• Bilski is Decided by the U.S. Supreme Court
  • July 26, 2010 | Author: Herbert R. Schulze
  • Law Firm: Holland & Hart LLP - Reno Office
  • If you’re an inventor -- if your company develops software -- if you’ve dreamed up a new way to do business -- then Monday’s Supreme Court decision 1 broadening patentability standards ever so slightly may be good news.

    The Decision

    A method might qualify as patent-eligible even if it doesn’t pass the “machine-or-transformation” test.

    The Background

    The case arose from the inventive activities of one Bernard Bilski and his colleague. They claimed a method of hedging that protects sellers against sudden price drops and buyers against sudden spikes.

    Bilski’s patent application was rejected by the Examiner and by the Board of Patent Appeals 2 on the ground that the invention was a mere abstract idea, and abstract ideas do not qualify as patentable subject matter. Bilski appealed. The Court of Appeals not only affirmed the rejection but went further, ruling that a method could be patented only if it either (1) was practiced in a specific machine or (2) transformed matter into a different state or thing 3.

    Under this new machine-or-transformation test, many method claims have been rejected. Of course, even if an invention passes the test, it still is subject to the requirements of novelty 4, non-obviousness 5, and full disclosure 6.

    Bilski appealed again -- to the U.S. Supreme Court. His case attracted about as many amicus briefs as have ever been filed in a patent case.

    What the Decision Means

    The Supreme Court agreed that Bilski’s invention was too abstract to be patented. The Court also ruled that the words of the Patent Act itself should determine which inventions may be patentable. The Court emphasized that the issue (as argued in Ryan’s brief) is whether an invention is a “new and useful art” and qualifies as patent-eligible under Section 101 of the Patent Act 9. The Court said that under its own prior decisions there already are three categories of subject matter that are not patentable subject matter under the "new and useful" requirement of Section 101 -- laws of nature, physical phenomena, and abstract ideas. The Court explained that some methods (including business methods) might qualify as patent-eligible under Section 101 even if they don’t pass the machine-or-transformation test.

    Within hours of the Court’s decision, the Patent Office had issued new guidance to patent examiners: if an invention meets the machine-or-transformation test, it is likely patent-eligible, but even if it doesn’t pass the test, the applicant will now have an opportunity to show that the invention is patent-eligible anyway. This guidance is new and may be changed by the Office or by the courts.

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    1. Bilski v. Kappos,   U.S. , 28 June 2010
    2. Ex parte Bilski, No. 2002-2257, 2006 WL 5,738,364 (B.P.A.I. Sept. 26, 2006)
    3. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008, en banc)
    4. 35 U.S.C. §102
    5. 35 U.S.C. §103
    6. 35 U.S.C. §112
    7. http://www.nvbar.org/PDF/IPSection-BilskiBrief.pdf
    8. 35 U.S.C. §100(b)
    9. 35 U.S.C. §101