Board of Patent Appeals and Interferences Case of Note: Ex Parte Lundgren

No “Technological Arts” Test to Determine Statutory Subject Matter Under 35 U.S.C. §101


In ex Parte Lundgren, Lundgren filed U.S. Patent Application No. 08/093,516 on July 16, 1993, claiming the benefit of a series of continuation applications going back to 1988 for a method of compensating a manager who exercises administrative control over operations of a privately owned firm in an oligopolistic industry comprising, inter alia, the step of transferring compensation to the manager.  The title of the application refers to a “Method and Apparatus,” but no apparatus is disclosed or claimed.

In prior Appeal No. 96-0519, the Board of Patent Appeals and Interferences reversed the examiner’s rejection of all of the claims under 35 U.S.C. §101 as being directed to non-statutory subject matter.  The Examining Corps filed a request for reconsideration and rehearing, listing the following two issues for reconsideration:

  1. Whether the invention as a whole is in the technological arts
  2. Assuming that the invention is in the technological arts, whether the claim transferring compensation to a manager is a practical application.

Lundgren filed a response to the Examining Corps’ request.  In a decision mailed on March 13, 2001, an expanded panel of the Board remanded the application to the examiner because the record did not reflect that the examiner had considered and evaluated Lundgren’s response, and because the Office of the Deputy Commissioner for Patent Examination Policy had requested that the application be remanded to the examiner so that issues regarding “technological arts” and “practical application” could be further considered.

In further prosecution, the examiner again rejected all of the claims as being directed to non-statutory subject matter under 35 U.S.C. §101, stating as follows:

both the invention and the practical application to which it is directed to be outside the technological arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.

The rejection was predicated on two assertions by the examiner—that the claims fail to produce a useful, concrete, and tangible result (later withdrawn by the Examiner), and that the claims are not limited to the technological arts as required by 35 U.S.C. §101.

Lundgren filed a second appeal to the Board, and an expanded panel of the Board heard oral argument on April 20, 2004.

In a rare precedential opinion issued in October 2005, a 3–2 majority consisting of Chief Administrative Patent Judge (APJ) Fleming, Vice Chief APJ Harkcom, and APJ Hairston reversed the examiner’s rejection of the claims as being directed to non-statutory subject matter under 35 USC 101 in an eight-page per curiam opinion.  The majority stated that the only issue for review in the appeal was, to use the examiner’s terminology, “whether or not claims 1, 2, 6, 7, 19-22, 32, and 35-40 are limited to the technological arts, as required by 35 U.S.C. § 101.”

The majority noted that claim 1 is directed to a process, one of the four statutory classes of subject matter listed in 35 U.S.C. § 101 which provides as follows:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain patent therefor, subject to the conditions and requirements of this title.

The majority acknowledged that the Supreme Court has “. . . recognized limits to § 101 and every discovery is not embraced within the statutory terms.  Excluded from such patent protection are laws of nature, physical phenomena and abstract ideas.”  Diamond v. Diehr, 450 U.S. 175, 185, 209 USPQ 1, 7 (1981).  The majority pointed out, however, that the examiner had not taken the position that claim 1 is directed to a law of nature, physical phenomena, or an abstract idea, the judicially recognized exceptions to date to 35 U.S.C. § 101, but that he had found a separate “technological arts” test in the law and had determined that claim 1 does not meet this separate test.  The majority pointed out that the examiner had found the separate “technological arts” test in In re Musgrave, 431 F.2d 882, 167 USPQ 280 (CCPA 1970); In re Toma, 575 F.2d 872, 197 USPQ 852 (CCPA 1978); and Ex parte Bowman, 61 USPQ2d 1669 (Bd. Pat. App. & Int. 2001) (non-precedential).

The majority then reviewed these three cases, and found that they did not support the examiner’s separate “technological arts” test, stating as follows:

Our determination is that there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under § 101.  We decline to create one.  Therefore, it is apparent that the examiner’s rejection can not be sustained.

The majority acknowledged APJ Barrett’s suggestion in his concurring-in-part and dissenting-in-part opinion that the Board enter a new ground of rejection of the claims under 35 U.S.C. § 101 as not being directed to statutory subject matter for different reasons than those expressed by the examiner.  However, the majority declined to do so because in their view the proposed new ground of rejection would involve development of the factual record, and thus they took no position in regard to the proposed new ground of rejection.  Accordingly, the majority reversed the decision of the examiner.

Strenuous Dissents Show Division On Board on What Constitutes Patentable Subject Matter

In a five-page dissenting opinion, APJ Jerry Smith took the position that the issue presented by the examiner was one of first impression, and disagreed with the majority’s apparent position that all categories of non-statutory subject matter have been established (i.e., laws of nature, physical phenomena, and abstract ideas).

APJ Smith warned the majority that their position that essentially anything that can be claimed as a process is entitled to a patent under 35 U.S.C. §101 “opens the floodgate for patents on essentially any activity which can be pursued by human beings without regard to whether those activities have anything to do with the traditional sciences or whether they enhance the technological arts in any manner.”  APJ Smith took the position that the appropriate forum for deciding the question at issue in this case is the federal judiciary, and urged that the examiner’s rejection be sustained so that the federal judiciary will have a chance to decide the question.  He also joined APJ Barrett in urging the Board to enter a new ground of rejection under 35 U.S.C. 101.

In a massive sixty-five-page single-spaced concurring-in-part and dissenting-in-part opinion, APJ Barrett agreed with the majority that there is no separate “technological arts” test.  However, in an exhaustive legal analysis of statutory subject matter reaching back to the British Statute of Monopolies of 1623, 21 Jac. 1, ch. 3., APJ Barrett vigorously dissented with virtually every other statement made by the majority and concluded that claim 1 is not directed to statutory subject matter under 35 U.S.C. § 101 for numerous other reasons, and urged that the Board enter a new ground of rejection under 35 U.S.C. § 101 for those reasons.

A copy of the case can be found at Ex parte Carl A. Lundgren, Appeal No. 2003-2088 (Bd. Pat. App. & Inter., heard April 20, 2004, decision issued October 2005) (precedential).


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