Alert
Alert
By Jack S. Barufka,
06.28.10
Today the Supreme Court issued a much anticipated decision regarding the test for patentable subject matter, broadening the test articulated by the Court of Appeals for the Federal Circuit in Bilski v. Kappos ("Bilski"). The Supreme Court held that the so-called "machine-or-transformation test"— that a process is patent-eligible if it either "transforms an article into a different state or thing" or is "tied to a machine"— is a valid test, but is not the only applicable test. However, the Supreme Court did not specifically define any other tests, thus leaving open the door to the possibility for a more flexible test to be adopted down the road. The Supreme Court, however, confirmed the long standing rule that laws of nature, abstract ideas and mental processes are not patentable.
Those hoping for or expecting radical change to the scope of patentable subject matter will be disappointed by the decision. For example, with respect to so-called business method patents, the court did not do away with or create a separate test for them. Rather, the test articulated by the Supreme Court applies to any process, including methods of doing business.
Background
Section 101 of the Patent Act states that "any new and useful process, machine, manufacture, or composition of matter" is entitled to a patent. However, even though the term "process" is defined in the patent statute itself1, the courts have struggled in articulating a test to for what constitutes a patentable process. Over the years, the courts have formulated different tests for what qualifies as a patentable process. The claims at issue in Bilski are directed to a method of hedging risk for commodity trading. Specifically, claim 1 of Bilski recites:
A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
b) identifying market participants for said commodity having a counter-risk position to said consumers; and
c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.
The Patent Examiner rejected the claims as not being directed to patentable subject matter, a decision that was upheld on appeal to the Board of Patent Appeals and Interferences (BPAI). In particular, the BPAI found the claims to be non-statutory for failing to accomplish any type of physical transformation. The BPAI also found that the claims preempted any and every possible way of performing the steps of the claimed process. Furthermore, the BPAI found that the claims did not produce a "useful, concrete, and tangible result", which was the test at the time. Bilski timely appealed his case to the Court of Appeals for the Federal Circuit (the "Federal Circuit") and the case was heard by the enlarged panel of the entire Federal Circuit.
Download: Supreme Court Broadens Test for Patentable Subject Matter
1The term "process" means process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material. See 35 U.S.C. §100(b)