The US Supreme Court recently issued its long-awaited decision in the case of Bilski v Kappos which is considered to be one of the most anticipated patent decisions of recent time.

The case involved a patent application for a method of hedging risk in commodities trading. The application was rejected in the first instance by the patent examiner as the invention was a business method which did not relate to any specific apparatus. It was therefore considered to be an abstract idea which is not patentable under US law. The case was then appealed all the way to the Supreme Court.

The main issue for the Supreme Court was whether a patent could be issued for an invention which was a business method. The Court rejected the lower court's ruling that the patent was invalid because it didn't meet the "machine or information" test, meaning that a process must be associated with a machine or must physically transform a product to qualify for a patent. It found that whilst the test was a useful tool, it was too narrow and should not form the sole test as it excluded all business methods. The focus should instead be on whether a claim is "directed to an abstract idea".

Although the Court stated that it would be possible to obtain a patent for a business method in some circumstances, it concluded that a patent should not be awarded to the petitioners in this case as the hedging method for which they were seeking a patent was an abstract idea.

The Court failed to commit itself to further guidance in respect of what business methods would be patentable and expressed the view that "the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles" but "nothing in this opinion should be read to take a position on where that balance ought to be struck".

Whilst this decision means that the door has been left open for innovation and new technologies, the ruling means a lack of clarity on precisely what types of business methods would meet the criteria for protection under patent laws.


The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

© MacRoberts 2010