U.S. Supreme Court in Bilski In Bilski v. Kappos, the U.S. Supreme Court decided the patentability of the Bilski patent application in issue, as well as addressed broader questions of whether business methods can be categorically excluded from patentability and how to determine the patentability of a "process" under 35 U.S.C. §101 of the United States Patent Act.
The claims in the Bilski patent application were generally directed to methods for managing investors' risk in a commodities market. The U.S. Patent Office argued before the Supreme Court that the claimed invention was not patentable because: 1) the claimed invention was not tied to a particular machine or did not transform an article to a different form or state; 2) the claimed invention involved a method of conducting business; and 3) the claimed invention was merely an abstract idea.
The Supreme Court accepted the final argument and rejected the claimed invention as being merely an abstract idea. The Court described the main claims as directed to the basic concept of hedging and commented that allowing the petitioners to patent risk hedging would preempt use of the approach in all fields, effectively granting a monopoly over an abstract idea.
On the broader issue of whether business methods were patentable, the Court found no statutory support for the contention that the term "process" in §101 categorically excludes business methods. Rather, the Court found support for the understanding that a business method is simply one kind of method that was, in some circumstances, patentable, and recognized the need to provide potential patent protection to new and emerging technologies. As a result, business methods are not precluded from patentability simply upon being categorized as business methods.
As for the appropriate test for determining the patentability of a process, the Supreme Court rejected the Court of Appeals' endorsement of the machine-or-transformation test as the exclusive test for the patentability of a process. It reasoned that to do so would improperly read limitations and conditions into patent laws which the legislature had not expressed. The Supreme Court held that while its previous decisions establish the machine-or-transformation test as a useful and important clue for determining whether some claimed inventions are processes under §101, it was not the sole test for deciding whether an invention was a patent-eligible process. Although the Supreme Court itself presented no alternative test for business method patents, it encouraged the Federal Circuit to develop a less extreme means of restricting business method patents through other limiting criteria that furthered the Patent Act's purposes and were not inconsistent with its text.
Subsequent to the Supreme Court's decision in Bilski, the United States Patent and Trademark Office issued a brief Memorandum providing interim guidance to patent examiners. The Patent Office acknowledged that in accordance with Bilski, the machine-or-transformation test was not the sole test for patent-eligibility of processes under §101, and that "the machineor- transformation test is a useful and important clue, an investigation tool, for determining whether some claimed inventions are processes under §101". In this regard, patent examiners are directed to examine pending and future patent applications for compliance with §101 using the existing guidelines concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under §101, and "[i]f a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under §101 unless there is a clear indication that the method is not directed to an abstract idea".
In view of this decision, the U.S. Supreme Court has concluded that business method patents are not excluded from patentability, and that the machine-or-transformation test is not the sole test for determining patentability of a process. While the Supreme Court has left the door open with respect to the patentability of business methods, patent applicants are well advised to review their applications to ensure that what they are attempting to patent is not merely an abstract concept or idea.
Technology Update edited by Robert Irani
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