News Analysis: The U.S. Supreme Court renders a narrow decision in the Bilski vs. Kappos case in which it upheld a lower court's rejection of a patent on a computerized business process for managing energy hedge funds. But the decision doesn't bar business process or software patents in general. The decision also fails to define a general test for granting business process patents.
The U.S. Supreme Court has decided that lower
courts and the U.S. Patent and Trademark Office were correct in rejecting
a patent for a method for handling energy hedge funds in its
long-awaited decision in the case of Bilski v. Kappos.
The Court ruled that the Bilski claim was based
on an abstract idea, and as such was not eligible for a patent. However,
the court also rejected the ruling by the U.S. Court of Appeals for the
Federal Circuit that a concept called the machine-or-transformation
test was the only test that could be allowed for considering whether a
a patent should be granted. That test considers whether the patent
involves a machine or in some way transforms some object from one state
According to Robert Tosti, an intellectual
property attorney and Partner at Brown Rudnick in Boston, the U.S. Court
of Appeals decision had a real impact on the ability of businesses to
patent innovative ideas. The June 28 decision eases the restrictions a
little. Tosti said that the appeals court decision had led to
interpretations that came down pretty hard on any method to patent a
Now, he said, the Supreme Court has made it
clear that the law didn't provide for such limits. Instead, the court
ruled that the machine-or-transformation test wasn't the only
consideration, Tosti said. "More broadly, they said the result was
right, but the test is only one way to see whether something is
patentable, however, it's not the only way," said Tosti.
While it rejected the Bilski patent, the court
did not provide any definitive test that could be used to determine
what business processes might be patentable even though it agreed with
the decision that abstract ideas could not be patented.
The Court also rejected the idea that business
processes and methods aren't patentable. Professor Edgar also
said that it was clear that the Court was concerned about allowing such
patents to be too easy, according to Professor Harold Edgar at Columbia
University School of Law. "Justice Kennedy talked about the
need for a high bar for patents on business systems," in his opinion on
the case, he said.
Professor Edgar said that the Court's decision
was really quite narrow. It upheld the lower court decision rejecting
the patent, and it rejected the test the lower court had been using to
determine whether something was patentable, but it did not provide more
than general guidance as to what constituted a valid test of
patentability. He said this was because the Court found the
decision very difficult to reach. "The fact that it came out on the
last day shows that it's the longest in gestation this term," he said.
"It shows that they see the issues as extremely difficult"
Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.
He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.