Respondent's "machine system for automatic record-keeping of
bank checks and deposits," under which checks and deposits are
customer-labeled with code categories which are "read," and then
processed by a data processor, such as a programmable electronic
digital computer, having data storage files and a control system,
permitting a bank to furnish a customer with an individual and
categorized breakdown of his transactions during the period in
question,
held unpatentable on grounds of obviousness. 35
U.S.C. § 103. Pp.
425 U. S.
225-230.
502 F.2d 765, reversed and remanded.
MARSHALL, J., delivered the opinion of the Court, in which all
Members joined except BLACKMUN and STEVENS, JJ., who took no part
in the consideration or decision of the case.
Page 425 U. S. 220
MR. JUSTICE MARSHALL delivered the opinion of the Court.
Respondent has applied for a patent on what is described in his
patent application as a "machine system for automatic
record-keeping of bank checks and deposits." The system permits a
bank to furnish a customer with subtotals of various categories of
transactions completed in connection with the customer's single
account, thus saving the customer the time and/or expense of
conducting this bookkeeping himself. As respondent has noted,
the
"invention is being sold as a computer program to banks and to
other data processing companies so that they can perform these data
processing services for depositors."
Brief for Respondent 19A;
Application of Johnston, 502
F.2d 765 (CCPA 1974).
Petitioner and respondent, as well as various
amici,
have presented lengthy arguments addressed to the question of the
general patentability of computer programs.
Cf. Gottschalk v.
Benson, 409 U. S. 63
(1972). We find no need to treat that question in this case,
however, because we conclude that, in any event, respondent's
system is unpatentable on grounds of obviousness. 35 U.S.C. § 103.
Since the United States Court of Customs and Patent Appeals (CCPA)
found respondent's system to be patentable,
Application of
Johnston, supra, the decision of that court is accordingly
reversed.
I
While respondent's patent application pertains to the highly
esoteric field of computer technology,
Page 425 U. S. 221
the basic functioning of his invention is not difficult to
comprehend. Under respondent's system, a bank customer labels each
check that he writes with a numerical category code corresponding
to the purpose for which the funds are being expended. For
instance, "food expenditures" might be a category coded "123,"
"fuel expenditures" a category coded "124," and "rent" still
another category coded "125." Similarly, on each deposit slip, the
customer, again through a category code, indicates the source of
the funds that he is depositing. When the checks and deposit slips
are processed by the bank, the category codes are entered upon them
in magnetic ink characters, just as, under existing procedures, the
amount of the check or deposit is entered in such characters.
Entries in magnetic ink allow the information associated with them
to be "read" by special document-reading devices and then processed
by data processors. On being read by such a device, the coded
records of the customer's transactions are electronically stored in
what respondent terms a "transaction file." Respondent's
application describes the steps from this point as follows:
"To process the transaction file, the . . . system employs a
data processor, such as a programmable electronic digital computer,
having certain data storage files and a control system. In addition
to the transaction file, a master record-keeping file is used to
store all of the records required for each customer in accordance
with the customer's own chart of accounts. The latter is
individually designed to the customer's needs and also constructed
to cooperate with the control system in the processing of the
customer's transactions. The control system directs the generation
of periodic output
Page 425 U. S. 222
reports for the customer which present the customer's
transaction records in accordance with his own chart of accounts
and desired accounting procedures."
Pet. for Cert. 4A-5A.
Thus, when the time comes for the bank customer's regular
periodic statement to be rendered, the programmed computer sorts
out the entries in the various categories and produces a statement
which groups the entries according to category and which gives
subtotals for each category. The customer can then quickly see how
much he spent or received in any given category during the period
in question. Moreover, according to respondent, the system can
"[adapt] to whatever variations in ledger format a user may
specify." Brief for Respondent 66.
In further description of the control system that is used in the
invention, respondent's application recites that it is made up of a
general control and a master control. The general control directs
the processing operations common to most customers and is in the
form of a software computer program,
i.e., a program that
is meant to be used in a general purpose digital computer. The
master control, directing the operations that vary on an individual
basis with each customer, is in the form of a separate sequence of
records for each customer containing suitable machine instruction
mechanisms along with the customer's financial data. Respondent's
application sets out a flow chart of a program compatible with an
IBM 1400 computer which would effectuate his system.
II
Under respondent's invention, then, a general purpose computer
is programmed to provide bank customers with an individualized and
categorized breakdown of their transactions during the period in
question.
Page 425 U. S. 223
After reviewing respondent's patent application, the patent
examiner rejected all the claims therein. He found that
respondent's claims were invalid as being anticipated by the prior
art, 35 U.S.C. § 102, and as not "particularly pointing out and
distinctly claiming" what respondent was urging to be his
invention. § 112.
Respondent appealed to the Patent and Trademark Office Board of
Appeals. The Board rejected respondent's application on several
grounds. It found first that, under § 112, the application was
indefinite, and did not distinctly enough claim what respondent was
urging to be his invention. It also concluded that respondent's
claims were invalid under § 101 because they claimed nonstatutory
subject matter. According to the Board, computer-related inventions
which extend "beyond the field of technology . . . are
nonstatutory," Pet. for Cert. 31A.
See Application of
Foster, 58 C.C.P.A. (Pat.) 1001, 1004, 438 F.2d 1011, 1015
(1971);
Application of Musgrave, 57 C.C.P.A. (Pat.) 1352,
431 F.2d 882 (1970), and respondent's claims were viewed to be
"nontechnological." Finally, respondent's claims were rejected on
grounds of obviousness. 35 U.S.C. § 103. The Board found that
respondent's claims were obvious variations of established uses of
digital computers in banking and obvious variations of an
invention, developed for use in business organizations, that had
already been patented. Dirks, U.S. Patent No. 3,343,133.
The CCPA, in a 3-2 ruling, reversed the decision of the Board
and held respondent's invention to be patentable. The court began
by distinguishing its view of respondent's invention as a
"
record-keeping machine system for financial
accounts'" from the Board's rather negative view of the claims as
going solely to the "`relationship of
Page 425 U. S. 224
a bank and its customers.'" 502 F.2d at 770 (emphasis in CCPA
opinion). As such, the CCPA held, respondent's system was "clearly
within the `technological arts,'"
id. at 771, and was
therefore statutory subject matter under 35 U.S.C. § 101. Moreover,
the court held that respondent's claims were narrowly enough drawn
and sufficiently detailed to pass muster under the definiteness
requirements of § 112. Dealing with the final area of the Board's
rejection, the CCPA found that neither established banking practice
nor the Dirks patent rendered respondent's system "obvious to one
of ordinary skill in the art who did not have [respondent's]
specification before him." 502 F.2d at 772.
In order to hold respondent's invention to be patentable, the
CCPA also found it necessary to distinguish this Court's decision
in
Gottschalk v. Benson, 409 U. S. 63
(1972), handed down some 13 months subsequent to the Board's ruling
in the instant case. In
Benson, the respondent sought to
patent as a "new and useful process," 35 U.S.C. § 101, "a method of
programming a general purpose digital computer to convert signals
from binary-coded decimal form into pure binary form." 409 U.S. at
409 U. S. 65. As
we observed: "The claims were not limited to any particular art or
technology, to any particular apparatus or machinery, or to any
particular end use."
Id. at 64. Our limited holding,
id. at
409 U. S. 71,
was that respondent's method was not a patentable "process" as that
term is defined in 35 U.S.C. § 100(b). [
Footnote 1]
The Solicitor of the Patent Office argued before the CCPA that
Benson's holding of nonpatentability as to the computer
program in that case was controlling here.
Page 425 U. S. 225
However, the CCPA concluded that, while
Benson involved
a claim as to the patentability of a "process," respondent in this
case was advancing claims as to the patentability of an "apparatus"
or "machine" which did not involve discoveries so abstract as to be
unpatentable:
"'The issue considered by the Supreme Court in
Benson
was a narrow one, namely, is a formula for converting binary coded
decimal numerals into pure binary numerals by a series of
mathematical calculations a patentable
process?' (Emphasis
added.) [Quoting
In re Christensen, 478 F.2d 1392, 1394
(CCPA 1973).]"
"[T]he instant claims in
apparatus form do not claim or
encompass a law of nature, a mathematical formula, or an
algorithm."
502 F.2d at 771 (emphasis in CCPA opinion). Having disposed of
the Board's rejections and having distinguished
Benson to
its satisfaction, the court held respondent's invention to be
patentable. The Commissioner of Patents sought review in this
Court, and we granted certiorari. 421 U.S. 962 (1975). We hold that
respondent's invention was obvious under 35 U.S.C. § 103, and
therefore reverse.
III
As a judicial test, "invention" --
i.e., "an exercise
of the inventive faculty,"
McClain v. Ortmayer,
141 U. S. 419,
141 U. S. 427
(1891) -- has long been regarded as an absolute prerequisite to
patentability.
See, e.g., Keystone Driller Co. v. Northwest
Engineering Corp., 294 U. S. 42
(1935);
Sharp v. Stamping Co., 103 U.
S. 250 (1880);
Hotchkiss v.
Greenwood, 11 How. 248 (1851). However, it was only
in 1952 that Congress, in the interest of "uniformity and
definiteness," articulated the requirement in a statute,
Page 425 U. S. 226
framing it as a requirement of "nonobviousness." [
Footnote 2] Section 103 of the Patent Act of
1952, 35 U.S.C. § 103, provides in full:
"A patent may not be obtained though the invention is not
identically disclosed or described as set forth in section 102 of
this title, if the differences between the subject matter sought to
be patented and the prior art are such that the subject matter as a
whole would have been obvious at the time the invention was made to
a person having ordinary skill in the art to which said subject
matter pertains. Patentability shall not be negatived by the manner
in which the invention was made."
This Court treated the scope of § 103 in detail in
Graham v.
John Deere Co., 383 U. S. 1 (1966).
There, we held that § 103 "was not intended by Congress to change
the general level of patentable invention," but was meant
"merely as a codification of judicial precedents . . . with
congressional directions that inquiries into the obviousness of the
subject matter sought to be patented are a prerequisite to
patentability."
Id. at
383 U. S. 17.
While recognizing the inevitability of difficulty in making the
determination in some cases, we also set out in
Graham,
supra, the central factors relevant to any inquiry into
obviousness: "the scope and content of the prior art," the
"differences between the prior art and the claims at issue," and
"the level of ordinary skill in the pertinent art."
Ibid.
Guided by these factors, we proceed to an inquiry into the
obviousness of respondent's system.
As noted,
supra at
425 U. S. 223,
the Patent and Trademark Office Board of Appeals relied on two
elements in the prior art in reaching its conclusion that
respondent's
Page 425 U. S. 227
system was obvious. We find both to be highly significant. The
first was the nature of the current use of data processing
equipment and computer programs in the banking industry. As
respondent's application itself observes, that use is
extensive:
"Automatic data processing equipments employing digital
computers have been developed for the handling of much of the
record-keeping operations involved in a banking system. The checks
and deposit slips are automatically processed by forming those
items as machine-readable records. . . . With such machine systems,
most of the extensive data handling required in a bank can be
performed automatically."
Pet. for Cert. 3A.
It is through the use of such data processing equipment that
periodic statements are ordinarily given to a bank customer on each
of the several accounts that he may have at a given bank. Under
respondent's system, what might previously have been separate
accounts are treated as a single account, and the customer can see
on a single statement the status and progress of each of his
"subaccounts." Respondent's "category code" scheme,
see
supra at
425 U. S. 221,
is, we think, closely analogous to a bank's offering its customers
multiple accounts from which to choose for making a deposit or
writing a check. Indeed, as noted by the Board, the addition of a
category number, varying with the nature of the transaction, to the
end of a bank customer's regular account number, creates, "in
effect, a series of different and distinct account numbers. . . ."
Pet. for Cert. 34A. Moreover, we note that banks have long
segregated debits attributable to service charges within any given
separate account, and have rendered their customers subtotals for
those charges.
The utilization of automatic data processing equipment in the
traditional separate account system is, of course,
Page 425 U. S. 228
somewhat different from the system encompassed by respondent's
invention. As the CCPA noted, respondent's invention does something
other than "provide a customer with . . . a summary sheet
consisting of net totals of plural separate accounts which a
customer may have at a bank." 502 F.2d at 771. However, it must be
remembered that the "obviousness" test of § 103 is not one which
turns on whether an invention is equivalent to some element in the
prior art, but rather whether the difference between the prior art
and the subject matter in question "is a difference sufficient to
render the claimed subject matter unobvious to one skilled in the
applicable art. . . ."
Id. at 772 (Markey, C.J.,
dissenting).
There is no need to make the obviousness determination in this
case turn solely on the nature of the current use of data
processing and computer programming in the banking industry. For,
as noted, the Board pointed to a second factor -- a patent issued
to Gerhard Dirks -- which also supports a conclusion of
obviousness. The Dirks patent discloses a complex automatic data
processing system using a programmed digital computer for use in a
large business organization. Under the system, transaction and
balance files can be kept and updated for each department of the
organization. The Dirks system allows a breakdown within each
department of various areas,
e.g., of different types of
expenses. Moreover, the system is sufficiently flexible to provide
additional breakdowns of "sub-areas" within the areas, and can
record and store specially designated information regarding each of
any department's transactions. Thus, for instance, under the Dirks
system, the disbursing office of a corporation can continually be
kept apprised of the precise level and nature of the corporation's
disbursements within various areas or, as the Dirks patent terms
them, "Item Groups."
Page 425 U. S. 229
Again, as was the case with the prior art within the banking
industry, the Dirks invention is not equivalent to respondent's
system. However, the departments of the business organization and
the areas or "Item Groups" under the Dirks system are closely
analogous to the bank customers and category number designations
respectively under respondent's system. And each shares a similar
capacity to provide breakdowns within its "Item Groups" or category
numbers. While the Dirks invention is not designed specifically for
application to the banking industry, many of its characteristics
and capabilities are similar to those of respondent's system.
Cf. Graham, 383 U.S. at
383 U. S. 35.
In making the determination of "obviousness," it is important to
remember that the criterion is measured not in terms of what would
be obvious to a layman, but rather what would be obvious to one
"reasonably skilled in [the applicable] art."
Id. at
383 U. S. 37. In
the context of the subject matter of the instant case, it can be
assumed that such a hypothetical person would have been aware both
of the nature of the extensive use of data processing systems in
the banking industry and of the system encompassed in the Dirks
patent. While computer technology is an exploding one, "[i]t is but
an evenhanded application to require that those persons granted the
benefit of a patent monopoly be charged with an awareness" of that
technology.
Id. at
383 U. S. 19.
Assuming such an awareness, respondent's system would, we think,
have been obvious to one "reasonably skilled in [the applicable]
art." There may be differences between respondent's invention and
the state of the prior art. Respondent makes much of his system's
ability to allow "a large number of small users to get the benefit
of large-scale electronic computer equipment and still continue to
use their individual ledger format and
Page 425 U. S. 230
bookkeeping methods." Brief for Respondent 65. It may be that
that ability is not possessed to the same extent either by existing
machine systems in the banking industry or by the Dirks system.
[
Footnote 3] But the mere
existence of differences between the prior art and an invention
does not establish the invention's nonobviousness. The gap between
the prior art and respondent's system is simply not so great as to
render the system nonobvious to one reasonably skilled in the art.
[
Footnote 4]
Accordingly, we reverse the Court of Customs and Patent Appeals
and remand this case to that court for further proceedings
consistent with this opinion.
So ordered.
MR. JUSTICE BLACKMUN and MR. JUSTICE STEVENS took no part in the
consideration or decision of this case.
[
Footnote 1]
"The term 'process' means process, art or method, and includes a
new use of a known process, machine, manufacture, composition of
matter, or material."
35 U.S.C. § 100(b).
[
Footnote 2]
S.Rep. No.1979, 82d Cong., 2d Sess., 6 (1952); H.R.Rep. No.1923,
82d Cong., 2d Sess., 7 (1952).
[
Footnote 3]
The Dirks patent does allow
"the departments or other organizational users [
i.e.,
the analogues to bank customers under respondent's invention, to]
retain their authority over operative file systems,"
and indicates that "[p]rogramming is very easy, and different
programs are very easily coordinated."
[
Footnote 4]
While "commercial success without invention will not make
patentability,"
A&P Tea Co. v. Superemarket Corp.,
340 U. S. 147,
340 U. S. 153
(1950), we did indicate in
Graham v. John Deere Co.,
383 U. S. 1 (1966),
that "secondary considerations [such] as commercial success, long
felt but unsolved needs, [and] failure of others" may be relevant
in a determination of obviousness.
Id. at
383 U. S. 17.
Respondent does not contend, nor can we conclude, that any of these
secondary considerations offer any substantial support for his
claims of nonobviousness.