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A Madness to the Method? The Impact of Bilski on Method Patents

By Brian Mudge

For more than a year, the software/information technology, financial, and even biotech industries, along with the patent bar, waited for the Supreme Court to weigh in on the issue of business methods and patent-eligible subject matter under ' 101 of the Patent Act. In its recent decision in Bilski v. Kappos, 561 U.S. __ (2010), the Supreme Court provided an answer for the business method claimed by Bilski, but not a lot of detailed guidance for future cases. Although reaching the same ultimate conclusion as the Federal Circuit about the unpatentability of Bilski's claims to a method for hedging risk, the Supreme Court's opinion effectively overruled the narrow test established by the Federal Circuit in its decision below. The Federal Circuit had established that a claimed process was eligible for patenting only if it was tied to a particular machine or transformed an article into a different state or thing, but the Supreme Court held that the “Machine or Transformation” test is not the exclusive test for determining whether a claimed process is eligible for patenting under the patent statute, 35 U.S.C. ' 101.

Faulting the Federal Circuit's interpretation of the patent statute, the Supreme Court explained that ' 101 broadly describes subject matter eligible for patenting. Looking to the Court's prior case law, the opinion identified only three exceptions to the statute's broad patent-eligibility principles: laws of nature, abstract ideas, or natural phenomena. Bilski, slip op. at 5. While the Court recognized that the Machine or Transformation test is a useful tool for analyzing processes under ' 101, it rejected as inconsistent with the broad statutory language the Federal Circuit's conclusion that the test is the sole or exclusive way in which to determine patent-eligibility for processes. Id. at 16.

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