What Is Patentable Subject Matter?

Patentable subject matter, also known as patent eligibility, refers to an invention that meets the standards set forth by the United States Patent and Trademark Office (USPTO) to receive patent protection. Statutory law, per §35 U.S.C. 101, defines patentable subject matter in the following way: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof may obtain a patent therefor, subject to the conditions and requirements of this title."

To qualify as patentable subject matter, an invention has to satisfy two criteria: one statutory, one judicial. First, as §35 U.S.C. 101 requires, the subject matter of the invention must fall into the category of process, machine, manufacture, or composition of matter. Second, that subject matter cannot fall within an exception recognized by the courts; namely, laws of nature, physical phenomena, and abstract ideas. 

Examples of patentable subject matter include:

  • Business methods and processes
  • Computer hardware
  • Machines
  • Sports equipment
  • Electronics
  • Pharmaceuticals
  • Fabrics and fabric designs
  • Computer software that produces a "useful, concrete, and tangible" result

Patent Terminology

To understand what is and is not patentable subject matter, you first have to know what certain key terms used in the statutory language mean:

  • Composition of matter: a patentable mixture of material made up of two or more different substances; a product that consists of two or more difference substances, whether they resulted from a chemical or mechanical mixture, and whether those substances are liquids, gases, solids, or powders.
  • Design patents: apply to purely ornamental designs that do not have functions. To get this type of patent, applicants don't have to show that the invention has utility. In fact, the the design must be non-functional. Design patents are easier to get than utility patents, don't extend as much protection (another design must be essentially identical to be found to infringe), and last only 14 years. 
  • Dominant vs. subservient patent: applicants can also secure patent rights in "any new and useful improvement" of an existing invention. The existing patent for the original invention is called the dominant patent, while the patent for the improvement is called the subservient patent.
  • Plant patents: apply to sexually reproduced plant seeds and asexually reproduced plants. Typically, this material results from scientific experiments that combine different species of plants to create new seeds and plants. These last 17 years and are the least commonly granted type of patents.
  • Process: a method or series of steps designed to achieve an end result, and that end result does not have to be an invention in and of itself. In other words, the process can be the invention, not the end result.
  • Machine: a device made up of moving or fixed pieces that work together to perform a task.
  • Manufacture: something that a human or a machine built, to be distinguished from something produced by nature. An example might be a desk or a vehicle as opposed to crude oil.
  • Utility patent: a patent granting rights in a process, machine, manufacture, or composition of matter invention. Utility patents offer the most powerful legal protection, but they're also the most difficult patents to secure. They stay in force 20 years from the date you file.

Products of Nature

The Plant Patent Act of 1930 and Plant Variety Protection Act of 1970 made new inventions through genetically engineering plant life patentable. However, this does not exclude other genetically engineered transformations of natural material. In the Diamond case, Congress established a distinction not between living an inanimate things, but between "products of nature, whether living or not, and human-made inventions." Diamond at 313.

As a result, even though products of nature aren't patentable, your claim won't be rejected automatically if you seek to patent a living thing, such as a vegetable or mineral. Products of nature that humans have modified that serve a different function from their naturally occurring form and that have characteristics different from that original form can be patented.

Why Is Patentable Subject Matter Important?

Unless your invention qualifies as patentable subject matter by the USPTO's and the courts' definitions, your patent application will get rejected. Qualifying as patentable subject matter means your invention has met the five basic criteria for patent eligibility, which are:

  1. The invention must meet Congress' definition of patentable subject matter, which is any "new and useful" machine, manufacture, process, or composition of matter. No patents on products or laws of nature, such as sunlight, for example.
  2. The subject matter must be useful, or offer "utility." This applies only to utility patents, however. Design patents and plant patents are exempt.
  3. The invention must be new, or "novel."
  4. The invention can't be obvious, which means its purpose can't simply be the logical extension of something that is already patented. This requirement is referred to as "non-obviousness."
  5. The inventor can't disclose the invention to the public before filing the application for the patent. In other words, the patent must be a secret at the time of filing.

Judicial Exceptions and Limitations

Remember that even if an invention makes it past the statutory standards for patent eligibility, there are still judicial hurdles to overcome. In 1980, in the case Diamond v. Chakrabarty, the Supreme Court reiterated the following judicial exceptions to patentable subject matter:

  • Laws of nature (e.g., naturally occurring correlations, such as the relationship to internal body temperature to ambient skin temperature according to Exergen Corp v. Brooklands Inc.)
  • Natural or physical phenomena (e.g., wind)
  • Abstract ideas (e.g., mental processes, such as a mathematical algorithm)

The Court first established the laws of nature exception in the Morse case of 1854, in which the inventor wanted a patent both for the electro-magnetic telegraph and electro-magnetism. The Court granted the patent for the telegraph but denied patent protection for electro-magnetism itself, as it was simply a law of nature rather than a novel invention. The Court reasoned that granting patents in laws of nature would actually chill invention rather than encourage it.

Likewise, products of nature are also not patentable subject matter, but there are exceptions to this exception. For example, although you wouldn't be able to secure a patent on naturally occurring bacteria, the USPTO has granted patents for man-made bacteria because it is a non-naturally occurring composition of matter. Similarly, products of nature that have been modified by humans, such as genetically engineered strains of corn, may be patented because they have characteristics that differentiate them from naturally occurring corn.

The Machine-or-Transformation Test

As applied to processes, the test for patentable subject matter was initially the machine-or-transformation test, per the Bilski decision. That test deemed a process patent-eligible if and only if it was: 1) tied to a particular machine or apparatus, or 2) transformed a particular article into a different state or thing. Recent case law in the Federal Circuit, however, has strayed from the machine-or-transformation test, finding the test ill-suited to the inventions of the Information Age. For example, the court in Ultramercial v. Hulu (2011) applied a different test to find the claims involved to be patent-eligible. 

Patentable Subject Matter and the Alice Decision

The Supreme Court handed down one of its most controversial patent decisions in 2014 in the Alice Corporation v. CLS Bank International case. In sum, the Court found that patent claims must be assessed for whether they are too "abstract." If they are, the claim then needs to be evaluated to determine whether it involves "significantly more" than an abstraction. The problem with the decision, however, is that the Supreme Court declined to define the terms "abstract" and "significantly more," which left a lot of ambiguity for the Federal Circuit to clear up.

The controversial aspect of Alice was that the Court essentially took aim business and software method inventions, requiring an added level of scrutiny. Since the decision, more than 15,000 patent claims have been thrown out under Section 101 of the U.S.C., and the majority of those fall into the business and software method category. Additionally, in some business method art areas, the rejection rate by the USPTO since Alice is over 90 percent.

Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012)

Mayo is a recent patent case that addressed the patentability of natural principles. According to the Court's definition, a natural principle is a function of nature that occurs without human intervention. For instance, the fact that sunlight has disinfecting properties is a natural principle. The association between high blood glucose levels and diabetes is also a natural principle.

Any correlation that happens when a man-made substance, like a pharmaceutical, interacts with a natural substance, like human blood, also qualifies as a natural principle. This is because although it takes human intervention to trigger the correlation — administering the drug — the correlation still happens independent of human action.

Credit Acceptance Corp. v. Westlake Services (2017) and Covered Business Methods

The Credit Acceptance Corp. (CAC) case was a major case out of the Federal Circuit court in 2017 that addressed covered business methods (CBMs) as patentable subject matter. In this case, CAC owned a patent that included a system and a methods claim aimed at providing financing for enabling a customer to buy a product chosen from a product inventory maintained by dealers.

The invention in this case concerned maintaining the database of each dealer's inventory, collecting financing information from customers, and offering a financing package to the dealer for every product in its inventory. The claims in this case involved the application of these steps with elements like a "user terminal," a "server," and a "database." Ultimately, the Court upheld the decisions of the Patent Trial and Appeal Board that these claims were patent-ineligible subject matter.

To reach that conclusion, the Court applied the two-step analysis set forth in the Alice and Mayo cases:

  1. They first determined whether the claims were directed to an abstract idea. The Court here decided that the claims were directed to "processing an application for financing a purchase," which qualified as an abstract idea by their reasoning.
  2. Because the Court did find that the claims were directed to an abstract idea, so they moved on to the second prong of the test: the inventive concept search. This step involves looking for an inventive concept, or an element that is enough to ensure that the patent in practice results in substantially more than a patent upon the ineligible concept by itself. 

Research Corp. Techs v. Microsoft Corp. (2010)

The Court in this case ruled that patentable subject matter should be decided on the basis of its abstractness. The Court did not apply the machine-or-transformation test here. The Court didn't define the word "abstract" except to say that, one, abstractness was a disqualifying characteristic, and two, that it "should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act."

Association for Molecular Pathology v. PTO (2011)

The Court found that some claims don't contain patentable subject matter because they are directed to "abstract mental processes" and they fail the machine-or-transformation test. The claim at issue in the case analyzed or compared a patient's BRCA sequence with the wild-type, or normal, sequence to determine whether cancer-predisposing mutations were present.

Cybersource Corp. v. Retail Decisions, Inc. (2011)

In the Molecular Pathology case, the Court hinted at an old rule called the mental steps doctrine, and the Cybersource case officially revived it. This case declared any methods that can be performed mentally to be unpatentable. In other words, any claims that are essentially human mental work are abstract ideas and thus not patentable subject matter. The claim at issue in this case, which was denied patent protection, was a method to detect fraud in credit card transactions that involved processes like looking at old Internet addresses used by the consumer.

Differences in Canadian Patent Law

If you're interested in patenting your invention in Canada as well as the U.S., you should be aware that Canada's patent laws have several slight differences in the following categories:

  1. Living matter. Single-cell life forms that are new, useful, and inventive can be patented. Higher life forms, such as plants, animals, seeds, and fungi, cannot be patented. But applicants may be able to patent a process for creating a higher life form if the process demands substantial technical human intervention and is not a natural biological process.
  2. Medical treatments. A surgical or therapeutic process or method isn't patentable. Methods of diagnosis, if they don't contain therapeutic or surgical steps, may be patented. In Canada, medical treatment method claims are converted to Swiss-style and German-style use claims, in which case they are patentable.
  3. Scientific principles or abstract theorems. Math formulas, abstract theories, algorithms, and scientific principles are not patentable in Canada, just as in the U.S.
  4. Computer implemented inventions. Software patents can be difficult to obtain in Canada just as in the U.S. If an inventor's claim contains only code listings, it will be rejected.
  5. Games. A game-playing method with a gaming article or apparatus can't be patented unless the article or apparatus is inventive and new, or the article or apparatus is used for a new and non-analogous purpose.
  6. Business methods. This area of case law is still evolving in Canada. The current Commissioner of Patents is against them, but a major Federal Court decision in Amazon's one-click checkout case ruled that they are patentable under Canadian law. However, the Commissioner appealed this decision, so the future patentability of business methods remains unclear.

Frequently Asked Questions

  • What is a "novel" invention?

The novelty requirement for patentable subject matter essentially means that the invention can't already exist in the U.S. or elsewhere. The invention can't be known or used by someone in this country, and it can't be patented or explained in a publication in the U.S. or another country prior to the date of the patent application.

The USPTO also has something called the "one-year rule," which will deny an invention patent protection if it has been described in a printed publication, was in public use, or was on sale in any country more than one year before the date of the patent application. Because of this rule, inventors risk destroying the novelty of their inventions by delaying their applications.

  • What does "non-obvious" mean for patentable subject matter?

The test the USPTO will apply to determine whether an invention is "non-obvious" is asking whether, given what patented inventions already exist, is this invention an obvious next step? If it's just a combination of several existing patents, it will be deemed "obvious" and denied patent protection.

To make this decision, the USPTO looks at "prior art," meaning the state of technological knowledge prior to the patent application, to evaluate whether the invention is "obvious to a person having ordinary skill in the art." To be deemed "non-obvious," the USPTO must find an inventive leap between prior art and the new invention.

  • What gives an invention "utility" or usefulness?

As previously stated, utility patents have to show that they are useful in the present, not simply potentially useful. For example, you won't be awarded a patent for a drug that has no empirical data to support its effectiveness because it would then lack utility.

If you need help determining whether your invention qualifies as patentable subject matter, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top five percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard and Yale, average 14 years of real-world legal experience, and have worked with or on behalf of impressive companies like Google, Menlo Ventures, and Airbnb.