Business Method Patents at the U.S. Supreme Court 


Summer 2009 - (Intellectual Property Brief Summer 2009)

Intellectual Property Brief Summer 2009

Later this year, for the first time in nearly twenty years the United States Supreme Court will consider the issue of patent-eligible subject matter. On June 1, 2009, the United States Supreme Court granted c ertiorari in Bilski v. Doll, and will consider whether the en banc decision of the Court of Appeals of the Federal Circuit ("Federal Circuit") in subjecting business method patents to the "machine or transformation" test was appropriate. Specifically, the Supreme Court will consider the following two issues:

  • Whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or- transformation" test), to be eligible for patenting under 35 U.S.C. §101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for "any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas.", and
  • Whether the Federal Circuit's "machine-or-transformation" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect "method[s] of doing or conducting business." 35 U.S.C. §273.

As was discussed in detail in the Spring 2009 edition of IP Brief , in In re Bilski, 545 F.3d 843, 88 U.S.P.Q.2d 1385, Fed.Cir. 2008, the Federal Circuit put strict limits on State Street Bank & Trust Co. v. Signature Financial Group Inc. , 149 F.3d1368, Fed. Cir. 1998, by requiring that any method be tied toa machine, or otherwise bring about some transformation in aphysical article to be considered patentable subject matter.

The last time the subject matter question was considered by the United States Supreme Court was in a pair of decisions in the early 1980s, specifically Diamond v. Chakrabarty , 447 U.S. 303, 309 (1980) and Diamond v. Diehr , 450 U.S. 175 (1981). In Chakrabarty , the Supreme Court held that a living, human-made micro-organism is considered patentable subject matter under 35 U.S.C §101. In Diehr , the Supreme Court affirmed that laws of nature, naturally occurring phenomena and abstract ideas are not considered patent-eligible subject matter, but held that where a claim includes a mathematical formula and performs a function "which patent laws were designed to protect," then the claim is eligible for patent protection. This holding in Diehr served as the basis for State Street Bank , and the broad protection afforded to method claims until Bilski.

While it is difficult to predict which way the Supreme Court will render its decision on this issue, applicants and interested parties alike will be awaiting the decision in the hopes that it will bring clarity to the patent-eligibility of business method patents, and put to rest the uncertainty surrounding business method patents in recent times. In granting certiorari, the Supreme Court has given weight to the importance of providing clear direction on the patenting of business methods. With broad implications for those patent applications being prosecuted before the United States Patent Office to those issued patents which may undergo litigation, the Supreme Court's decision will be eagerly anticipated, when it is delivered in late 2009 or early 2010.

This article appeared in the Lang Michener LLP Intellectual Property Brief Summer 2009.