Eileen McDermott, New York
In its eagerly awaited decision in In re Bilski, the US Court of Appeals for the Federal Circuit last month reaffirmed its finding in State Street that business methods are patentable in the same way as any other process or method, but the Court rejected the "useful, concrete, tangible" test set forth in previous opinions.
In a judgment that some see as the Federal Circuit's attempt to defer to the Supreme Court after having had a number of its decisions reversed by the High Court in recent years, Chief Judge Paul Michel, writing the for a majority of the 12 judges, said (in a footnote): "Although invited to do so by several amici, we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court."
These "fundamental principles" were defined in the opinion as "laws of nature, natural phenomena, and abstract ideas", the latter of which the Court said applied to the claims at issue in the Bilski invention.
The USPTO rejected Bilski's patent application for an invention relating to a method for hedging risk associated with a commodity sold at a fixed price because claims 1 to 11 of the invention were "not implemented on a specific apparatus and merely manipulate[d] [an] abstract idea and solve[d] a purely mathematical problem without any limitation to a practical application".
During the en banc Federal Circuit hearing in May, David Hanson of the Webb Law Firm, representing Bilski, argued that "consumption risk is not abstract".
The Court rejected the argument, but also said that the "useful, concrete, and tangible result" enquiry associated with the State St and Alappat cases "is insufficient to determine whether a claim is patent-eligible".
Michel said that enquiry is "inadequate" and the so-called machine-or-transformation test outlined by the Supreme Court in Benson and Diehr is the proper test to apply. That test requires that an invention must either be somehow tied to a machine or transformed into "a different state or thing" in order to be patentable.
Many feel the new test leaves open key questions that will create confusion and put inventions – particularly in the financial services and software industries – at risk. Importantly, the Court chose not to define the parameters for meeting the machine implementation test, since Bilski admitted that his invention did not require any specific machine or apparatus in order to be used. "As a result, issues specific to the machine implementation part of the test are not before us today," Michel wrote. "We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine."
Richard Eskew of Stroock and Stroock and Lavan said: "The court's failure to resolve the computer implementation question creates a lot of uncertainty for businesses trying to decide whether a particular invention is patentable."
But others felt the decision brought clarity. "This decision will not put the brakes on business method, software, or financial patents, but rather provides clear instruction on how to craft patent applications to get over the threshold hurdle of patentable subject matter under 101," said JD Harriman of DLA Piper.
