BILKSI v. KAPPOS
On June 28, 2010, the U.S. Supreme Court handed down the long awaited decision in
by Paul J. Esatto, Jr.
Bilski v. Kappos.
The Court unanimously held that the "machine or transformation" test is not the sole test for patent eligibility of process claims
under section 101. However, the Court stated that the "machine or transformation" test is a "useful and important clue" for
determining whether a process is patent eligible.
In addition, the Court in a 5-4 decision, upheld the patent eligibility of business method patents, provided the claims meet
all the requirements of patentability under the statute, namely, sections 101, 102, 103 and 112. However, 4 of the 5 Justices
in the majority endorsed the concept that there should be a higher bar for business method patents and they encouraged the
Court of Appeals for the Federal Circuit ("CAFC") to try to narrowly define a category of business methods that are unpatentable
because they are an attempt to patent an abstract idea. Whether or not the CAFC will actually do this remains to be seen.
The Court reiterated that the only test for patentability under section 101 is whether or not the claimed invention is directed to a law
of nature, physical phenomena or an abstract idea. If the claimed invention falls into one of these three categories, it is not patentable.
Since the claims at issue in this case are business method/software type method claims, the guidance for this determination are
the prior Supreme Court decisions in Gottchalk v. Benson, Parker v. Flook and Diamond v. Diehr. Based on these decisions, the
Court held that the claims at issue were directed to an abstract idea and therefore the Bilski patent claims were not patentable.
But in finding the Bilski claims unpatentable, the Court did not define any particular test to be used to determine whether a claim
is to an abstract idea, such as in Benson and Flook, or whether it is more than that as in Diehr. In fact, the Court specifically upheld
the CAFC's rejection of the "useful, concrete, and tangible result" test previously used by the CAFC.
The Court only stated that the Bilski claim was solely directed to a "basic concept" of hedging, citing Judge Radar's dissent in the
CAFC's en banc Bilski decision that hedging was a well-known fundamental practice. The Court also cited Flook that just by limiting
the concept to a particular field or adding token post-solution components does not make the concept patentable.
Thus, the Supreme Court has affirmed that software and business method claims are eligible for patenting. There are no
hard and fast rules to determine whether such a claim is patentable under section 101. There are only the examples of the
claims that were found unpatentable abstract ideas in Benson and Flook and the claim found not to be an abstract idea in Diehr.
In short, a process claim directed to a mathematical algorithm per se is not patent eligible, and the inclusion of insignificant
post-solution activity or a field of use will not save the claim from being directed to the algorithm per se. In addition, claims
directed solely to a basic well-known concept are not patent eligible under section 101. Claims drafted to meet the "machine
or transformation test" would be patent eligible but on the other hand, claims that fail to meet that test cannot be rejected on that basis.