U.S. Supreme Court Issues Long-Awaited Bilski Opinion
Jun 28, 2010
Business Methods and Software Remain Patent-Eligible Subject Matter for Now
On Monday, June 28, 2010 (the last day of the term), the Supreme Court finally handed down its opinion in Bilski v. Kappos. As previously discussed here and here, the Bilski case involves fundamental questions about the extent to which processes may form patent-eligible subject matter.
As brief background, Section 101 of the Patent Act identifies four broad categories of inventions or discoveries (processes, machines, articles of manufacture, and compositions of matter) that are eligible for patent protection. While the present case focuses on the limits of patentability for a process, the Court explains that all of these categories have historically been given broad scope, as ingenuity should receive liberal encouragement from the patent laws. Noted exceptions include laws of nature, physical phenomena, and abstract ideas.
With regard to the Federal Circuit’s so-called “machine-or-transformation” test as the “sole” test for determining patentability of a process under Section 101, the Court shot down such a bright-line rule as improperly reading into the patent laws limitations and conditions that the legislature has not expressed. Thus, while the machine-or-transformation test remains a “useful and important clue” for determining whether some claimed inventions are proper processes, it is “not the sole test for deciding whether an invention is a patent-eligible ‘process.’”
Unfortunately, the opinion of the Court does not offer an abundance of guidance or predictability as to which processes may form proper subject matter. While the Court notes 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,” it then states that “[n]othing in this opinion should be read to take a position on where that balance ought to be struck.”
As somewhat expected, Mr. Bilski’s claimed invention in the present case (the broad concept of hedging risk and the application of that concept to energy markets) was held to be an unpatentable abstraction under Section 101. The Court makes clear that such holding is not based upon a bright-line application of the machine-or-transformation test, but is instead based upon the language of the statute as read in light of prior Supreme Court precedent. In particular, the Court relies upon its decisions in Benson, Flook, and Diehr to hold that the claims at issue are “not patentable processes because they are attempts to patent abstract ideas.”
It is noted that although today’s opinion is far from the landmark reshaping of the scope of patentable subject matter that some had predicted, the patentability of pure business methods survived only narrowly. Justice Stevens, joined by three other justices, penned a passionate concurrence in which he lays out the case (based upon both historical and practical reasons) as to why business methods should not be provided patent protection under his reading of the statute. While not quite garnering a majority, four of the justices agree that the present case should have been decided on the basis that the claimed process is not patentable because it “describes only a general method of engaging in business transactions—and business methods are not patentable.”
For the time being, however, the broad categories of business methods and computer software remain proper patentable subject matter, subject of course to the other requirements for patentability. Look for more in-depth analysis of this important case in a future edition of our Ingenuity Update newsletter.
If you have any questions or concerns about the impact this case may have on your present or future patent applications, please contact us for more information or to schedule an appointment.
The entire text of the Supreme Court’s opinion in Bilski can be found at the following link:
http://www.supremecourt.gov/opinions/09pdf/08-964.pdf.
Brandon Warner is an associate at Hovey Williams. You can contact Brandon at .(JavaScript must be enabled to view this email address).