Issue
What is the likely impact of the court’s decision in re Bilski on future business method patents?
Rules of Law
Before Bilski, there was a lot of confusion as to the patentability of business methods. Generally, business methods were not patented. However, the situation changed with the court’s ruling in State Street Bank & Trust Co. v. Signature Financial Group, where the court stated that business methods are patentable so long as the process sought to produce a useful and tangible result. The decision in State Street opened the floodgates for patents.
Interestingly, the situation changed again in re Bilski, where the court raised the standard for business methods’ patentability. The court relied on the decision in Diamond v. Diehr, where the court came up with the machine-transformability test. Under this test, a business method is patentable if it is integrated into a particular thing or changes an article from one thing to another. In 2010, this position was later clarified by the Supreme Court, which held that courts and the PTO must not rely on the machine-transformability test alone in determining patentability. Notably, the Supreme Court stated that Bilski’s process was an unpatentable abstract idea, similar to an algorithm. It appears that the aim of raising the standard for patentability of business methods is to prevent the patenting of fundamental principles and algorithms.
The decision of the Supreme Court in re Bilski is relatively inconsequential. If any, very few business methods have been denied patentability because they did not pass the machine-transformability test. Legal commentators have criticized the ruling in re Bilski that the Supreme Court failed to define the term “abstract.” Therefore, no clear line is drawn as to what amounts an abstract process.
Immediately after hearing re Bilski, the Supreme Court heard Ferguson v. Kappos and denied the complainants certiorari. In this case, the federal court had relied on the machine-transformability test to rule out Fergusson’s claim as abstract. Fergusson’s process involved steps for marketing products. Therefore, Fergusson intended to obtain exclusive rights to use this process.
In the same year, the Federal Circuit court in Research Corporation Technologies, Inc., v. Microsoft Corporation, applied the abstract test to determine whether a method of halftoning grayscale images was patentable. The court found that the method met all other requirements regarding patentability. The only issue remaining was the issue of the abstract nature of the process. Interestingly, the court avoided defining the term “abstract,” holding that an abstract article must be so observable that without definition, one can conclude that it fails to meet the requirements in the law. It follows; the Supreme Court’s decision in Bilski did not leave so much impact because individuals need only prove that their business method passes the machine-transformability test.
Application of the Law
For an individual to have their business method patented, the process must not be disembodied. Specifically, the method must be integrated into a machine, the said integration must be central to the method, and the method must not be solely a language or a code.
Conclusion
Patenting of business methods follow strict regulations by law. People seeking patents for their methods must prove that their methods are not abstract.
REFERENCE
re Bilski 545 F.3d 943 (Fed. Cir. 2008).
State Street Bank & Trust Co. v. Signature Financial Group, 5149 F. 3d 1368 (Fed. Cir. 1998).
Diamond v. Diehr, 450 U.S. 175 (1981).
Ferguson v. Kappos, No. 09–1501.
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