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We Get The Message! Business Method Patents After In re Bilski

Intellectual Property Update

November 7, 2008

Those hoping that business method patents have a scope outside of what the U.S. Supreme Court has previously ruled is acceptable were knocked down a notch last week by the Federal Circuit Court of Appeals in an en banc ruling. Unlike some previous rulings by the Federal Circuit, by following U.S. Supreme Court precedent more closely this time, the Federal Circuit appears to be saying to the higher court "We Get The Message!".

The Federal Circuit in In re Bilski, No. 2007-1130 (Fed.Cir. Oct. 30, 2008) (en banc) held that business method claims (and indeed all process claims) are subject to the same legal requirements for patentability as applied to any other process or method, and expressly reaffirmed the validity of business method patents in the context of a machine or transformation. The Federal Circuit also reaffirmed (or readopted) the machine-or-transformation test for patentability as first articulated by the U.S. Supreme Court in Gottschalk v. Benson, 409 U.S. 63 (1972) and later affirmed in Diamond v. Diehr, 437 U.S. 175 (1981). In so doing, the Federal Circuit rejected several other tests for patentability, including its own broader "useful, concrete, and tangible result" test articulated in State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998), which had first dealt with whether patents directed to business or financial transactions were proper subject for patents. 

As a result, by using the machine-or-transformation test, the Federal Circuit has confirmed what the U.S. Supreme Court had previously stated can successfully be protected as proper patent-eligible subject matter. Unlike some other opinions of late, however, In re Bilski also provides more of a roadmap to patent application preparation for many computer-implemented or other machine oriented business methods inventions.

Supreme Court Review

Unquestionably, the majority opinion in In re Bilski is written to square the law of patent- eligible subject matter firmly within Supreme Court precedent and avoid further guidance.  But the opinion also recognizes that the Supreme Court may ultimately decide to review In re Bilski in order to alter or perhaps even set aside the machine-or-transformation test to accommodate emerging technologies.