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Short Circuit: How will Bilski v. Kappos inform the Federal Circuit on Medical Diagnostic Patents?

On Monday, June 28, the Supreme Court stated that the "machine or transformation test" enunciated by the Court of Appeals for the Federal Circuit in In re Bilski, 545 F. 3d 943 (Fed. Cir. 2008), is not the exclusive test for whether an invention is patentable subject matter under 35 U.S.C. § 101. The majority leaves the Federal Circuit to develop its own jurisprudence in considering what other tests or considerations should apply. On Tuesday, June 29, the Supreme Court told the Federal Circuit to get to work on that, granting certiori, vacating and remanding the Federal circuit's opinions in Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Mayo Clinic Rochester, 581 F.3d 1336 (Fed. Cir. 2009) and Classen Immunotherapies, Inc. v. Biogen Idec and Glaxosmithkline and Merck and Co., Inc., (Fed. Cir. 2008, nonprecedential, 2006-1634, -1649). Both of these cases involve medical diagnostic processes. Bilski v. Kappos is being discussed in the business method patent context in numerous other venues, so matters specific to that topic, including its facts, will not be addressed here.

In Bilski, the Federal Circuit had held that an invention was patentable as a process only if "(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." 545 F.3d at 954. All nine Justices agreed that this was not the exclusive test for statutory patentable subject matter. However, both the nature of, and the extent to which other tests or criteria should apply was not enunciated by a majority of the Court.

The Opinion of The Court, delivered by Justice Kennedy, was a majority opinion limited to its judgment that Bilski's patent was invalid because its claims an abstract idea, (all nine Justices), and its holding that patents to a business method are not invalid per se. (Justices Kennedy, Roberts, Alito, Thomas and Scalia). All nine Justices also agreed that the "machine or transformation" test is an important tool in determining whether an invention is patentable subject matter as a process.

In an opinion much longer than the Opinion of the Court, and concurring in the judgment, Justice Stevens, joined by Justices Ginsburg, Breyer and Sotomayor would have resolved the case on the grounds that business methods are per se unpatentable.

Practically speaking, Bilski v. Kappos has done little to change the law concerning business method patents. Yet, it may have important implications for patents claiming medical diagnostic methods. The Federal Circuit will now have to decide again its Prometheus and Classen cases in view of Bilski. The simultaneous remand of these two cases is particularly interesting because in Prometheus the Federal Circuit reversed the district court's holding that the medical diagnostic claims at issue were invalid. In contrast, Classen, upheld the district court's holding of invalidity. In each case, the Federal Circuit applied solely the machine or transformation test. In Prometheus, it found the claim to be a medical treatment method that passed the transformation prong of the test. In Classen, it found the medical diagnostic claims to fail both prongs of the test.

The Federal Circuit will find limited guidance in the Supreme Court's decision. In a non-majority portion of Justice Kennedy's opinion (not joined by Justice Scalia), it stated that "Section 101 is a ‘dynamic provision designed to encompass new and unforeseen inventions.' … A categorical rule denying patent protection for ‘inventions in areas not contemplated by Congresss … would frustrate the purposes of the patent law.'" It further stated "As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals." However, Justice Kennedy continued, "It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should or should not receive patent protection. … the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck."

In a majority portion of the Opinion of the Court (joined by Justice Scalia) it said "Rather than adopting categorical rules that might have wide-ranging and unforeseen impacts, the Court resolves this case narrowly on the basis of this Court's decisions in Benson, Flook, and Diehr, which show that petitioners' claims are not patentable processes because they are attempts to patent abstract ideas." All nine Justices agreed with this.

The Opinion of the Court concluded that "It may be that the Court of Appeals thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit's development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text."

Thus, the Opinion of the Court appears to tell the Federal Circuit to take other factors into account in determining patentable subject matter, without clearly stating what those factors should be.

Justice Stevens' opinion concurring in the judgment was primarily directed to proving that business methods are per se invalid. However, it did provide some insight into how these four justices might regard medical diagnostic test claims.

Justice Stevens observed that throughout the development of English and American patent law, processes for organizing human activity had never been considered patentable. It also was kinder to the machine or transformation test, stating "I understand the Court's opinion to hold only that the machine-or-transformation test remains an important test for patentability. Few, if any, processes cannot effectively be evaluated using these criteria.

This opinion also discussed the term "useful arts", as used in the Constitution to grant Congress the power to establish a patent system. "Numerous scholars have suggested that the term ‘useful arts' was widely understood to encompass the fields that we would now describe as relating to technology or ‘technological arts.'" It also reiterated that no one can patent laws of nature, natural phenomena and abstract ideas. "These ‘are the basic tools of scientific and technological work, … and therefore, if patented would stifle the very progress that Congress is authorized to promote."

Justice Stevens also addressed whether a patent monopoly is necessary to "motivate the innovation." "Although there is certainly disagreement about the need for patents, scholars generally agree that when innovation is expensive, risky, and easily copied, inventors are less likely to undertake the guaranteed costs of innovation in order to obtain the mere possibility of an invention that others can copy. Both common sense and recent economic scholarship suggest that these dynamics of cost, risk, and reward vary by the type of thing being patented. And the functional case that patents promote progress generally is stronger for subject matter that has ‘historically been eligible to receive the protection of our patent laws.'"

While joining in Justice Stevens' concurring opinion, Justice Breyer wrote a separate concurring opinion to "highlight the substantial agreement among many Members of the Court on many of the fundamental issues of patent law raised by this case." He concluded that "In sum, it is my view that, in reemphasizing that the "machine-or-transformation" test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test's usefulness nor to suggest that many patentable processes lie beyond its reach. Justice Scalia joined this portion of Justice Breyer's opinion, making it a majority view.

In view of the foregoing, the Federal Circuit's result in Prometheus seems rather safe. Claim 1 of the patent-in-suit was for:

A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder;

wherein the level of 6-thioguanine less than about 230 pmol per 8x10⁸ red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine less than about 400 pmol per 8x10⁸ red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

The Federal Circuit applied the machine or transformation test and found the claim to be patentable. "We conclude that the methods of treatment claimed in the patents in suit squarely fall within the realm of patentable subject matter because they ‘transform an article into a different state or thing,' and this transformation is ‘central to the purpose of the claimed process.' … The transformation is of the human body following administration of a drug and the various chemical and physical changes of the drug's metabolites that enable their concentrations to be determined." … "The asserted claims are in effect claims to methods of treatment, which are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition."

Since all nine Supreme Court Justices agreed that the machine or transformation test is important, it seems unlikely that any decision upholding the validity of a claim because it passes the test would be reversed by the Supreme Court. To the extent that some other considerations should be taken into account, the Federal Circuit already has the basis for that in its Prometheus opinion. "Prometheus contends that adoption of the district court's reasoning would have the effect of eliminating all medical treatment and diagnostic patents, when future medical advances will depend on optimizing treatment based on genetic or other testing." "A number of amici curiae filed helpful briefs on both sides. … They also argue that the future of personalized medicine will involve knowledge of the physiological or biological significance of biomarkers and how to use them in diagnostic or therapeutic procedures and that patents on those biomarkers should be granted.

Thus, in addition to applying the machine or transformation test, the court considered Justice Kennedy's concern about providing certainty about patentability in an emerging technology. It also considered Justice Stevens' comment about whether a patent monopoly is necessary to "motivate the innovation." Certainly, testing of the sort patented by Prometheus is both expensive to develop and easy to copy. Thus, it appears to be the sort of development the patent laws were intended to promote.

In addition, the patented invention in Prometheus clearly is not in the field of "processes for organizing human activity", but rather falls squarely within "relating to technology or ‘technological arts". Thus, it appears to be within the boundaries of the "useful arts" discussed in the Constitution.

Cases that have found a medical diagnostic claim to be invalid based solely upon the machine or transformation test may be slightly trickier. Classen is such a case. In a single paragraph non-precedential opinion, the Federal Circuit said, "In light of our decision in In re Bilski, … we affirm the district court's grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen's claims are neither ‘tied to a particular machine or apparatus" nor do they ‘transform a particular article into a different state or thing." We have been unable to locate any district court order finding the claims invalid, so the reasoning behind this finding is unknown.

Dr. Classen's U.S. Patent No. 5,723,283 was involved in the litigation. Claim 1 of the ‘283 patent recites:

A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, which comprises immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

The primary difference between this claim and the claim in Prometheus appears to be that the claim in Prometheus covers a method that has a therapeutic effect on the test subject, whereas claim 1 of the ‘283 patent does not. To the contrary, the intent of claim 1 of the ‘283 patent is to induce the chronic immune-mediated disorder in at least some of the treatment group animals to establish a link between the immunization schedule and the chronic immune-mediated disorder. Thus, the immunization steps and comparing steps are solely for the purpose of gathering data, and not for therapeutic effect.

There is no doubt that there is a transformative step involved, since the treatment animal is transformed by the immunization step from a healthy animal to an animal having the chronic immune-mediated disorder. In Prometheus, the court said "This transformation is central to the purpose of the claims, since the determining step is, like the administering step, a significant part of the claimed method of treatment." In contrast, the transformative immunization step of claim 1 of the ‘283 patent is performed solely for the purpose of generating data. If this is the basis for distinguishing between patentable subject matter and unpatentable subject matter, then purely diagnostic claims are unpatentable under a new or modified Bilski rule: an invention is patentable as a process only if "(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing, other than for the sole purpose of gathering data."

This new rule would render unpatentable any medical diagnostic test that is not integral with a treatment regimen. Nearly every diagnostic test will be transformative of one chemical or another, since this is the very basis for distinguishing between positive and negative results, as well as quantitative results. However, most diagnostic tests are designed to not transform the body, since this is generally regarded as an unwanted side effect.

Thus, this appears to be a case where the Federal Circuit's original Bilski rule is formally met, since the claimed method is transformative, but its sole purpose is gathering data. Perhaps this is the type of case that requires consideration of other factors.

First, is the claimed method just a natural phenomenon coupled with a data gathering step? No, it is not. Immunity is a natural phenomenon, but an immunization protocol does not take place without human intervention. The fact that it takes advantage of the natural phenomenon of immunity does not make it any less man made. In the same way, an invention that takes advantage of, say gravity or resistance would not be invalid. Nor does it remove from the public domain a fundamental tool of science.

Second, is whether a patent monopoly is necessary to "motivate the innovation." The medical diagnostics field appears to be important to the future of personalized medicine, where simple tests are performed on patients to help determine what course of treatment is most likely to be successful, thereby avoiding costly, unnecessary, and potentially dangerous procedures. However, the diagnostic methods can be very costly to develop. Once developed, they are equally easy to copy. In this sense, it appears that this is the type of technology that the patent laws were intended to promote.

Third, this is, in fact, technology. It is science. It is chemistry, or physics, or biology, or a combination of these. As such, it is clearly in the field "relating to technology or technological arts", not to an unrelated field such as "processes for organizing human activity." Thus it appears to be within the "useful arts" which the Constitution wished to promote.

Taken together, these considerations appear to support that medical diagnostic procedures that transform a chemical in the body in a manner that would not happen without human intervention, should be statutory patentable subject matter, even if they are performed solely for the purpose of generating data relating to the subsequent treatment of the patient.