United States: Supreme Court Unanimously Rejects Bilski Patent Application But Narrowly Upholds Business Method Patents

The Bilski case presented the Supreme Court with an opportunity to eliminate business methods from the scope of patentable subject matter. Today, by a single vote, the Court declined to take that step. Even though the specific patent application before the Court was unanimously rejected, the boundaries of patent-eligible inventions remain uncertain.

Bilski and a co-inventor filed a patent application on a method for hedging against price changes in the energy market. After their application was rejected by the Patent and Trademark Office, the inventors appealed to the Court of Appeals for the Federal Circuit. The Federal Circuit announced en banc that the so-called "machine-or-transformation" test would henceforth be the sole test to determine whether a claimed process describes patentable subject matter. According to that test, a claim to a process can only be patentable if it recites a transformation of matter or is tied to a particular machine. While the test itself was not new—having been created many years earlier by the Supreme Court—it had never before been deemed the sole test that could be used. Bilski's claims failed the test, and were thus held unpatentable.

In today's decision, the Supreme Court unanimously agreed that the machine-or-transformation test is not the sole test for establishing whether a process describes patentable subject matter. The Court went out of its way to explain that this test does, in many instances, provide "an investigative tool" for determining patentability of certain processes. In sum, the machine or transformation test is a sufficient but not necessary condition for patentability.

Although all members of the Court ultimately agreed that Bilski's claims were unpatentable, the three separate opinions illustrate a court deeply divided over the issue of whether business method inventions as a whole should remain patentable. 

The Court's opinion, authored by Justice Kennedy, rejected the notion that methods of doing business are categorically excluded from the meaning of "process" under 35 U.S.C. § 101. Instead, the Court held that Bilski's claims were unpatentable because they were directed to an abstract idea—a long-recognized exclusion from what is patentable subject matter. Unfortunately, the Court provided no clear guidance as to how to determine whether a claim is merely an abstract idea. The Court expressly stated that it was not attempting to make any holding about whether certain "technologies from the Information Age should or should not receive patent protection." The Court observed that the modern age allows more and more people to innovate, thus posing a challenge for patent law to strike the balance between protecting inventors and avoiding inappropriate monopolies. "Nothing in this opinion should be read to take a position on where that balance ought to be struck."

On the other hand, Justice Stevens' concurring opinion attempted to do just that. Although concurring in the judgment, Justice Stevens, joined by Justices Ginsburg, Breyer and Sotomayor, took great issue with the Court's rationale, arguing instead that business methods should be unpatentable based on the intent of the Framers, and the history of British and American patent law.
Justice Breyer, joined in part by Justice Scalia, also wrote separately to underscore those topics upon which all the members of the Court could agree. Justice Breyer again took the opportunity, as he had previously in his LabCorp opinion, to refute the notion that patentability extends to "anything which produces a useful, concrete, and tangible result."

With the retirement of Justice Stevens, there are three justices—Ginsburg, Breyer and Sotomayor—on record as categorically opposing business method patents. The Court will inevitably agree to hear another challenge to business method patents at some future date. For the time being, however, a claim to a process—business or otherwise—that does not claim only an abstract idea, law of nature, or natural phenomenon remains within the scope of patentable subject matter.

Practical Implications

Businesses should continue to seek to protect innovations that are core to operations. In particular, business method patents should be described in a way that focuses on particular improvements and efficiencies in the performance of a business field, with specific connection to the "means" for implementing the business method, such as particular systems (e.g. computer systems, organizational structures, or the like). Companies with existing portfolios should audit their patents and identify those that are appropriate for reissue, and where necessary add limitations that identify particular means. For those business methods that are inherently practiced by a computer system, claim limitations reciting that the process is executed by a computer currently suffice before the USPTO, though the Office may issue new guidelines in view of today's decision. We expect to learn more about the USPTO's position in September, when the USPTO hosts its annual Business Methods Roundtable, at which Fenwick attorneys will be speaking on the Bilski decision.

The Court's reliance on the rule that abstract ideas are unpatentable subject matter is likely to not be at issue for life science patents. Rather, the issue faced by these patents is the law of nature exception that was at issue in LabCorp v. Metabolite, 548 U.S. 124 (2006), an issue not squarely addressed in Bilski. Rather, the question of preemption is most likely to govern which life science process inventions are within the ambit of Section 101. So long as a claim does not "wholly pre-empt" a basic law of nature, it should pass muster under Section 101.Of course, whether the assay-and-correlate-style LabCorp. claims (based on relationships between levels of physiologic substances) can be considered to pre-empt a law of basic law of nature remains unanswered. More clear, however, is the patentability of complex personalized medicine diagnostics that prognose risk or outcome based on a number of genetic or biological markers. Such methods do not preempt any basic law of nature because alternative predictive models can be developed using different sets of markers. Consequently, they should not be subject to Section 101 rejections under current law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
16 Nov 2018, Other, California, United States

Join leading dealmakers for a complimentary ​live video webcast panel on cross border M&A.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions