The United States Supreme Court released its long-awaited and highly anticipated decision in Bilski v. Kappos, 561 U. S. ___ (2010) yesterday. The Court unanimously affirmed the judgment of the en banc decision of the United States Court of Appeals for the Federal Circuit that the claims of the Bilski patent application are not directed to patent eligible subject matter. However, the Court found that the Federal Circuit did not apply the correct standard for determining whether a “process” is drawn to patent eligible subject matter.
In particular, the Court rejected the Federal Circuit’s position that the “machine-or-transformation test”i is the sole test for deciding whether a claim is directed to a patent-eligible “process” under 35 U.S.C. §101.ii The Court held that the Federal Circuit “incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test.”iii Rather, the “the machine-or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101.”ii
Further, the Court held that “Section 101 similarly precludes the broad contention that the term process categorically excludes business methods.”iv Rather, the “term method, which is within §100(b)’s definition of process, at least as a textual matter and before consulting other limitations in the Patent Act and this Court’s precedents, may include at least some methods of doing business.”iv Indeed, the Court finds that 35 U.S.C. §273 clarifies “the understanding that a business method is simply one kind of method that is, at least in some circumstances, eligible for patenting under §101.”v
While the Court found that Bilski’s patent “application is not categorically outside of §101 under the two broad and atextual approaches the Court rejects today, that does not mean it is a process under §101.”vi “Rather than adopting categorical rules that might have wide-ranging and unforeseen impacts, the Court resolves this case narrowly on the basis of this Court’s decisions in Benson, Flook, and Diehr, which show that [the Bilski patent application’s] claims are not patentable processes because they are attempts to patent abstract ideas.”vi “Indeed, all members of the Court agree that the patent application at issue here falls outside of §101 because it claims an abstract idea.”vi
The Court found that the “concept of hedging, described in claim 1 [of the Bilski patent application] and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea.”vii The Court then held that the Bilski “patent application here can be rejected under [the Court’s] precedents on the unpatentability of abstract ideas [and that the] Court, therefore, need not define further what constitutes a patentable process, beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.”viii The Court further added that “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past.”viii
In short, the bright line “machine-or-transformation test” that was announced by the Federal Circuit in In re Bilski is now relegated as one way, rather than the only way, of evaluating whether a process is properly considered to be patent eligible subject matter under Section 101 of the Patent Act. Further, while the Supreme Court rejected the “machine-or-transformation test” as the exclusive test and held that at least some business methods may qualify as patent eligible subject matter, the majority opinion of the Court, delivered by Justice Kennedy, provides only limited guidance on the ultimate bounds of patent eligible subject matter.ix
i The “machine-or-transformation test” is a two-branch inquiry for determining whether a process qualifies as patent eligible subject under §101. Under this test, an invention would only qualify as a patent eligible process under §101 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 re Bilski, 545 F.3d, 943, 954 (CA Fed. 2008) (en banc).
ii Opinion, p. 8
iii Id., p. 7
iv Id., p. 10
v Id., p. 11
vi Id., p. 13
vii Id., p. 15
viii Id., p. 16
ix Concurring opinions by Justice Stevens, with whom Justices Ginsburg, Breyer and Sotomayor join, and by Justice Breyer, with whom Justice Scalia joins, do attempt to provide some additional guidance, but are not controlling.