Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

All of the judges recognized that the test for patent eligibility under section 101 should be “a consistent, cohesive, and accessible approach” that provides “guidance and predictability for patent applicants and examiners, litigants, and the courts.” However, the judges hotly disagree as to the pathway that will lead to that result.

... simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility.... At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility. In short, the requirement for computer participation in these claims fails to supply an “inventive concept” that represents a nontrivial, nonconventional human contribution or materially narrows the claims relative to the abstract idea they embrace.

Opinion for the court filed PER CURIAM.

Concurring opinion filed by LOURIE, Circuit Judge, in which DYK, PROST, REYNA, and WALLACH, Circuit Judges, join.

Concurring-in-part and dissenting-in-part opinion filed by RADER, Chief Judge, LINN, MOORE, and O’MALLEY, Circuit Judges, as to all but part VI of that opinion. RADER, Chief Judge, and MOORE, Circuit Judge, as to part VI of that opinion.

Dissenting-in-part opinion filed by MOORE, Circuit Judge, in which RADER, Chief Judge, and LINN and O’MALLEY, Circuit Judges, join.

Concurring-in-part and dissenting-in-part opinion filed by NEWMAN, Circuit Judge.

Dissenting opinion filed by LINN and O’MALLEY, Circuit Judges.

Additional reflections filed by RADER, Chief Judge.

So in April, 1790, the first Congress enacted the first Patent Act. Over the next two centuries, the Act was amended and strengthened regularly, because successive Congresses observed industrialization and economic growth all around them, as under the Founders' system, the United States went from importing nearly all manufactured goods to itself manufacturing all the products it needed and prospering as a major net exporter.

Within just a little over one hundred years, America surpassed all other nations in wealth and technology, partly because of its strong patent system, aided by wide oceans, abundant natural resources, and universal public education. Throughout the 19th century American inventors outpaced their counterparts elsewhere. During the 20th century, the American patent system helped stimulate the computer revolution as well as astonishing advances in medicine, including creation of whole new fields, such as bio-technology. After a slump in the 1970s, when Japan replaced America as the leading maker of consumer electronics, in the last two decades of the century our nation regained its rapid growth and technological leadership.

Ironically, criticism of patents and especially of the U. S. Patent and Trademark Office is peaking just as an array of reforms are taking hold. Over the past nearly four years the extraordinary leadership of former IBM executive David Kappos has greatly upgraded PTO operations. The courts, too, have instituted reforms in damages and other areas of controversy. Congress has responded by enacting the America Invents Act, which after a decade of neglect and fee diversion finally has provided the PTO with the resources it needs. The AIA also launched a Patent Pilot Program to have volunteer judges in over a dozen districts largely specialize in managing such cases. And, the private sector has stepped in to help train patent examiners in the newest technologies. In light of all this, now is the time to rely more, not less, on the American Patent System.

Nevertheless, some commentators suggest excluding whole business sectors, such as software, from patent eligibility and greatly shortening the patent term for other technologies. A few go so far as to say that only pharmaceutical firms really need patent protection. But the behavior of hundreds of companies in dozens of technologies suggests otherwise. Witness IBM: for the past 20 consecutive years it has received more U.S. patents than any other company in the world. Examples of other companies that rely on patents include Microsoft, General Electric, General Motors, Caterpillar, DuPont and Procter & Gamble. Ignoring such facts, certain commentators even argue that patents deter more innovation than they promote.

"OK, maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

Yet, with many corporations and banks flush with cash reserves and pension and private equity funds seeking places to invest, now should be the era of increased investment in innovation, the country’s best hope for creating new wealth and new jobs. Instead, such investments lag. What, then, is needed to produce the needed private investment? Adequate incentives, for such investments are inherently risky. Slack consumer demand in a continuing recession is part of the problem, but so is the inadequate strength of patents. Obtaining and enforcing them remains far too slow, costly and cumbersome. Still worse, the uncertain scope of patents and the unpredictability of infringement and remedies outcomes inhibit business leaders who need certainty and predictability.

Most informed persons believe, correctly, that innovation holds the key to future prosperity. What we need is a stronger, faster, fairer patent system with quality patents and predictable protections. The issue is whether companies can look beyond short-term earnings and stock prices to also focus on the company’s long-term health and on the needs of the American economy, American communities and American workers.

Simple economics makes clear that, if patent protection for software were curtailed, the adverse consequences would be swift and severe. With less profit to capture from the commercialization of the fruits of research and development, businesses would divert their resources into other ventures, and software development would suffer. That would have a ripple effect on productivity across the entire economy. Advanced software allows factory workers to be more precise, cars more fuel efficient, and healthcare more effective. Any new obstacles to software development would carry a penalizing multiplier effect that could threaten the continued technological advantage of the United States. For these reasons, “[d]iscrimination against a form of innovation that is increasingly critical to technological advancement, indeed that in many areas dominates technological advancement, makes no sense.”

...the heavy load of patent cases on the court's docket means that the judges of the Federal Circuit are constantly interacting with patent lawyers. In addition to hearing their arguments in the courtroom, they read the same patent law publications as the lawyers, hire young patent lawyers to clerk for them, and are invited to speak at events organized by the patent bar.

Moreover, the prestige of the Federal Circuit itself is directly tied to the prominence of patent law in the American legal system. If the Federal Circuit had followed the stricter rules in place before the court was created, patent law might have remained a legal backwater, receiving little attention from either the legal profession or the general public. That, of course, would have made the Federal Circuit a less prestigious place to work.

[....] patent appeals are exclusively heard in DC by judges who live and breathe patent law. Unsurprisingly, this leads to insular thinking. For example, when we interviewed Paul Michel, who served as the Federal Circuit's chief judge from 2004 to 2010, he didn't seem to understand the problems facing small software companies. "If software is less dependent on patents, fine then. Let software use patents less as they choose," he said, seemingly oblivious to the fact that software companies don't have the option to opt out of patent troll lawsuits.

This dismissive attitude toward Supreme Court precedents apparently survives to this day among patent lawyers. In the wake of this year's decision limiting patents on the practice of medicine, patent attorney Gene Quinn wondered, "How long will it take the Federal Circuit to overrule this inexplicable nonsense?" Obviously, the Federal Circuit can't "overrule" a Supreme Court decision. But with enough persistence, it can, and often does, subvert the principles enunciated by the nation's highest court. And when it does so, it almost always works in the direction of making patents easier to obtain and enforce.

The consolidation of the patent jurisdiction in a single appeals court has also deprived the judicial system of valuable viewpoint diversity. Consider Judge Richard Posner of the Seventh Circuit Court of Appeals. This summer, he threw out the entire patent lawsuit between Apple and Motorola, arguing that the patent system had descended into "chaos." Posner was able to hear the case because he was temporarily filling in as a trial court judge, but the Federal Circuit—not his own Seventh Circuit—will hear appeals in the case.

Under the pre-1982 judicial structure, Posner and his colleagues on the Seventh Circuit Court of Appeals would have heard appeals in some of the nation's patent lawsuits. If his comments in the Apple/Motorola case are any indication, Posner would sharply disagree with some of the Federal Circuit's precedents. This kind of disagreement among appeals courts, known in legal jargon as a "circuit split," would signal the Supreme Court that it needed to step in and resolve the dispute.

Posner's skeptical view of the patent system may be explained by the fact that he's an academic as well as a judge. This background may have exposed him to academic criticisms of current patent jurisprudence that aren't as well known to other judges. Similarly, if the Ninth Circuit Court of Appeals (based in San Francisco) were allowed to hear patent appeals, some of its judges might share Silicon Valley's skeptical attitude toward software patents. Such dissenting views would provide balance to the Federal Circuit's pro-patent rulings and give the Supreme Court the raw material it needs to fashion a sensible body of patent law.

The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did. It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it. When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions. But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Su-preme Court concerning the proper interpretation of those acts.

One has to imagine that if people close to Michel—say, a son who was trying to start a software company—were regularly getting hit by frivolous patent lawsuits, he would suddenly take the issue more seriously. But successful software entrepreneurs are a small fraction of the population, and most likely no judges of the Federal Circuit have close relationships with one. In contrast, every judge on the Federal Circuit knows numerous patent attorneys, so they’re well-attuned to the concerns and strongly pro-patent worldview of the patent bar.

While Epstein has done a lot of great scholarship, his “maximalist” approach to copyright and patent issues tends to underestimate the economic frictions introduced by these legal regimes. But there’s one exception: he has a clear understanding of the problems weakened fair use rights pose for documentary filmmakers. Why? Because his son is a documentary filmmaker who has experienced firsthand the difficulty of assembling the rights necessary to publish a documentary film.

The petition for a writ of certiorari is granted [G]. The judgment is vacated [V], and the case is remanded [R] to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

Some scholars have collected facts and figures. For example, a 2008 book by James Bessen and Michael Meurer attempted to compute the costs and benefits of the patent system to various industries. They found that benefits significantly exceeded costs for the pharmaceutical industry, but the costs of litigation exceeded the benefits of holding patents in many other industries. Their work suggests that the patent system has become a net disincentive to innovation in those industries. The problem was particularly severe in software.

Strangely, Michel singled out Bessen and Meurer's book as an example of a text that relied too much on anecdotes and not enough on data, declaring it "very disappointing." We pressed him on this. Michel conceded the problem was less that it was too anecdotal and more that he disagreed with the book's premise—that high litigation costs were a sign the patent system wasn't working.

Judge Michel seemed unaware of the depth of the software industry's dissatisfaction with the patent system. He suggested the patent system's critics were relatively marginal figures not representative of the views of the broader technology industry. And he didn't seem to understand the dynamics of the patent arms race currently affecting the software industry.

"If software is less dependent on patents, fine then. Let software use patents less as they choose," Michel said. "If other industries are terribly dependent on patents, then let's not wreck the system just because software people are unhappy."

Rader and Michel's perspectives are likely skewed by the fact they spent their time on the bench surrounded by patent lawyers (who by definition work with firms that have the resources to hire patent attorneys). For the typical software-producing firm, patent lawyers are simply too expensive. Most firms never get patents, and they typically settle patent claims rather than taking them to court. As a result, Judges Michel and Rader rarely hear from smaller firms for whom the patent system is nothing but a burden.

At the core of the '545 patent is the basic idea that one can use advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting through a sponsored message instead of paying money to download the media. This core principle, similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart, therefore, the patent does no more than disclose an abstract idea.

While machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age.... Technology without anchors in physical structures and mechanical steps simply defy easy classification under the machine-or-transformation categories.

Whether, or in what circumstances, a patent's general and indeterminate references to "over the Internet" or at "an Internet website" are sufficient to transform an unpatentable abstract idea into a patentable process for purposes of 35 U.S.C.

Because of the manner in which patent cases make their way from the PTO to the Federal Circuit, the PTO has a decided institutional interest in granting more patents than it should. And because of this same interaction, the Federal Circuit is engaged in an unwitting expansion of the patentability rules. The key lies with the asymmetric nature of appeals from the PTO to the Federal Circuit. When the PTO denies a patent application, the aggrieved applicant may appeal to the Federal Circuit. When the PTO grants a patent, however, there is no losing party to appeal--the victorious applicant merely walks away with its patent. That patent is unlikely ever to see the inside of a courtroom, given how few infringement lawsuits are litigated. Like most administrative agencies, the PTO wishes to avoid appeals and especially reversals. In order for the Agency to accomplish this, it need only err on the side of granting excessive numbers of patents--even invalid patents--for which there is no appeal. This desire to avoid litigation is a source of the invalid patents now being issued by the PTO in vast numbers--the patent system’s first problem.

The second problem, the ongoing expansion of the rules governing what types of inventions may be patented, stems from the PTO’s proclivity to grant any plausible patent. Because of the PTO’s efforts, the patent applications that the Agency denies will predominantly concern inventions that are unpatentable under current law. When a disappointed patent applicant appeals such an application to the Federal Circuit, that court has two options. It can reject the patent under existing law, preserving the law as it stands, or it can grant the patent under a new, more expansive understanding of what is patentable. The circuit denies most of these applications. But when the Federal Circuit eventually decides a case in favor of an applicant, it creates a new precedent that enlarges the scope of what may be patented. The process then repeats itself, with the PTO denying more boundary-pushing patent applications and the Federal Circuit being presented with further opportunities to expand the limits of patentability. The result is a natural inflationary pressure on the law, generated entirely by the types of cases that the PTO sends to the Federal Circuit.

Patent exhaustion does not bar an infringement action. Even if Monsanto’s patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence because once a grower, like Bowman, plants the commodity seeds containing Monsanto’s Roundup Ready technology and the next generation of seed develops, the grower has created a newly infringing article.

Taken together, these post-Bilski cases confuse, rather than clarify, the standard for impermissible abstraction. In four cases (Bilski, Ultramercial, Classen, and CyberSource), two patents were too abstract (patents for hedging risks and detecting credit card fraud) and two were not (patents for showing ads before copyrighted content and devising immunization schedules). For laypeople and attorneys alike, it is hard to understand why the latter two patents were any more concrete than the former. One might argue that the upheld patents required added complexity (computer programming and administering an immunization), but the abstract patents would likewise require additional steps to execute. What distinguishes those steps that are too abstract from those that are not?

It is undisputed that Myriad’s claimed isolated DNAs exist in a distinctive chemical form--as distinctive chemical molecules--from DNAs in the human body, i.e., native DNA. Native DNA exists in the body as one of forty-six large, contiguous DNA molecules. Each DNA molecule is itself an integral part of a larger structural complex, a chromosome. In each chromosome, the DNA molecule is packaged around histone proteins into a structure called chromatin, which in turn is packaged into the chromosomal structure....

Isolated DNA, in contrast, is a free-standing portion of a native DNA molecule, frequently a single gene. Isolated DNA has been cleaved (i.e., had covalent bonds in its backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule.

In this case, the claimed isolated DNA molecules do not exist as in nature within a physical mixture to be purified. They have to be chemically cleaved from their chemical combination with other genetic materials. In other words, in nature, isolated DNAs are covalently bonded to such other materials. Thus, when cleaved, an isolated DNA molecule is not a purified form of a natural material, but a distinct chemical entity. In fact, some forms of isolated DNA require no purification at all, because DNAs can be chemically synthesized directly as isolated molecules.

At the outset, it is important to identify the inventive contribution underlying Myriad’s patents. Myriad was not the first to map a BRCA gene to its chromosomal location. That discovery was made by a team of researchers led by Dr. Mary-Claire King.... And Myriad did not invent a new method of nucleotide sequencing. Instead, it applied known sequencing techniques to identify the nucleotide order of the BRCA genes. Myriad’s discovery of those sequences entailed difficult work, and the identified sequences have had important applications in the fight against breast cancer. But the discovery of the sequences is an unprotectable fact, just like Dr. King’s discovery of the chromosomal location of the BRCA1 gene.

Myriad is claiming the genes themselves, which appear in nature on the chromosomes of living human beings. The only material change made to those genes from their natural state is the change that is necessarily incidental to the extraction of the genes from the environment in which they are found in nature. While the process of extraction is no doubt difficult, and may itself be patentable, the isolated genes are not materially different from the native genes. In this respect, the genes are analogous to the “new mineral discovered in the earth,” or the “new plant found in the wild” that the Supreme Court referred to in Chakrabarty. It may be very difficult to extract the newly found mineral or to find, extract, and propagate the newly discovered plant. But that does not make those naturally occurring items the products of invention.

The same is true for human genes.

In court, parties have to prove their case by some "standard of proof." In almost all civil cases, the standard is "preponderance of the evidence" -- meaning it is more likely than not that the facts are true. When the question is invalidating a patent, however, the U.S. Court of Appeals for the Federal Circuit decided that a defendant trying to prove a patent invalid must do so by a higher standard than normal civil cases, that of "clear and convincing" evidence. "Clear and convincing" means that the facts are "highly probable," which is a much more difficult standard to meet when trying to invalidate a patent than just a preponderance.

The lesson here is that the creation of the Federal Circuit in the early 1980s was a mistake. Before Congress created the court to handle patent cases, patent appeals were handled by the same courts that handled other kinds of appeals. There tends to be a lot more diversity on the normal circuit courts, which helps the judges on the courts to have a better sense of perspective and not see every case as an opportunity to expand patenting. Perhaps more importantly, the competition among circuits made the Supreme Court's job a lot easier. If one circuit wandered off the reservation, other circuits would typically hand down decisions more consistent with Supreme Court precedent, producing what the lawyers call a "circuit split." That would serve as a signal that the Supreme Court needed to step in, and it allowed the high court to simply give its blessing to the circuit whose rulings were closer to the Supreme Court's own thinking. In contrast, the current setup forces the Supreme Court to do a lot of the heavy lifting itself, repeatedly reviewing and overruling Federal Circuit decisions in an effort to establish a better set of precedents. Congress should give the Supreme Court a hand by eliminating the Federal Circuit and restoring jurisdiction over patent appeals to the other circuits. The judges currently on the Federal Circuit should probably be re-assigned to the other circuits, where they can provide helpful advice on the nuances of patent law to their colleagues but won't have enough votes to continue indiscriminately expanding patent law.