05 November, 2008

Latest Developments - Software and Business Method Patents in the U.S.

Latest Developments - Software and Business Method Patents in the U.S.

On 30 October 2008, the U.S. Court of Appeals for the Federal Circuit handed down its long awaited decision in the appeal against the United States Patent and Trademarks Office (USPTO) in the case of In re Bilski. The decision relates to the scope of patentable subject matter in the United States of America and is of fundamental importance to computer software and business method patents.

Favourably to patent applicants, the Court of Appeals declined “to adopt a broad exclusion over software or any other category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court” and reaffirmed its finding in the State Street decision that business methods like other processes or methods may be patentable.

However, the Court of Appeals repudiated its own prior “useful, concrete and tangible result” test as being insufficient for establishing patent eligibility. The proper test for whether a method or process claims is patent eligible, the Court said, is: (1) whether the claimed invention is tied to a particular machine or apparatus; or (2) whether the claimed invention transforms a particular article into a different state or thing. This appears to represent a restriction in the scope of patent eligible subject matter. In consideration of future developments in technology, the Court added that claims that do not meet the new test may yet be patentable. A positive result to the new test is thus sufficient but a negative result does not per se preclude patent eligibility.

The decision confirms that a computer performing an operation upon data that characterises a physical object is clearly patent eligible. However, claims directed to a pure business method, even when performed using a computer, may not meet the new test for patent eligibility. Some judges, in dissent, expressed concern that the Court’s majority decision would be regressive and possibly disadvantage some software-related patent applications. The decision may yet be appealed to the U.S. Supreme Court.

A copy of the decision is available at: http://www.cafc.uscourts.gov/opinions/07-1130.pdf

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