Copy

Business Method Patents Live             June 28, 2010
 to See Another Day!


After deliberating for over seven months and feeding the mystery up to its very last day in session before its long summer recess, the US Supreme Court  finally issued its decision a few minutes ago in the much anticipated case Bilski v. Kappos, on appeal from the US Court of Appeals for the Federal Circuit. For those who missed our latest issue of Pointers last week or are not familiar with this case, the Supreme Court had to decide on the patentability of business methods and had the opportunity to put an end to the long standing controversy surrounding software patents. To say that this case was followed very closely by the legal  community would be an understatement,  as it presented the highest tribunal with an opportunity to effect a paradigm shift in the way inventions would be protected going forward, as well as whether ten of thousands of patents issued by the USPTO are still valid.

 Last year, the majority for the Court of Appeals in its decision affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading. The court also reiterated the machine-or-transformation test as the applicable test for patent-eligible subject matter, and stated that the test in State Street Bank v. Signature Financial Group should no longer be relied upon. The Supreme Court granted certiorari on June 1, 2009 and oral argument on the patent applicants' appeal was heard on November 9, 2009 and everyone had been waiting anxiously to see how the highest court would come down.

Well, the suspense is finally over! In a very rare unanimous decision, the Supreme Court essentially disavowed the Court of Appeals' attempt to establish the "machine or transformation" test as the exclusive test for allowing the patentability of any invention (including business method patents) and clearly recognized business method patents as one of the many categories of inventive subject matter, as long as they met the other requirements (e.g. novelty, non-obviousness and usefulness) required by the Patent Act and further defined by over a century of precedents. In short, a "process" doesn't have to be tied to a machine or a transformation. But process there must be and Justice Alito, writing for the Court, ruled that the invention made by Bilski (the concept of a hedging risk and its corresponding application) was a mere abstract mathematical formula that did not amount to a "process" and therefore was not worthy of patent protection. The lower court judgment is thus affirmed in that respect.

The 70 page judgment by the US Supreme Court  contains many nuances and comments from various Justices that will no doubt be looked at with a magnifying glass in the weeks to come and generate many in depth analyses. It will also be interesting to witness how the USPTO will apply this ruling in examining new patent applications. We will report further once the dust has settled and clearer guidelines have emerged. In the meantime, if you're a proponent of patents as an engine of innovation or are particularly fond of business method patents, you can relax: in fact, you are having a very good day! 


Louis Carbonneau
Founder & Principal
The Point Law Group


THE POINT LAW is a boutique law firm specializing in business and technology law catering primarily to technology and e-commerce companies. We offer a full range of legal and business solutions to start-ups, small and medium-sized businesses and large multinational corporations.

You can contact Louis directly at:

louicar@thepointlaw.com
(425) 868-9280 (o)(425) 213-7252 (m)