Section 101 Requirements

Section 101 specifies four independent categories of inventions or discoveries that are patent eligible:  processes, manufactures, machines, and compositions of matter.

Congress plainly contemplated that the patent laws would be given wide scope,” Diamond v. Chakrabarty, 447 U. S. 303, 308, in order to ensure that “ ‘ingenuity should receive a liberal encouragement,’ ” id., at 308–309.

The Supreme Court’s precedents provide three specific exceptions to §101’s broad principles: laws of nature, physical phenomena, and abstract ideas.

While not required by the statutory text, these exceptions are consistent with the notion that a patentable process must be “new and useful.”

The §101 eligibility inquiry is only a threshold test.  Even if a claimed invention qualifies in one of the four categories, it must also satisfy “the conditions and requirements of this title,” §101(a), including novelty, see §102, non-obviousness, see §103, and a full and particular description, see §112.

How to Overcome Abstract Idea Rejections

The best advice for avoiding an abstract idea objection from the USPTO is to focus on Section II-A of Justice Kennedy’s opinion.

Section 101 patent eligibility is “only a threshold test.”   The invention must also “be novel, see §102, nonobvious, see §103, and fully and particularly described, see §112.”

Bilski’s method of hedging risk was not patentable because it is an abstract idea “just like the algorithms at issue in Benson and Flook.”

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.

Petitioners’ remaining claims are broad examples of how hedging can be used in commodities and energy markets. Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable.  That is exactly what the remaining claims in petitioners’ application do.  These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation.  Indeed, these claims add even less to the underlying abstract principle than the invention in Flook did, for the Flook invention was at least directed to the narrower domain of signaling dangers in operating a catalytic converter.