On June 28, 2010, the U.S. Supreme Court finally ruled in Bilski v. Kappos, 08-964, on the long contentious issues of whether business methods are patentable
subject matter under the patent laws, and whether the Federal Circuit’s machine-or-transformation
test was the exclusive test in making this determination.
To provide some context, the patent laws provide that there
are four independent categories of inventions or discoveries that are
patentable: (1) processes, (2) machines, (3) manufactures, and (4) compositions
of matter. The Supreme Court has held
that there are three specific exceptions to these categories that do not constitute
patentable matter: (i) laws of nature, (ii) physical phenomena, and (iii) abstract
ideas.
In Bilski, the Supreme
Court held that “process” does not categorically exclude business methods. Rather, a business method is simply one kind
of “method” that is, at least in some circumstances, patent-eligible.
The Court also held that the Federal Circuit’s machine-or-transformation
test, while useful, is not the sole or exclusive test for deciding whether an
invention is patent-eligible. Under the machine-or-transformation
test, an invention is a “process” only if (1) it is tied to a particular
machine or apparatus, or (2) it transforms a particular article into a
different state or thing.
In deciding Bilski,
the Court declined to determine whether petitioners’ underlying patent application
for hedging against the risk of price fluctuations in the commodities and
energy market constituted patentable “processes,” or to define further what constitutes
a patentable “process” beyond the definitions provided in Section 100(b) of the
Patent Act or the Court’s guideposts in Gottschalk
v. Benson, 409 U. S. 63 (1972), Parker
v. Flook, 437 U. S. 584 (1978) and Diamond
v. Diehr, 450 U. S. 175 (1981). Instead,
the Court held that the petitioners’ patent application was not patentable
simply because it claimed an abstract idea.
Allen M. Lee. Mr. Lee’s practice focuses on business,
corporate and intellectual property matters, including the creation, protection
and exploitation of intellectual property assets. He counsels clients on business formation,
general corporate matters, trademark, copyright, trade secret, patent,
licensing, internet and domain name issues, among other things. For more information contact: Allen M. Lee, a
Professional Law Corporation, Tel: (408) 249-2735, Fax: (408) 260-8263, Email: info@allenmlee.com, Internet: www.allenmlee.com.
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