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Bilski v. Kappos

Supreme Court of the United States

November 9, 2009, Argued; June 28, 2010, Decided

No. 08-964

Opinion

 [*597]  [***799]  Justice Kennedy delivered the opinion of the Court, except as to Parts II-B-2 and II-C-2.1

The question in this case turns on whether a patent can be issued for a claimed invention designed for the business  [*598]  world. The patent application claims a procedure for instructing buyers and sellers how to protect against the risk of price fluctuations in a discrete section of the economy. Three arguments are advanced for the proposition that the claimed invention is outside the scope of patent law: (1) It is not tied to a machine and does not transform an article; (2) it involves a method of conducting business;  [****9] and (3) it is merely an abstract idea. The Court of Appeals ruled that the first mentioned of these, the so-called machine-or-transformation test, was the sole test to be used for determining the patentability of a “process” under the Patent Act, 35 U.S.C. § 101.

 [*599]  I

Petitioners' application seeks patent protection for a claimed invention that explains how buyers and sellers of commodities in the energy market can protect, or hedge, against the risk of price changes. The key claims are claims 1 and 4. Claim 1 describes a series of steps instructing how to hedge risk. Claim 4 puts the concept articulated in claim 1 into a simple mathematical formula. Claim 1 consists of the following steps:

“(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity [**3224]  at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumers;

“(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

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561 U.S. 593 *; 130 S. Ct. 3218 **; 177 L. Ed. 2d 792 ***; 2010 U.S. LEXIS 5521 ****; 95 U.S.P.Q.2D (BNA) 1001; 78 U.S.L.W. 4802; 2010-1 U.S. Tax Cas. (CCH) P50,481; 22 Fla. L. Weekly Fed. S 703

BERNARD L. BILSKI and RAND A. WARSAW, Petitioners v. DAVID J. KAPPOS, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR, PATENT AND TRADEMARK OFFICE

Prior History:  [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT.

In re Bilski, 545 F.3d 943, 2008 U.S. App. LEXIS 22479 (Fed. Cir., 2008)

Disposition: Affirmed.

CORE TERMS

patent, business methods, invention, patent law, machine-or-transformation, innovation, abstract idea, petitioners', manufacture, processes, machine, technological, useful arts, subject matter, do business, unpatentable, progress, conducting business, series of steps, commodity, courts, terms, transform, eligible, clue, patent-eligible, consumers, hedging, limitations, monopolies

Patent Law, Subject Matter, General Overview, Anticipation & Novelty, Specifications, Description Requirement, Nonobviousness, Utility Patents, Process Patents, Elements, Governments, Legislation, Interpretation, Infringement Actions, Defenses, Computer Software & Mental Steps