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The Inventor's Mentor

July 2010

Important Supreme Court Decision – In Re Bilski

Good news for inventors! The long awaited decision from the Supreme Court in Re Bilski has finally been rendered. The Court stated that business methods and software are patentable. In addition it ruled that the so called “Specific Machine or Transformation” test is too restrictive and that other tests can be used.


The applicants (Bernard L. Bilski and Rand Warsaw) filed a business method patent application (on 10 April 1997) for a method of hedging risks in commodities trading. The patent was rejected by the examiner on the grounds that "the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts."

The inventor appealed to the Board of Patent Appeals and Interferences (BPAI), which affirmed the rejection of the examiner. The Board concluded that the invention claimed by the applicant did not satisfy the Specific Machine or Transformation of Matter test. It held that the transformation of "non-physical financial risks and legal liabilities of the commodity provider, the consumer, and the market participants" is not patent-eligible subject matter because it is not tied to a particular machine nor does it produce a tangible transformation of matter. The courts stated that it did not produce a "useful, concrete and tangible result," and for this reason as well was not patentable.

The case was appealed to the US Supreme Court which issued its decision on June 28, 2010.


The Supreme Court Decision

The court unanimously affirmed the Federal Circuit’s ruling that Bilski’s patent should be rejected. The Justices agreed that abstract ideas cannot be patented and that the Bilski’s claims for methods of hedging were too abstract, and were describing a general process well established in the field.


However, the nine justices unanimously agreed that the Federal Circuit erred in relying solely on the “machine or transformation” test as the only criterion for determining if a process is patentable. The Supreme Court chastised the lower court for being too restrictive:


“This Court has more than once cautioned that courts ‘should not read into patent laws limitations and conditions which the legislature has not expressed.’”



In short, the Supreme Court made the following points:


·                     Laws of nature, physical phenomena, and abstract ideas are not patentable.

·                     Business method patents and software patents are patentable.

·                     The current test of "Specific Machine or Transformation of Matter" is an accurate test for patentability but not the only test.

·                     Other tests for patentability are also available. Unfortunately the Supreme Court did not specify what these other tests are, leaving this issue to be resolved in the future by the lower courts.


What Does this Mean to You the Inventor?

Patent law was drafted many years ago by legislators who could not have imagined the age of the computer and Internet and therefore the original statutes need to be re-interpreted in view of the modern technological landscape. In response to the modern world, the legislature and the courts move slowly and not always in a straight line. The pendulum swings back and forth between being too restrictive or too permissive in interpreting patent laws. Keep in mind that non-patentable subject matter includes (but is not limited to):

  • Laws of nature
  • Natural phenomena
  • Scientific principles
  • Abstract ideas
  • Pure algorithms

The recent court decision is good for inventors. It goes back to the original purpose of patent law which is to reward inventors:


“whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.(35USC 101).”


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