Bilski Decision Gives Test for Scope of Patentable Subject Matter for U.S. Patents

Bilski Decision Gives Test for Scope of Patentable Subject Matter for U.S. Patents

The much anticipated decision by the U.S. Court of Appeal for the Federal Circuit in Re Bilski is the latest development in the ongoing debate over the scope of patentable subject matter in the United States. More specifically, the case gave the Court an opportunity to re-examine the subject matter requirements for business method, software and other process patents. The case was heard en banc (before the whole court) and resulted in a nine member majority, with a two member concurrence, and three separate dissents.

The patent that Bilski sought was for a method of hedging risk in commodities trading. His patent was rejected by the examiner and then again by the Board of Patent Appeals for not being directed to patent-eligible subject matter. The central issue is where the line should be drawn between unpatentable fundamental principles or abstract ideas and properly patentable subject matter.

The majority endorsed a “machine-or-transformation” test wherein a valid process claim must either be tied to a particular machine or transform a particular article into a different state or thing. The Court then went through a more detailed examination of the transformation branch, which was the branch relevant to these facts, and chose to leave further discussion of the machine branch for another day.

In applying the transformation branch of the test to the facts, the Court found that Bilski’s claims did not transform any article to a different state or thing because “public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances”.

The full impact of this decision remains to be seen as it leaves certain questions unanswered (including what the full scope of the machine branch should be and what exactly will qualify as “representing a physical object or substance"). While clever claims drafters may be able to successfully characterize some of their claims in a manner that satisfies the test, it’s likely to force them to present some of the more abstract claims more narrowly - as either tied to a specific machine or as representing a specific physical object or substance.

As for the other opinions in the judgment, the first dissent argued the majority opinion was too restrictive; the second dissent argued the majority did not go far enough and that business method patents should be eliminated altogether; and the third dissent argued that a new test like this was flawed and not needed to conclude the claims covered an abstract idea. The concurring opinion simply responded to the claims in two of the dissents that the majority decision was not grounded in the statute.

I found the opinions interesting when read together, in part because they reveal how much the underlying issue is really a policy question more so than one of legal interpretation. As far as that question is concerned, while likely the most extreme position, I prefer the Mayer dissent arguing for the elimination of business method patents. I continue to fail to see how this particular brand of inventiveness needs the additional incentive of monopoly rights. Though I suppose Lord Justice Jacob would tell me that my opinion is coloured by my “suspicious view of patents as an inhibition of trade”.

For additional coverage and analysis of this important decision check out the PatentlyO blog here, here, here, here, here, and here!