What is Patentable?  A Brief Background on Bilski and Where We Are Now.

by Mark Malek

Oral arguments before the United States Supreme Court In re Bilski were held on November 9, 2006.  This case has been closely watched by the patent community because it can have some serious ramifications as to the type of subject matter that is patentable.  The patent application filed by Bernard Bilski and Rand Warsaw is directed to a method of hedging risks in commodities trading.  The Examiner issued a final rejection, noting that the invention was not directed to patentable subject matter, pursuant to Section 101 of Title 35, United States Code.  Pursuant to 35 U.S.C. § 101, to be patentable, an invention must be directed to a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”

The Applicants appealed the Patent Office’s decision to the Federal Circuit.  The en banc Federal Circuit upheld the PTO’s decision and noted that patentable subject matter does not include “laws of nature, national phenomena, or abstract ideas.”  The court went on to reiterate the “machine or transformation test” with respect to patentability.  More specifically, patentable subject matter must be tied to a particular machine or apparatus, or it must transform a particular article into a different state or thing.  Using that test, the Federal Circuit found that the method of hedging risks in commodities trading did not meet the requirements for patentability.

The decision of the en banc Federal Circuit represents the current state of the law.  This has had an effect on software patents, business method patents, and pharmaceutical patents.  These types of patents have been heavily worded using methods and lightly, if any, wording directed to structure.  The Bilski decision has single handedly bundled most of these patent applications into a category of abstract ideas that are not patentable.  This is not to say that all inventions in the fields of software, business methods and pharmaceuticals are not patentable.  Instead, these patent applications must now be tied to a machine or apparatus, or transform a particular article into a different state or thing.  When dealing with software, it is not too difficult to overcome this burden.

The Bilski case is now in the hands of the Supreme Court.  As noted above, the oral arguments were recently held, and we should expect a decision from the Supreme Court sometime next year.  On a personal note, I believe the machine or transformation test is a good one, but I think that the court should look into carving out some protection specific to software and pharmaceuticals.