New & Events
Supreme Court decision in Bilski v. Kappos
On June 28, 2010, the Supreme Court of the United States issued its much-anticipated decision in Bilski v. Kappos (No. 08-964, Argued November 9, 2009) regarding the patentability of a process or method invention.
The Court rejected the “machine-or-transformation” test as the sole test for the eligibility of a “process” for patent protection, and also rejected any categorical exclusion of “business methods” as patent eligible subject matter. However, the Court affirmed the judgment of the Federal Circuit that the application-at-issue was not patent eligible because its claims were directed to abstract ideas.
The specific issue in the case was whether a patent can be issued for a process used by buyers and sellers of commodities in the energy market for protecting or hedging against the risk of price changes. The Court held that the claims of the application-at-issue were directed to the “concept of hedging risk and the application of that concept to energy markets” and that “[a]llowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.”
The “machine-or-transformation” test, imposed by the Federal Circuit, required a process to be (1) tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing. In rejecting the “machine-or-transformation” test as the sole test for patentability of a process, the Court indicated that the test may be a “useful and important clue or investigative tool” for deciding whether an invention is a patent-eligible “process,” but specifically declined to define further what constitutes a patentable “process.” Thus, the decision leaves undetermined the protectability of process or method inventions in many areas, such as computer software and advanced diagnostic medicine techniques.
With respect to “business methods,” the decision rejects the broad contention that the term “process” categorically excludes business methods. Pointing to a provision in the Patent Act (U.S. Code, Title 35) that provides a defense of prior use to infringement claims based on “a method [of doing or conducting business] in [a] patent,” (35 U.S.C. §273(b)(1)) the Court concluded that the statute itself acknowledges that there may be business method patents. Nevertheless, the Court also indicated that the statute “does not suggest broad patentability of such claimed inventions.”
The Court also stated, multiple times, that in order to receive patent protection, a claimed process or method invention must still be novel (§102), nonobvious (§103), and fully and particularly described (§112), indicating, perhaps, the Court’s skepticism of certain “business method patents.” Indeed, the majority opinion on “business methods” was only narrowly supported (5-4), with the minority panel issuing a lengthy concurring opinion (classified as “concurring” because it concurs in the judgment) concluding that business methods are not patentable.
As discussed above, the decision reaffirms that claims directed to “abstract ideas” are not patentable, although little guidance is provided as to what makes an idea “abstract” versus “non-abstract.” Further, the Court stated that “limiting an abstract idea to one field of use or adding token postsolution components” will not make an abstract idea or concept patentable.
Indeed, the U.S. Patent and Trademark Office (“USPTO”) has already issued interim guidelines to the Patent Examining Corps instructing that (1) if a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea, and (2) if a claim is rejected on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea. Accordingly, at the present time, it appears that the machine-or-transformation test will continue to be used as a threshold test by the USPTO for patentability of method claims, and applicants will face rejection of their claims unless there is a “clear indication” that the method is not directed to an abstract idea.
The full text of the Court’s opinion can be viewed by clicking here.
Jeffrey A. Haeberlin is one of Stites & Harbison's 17 Registered U.S. Patent Attorneys. He concentrates his practice on electrical, computer and mechanical patent prosecution.