Link to Case: In re Comiskey, 499 F.3d 1365 (Fed. Cir. 2007)

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The dispute in Comiskey related to patent application No. 09/461,742 for a method and system for mandatory arbitration involving legal documents:

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.”1

499 F.3d at 1368-69. After Comiskey filed his patent application in December 1999, he received a first office action in March 2001, rejecting all of the claims under 35 U.S.C. 103(a). After receiving a rejection on the same basis in May 2001, Comiskey filed an amendment that August, which was rejected in December 2001. After filing a request for continued examination and receiving a 103 rejection, Commiskey appealed. The Board affirmed the denial on November 20, 2005, upon which Comiskey timely appealed to the United States Court of Appeals for the Federal Circuit (CAFC). After oral argument, the CAFC requires supplemental briefing directed at the patentability of Comiskey’s claims under 35 U.S.C. § 101. Comiskey argued that the CAFC lacked the power to consider a ground not relied on below, and in the alternative, the claims were patentable. The United States Patent and Trademark Office (PTO) urged the CAFC to take up the issue, noting that 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.

Power to Consider the §101 Issue

The CAFC first addressed Comiskey’s argument that it could not review the new ground of invalidity. Looking to Security & Exchange Commission v. Chenery Corp., the Federal Circuit reiterated that a reviewing court could 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 CAFC looked to its precedent supporting affirming grounds other than those the agency relied on when making their decision.

The CAFC differentiated from In re Margols, 785 F.2d 1029, where it held “it is inappropriate for this court to consider rejections that had not been considered by or relied upon by the Board,” noting that in Margols, the new grounds would require factual determinations not made by the agency. It pointed out that there may be cases of 101 eligibility that turn on factual issues but that Comiskey had not raised any such issues.

Eligibility under Section 101

In turning to patentability under 35 U.S.C. Section 101, the CAFC first reviewed the rule of its holding in State Street Bank, 149 F.3d, wherein it found a “business method” related to financial services eligible under §101. Despite the comprehensive treatment of State Street, the CAFC qualified the holding, noting that business methods were still “subject to the same legal requirements for patentability as applied to any other process or method.”

After providing a detailed backdrop of the §101 eligibility framework going back to the Statute of Monopolies in 16th and 17th century England, the CAFC several Supreme Court cases addressing the issue. It cited the “abstract idea” exception promulgated by the Court as early as 1852 and continually applied as a means of filtering claims directed to “ideas, principles, and fundamental truths” lacking real-world application. The CAFC noted that in Benson, the Court held that claims for converting binary-coded decimal numbers into pure binary numerals were “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.

Modern “Business Method” Patentability

Looking to the practical application requirement, the CAFC observed that the Supreme Court had only found patentable claims reciting an algorithm or abstract process if they were embodied in, operated on, transformed, or otherwise involved another class of statutory subject matter. See PTO Supp. Br. 4 (quoting Flook, 437 U.S. at 588 n. 9 (“[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 [1] was tied to a particular apparatus’ or [2] operated to change materials to a ‘different state or thing’”).

The CAFC distinguished such claims related to practical applications to those related to “mental processes or processes of human thinking standing alone.” It noted that in Flook, the Supreme Court rejected an argument that claims were limited to the practical application of a mathematical algorithm to update “alarm limits” for catalytic conversion, concluding that generic post-solution activity was insufficient. The CAFC noted that it had followed the Court’s lead, as in cases like Schrader, where it held a method for conducting auctions unpatentable. 22 F.3d at 291. It concluded 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 a mental process.”

Applying the Exception to Comiskey’s Claims

Having considered the governing law, the CAFC first rejected independent claims 1 and 32, which recited methods for mandatory arbitration resolution. As to these claims, Comiskey had conceded that they did not require a machine or other process of manufacturing. The CAFC, likening Benson and Flook’s claims, held that Comiskey’s method claims sought to patent “the use of human intelligence in and of itself.”

The CAFC took a slightly different approach in rejecting independent claims 17 and 46. The claims recited “modules,” 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. It also noted that claim 17 included a means for selecting an arbitrator from an arbitrator database and that several of the claims included the limitation of having communication means such as “the Internet, intranet, World Wide Web, software applications, telephone … .” The CAFC noted that “[w]hile the mere use of the machine to collect data necessary for application of the mental process may not make the claim patentable subject matter, these claims … claim patentable subject matter.”

However, the CAFC found that while the claims passed muster under §101, they must still meet the other requirements, such as non-obviousness. The CAFC held that adding a general-purpose computer to the claims could be routine and invalid under obviousness grounds and remanded the case to the PTO to resolve the §103 issue.

Conclusion

The CAFC concluded that Comiskey’s independent method claims 1 and 32 and dependent claims 2-14, 16, 33-43, and 45 were invalid under §101. It also concluded that independent claims 17 and 46 (their dependent claims), and dependent claims 15, 30, 44, and 58 were valid under §101, and remanded the case to the PTO to determine “in the first instance whether the addition of modern computers and communication devices would have been obvious.”

[1] In re Comiskey, 499 F.3d 1365, 1368-69 (Fed. Cir. 2007)