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Bilski Has Been Decided
Douglas A. Miro and Joel Felber - 6/28/2010
SUPREME COURT ISSUES RULING IN BILSKI v. KAPPOS: Court Affirms General Principle That Business Method Patents Are Patentable Subject Matter, But Struck Down Machine-Or-Transformation Test As The Sole Test For Determining Patentability of Business Methods.
On June 28, 2010, the U.S. Supreme Court issued its long awaited decision in Bilski v. Kappos. The decision left open the possibility of patent protection for processes and methods. The Court held that the “Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within the patentable subject matter under [the law] of §101.”
The Supreme Court’s ruling also struck down the CAFC holding that the machine-or-transformation test is “governing” and held that “there are reasons to doubt whether the [machine-or-transformation] test should be the sole criterion for determining the patentability of inventions in the Information Age.” The Court of Appeals for the Federal Circuit (“CAFC”) previously held that “[the] machine-or-transformation test, properly applied, is the governing test for determining patent eligibility of a process[.]” That test requires that any method or process be tied to a particular machine or transform matter from one physical state to another, in order to be eligible for patent protection.  
With regard to the specific facts in the case, the Court held that Bilski’s process was not “patentable.” The claims were held to be a “basic concept of hedging” and, in at least one dependent claim, was reduced to a “mathematical formula” which was deemed an unpatentable abstract idea.
The Court’s decision was provided in three parts: a majority opinion written by Justice Kennedy, a separate concurring opinion written by Justice Stevens (joined by Justice Ginsburg, Justice Breyer and Justice Sotomayor), and a third, partial concurring opinion written by Justice Breyer (joined by Justice Scalia). In the concurring opinion written by Justice Breyer, four general points were highlighted as agreed upon by the Justices. First, there are limits to patent eligibility, and not all methods and processes are patentable. Second, the machine-or-transformation test is “the clue” to the patentability of a process claim that does not include a machine. Third, the machine-or-transformation test is not the “sole” test for determining patentability. Fourth, anything that produces a “useful, concrete and tangible result” is not necessarily per se patentable. These four points provide a common connection between the respective justices’ positions in the case.
The Supreme Court decision may put at least a temporary cap on legal wrangling in connection with patenting inventions directed to business methods and computer software. Ostrolenk Faber expects the Court’s decision to be favorable for those inventors seeking to patent methods and processes, including software-related inventions. Even though the Supreme Court refused to adopt the machine-or-transformation test as the sole criterium for determining whether a process is eligible for patent protection, it did not “foreclose the [CAFC’s] development of other limiting criteria that further the purpose of the Patent Act and are not inconsistent with its text.” Thus, future cases are likely to arise that limit the eligibility for patent protection for certain inventions. At least for now, though, the Court declined to impose additional limitations on the Patent Act, and cited to its previous decisions, such as in Gottschalk v. Benson , Parker v. Flook and Diamond v. Diehr.  
Check back with Ostrolenk Faber’s web site for updates, such as how the Patent Office and the courts interpret the Supreme Court’s decision in Bilski v. Kappos. To see the full Decision: Click Here.