appeal to the Supreme Court has filled inventors and innovators with more dread
than Bilski v. Kappos.
Before the court was nothing less than the question of what can and cannot be
feared a sweeping decision that would wipe away entire categories of patents,
including those covering software, business methods, and many types of medical
diagnostics. On June 28, 2010, the Supreme Court issued its opinion and
inventors heaved a sigh of relief.
majority opinion confirmed that abstract ideas, laws of nature and physical phenomena
are not patentable, but declined to conclude that software or business methods
are inherently unpatentable abstract ideas, or that medical diagnostics involve
only unpatentable physical phenomena or laws of nature.
the court rejected as overly rigid the Federal Circuit's approach for
determining what methods can and cannot be patented.
As we have
Bernard Bilski filed a patent related to hedging the seasonal risks of buying
energy. The patent claims had very general language. Mr. Bilski was rebuffed by
the patent examiner, who found that the application described an abstract idea,
not an invention. This view was upheld by the Board of Patent Appeals.
Circuit likewise found the application ineligible for patent protection, but its opinion was
based upon a newly articulated "machine or transformation" test. To pass this
test for patentability, a process must either be tied to a special-purpose
machine or apparatus or transform an article into "a different state or thing."
(The meaning of "special-purpose machine" is not clear, but might include a
general purpose computer running a program that causes the computer to perform
majority and concurring opinions in Bilski
reveal a sharp debate among the justices on many issues of patentability. As a
guide to practice, it is useful to identify the areas where at least five
justices agree, for it is on those points that the Federal Circuit is likely to
focus its future efforts to define the boundaries of patentability. The
following points drew majority support:
remaining issues, the Court was fragmented. Four of the conservative justices
(Kennedy, Roberts, Thomas and Alito) suggested that the "Information Age"
requires new paradigms regarding patent-eligible subject matter, while four
liberals (Stevens, Breyer, Ginsburg and Sotomayor) argued for strict
construction based upon a review of centuries of precedent. Justice Scalia
divided his vote between these two groups, depending on the issue. For example,
he seems to favor business method patents, while shying away from the
"Information Age" paradigms.
can we conclude about patents previously believed to be at risk--those based
upon software, business methods, medical diagnostics and other fields that
might be seen as involving only abstract ideas or phenomena occurring in
As a first
principle, patent applications for processes in these fields should, if
possible, include claims anchored to tools, disposables, special-purpose
computers or machines, and/or to the transformation of physical articles in
order to satisfy the machine-or-transformation test.
test sometimes seems difficult to satisfy, it can be interpreted with some
latitude. The medical diagnostics field is currently the beneficiary of such an
interpretation. As we discussed in an earlier
article, the Federal Circuit held in Prometheus
Laboratories, Inc. v. Mayo Collaborative Services (2009),
that a diagnostic test that administered a compound to mammals and measured the
level of a metabolite into which the digestive system broke the compound was
patentable, and was not merely a natural phenomenon.
minority in Bilski
made favorable reference to the dissent in Laboratory
Corp. of America Holdings v. Metabolite
Laboratories, Inc. (2006), which would have denied patent
eligibility to such a diagnostic method. In their view such a test merely
reveals a natural phenomenon. Thus, the patent eligibility of diagnostics is
controversial among the justices of the Supreme Court, but for now its critics
are in the minority.
that business methods may be patented was confirmed by a majority in Bilski, notwithstanding
an eloquent essay to the contrary authored by Justice Stevens and joined by
three other justices. While business methods are not ineligible, claims
addressed to business methods should be drafted to satisfy the
software, the outlook is murkier. Justice Kennedy, writing for himself and
three other justices, made the only mention of software in Bilski, noting that the
machine-or-transformation test creates uncertainty as to the patentability of
software. No resolution of this uncertainty can be gleaned from the
opinion. However, it is instructive that a portion of the opinion joined
by the majority reviewed prior Supreme Court opinions in which software played
v. Benson (1972), the court held that an algorithm to convert
decimal numbers into binary code was an unpatentable abstract idea. Later, in Diamond
v. Diehr (1981),
the court upheld the patentability of an invention for molding uncured
synthetic rubber into cured precision products in a process that included
having a computer follow a mathematical formula.
Diehr explained that while the formula
could not be patented, the application of the formula to a known structure or
process could be. The court noted that the claim was directed to an industrial
process for the molding of rubber products.
affirmation that business methods may be patented, it seems unlikely that
software claims need to be tied to an industrial process to be valid.
Nonetheless, it will be much easier for the courts to uphold such claims if the
software plays a role in a process that satisfies the machine-or-transformation
majority opinion in Bilski
said that the machine-or-transformation test is not exclusive, we
suspect that the Federal Circuit will be reluctant to expand the contours of
patent eligibility beyond that test for fear of reversal. Despite that
limitation, and the rejection of the notion that patents can cover "anything
under the sun," inventors can breathe a little easier as a result of the
Supreme Court's opinion.
number of years the court has been critical of the patent system. In the
Supreme Court's eBay
decision (2006), which made it harder for patent holders to get injunctions,
Justice Kennedy wrote a concurring opinion, which three other justices joined,
in which he complained of the "vagueness and suspect validity" of patents being
asserted by firms using "patents not as a basis for producing and selling goods
but, instead, primarily for obtaining licensing fees."
2010, when the United States economy has been licking its wounds from a
worldwide recession, the tone of the court is different. For once, the Court
chides the Federal Circuit for being too narrow in its view of patent
eligibility. Perhaps the pendulum has finally begun to swing the other way.
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