The Supreme Court of the United States has issued its long awaited ruling In re Bilski. The decision has been eagerly awaited because it promised to discuss the provision in US patent law that governs what types of invention are eligible for patent protection. In particular, the decision concerns the scope of protection available for processes, and is of particular interest for those involved with business method type inventions.

The claims at issue defined a process explaining how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. In an earlier decision, the Court of Appeals of the Federal Circuit (sitting en banc) had affirmed that this process was not eligible for patent protection, and held that there was an exclusive test for deciding whether or not a claimed process patentable. This test, known as the "machine-or-transformation test", holds that a claimed process is eligible for patent protection if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. This test represented a significant limitation of the traditional interpretation of patentable subject matter in the US.

However, in its decision the Supreme Court expressly disagreed that the machine-or-transformation test is the sole test for deciding whether or not a process is eligible for patentability, although did agree that in can be a useful and important clue or investigative tool. This finding effectively reinforces the traditional US position that patents are available on a very broad range of subject matter. On this point, the Supreme Court expressly acknowledged that business method inventions are not categorically excluded.

The decision does not set out any new guidance to help patent practitioners determine whether or not an invention is patentable in the US; the claims at issue were ruled as unpatentable using precedents (set by previous Supreme Court decisions) because they were held to define only an abstract idea. So, while the Supreme Court has left the door open for the Court of Appeals of the Federal Circuit to develop case law in future that puts limits on patentable subject matter, for now this decision acts to revert US patentability practice to its traditional open stance.

The full opinion can be read here.

Published on 29th June 2010