In an order that is sure to have major repercussions for the future of patent law, the U.S. Supreme Court granted certiorari, agreeing to take up for appeal the case of Bilski v. Doll. The order granting the appeal is a discretionary act of the Supreme Court, and is an acknowledgment that patent law principles of the permissible scope of patentable subject matter are in need of further clarification.
Focusing specifically on business method patents, the en banc decision of the Court of Appeals for the Federal Circuit (CAFC), Chief Judge Michel writing for nine of the twelve members of the CAFC opined on the issue of patentable subject matter as widely applied in test from a previous decision, State Street Bank v. Signature Financial Group. The CAFC opinion did not explicitly overrule the State Street decision, but declared State Street's "useful, concrete and tangible" test as being irrelevant to determine whether the claimed method constitutes a statutory "process" under § 101 so as to be the patent eligible subject matter under the Patent Laws.
The basis of the Bilski opinion is grounded in the intent of the Congress in defining what is patentable subject matter. Generally, neither laws of nature, natural phenomena, nor abstract ideas are patentable. The CAFC concluded the claims of Bilski were unpatentable because they failed the new test which was established by the Court. The court held that any process that does not transform physical matter or require performance by machine is not within the definition of "process." "Process" is defined in the 1952 patent statute (35 U.S.C. §100(b)) as "a process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material." In contradistinction, a precedential decision of the Supreme Court found a life form to be patentable, and opined that "everything under the sun made by man" should be considered patentable.
While in Bilski the CAFC reaffirmed generally that both business methods and software are patent eligible subject matter, the decision also reiterated that a more appropriate test is the "machine or transformation" test as set forth above. The patent community had interpreted that test to require a method or software either be associated with a machine or device or alternatively that the method transform a particular article into a different state or thing.
In Bilski, the court affirmed the Examiner's rejection of Bilski's method claims, by affirming the ruling of the Board of Patent Appeals and Interferences. The claims were drawn to a method of hedging risk in the field of commodities trading. The CAFC found that the Bilski claims failed to provide the necessary transformation a particular article into a different state or thing. Now the U.S. Supreme Court has determined that its guidance is necessary for further clarification of what subject matter is patentable under the patent laws enacted by the Congress. It is generally assumed that the U.S. Supreme Court would not have granted certiorari unless it intends to overturn the CAFC decision. However, further clarification of the eligible subject matter will be a welcome result, whatever the outcome. Numerous business method patents have been issued by the USPTO and their validity is in question following the CAFC Bilski decision. As an added variable, timely consent by the Senate to the appointment to the Supreme Court of Judge Sotomayor will allow the case to be heard by a full complement of nine justices, and should also provide some insight into her philosophy regarding patents, something that her prior experience as a prosecutor and judge has not yet revealed.
Vol. 53, June 2010