Case Briefs
Case(s): Bilski v. Kappos, 561 U.S. 593 (2010)
Bernard Bilski and Rand Warsaw filed a patent application for a method of hedging risk in commodities trading. The key claims were: Claim 1, which describes a series of steps instructing how to hedge risk; and Claim 4, which places the claim 1 concept into a simple mathematical formula. The United States Patent and Trademark Office (“USPTO”) rejected the application, stating that it claimed an abstract idea and was not eligible for a patent because the invention does not amount to patentable subject matter under 35 U.S.C. Section 101.
The Board of Patent Appeals and Interferences agreed and affirmed. On appeal, the U.S. Court of Appeals for the Federal Circuit affirmed. An en banc court later rejected its prior test for determining whether a claimed invention was a patentable “process” under Patent Act, 35 U. S. C. §101—i.e., whether the invention produced a “useful, concrete, and tangible result,” see, e.g., State Street Bank & Trust Co v. Signature Financial Group, Inc., 149 F. 3d 1368, 1373. It held instead that a claimed process is patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Concluding that this “machine-or-transformation test” is the sole test for determining patent eligibility of a “process” under §101. The court applied the test and held that the application was not patent eligible.
Supreme Court Opinion
On June 28, 2010, the Supreme Court issued its decision, affirming the Federal Court’s decision but revising the aspects of the court’s decision concerning the test to assess process patentability and the exemption of business methods from patentable subject matter. The questions before the court included: (1) Did the Federal Circuit err by using the machine-or-transformation test in determining patentable subject matter? and (2) Does the machine-or-transformation test prevent patent protection for many business methods and thus contradict congressional intent that patents protect “methods of doing or conducting business.”
The court unanimously held that the Federal Circuit did not err when it used the “machine-or-transformation test” – which had been used by lower courts to assess the patentability of business methods – to determine patentability. However, the court diverged from the Federal Circuit’s decision in holding that the machine-or-transformation test is not the sole test for determining patent eligibility. The court also emphasized that abstract ideas and fundamental economic practices were not eligible for patents unless they were tied to a specific application or process that transformed them into something more than abstract ideas.