The Seminal Decision of 'Bilski v. Kappos'

The SE Texas Record Jul. 22, 2010, 5:23am

By Nicole Keenan and Sydney Kokjohn

In the seemingly pro-patent decision of Bilski v. Kappos, the U.S. Supreme Court relied on prior decisions -- instead of the test that was articulated by the Federal Circuit -- to find Bilski's business method unpatentable.

Patent applicants Bernard L. Bilski and Rand Warsaw claimed a method for hedging risk in the energy market. The patent examiner rejected the application and the Board of Patent Appeals and Interferences affirmed.

On appeal, in In re Bilski, the Federal Circuit also affirmed the rejection. The Federal Circuit held that the "machine-or-transformation test" should be the sole test governing § 101 analyses.

The test requires that an invention be "tied to a particular machine or apparatus" or "transform[] a particular article into a different state or thing" in order for it to be a patentable "process" under statute.

The Supreme Court granted certiorari and affirmed the finding that Bilski's method of hedging risk was unpatentable, but rejected the Federal Circuit's holding that the "machine-or-transformation test" was the only test that could be applied.

The Court instead applied the principles articulated in the Benson, Flock and Diehr cases to find Bilski's invention unpatentable because it claimed an abstract idea.

Specifically, the majority opinion was authored by Justice Anthony Kennedy and joined by Justices Clarence Thomas, John Roberts, Samuel Alito and Antonin Scalia (except for Parts II-B-2 and II-C-2, which Justice Scalia did not join).

Justice Stevens, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor, concurred in rejecting the "machine-or-transformation" test as the only applicable test and in finding Bilski's risk hedging method unpatentable.

But while the majority found that business methods were not per se unpatentable, the concurrence argued that a claim for a business method was not a "process" under Section 101.

Justice Breyer wrote another concurring opinion, which Justice Scalia joined in part, summarizing his view of the points of law that were consistent among all members of the Court.

Interestingly enough, while Bilski's business method was deemed unpatentable, the Court left open the possibility that other business methods could be patentable subject matter.

By rejecting the exclusive application of the stringent "machine-or-transformation test," the Supreme Court's decision in Bilski may make business method patents easier to obtain.

The decision in Bilski provides the Patent Office and the courts greater flexibility in ruling on the patentability of business methods.

However, it will be interesting, of course, to see how they actually apply the Bilski decision.

Nicole Keenan is a partner and Sydney Kokjohn is an associate at McDonnell Boehnen Hulbert & Berghoff LLP, an intellectual property firm in Chicago, Ill. Keenan can be contacted at 312-935-2372 (direct)or Kokjohn can be contacted at 312-913-3304 (direct) or

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