Supreme Court's Bilski Decision Rejects Federal Circuit's Machine-Or-Transformation Test For Business Method Patents
On June 28, 2010, the Supreme Court handed down a highly anticipated decision affirming the Federal Circuit in Bilski v. Kappos. At issue in Bilski was the patentability of a claimed business method or process for hedging against the risk of price changes in an energy market. The Court unanimously affirmed the Federal Circuit’s decision to reject Bilski’s process claims as being unpatentable, but split in its opinion as to the grounds for rejecting the claims.
The majority opinion of the Court was delivered by Justice Kennedy, joined in full by Chief Justice Roberts, Justices Thomas and Alito, and joined in part by Justice Scalia. The Court held that the “machine-or-transformation” test applied by the Federal Circuit to reject Bilski’s business method claims is not the sole test to be considered in determining whether a claimed process is a “patent-eligible” process. In particular the Court stated that the test may be insufficient for determining the patentability of inventions concerning emerging technologies including, for example, software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression and the manipulation of digital signals.
The Court rejected the outright exclusion of process claims directed to so-called “business methods,” finding that the scope of such an exclusion was unclear and that Congress’ “prior use” defense to the infringement of business method claims as expressed in 35 U.S.C. §§ 273 (a)(3), (b)(1) would be meaningless if such claims were fully excluded from consideration as patent-eligible inventions.
