The claimed invention at issue in Bilski, a method for managing commodity trading risk, raised questions about what can be patented under U.S. law – and in particular what is the dividing line between abstract, unpatentable ideas and patent-eligible inventions. The decision has important implications for industries from health care to high tech.
The Licensing Executives Society (USA and Canada), Inc. supported the Court’s position to uphold the long-standing tenet of patent law that abstract ideas, such as Bilski’s, are not patentable.
The Supreme Court held that the Federal Circuit’s “machine or transformation” test, while an important consideration, is not the sole test for patent eligibility. In holding that the machine test is not the sole test for patentability, the Court noted that the term “method” within the statute’s “process” definition may include at least some methods of doing business though it cautioned that one should not assume broad patentability of such inventions.
“The patent application here can be rejected under our precedents on the unpatentability of abstract ideas,” Justice Anthony Kennedy wrote for the court. “The court, therefore, need not define further what constitutes a patentable process.”
So, Bilski didn’t get his patent upheld … but the patent door is open for those who have specific business methods.
“Overall, we believe the Supreme Court’s decision represents an important step towards maintaining a balanced, effective patent system that promotes innovation and opportunity for both inventors and consumers,” said LES (USA and Canada) Public Policy Chair, Brian O’Shaughnessy. “By excluding abstract ideas from patent protection, while maintaining the patentability of real-world inventions in all technical fields, this decision will enhance companies’ ability to work together through licensing to offer new products and services.”
Meanwhile, Gene Quinn, a patent attorney and author of the IPWatchdog blog, likewise agreed with the Court’s decision.
“Today, after a wait of nearly 8 months the Supreme Court has seemingly got it right, at least based on early analysis. In doing away with the machine or transformation test as the sole test for determining whether an invention is patentable subject matter the Supreme Court has kicked open the door and will not allow it to be closed on new technologies and innovations that we cannot today imagine.”
Ocean Tomo, a leading Intellectual Capital Merchant Banc firm, also took comfort in the long-awaited ruling:
“Our conclusion today is that the Bilski opinion should be positive for those firms that rely on proprietary business methods to generate returns,” said James E. Malackowski, the firm’s chairman.
Bottom line: Business methods can be patented, but they’ll have to pass more than just one test going forward.