Patents seek to promote innovation by providing inventors with monopoly rights over their inventions for a limited time. What constitutes a patentable invention has long been at issue, particularly in the case of business methods. Many inventors and patent attorneys hoped that the Supreme Court decision in Bilski v. Kappos would help resolve this ambiguity.
For many years, the U.S. Patent Office did not issue patents for business methods. However, with the rise of software and other computer-based information-processing methods, the U.S. Patent Office could often not determine whether a given patent application was a technological invention or a business practice. In 1998’s State Street Bank v. Signature Financial Group, the Federal Court of Appeals affirmed the patentability of business methods that involve some practical application and produce a useful, concrete, and tangible result.
The Supreme Court’s decision in Bilski, handed down on June 28, 2010, jettisoned the patentability test laid down in State Street in its rejection of the patent claim at issue–a business method for hedging risks in commodities trading. IP Attorney Judith L. Grubner writes, “three of the justices speculated that because technology and other innovation “progress in unexpected ways,” the machine-or-transformation test may be sufficient to evaluate processes similar to those in the Industrial Age, but new technologies in the Age of Information “may call for new inquiries.” They specifically refused to take a position on where the balance should be struck between protecting inventors and refusing monopolies over procedures that others could “discover by independent, creative application of general principles.”’ By not resolving the wider issue of whether business methods are patentable, the court dodged the difficult question and deferred a more complete ruling to future justices.
According to attorney Luis Villa, “this is the most change-averse patent opinion the Supreme Court has issued in recent years, and it will leave the Federal Circuit very reluctant to broadly attack entire classes of patents in the near future. It will be up to the Federal Circuit to try and find a new rule, somewhere between ‘machine or transformation’ and ‘useful, concrete, tangible’ and this almost certainly means that we’ll be back at the Supreme Court arguing similar issues within a few years, asking the court to ratify or reject the next Federal Circuit attempt.”
Attorney Jim Singer notes that the Supreme Court’s (in)decision may spur Congressional action. Senator Patrick Leahy in particular sees Bilski as a mechanism for driving legislative reforms, saying, “the courts are constrained by the text of our outdated statutes, and it is time for Congress to act.”