Facts:

Pioneer owned several patents directed to plants and seeds of new varieties of hybrid and inbred corn. When Pioneer sued J.E.M. for infringement, J.E.M. moved for summary judgment on the basis that sexually reproduced plants are not patentable subject matter under 35 U.S.C. § 101. Citing Diamond v. Chakrabarty, the district court denied J.E.M.’s motion and held that 35 U.S.C. § 101 covers plant life and that sexually reproducing plants are patentable subject matter. A unanimous panel of the Court of Appeals for the Federal Circuit affirmed the district court’s decision.

Issue:

Whether sexually reproduced plants and seeds are patentable subject matter within the scope of 35 U.S.C. § 101, despite being unpatentable under the later enacted and more specific Plant Variety Protection Act (PVPA).

Holding:

Yes. Plants are patentable subject matter under both the PVPA and 35 U.S.C. § 101.

Reasoning:

J.E.M. had argued that 35 USC § 101 did not apply to seeds and seed grown plants because Congress intended that they be protected under the Plant Protection Act of 1930 (PPA) and the (PVPA), and that the general statute was superseded by the more specific PVPA.

The Court held that Congress did not intend for the PVPA to exclude new plant varieties from protection under the patent statues. The court held that 35 USC and the PVPA differ in the rights and obligations imposed on a prospective patentee in order to obtain patent protection, but that plants are patentable subject matter under both.

Disposition: Affirmed.

J. E. M. Ag Supply, Inc., dba Farm Advantage, Inc., et al., Petitioners v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001).

In re Brana, 51 F.3d 1560 (Fed. Cir. 1995).

Facts:

Brana filed a patent application directed to antitumor compounds. The compounds were very similar to other known antitumor compounds but had not been tested in human subjects. The known compounds had been evaluated using a computer test that was used to identify compounds as candidates for further testing by the National Cancer Institute. The National Cancer Institute then performed in vitro tests for antitumor activity against human tumor cells, and in vivo tests for efficacy against two lymphatic leukemias in mice. The patent application pointed out the similarity between the claimed compounds to the known antitumor compounds and demonstrated the cytotoxicity of the compounds against human tumor cells in vitro.

The examiner rejected the application on the grounds that the application failed to specify a specific disease against which the compounds were effective, and because the test results were insufficient to establish that there was a reasonable expectation that the compounds had a practical utility. On appeal, the Board of Patent Appeals and Interferences affirmed the examiner’s rejection.

Issue: The issue is what the applicant must prove regarding the practical utility or usefulness of pharmaceutical inventions.

Holding: The court held that while the examiner’s rejection and the Board of Patent Appeals and Interferences decision appeared to be based on the issue of whether the compounds had a practical utility, the real issue pertained to the requirements for patentability under 35 USC 112 p 1. The court considered two issues.

Specific Utility:

The first basis for the Board’s decision was that the application had failed to disclose that the compounds were active against a specific disease and that one of ordinary skill in the art would be unable to use the invention without undue experimentation. (See Hybritech Inc. v. Monoclonal Antibodies, Inc.)

The court held that the applicants’ favorable comparison to the compounds with known activity implicitly asserted that the claimed compounds were highly effective against lymphocytic leukemia and therefore useful. In light of the comparison to the known compounds, the court held that the specification alleged a sufficiently specific use. The court held that while the tumors were man made, they nevertheless represented real tumors and it was unnecessary to wait for them to occur naturally.

Utility:

The Board also affirmed the rejection of the claims on the basis that even if the specification disclosed a specific utility, the application did not prove that the claimed compounds are useful. The court held that the PTO has the initial burden to make a prima facie showing that the invention lacks utility. The PTO must challenge the application’s presumptively correct utility disclosed in the application. Only after the PTO has provided evidence that one of ordinary skill in the art would reasonably doubt the asserted utility does the burden shift to the applicant to provide evidence sufficient to convince such a person of the invention’s asserted utility. The court found that the PTO failed to make a prima facie showing that the invention lacked the asserted utility and that the applicants should not have been required to substantiate their disclosure to avoid the rejection. The court also found that even if the PTO had meet this initial burden, the applicants submitted sufficient evidence to convince one of skill in the art of the asserted utility. The court noted that the requirements to obtain the approval to market a drug are not the same as the requirements to obtain a patent. The court stated that

[u]sefulness in patent law, and in particular in the context of pharmacological inventions, necessarily includes the expectation of further research and development. The stage at which an invention in this field becomes useful is well before it is ready to be administered to humans. Were we to require Phase II testing in order to prove utility, the associated costs would prevent many companies from obtaining patent protection on promising new inventions, thereby eliminating an incentive to pursue, through research and development, potential cures in many crucial areas such as the treatment of cancer.

The court also reaffirmed that proof of an alleged pharmaceutical property for a compound through statistically significant tests using standard laboratory animals is sufficient to establish utility. Namely, one who has taught the public that a compound exhibits some desirable pharmaceutical property in a standard laboratory animal has made a significant and useful contribution to the art, even though it may eventually appear that the compound is without value in the treatment of humans. (See In re Krimmel.)

Disposition: Reversed.

Facts:

Signature Financial Group obtained a patent entitled “Data Processing System for Hub and Spoke Financial Services Configuration”. The invention involved a computer program in connection with a system in which mutual funds (“spokes”) pooled their assets in an investment portfolio (“hub”) that was organized as a partnership. The system managed the daily allocation of assets for mutual funds with investments in the same portfolio and made daily determinations of the true assets held by each fund. State Street made an unsuccessful attempt to obtain a license and subsequently brought a declaratory judgment action asserting that the patent was invalid because it was not patentable subject matter under 35 USC 101. The district court found that the patent was invalid and granted summary judgment in favor of State Street.

Issue: Is a machine or program that stores and calculates numbers in a useful manner eligible for a patent?

Holding:

Yes. A machine or program that stores and calculates numbers in a useful manner is patentable subject matter. The patent claim at issue was directed to a data processing system and recited each element as a means plus function. The court, citing In re Allapat, held that “”machine” claims having “means” clauses may only be reasonably viewed as process claims if there is no supporting structure in the written description that corresponds to the claimed “means” elements.” The court held that the claim was not invalid for lack of patentable subject matter because machines are patentable under 35 USC 101. The court also noted that the question of whether the claim was directed to a machine or a process was irrelevant because both are patentable subject matter.

The district court had also found the claim invalid because it fell within two judicially created exceptions to statutory subject matter. The district court held that the claimed subject matter fell within the “mathematical algorithm” exception and the “business method” exception. The Federal Circuit rejected these arguments. Citing Diamond v. Chakrabarty and Diamond v. Diehr, the court stated that Congress intended 35 USC 101 to extend to “anything under the sun that is made by man.”

“Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces “a useful, concrete and tangible result”–a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.”

Disposition: Reversed and remanded.

State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).

Diamond v. Diehr, 450 U.S. 175 (1981).

Argued October 14, 1980. Decided March 3, 1981.

Facts: The PTO rejected claims in Diehr’s patent directed to a process for curing rubber. The Patent Office contended that steps that are performed by a computer by means of a stored program do not constitute statutory subject matter under 35 USC 101. On appeal, the PTO Board of Appeals upheld the examiner’s rejection. On appeal to the Court of Customs and Patent Appeals, the Court reversed, finding in favor of Diehr.

Issue:Are otherwise valid claims rendered invalid by including mathematical formulas?

Holding: Claims that include mathematical formulae are not necessarily invalid. A process is “an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. If new and useful, it is just as patentable as is a piece of machinery. . . . The machinery pointed out as suitable to perform the process may or may not be new or patentable.”

The mere use of a mathematical formula, computer program, or digital computer does not render a process unpatentable. The claims must be considered as a whole; if the structure or process, when considered as a whole, is otherwise patentable subject matter, the utility requirements of 35 USC 101 are satisfied.

Disposition: Affirmed.

Notes:

Diamond v. Diehr was instrumental in paving the way for State Street v. Signature Financial and the patentability of business methods.

Diamond v. Chakrabarty was also instrumental in establishing the Court of Appeals for the Federal Circuit’s expansive approach to patentable subject matter: “the Supreme Court has acknowledged that Congress intended § 101 to extend to anything under the sun that is made by man.”

Diamond v. Chakrabarty, 447 U.S. 303 (1980).

Argued March 17, 1980. Decided June 16, 1980.

Facts:

Chakrabarty filed a patent application directed to an oil-eating bacterium. The PTO rejected a claim to the bacterium itself on the grounds that living matter is not patentable subject matter. The Board of Patent Appeals and Interferences upheld the examiner’s rejection. The rejection was overturned on appeal to the US Court of Customs and Patent Appeals and the US Supreme Court granted certiorari.

Issue: Are human-made micro-organisms patentable subject matter?

Holding:

Living organisms are patentable subject matter under 35 USC 101 and Chakrabarty’s micro-organism constitutes a “manufacture” or “composition of matter” within the meaning of that statute. The Court held that the terms “manufacture” and “composition of matter” are to be given a broad construction.

The court noted that the judiciary must be cautious when contemplating expanding patent law to new areas that Congress had not foreseen. The court noted however that title 35 contains no ambiguity and was to be construed broadly. The PTO also argued that the court should reject the patenting of living organisms as against public policy. The court held that such a determination was the province of the judiciary and held that the oil-eating bacterium was patentable subject matter.