On Monday November 9, 2009 the United States Supreme Court heard oral arguments in the case of Bilski v. Kappos (formerly Bilski v. Doll). The case involves the patent eligibility of business method claims in general, and specifically concerns claims directed to a method for hedging risk in commodities trading. After being denied a patent by the United States Patent & Trademark Office (“USPTO”), the applicants appealed to the Federal Circuit claiming the USPTO erroneously rejected the claims as not directed to patent-eligible subject matter under 35 U.S.C. §101. In affirming the decision, the Federal Circuit crafted a new “machine or transformation” test for patent eligibility of method claims, in which the method must be tied to a machine or transform a particular article into a different state or thing. The applicants appealed to the U.S. Supreme Court to determine whether the “machine or transformation” test is impermissibly rigid in the face of broad statutory language allowing patents for"any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas."
Since its inception, the “machine or transformation” test has been a source of great interest as it effectively forecloses patent eligibility and meaningful protection for many business methods. Many have also been concerned that it could have an affect on the patent eligibility of software methods or computer related technologies, as well as medical diagnostics and other biotechnology methods.
Both sides presented oral arguments before the U.S. Supreme Court in support of their respective positions. While there is usually no way to predict how the Court will rule based on oral arguments, there did seem to be an indication that this case may not be the landmark decision it appeared to be at first blush. The Court seemed focused on trying to determine a balance between allowing broad patent protection under the statute and granting patent protection for mere abstract ideas. They also seemed resistant to issue a broad ruling that could later be applied to other areas of method claims, such as software and medical diagnostics. However, we will have to wait until the Court issues its ruling to know for sure how they will decide.
For those interested, the transcript of the oral arguments can be found here