Bilski's impact on software patents

Intellectual Property and Technology News

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Bilski is a favorable decision for software patents – it broadened patentable processes beyond those that meet the machine-or-transformation test, and expressly recognized that even some business methods are patentable. Overall, Bilski will allow properly drafted software method claims to enjoy patentability for years to come.

 

In the majority opinion, the Court discussed the country’s shift from the Industrial Age to the Information Age, the former being characterized by traditional machines and the latter being characterized by, for example, computer programs. Bilski v. Kappos, 130 S. Ct. 3218, 3227 (2010). Determining patentability of processes using solely the machine-or-transformation test “would create uncertainty as to the patentability of software.” Id.

 

According to Raymond Chen, Deputy General Counsel for Intellectual Property Law and Solicitor at the USPTO, the Supreme Court decision in Bilski has in some ways created uncertainty for the public, practitioners, and patent examiners in the preparation and prosecution of process claim patent applications. Although the Supreme Court has discussed the abstract idea exception to patent eligibility, no clear test was given. The only clear boundary provided by the Supreme Court is that Bilski’s claims, as drafted, violated the abstract idea standard. As to the future of software and business method patents, Mr. Chen reiterated a position that is spelled out in the briefs and arguments of the USPTO in the Bilski case, namely, the USPTO never sought to exclude software or business methods from patent eligibility, but has merely been seeking a clear and understandable path for the public, practitioners, and examiners to determine whether claims (including claims drawn to business methods and software) meet statutory requirements.

 

Even though the Court was unwilling to commit to the machine-or-transformation test, the Court explained it is still the preferred test for determining whether a process is patentable. Clearly, the machine-or-transformation test is preferred by the Federal Circuit, and it appears to be the preference of the USPTO as well. For example, the USPTO’s Interim Guidelines in Response to Bilski explain that factors weighing in favor of patent eligibility for process claims are satisfaction of the machine-or-transformation test or evidence that an abstract idea has been “practically applied.” See Federal Register, Volume 75, No. 143.

 

These guidelines provide a clear boundary for practitioners in drafting claim families in patent applications, and software and business method patent application claims should therefore be drafted in the style of the machine-or-transformation test with the USPTO’s patent eligibility factors in mind. The claims of the Bilski patent application that were held unpatentable truly claimed an abstract idea, and did not follow the guidelines. The claims were not tied to a machine, did not describe a particular implementation of the hedging risk, and did not describe observable or verifiable results. In the litigation context, suits over software patents likely will involve disputes over whether the claims cover abstract ideas and whether they satisfy the machine-or-transformation test or perhaps an alternative test that has yet to be adopted. At least in the near future, it is probable that district courts will utilize the USPTO’s Interim Guidelines as an aid in their analysis of patentability issues.