29 June, 2010

Door Kept Open to Patenting of Business Methods in United States

Door Kept Open to Patenting of Business Methods in United States

Yesterday, the US Supreme Court handed down its long-awaited decision in the Bilski case, leaving open the door to the patenting of business methods in the U.S., but finding the particular business method at issue unpatentable because the specific method claimed merely involved an abstract idea.  The Supreme Court held that the US patent legislation does not exclude the patenting of business methods per se.  Any claimed “process” must meet the ordinary criteria for patentability of an invention.

Bilski's application contained claims reciting a process of hedging risk in commodity transactions, especially in energy markets.  The relevant claims contained no structural or field-of-use limitations and defined a business method in its purest sense.  Of significant concern, the (lower) Federal Circuit, as reported in our previous News Alert, had concluded that the claims were unpatentable because the claimed process did not satisfy its exclusive machine-or-transformation test.  Under this test, a claimed process to be patentable must either be tied to a particular machine or transform an article into a different state or thing.  This test had the potential to considerably restrict what could be patented in the United States, including for example medical diagnostic procedures and software, amongst other things.

The majority of the Supreme Court clarified that the machine-or-transformation test is not the exclusive test for determining whether a claimed process is the proper subject matter of patent, a threshold requirement of patentability.  The Court stated that the ordinary, contemporary, common meaning of “process” in the US patent legislation did not require a process to be tied to a machine or to transform an article, and hence while this test is a useful investigative tool, it is not the sole test to determine the patentability of a process.  The Court also stated that the other requirements of novelty and non-obviousness remained as separate tests for ultimate patentability.

The Supreme Court did not provide new guidance in terms of tests as to what processes satisfy the threshold requirement of statutory subject matter, leaving uncertain the extent to which processes, in particular business methods, can be patented.  A significant and well explained minority of the Supreme Court found that the claims related to a method of doing business that was outside the area of proper subject matter for patent protection.  The minority were not satisfied with the majority’s categorisation of the Bilski claims as “abstract”, since no satisfactory reasoning was given.  The minority considered the patent specification as well described and exemplified in application.

Overall, the decision is encouraging in rejecting the narrow machine-or-transformation test as the sole test.  Further, the majority made clear reference to the current “information age” and to the (older) “industrial age”, acknowledging that the patent laws have to adapt with the times.  This will provide some relief to technologists, particularly in the areas of biotechnology and advanced medical diagnostics, indicating that inventions that go beyond mere discoveries or abstract ideas, for example by having field-of-use and structural limitations, should be more favourably considered.  This is consistent with other case law that asserts that patents may be granted for applications of discoveries and ideas, not discoveries or ideas themselves.

Latest Tweets

Follow @sprusons on twitter.