The Supreme Court’s June 28, 2010 decision in Bilski v. Kappos will be remembered as a case in which the Supreme Court refused to categorically deny protection to business methods. In what was arguably the most eagerly anticipated patent case ever, opinions from commentators have varied widely. Generally agreed, however, is that there was little provided in the way of guidance with respect to applying the narrow holding of the case, in which the Supreme Court concluded the Bilski claims were merely directed to an abstract idea.
In its opinion, the Court set forth that the machine or transformation test is only a clue or investigative tool into whether patentable subject matter is present, rejecting the inflexible rule adopted by the Federal Circuit. The Court also indicated that certain business methods may be patentable if they otherwise satisfy the criteria of the statute. Finally, the Opinion of the Court concluded that the Bilski claims were to an abstract idea, and were therefore not patentable subject matter. Of interest are the lines on which the Justices positions were drawn – all nine justices concluded that the Bilski claims were not patentable, five to four essentially permitted business methods in certain cases to be considered patentable subject matter, and apparently eight to one fell on the side of considering software claims to be patentable.
The Bilski claims were for a pure business method for hedging commodity purchases by having a consumer make purchases at high and low fixed rates. No computers or software applied to the invention. However, the Bilski opinion reaches beyond business methods alone. Areas that may be impacted include software patents, biotech patents, tax strategy patents, and medical diagnostic testing patents. In the first appeal at the Board of Patent Appeals and Interferences at the U.S. Patent and Trademark Office after the Bilski opinion was issued, the Board arguably held that the software claims were not patentable because they were abstract. Two medical diagnostic testing cases have been remanded by the Supreme Court to the Federal Circuit to be heard again in view of the decision in Bilski.
In a June 28, 2010 memorandum to patent examiners, the Patent Office has given interim instructions on how to address the Bilski opinion. The examiners are to continue to apply the machine-or-transformation test. If passed, no subject matter rejection will be issued unless claims are clearly to an abstract idea. If the test is failed, the examiners will issue a rejection based on lack of patentable subject matter, and, unless clearly not abstract, the applicant can then explain why the invention is not abstract. More direction to the examiners is to follow.