Supreme Court Releases Long-Awaited Patent Decision Affecting Business Methods

ALBANY, NY (06/29/2010)(readMedia)-- On June 28, 2010, the United States Supreme Court issued the long-awaited Bilski v. Kappos decision, affirming the judgment of the United States Court of Appeals for the Federal Circuit. (Bilski v. Kappos, U.S., No. 08-964, 6/28/10). Although this opinion does not specifically address business methods, it is likely to allay the fears of many patent holders who worried that the Supreme Court would strike down business method patents altogether.

Bilski's patent claims were directed toward a process for hedging risk in commodities trading. The Court ruled that "business methods" are eligible subject matter under the law, but did not accept the Federal Circuit's "machine-transformation test" as the exclusive test for determining whether subject matter is patentable. While the Court ultimately ruled that Bilski's patent claims were directed to "abstract ideas", and therefore not eligible for patent protection, the Court did not foreclose the possibility of obtaining patent protection for other "business methods."

The following is a quotation from the Court's majority:

"Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act's text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. 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.

"And 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. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357. It may be that the Court of Appeals thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit's development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text."

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