Blessing of ‘Business Patents’ in US will affect you.The US Supreme Court recently issued its long-awaited decision in the case of Bilski v Kappos which is considered to be one of the most anticipated patent decisions of recent time.
The case involved a patent application for a method of hedging risk in commodities trading. The application was rejected in the first instance by the patent examiner as the invention was a business method which did not relate to any specific apparatus. It was therefore considered to be an abstract idea which is not patentable under US law. The case was then appealed all the way to the Supreme Court.
The main issue for the Supreme Court was whether a patent could be issued for an invention which was a business method. The Court rejected the lower court's ruling that the patent was invalid because it didn't meet the "machine or information" test, meaning that a process must be associated with a machine or must physically transform a product to qualify for a patent. It found that whilst the test was a useful tool, it was too narrow and should not form the sole test as it excluded all business methods. The focus should instead be on whether a claim is "directed to an abstract idea".
The Court's Opinion
The Court's opinion was written by Justice Kennedy and joined by Chief Justice Roberts and Justices Scalia (in part), Thomas, and Alito...
What this means to you?
Holders of existing business method patents can breathe a sigh of relief. By not foreclosing the patent-eligibility of all business methods and rejecting the exclusivity of the machine-or-transformation test, the Supreme Court has given existing business method patents new life. Going forward, the Patent Office must now consider how to adapt. The machine-or-transformation test remains important, and processes that meet this test are likely to be deemed patentable, provided other statutory criteria (e.g., for novelty and non-obviousness) are satisfied. However, the machine-or-transformation test is not the exclusive test for patent-eligibility, and some business methods that do not meet this test could be patent-eligible, if not too abstract.
While abstract ideas, laws of nature, and mathematical formulae are not patent-eligible, as noted by the Supreme Court, "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Indeed, the inventors in Bilski have themselves promised to go back to the Patent Office seeking the allowance of revised claims. The Federal Circuit will likely revisit the scope of patent eligibility very soon, as the Supreme Court vacated and remanded two cases (Classen Immunotherapies Inc. v. Biogen Idec and Mayo Collaborative Services v. Prometheus Laboratories) in light of Bilski.
1. For additional details concerning the Bilski case, please link to our recent circular: http://www.ogilvyrenault.com/en/resourceCentre_10445.htm
2. Bilski et al. v. Kappos, US Sup. Ct., Slip Opinion No. 08-964 (28 June 2010)
3. Indeed, in Bilski the Court affirmed the rejection of claims drawn very broadly toward the protection of methods of hedging risks in commodities markets. The rejected claims, however, were so broad that they could have been infringed by individuals passing cash among amongst themselves in a living room.
4. In Re Bilski et al., US Court of Appeals for the Federal Circuit, Slip Opinion No. 2007-1130, at 21 and note 23.
5. See Respondent's Memorandum of Fact and Law in Amazon.com, Inc. v. Attorney General, Fed. Court file T-1476-09, at 27. CIPO's reliance on Bilski has itself been questioned.
6. Fed. Court file T-1476-09.
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