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Got Patents? The Long-Awaited Bilski (In)Decision

June 29, 2010

Earlier this week, the U.S. Supreme Court issued the long-awaited decision in Bilski et al. v. Kappos, 561 U.S. _____ (2010), a case focused on the patentability of business methods and other software-implemented inventions. The Supreme Court's decision could have significantly altered the patent landscape for years to come. Instead, the Court essentially maintained the status quo and left the door open for new tests that could expand or contract the scope of patent protection for such inventions.

In Bilski, the Supreme Court was asked to review whether the Federal Circuit Court of Appeals' "machine-or-transformation test" was the proper test to apply in determining patent-eligibility of business methods and other software-implemented inventions.

The "machine-or-transformation test," handed down earlier in Bilski, provided that a claimed process (such as a business method) was patentable only if it: (1) was tied to a particular machine or apparatus or (2) transformed a particular article into a different state or thing. With respect to the invention in the Bilski case, which involved a method for hedging risk in commodities or energy markets, the Federal Circuit found that the claimed method neither was tied to a particular machine or apparatus, nor transformed something from one state to another. Thus, the invention was not patent-eligible subject matter.

The Supreme Court upheld that the method at issue in the Bilski case was not patentable, but did so because the patent applicant attempted to patent an abstract idea, noting: "The concept of hedging . . . reduced to a mathematical formula . . . is an unpatentable abstract idea." The Court further found, quite significantly, that while the "machine-or-transformation test" may be helpful in determining the patentability of processes (such as business methods), it "is not the sole test for deciding whether an invention is a patent-eligible 'process'."

What does this mean for you? Frankly, the jury is still out. There are a couple of things we know for sure. First, business methods clearly are still patent-eligible subject matter, so you should continue to consider patent protection for your business methods and software-implemented inventions. Second, although the "machine-or-transformation test" was rejected as the exclusive test to determine whether a process is patent-eligible, it remains a "useful and important clue" to gauge whether a process (such as a business method) is patent-eligible.

The Supreme Court stated very clearly that it was not commenting on the patent-eligibility of any particular type of invention, or whether technologies from the Information Age should or should not receive patent protection. Rather, the Court pointed out that new technologies may require new inquiries into whether processes are patent-eligible subject matter, and that new tests may need to be created to answer such inquiries.

This week's (in)decision may have been less than the bright-line test for which we all were hoping, but it does leave the door open for future interpretation. It likely does not broaden or narrow what may be protected by patent. It does, however, set the stage to protect emerging technologies and advances that are unknown today, but that may be the foundation for things to come in the future. "

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