`
`
`Page 4
`
`7.11
`
`[16] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`a
`is
`test
`The machine-or-transformation
`two-branched inquiry; an applicant may show that a
`process claim satisfies the statute either by showing
`that his claim is tied to a particular machine, or by
`showing that his claim transforms an article. 35
`U.S.C.A. § 101.
`
`[17] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.11
`
`For purposes of determining patent-eligibility of a
`process claim, the use of a specific machine or trans-
`formation of an article must impose meaningful limits
`on the claim's scope to impart patent-eligibility. 35
`U.S.C.A. § 101.
`
`[18] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.11
`
`For purposes of determining patent-eligibility of a
`process claim, the involvement of the machine or
`transformation in the claimed process must not merely
`be insignificant extra-solution activity. 35 U.S.C.A. §
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`4
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`101.
`
`[19] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7 k. Process or methods in general.
`Most Cited Cases
`
`
`7
`
`7
`
`A claimed process is patent-eligible if it trans-
`forms an article into a different state or thing; this
`transformation must be central to the purpose of the
`claimed process. 35 U.S.C.A. § 101.
`
`[20] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7 k. Process or methods in general.
`Most Cited Cases
`
`
`7.14
`
`It is virtually self-evident that a process for a
`chemical or physical transformation of physical ob-
`jects or substances is patent-eligible subject matter. 35
`U.S.C.A. § 101.
`
`[21] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`Process in patent application for method of
`hedging risk in field of commodities trading did not
`transform any article to different state or thing, and
`thus claim was not drawn to patent-eligible subject
`matter under
`transformation branch of ma-
`
`Page 5
`
`chine-or-transformation test, as required for pa-
`tent-eligibility;
`applicants
`sought
`to
`claim
`non-transformative process that encompassed purely
`mental process of performing requisite mathematical
`calculations without aid of computer or any other
`device, mentally identifying those transactions that
`calculations revealed would hedge each other's risks,
`and performing post-solution step of consummating
`those transactions, and effective pre-emption of all
`applications of hedging even just within area of con-
`sumable
`commodities was
`impermissible. 35
`U.S.C.A. § 101.
`
`[22] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`7.14
`
`transformations or manipulations
`Purported
`simply of public or private legal obligations or rela-
`tionships, business risks, or other such abstractions
`cannot meet the machine-or-transformation test to
`determine patent-eligibility of process claims, because
`they are not physical objects or substances, and they
`are not representative of physical objects or sub-
`stances. 35 U.S.C.A. § 101.
`
`*946 David C. Hanson, The Webb Law Firm, of
`Pittsburgh, PA, argued for appellants. With him on the
`brief were Richard L. Byrne and Nathan J. Prepelka.
`
`Raymond T. Chen, Associate Solicitor, Office of the
`Solicitor, United States Patent and Trademark Office,
`of Arlington, Virginia, argued for the Director of the
`United States Patent and Trademark Office. With him
`on the brief were James A. Toupin, General Counsel,
`Stephen Walsh, Acting Solicitor, and Thomas W.
`Krause, Associate Solicitor. Of counsel on the brief
`were Jeffrey S. Bucholtz, Acting Assistant Attorney
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`5
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`General, John J. Fargo, Director, Intellectual Property
`Staff, Commercial Branch, and Scott R. McIntosh and
`Mark R. Freeman, Attorneys, Appellate Staff, Civil
`Division, United States Department of Justice, of
`Washington, DC.
`
`John F. Duffy, Fried, Frank, Harris, Shriver & Ja-
`cobson LLP, of Washington, DC, argued for amicus
`curiae Regulatory Datacorp, Inc. Of counsel on the
`brief were Thomas S. Biemer, Steven I. Wallach, and
`Philip J. Foret, Dilworth Paxson LLP, of Philadelphia,
`PA; and John A. Squires, Goldman, Sachs & Co., of
`New York, NY.
`
`William F. Lee, Wilmer Cutler Pickering Hale and
`Dorr LLP, of Boston, Massachusetts, argued for amici
`curiae Financial Services Industry, Bank of America,
`et al., and for all other amici. With him on the brief for
`Financial Services Industry, Bank of America, et al.,
`were Randolph D. Moss, Donald R. Steinberg, and
`Felicia H. Ellsworth, and Seth P. Waxman, of Wash-
`ington, DC.
`
`J. Michael Jakes, Finnegan, Henderson, Farabow,
`Garrett & Dunner, L.L.P., of Washington, DC, for
`amicus curiae Accenture. With him on the brief were
`Erika H. Arner and Ronald E. Myrick, and Denise W.
`DeFranco, of Cambridge, MA. Of counsel on the brief
`was Wayne P. Sobon, Accenture, of San Jose, CA.
`
`Christopher A. Hansen, American Civil Liberties
`Union Foundation, of New York, NY, for amicus
`curiae American Civil Liberties Union.
`
`Kenneth C. Bass, III, Sterne, Kessler, Goldstein & Fox
`P.L.L.C., of Washington, DC, for amicus curiae
`American Express Company. With him on the brief
`were Robert Greene Sterne and Michelle K.
`Holoubek. Of counsel on the brief was Maxine Y.
`Graham, American Express Company, of New York,
`NY.
`
`
`Page 6
`
`Kelsey I. Nix, Willkie Farr & Gallagher LLP, of New
`York, NY, for amicus curiae American Institute of
`Certified Public Accountants.*947 With him on the
`brief was Heather M. Schneider.
`
`Meredith Martin Addy, Brinks Hofer Gilson & Lione,
`of Chicago, IL, for amicus curiae American Intellec-
`tual Property Law Association. With her on the briefs
`was Charles M. McMahon. Of counsel on the briefs
`were James Pooley and Judith M. Saffer, American
`Intellectual Property Law Association, of Arlington,
`Virginia, and Denise W. DeFranco, Barbara A. Fiac-
`co, James M. Flaherty, Jr., and Miriam Pogach, Foley
`Hoag LLP, of Boston, MA.
`
`Joseph A. Keyes, Jr., Association of American Med-
`ical Colleges, of Washington, DC, for amicus curiae
`Association of American Medical Colleges.
`
`Nancy J. Linck, Rothwell, Figg, Ernst & Manbeck, of
`Washington, DC, for amicus curiae Biotechnology
`Industry Organization. With her on the brief were
`Minaksi Bhatt and R. Elizabeth Brenner–Leifer. Of
`counsel on the brief was Hans Sauer, Biotechnology
`Industry Organization, of Washington, DC.
`
`Erik P. Belt, Bromberg and Sunstein LLP, of Boston,
`MA, for amicus curiae Boston Patent Law Associa-
`tion. With him on the brief were John J. Stickevers and
`Jakub M. Michna. Of counsel on the brief were Robert
`M. Abrahamsen, Steven J. Henry, and Ilan N. Barzi-
`lay, Wolf, Greenfield and Sacks, P.C., of Boston, MA.
`
`Andrew J. Pincus, Mayer Brown LLP, of Washington,
`DC, for amicus curiae The Business Software Alli-
`ance. With him on the brief were Dan Himmelfarb and
`Brian D. Netter.
`
`Richard H. Stern, Kellogg, Huber, Hansen, Todd,
`Evans & Figel, P.L.L.C., of Washington, DC, for
`amicus curiae Center for Advanced Study and Re-
`search on Intellectual Property of the University of
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`6
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`Washington School of Law.
`
`Dean Alderucci, CFPH, LLC, of New York, NY, for
`amicus curiae CFPH, LLC.
`
`Matthew Schruers, Computer & Communications
`Industry Association, of Washington, DC, for amicus
`curiae Computer & Communications Industry Asso-
`ciation.
`
`Jason M. Schultz, University of California Berkeley
`School of Law, of Berkeley, CA, for amici curiae
`Consumers Union, et al.
`
`Carter G. Phillips, Sidley Austin LLP, of Washington,
`DC, for amici curiae Dell Inc., et al. With him on the
`brief were Jeffrey P. Kushan, and Constantine L.
`Trela, Jr. and Richard A. Cederoth, of Chicago, IL.
`
`James J. Kelley, Eli Lilly and Company, of Indianap-
`olis, IN, for amicus curiae Eli Lilly and Company.
`With him on the brief were Robert A. Armitage and
`Alexander Wilson.
`
`Jerry Cohen, Burns & Levinson, LLP, of Boston, MA,
`for amicus curiae End Software Patents.
`
`Michael J. Songer, Crowell & Moring, LLP, of
`Washington, DC, for amicus curiae Federal Circuit
`Bar Association. Of counsel on the brief was Edward
`R. Reines, Federal Circuit Bar Association, of Wash-
`ington, DC.
`
`Maxim H. Waldbaum, Schiff Hardin LLP, of New
`York, NY, for amicus curiae Fédération Internationale
`Des Conseils En Propriété Industrielle.
`
`Michael R. McCarthy, Parsons Behle & Latimer, of
`Salt Lake City, UT, for amicus curiae Professor Lee
`A. Hollaar.
`
`
`Page 7
`
`Howard L. Speight, of Houston, TX, for amicus curiae
`Houston Intellectual Property Law Association.
`
`Eric E. Bensen, Paul, Hastings, Janofsky & Walker
`LLP, of New York, New York, for amicus curiae
`Intellectual Property Owners Association. Of counsel
`on *948 the brief were Robert P. Hayter and Steven
`W. Miller, Intellectual Property Owners Association,
`of Washington, DC. Of counsel was Herbert C.
`Wamsley, Intellectual Property Owners Association,
`of Washington, DC.
`
`Christopher Landau, Kirkland & Ellis LLP, of
`Washington, DC, for amicus curiae International
`Business Machines Corporation. With him on the brief
`were Gregory S. Arovas and Timothy K. Gilman, of
`New York, NY. Of counsel on the brief were David J.
`Kappos, IBM Corporation, of Armonk, New York,
`and John R. Thomas, Georgetown University Law
`Center, of Washington, DC.
`
`Jack E. Haken, Philips Intellectual Property and
`Standards, of Briarcliff Manor, NY, for amicus curiae
`Koninklijke Philips Electronics N.V. With him on the
`brief was Todd Holmbo.
`
`Mark A. Lemley, Stanford Law School, of Stanford,
`California, for amici curiae law professors John R.
`Allison, et al. Of counsel on the brief were Michael
`Risch, West Virginia University College of Law, of
`Morgantown, WV, and R. Polk Wagner, University of
`Pennsylvania Law School, of Philadelphia, PA.
`
`Joshua D. Sarnoff, Washington College of Law,
`American University, of Washington, DC, for amici
`curiae law professors Ralph D. Clifford, et al.
`
`Todd L. Juneau, Juneau Partners Patent & Trademark
`Firm, PLLC, of Alexandria, VA, for amicus curiae
`Jason V. Morgan.
`
`James R. Myers, Ropes & Gray LLP, of Washington,
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`7
`
`

`
`
`
`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`DC, for amici curiae Pacific Life Insurance Company,
`et al. With him on the brief was Brandon H. Stroy, of
`New York, NY.
`
`Robert H. Tiller, Red Hat, Inc., of Raleigh, NC, for
`amicus curiae Red Hat, Inc. With him on the brief was
`Richard E. Fontana.
`
`Charles R. Macedo, Amster, Rothstein & Ebenstein
`LLP, of New York, NY, for amici curiae Reserve
`Management Corporation, et al. With him on the brief
`were Anthony F. Lo Cicero and Jung S. Hahm.
`
`Katherine K. Lutton, Fish & Richardson P.C., of
`Redwood City, CA, for amicus curiae SAP America,
`Inc. With her on the brief were John A. Dragseth, of
`Minneapolis, Minnesota, and Christian A. Chu, of
`Washington, DC. Of counsel on the brief were Kevin
`R. Hamel and Gerard Wissing, SAP America, Inc., of
`Newtown Square, PA.
`
`Scott E. Bain, Software & Information Industry As-
`sociation, of Washington, DC, for amicus curiae
`Software & Information Industry Association.
`
`Michael J. Swope, Woodcock Washburn LLP, of
`Seattle, WA, for amicus curiae Washington State
`Patent Law Association. With him on the brief was
`Grzegorz S. Plichta. Of counsel on the brief were Peter
`J. Knudsen, Nastech Pharmaceutical Co., Inc., of
`Bothell, Washington, and Dale C. Barr, Washington
`State Patent Law Association, of Seattle, WA.
`
`R. Carl Moy, William Mitchell College of Law, of St.
`Paul, MN, for amicus curiae William Mitchell College
`of Law Intellectual Property Institute. With him on the
`brief was Jay A. Erstling.
`
`Christopher J. Wright, Harris, Wiltshire & Grannis
`LLP, of Washington, DC, for amici curiae Yahoo!
`Inc., et al. With him on the brief were Timothy J.
`Simeone and Joseph C. Cavender.
`
`Page 8
`
`
`Gregory Aharonian, of San Francisco, CA, as amicus
`curiae, pro se.
`
`Kevin Emerson Collins, Indiana University School of
`Law, Bloomington, of Bloomington, IN, as amicus
`curiae, pro se.
`
`*949 Roberta J. Morris, of Menlo Park, CA, as amicus
`curiae, pro se.
`
`Before MICHEL, Chief Judge, NEWMAN, MAYER,
`LOURIE, RADER, SCHALL, BRYSON, GAJARSA,
`LINN, DYK, PROST, and MOORE, Circuit Judges.
`
`Opinion for the court filed by Chief Judge MICHEL,
`in which Circuit Judges LOURIE, SCHALL,
`BRYSON, GAJARSA, LINN, DYK, PROST, and
`MOORE join. Concurring opinion filed by Circuit
`Judge DYK, in which Circuit Judge LINN joins.
`Dissenting opinion filed by Circuit Judge NEWMAN.
`Dissenting opinion filed by Circuit Judge MAYER.
`Dissenting opinion filed by Circuit Judge RADER.
`
`MICHEL, Chief Judge.
`Bernard L. Bilski and Rand A. Warsaw (collec-
`tively, “Applicants”) appeal from the final decision of
`the Board of Patent Appeals and Interferences
`(“Board”) sustaining the rejection of all eleven claims
`of their U.S. Patent Application Serial No. 08/833,892
`'892 application”). See Ex parte Bilski,
`(“
`No.2002–2257, 2006 WL 5738364 (B.P.A.I. Sept. 26,
`2006) (“ Board Decision ”). Specifically, Applicants
`argue that the examiner erroneously rejected the
`claims as not directed to patent-eligible subject matter
`under 35 U.S.C. § 101, and that the Board erred in
`upholding that rejection. The appeal was originally
`argued before a panel of the court on October 1, 2007.
`Prior to disposition by the panel, however, we sua
`sponte ordered en banc review. Oral argument before
`the en banc court was held on May 8, 2008. We affirm
`the decision of the Board because we conclude that
`
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`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`Applicants' claims are not directed to patent-eligible
`subject matter, and in doing so, we clarify the stand-
`ards applicable in determining whether a claimed
`method constitutes a statutory “process” under § 101.
`
`
`I.
`Applicants filed their patent application on April
`10, 1997. The application contains eleven claims,
`which Applicants argue together here. Claim 1 reads:
`
`
`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 his-
`torical averages, said fixed rate corresponding to
`a risk position of said consumer;
`
`identifying market participants for said
`(b)
`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
`
`
`
`
`
`
`
`
`
`'892 application cl.1. In essence, the claim is for a
`method of hedging risk in the field of commodities
`trading. For example, coal power plants (i.e., the
`“consumers”) purchase coal to produce electricity and
`are averse to the risk of a spike in demand for coal
`since such a spike would increase the price and their
`costs. Conversely, coal mining companies (i.e., the
`“market participants”) are averse to the risk of a sud-
`den drop in demand for coal since such a drop would
`reduce their sales and depress prices. The claimed
`method envisions an *950 intermediary, the “com-
`
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`
`modity provider,” that sells coal to the power plants at
`a fixed price, thus isolating the power plants from the
`possibility of a spike in demand increasing the price of
`coal above the fixed price. The same provider buys
`coal from mining companies at a second fixed price,
`thereby isolating the mining companies from the pos-
`sibility that a drop in demand would lower prices
`below that fixed price. And the provider has thus
`hedged its risk; if demand and prices skyrocket, it has
`sold coal at a disadvantageous price but has bought
`coal at an advantageous price, and vice versa if de-
`mand and prices fall. Importantly, however, the claim
`is not limited to transactions involving actual com-
`modities, and the application discloses that the recited
`transactions may simply involve options, i.e., rights to
`purchase or sell the commodity at a particular price
`within a particular timeframe. See J.A. at 86–87.
`
`
`The examiner ultimately rejected claims 1–11
`under 35 U.S.C. § 101, stating: “[r]egarding ... claims
`1–11, the invention is not implemented on a specific
`apparatus and merely manipulates [an] abstract idea
`and solves a purely mathematical problem without any
`limitation to a practical application, therefore, the
`invention is not directed to the technological arts.” See
`Board Decision, slip op. at 3. The examiner noted that
`Applicants had admitted their claims are not limited to
`operation on a computer, and he concluded that they
`were not limited by any specific apparatus. See id. at 4.
`
`
`On appeal, the Board held that the examiner erred
`to the extent he relied on a “technological arts” test
`because the case law does not support such a test. Id. at
`41–42. Further, the Board held that the requirement of
`a specific apparatus was also erroneous because a
`claim that does not recite a specific apparatus may still
`be directed to patent-eligible subject matter “if there is
`a transformation of physical subject matter from one
`state to another.” Id. at 42. Elaborating further, the
`Board stated: “ ‘mixing’ two elements or compounds
`to produce a chemical substance or mixture is clearly a
`statutory transformation although no apparatus is
`claimed to perform the step and although the step
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`545 F.3d 943, 2008-2 USTC P 50,621, 88 U.S.P.Q.2d 1385
`(Cite as: 545 F.3d 943)
`could be performed manually.” Id. But the Board
`concluded that Applicants' claims do not involve any
`patent-eligible transformation, holding that transfor-
`mation of “non-physical financial risks and legal lia-
`bilities of the commodity provider, the consumer, and
`the market participants” is not patent-eligible subject
`matter. Id. at 43. The Board also held that Applicants'
`claims “preempt[ ] any and every possible way of
`performing the steps of the [claimed process], by
`human or by any kind of machine or by any combi-
`nation thereof,” and thus concluded that they only
`claim an abstract idea ineligible for patent protection.
`Id. at 46–47. Finally, the Board held that Applicants'
`process as claimed did not produce a “useful, concrete
`and tangible result,” and for this reason as well was
`not drawn to patent-eligible subject matter. Id. at
`49–50.
`
`
`Applicants timely appealed to this court under 35
`U.S.C. § 141. We have jurisdiction under 28 U.S.C. §
`1295(a)(4)(A).
`
`
`II.
`[1][2][3][4] Whether a claim is drawn to pa-
`tent-eligible subject matter under § 101 is a threshold
`inquiry, and any claim of an application failing the
`requirements of § 101 must be rejected even if it meets
`all of the other legal requirements of patentability. In
`re Comiskey, 499 F.3d 1365, 1371 (Fed.Cir.2007) FN1
`(quoting *951Parker v. Flook, 437 U.S. 584, 593, 98
`S.Ct. 2522, 57 L.Ed.2d 451 (1978)); In re Bergy, 596
`F.2d 952, 960 (CCPA 1979), vacated as moot sub
`nom. Diamond v. Chakrabarty, 444 U.S. 1028, 100
`S.Ct. 696, 62 L.Ed.2d 664 (1980). Whether a claim is
`drawn to patent-eligible subject matter under § 101 is
`an issue of law that we review de novo. Comiskey, 499
`F.3d at 1373; AT & T Corp. v. Excel Commc'ns, Inc.,
`172 F.3d 1352, 1355 (Fed.Cir.1999). Although claim
`construction, which we also review de novo, is an
`important first step in a § 101 analysis, see State St.
`Bank & Trust Co. v. Signature Fin. Group, 149 F.3d
`1368, 1370 (Fed.Cir.1998) (noting that whether a
`claim is invalid under § 101 “is a matter of both claim
`
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`
`construction and statutory construction”), there is no
`claim construction dispute in this appeal. We review
`issues of statutory interpretation such as this one de
`novo as well. Id.
`
`
`FN1. Although our decision in Comiskey
`may be misread by some as requiring in
`every case that the examiner conduct a § 101
`analysis before assessing any other issue of
`patentability, we did not so hold. As with any
`other patentability requirement, an examiner
`may reject a claim solely on the basis of §
`101. Or, if the examiner deems it appropriate,
`she may reject the claim on any other
`ground(s) without addressing § 101. But
`given that § 101 is a threshold requirement,
`claims that are clearly drawn to unpatentable
`subject matter should be identified and re-
`jected on that basis. Thus, an examiner
`should generally first satisfy herself that the
`application's claims are drawn
`to pa-
`tent-eligible subject matter.
`
`
`
`A.
`As this appeal turns on whether Applicants' in-
`vention as claimed meets the requirements set forth in
`§ 101, we begin with the words of the statute:
`
`
`Whoever invents or discovers any new and useful
`process, machine, manufacture, or composition of
`matter, or any new and useful improvement thereof,
`may obtain a patent therefor, sub