On June 28, 2010, the Supreme Court decided a case that is important to so-called business method patents. The Court ruled: (i) by a 9-0 vote, that Bilski's mathematical model for reducing risk in trading commodities was not patentable because it was directed to an abstract idea; (ii) by a 5-4 vote, that business methods are not categorically unpatentable and may be patented if they meet the proper tests; and (iii) by a 9-0 vote, that the recitation of a particular machine or the transformation of an article in business method claims is not the only test for patentability of such claims.
Because of the way the Bilski case had been decided by lower courts, the decision had the potential to extend beyond business methods and to also affect the availability of patent protection for software. This patent case thus received a record amount of attention at the U.S. Supreme Court and now stands as the case having the most amicus ("friend-of-the-court") briefs ever filed in the Supreme Court.
Although the main part of the case was decided unanimously, there were differences on some of the issues that resulted in three separate opinions. Justice Kennedy authored the Court's majority opinion, which was joined in its entirety by Justices Thomas and Alito, and by Chief Justice Roberts. Justice Scalia joined in the majority opinion except for two parts. A separate opinion concurring in the judgment was authored by Justice Stevens, which was joined by Justices Ginsburg, Sotomayor and Breyer. Justice Breyer authored an additional concurring opinion, in which Justice Scalia joined in part.
Business methods patents became common after the Federal Circuit's 1998 decision in the State Street Bank & Trust Co. v. Signature Financial Group case that business methods were patentable if they had a "useful, concrete and tangible" result. The Stevens concurring opinion would have the Court flatly hold that business methods are not patentable subject matter. But the majority opinion held that it was improper to categorically exclude business methods and computer software as always being unpatentable, resulting in the slim 5-4 decision that business methods are not per se unpatentable. However, the future of business method patents in the financial services industry that are not tied to a machine may not be particularly bright. The majority opinion left the door open for "a narrower category or class of patent applications that claim to instruct how business should be conducted" to be ruled unpatentable. It also noted that "nothing in today's opinion should be read as endorsing interpretations . . . that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, …"
Unfortunately, the Supreme Court's decision leaves no bright line test for determining whether or not a particular business method is patentable subject matter. Those considering patent protection for such inventions may wish to consult with a registered patent attorney.
For more information, please contact the author of this article, Robert M. Bauer, at rbauer@mijb.com, any member of MacDonald Illig's Intellectual Property Group, or the MacDonald Illig attorney with whom you've worked.
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