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P's application seeks patent protection for a claimed invention that explains how buyers and sellers of commodities in the energy market can protect, or hedge, against the risk of price changes. Claim 1 describes a series of steps instructing how to hedge risk. Claim 4 puts the concept articulated in claim 1 into a simple mathematical formula. The patent examiner rejected the application, explaining that it “'is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.’” The Court of Appeals affirmed. The court held that “a claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” The court concluded this “machine-or-transformation test” is “the sole test governing § 101 analyses,” and thus the “test for determining patent eligibility of a process under § 101. Applying the machine-or-transformation test, the court held that P's application was not patent eligible. The Supreme Court granted certiorari.

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