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Bilski v. Kappos: Machine-or-Transformation Test Holds

At long last, the Supreme Court reached a decision on Bilski v. Kappos Monday, declaring that methods of doing business may be patentable--but Bernard Bilski's was not, as it was an intangible and abstract idea. The court unanimously ruled that the patent office correctly denied Bilski's patent application. The majority opinion stated that "a business method is simply one kind of 'method' that is, at least in some circumstances, eligible for patenting," and added that it "does not suggest broad patentability of such claimed inventions."

The case began in 1997 when Bilski and Rand A. Warsaw tried to patent a system that businesses and schools could use to hedge risks of buying energy. Bilski cited the precedent of the Federal Circuit case, State Street Bank & Trust Co. v. Signature Financial Group Inc., which concluded that business methods and processes are patentable so long as they produce a "useful, concrete and tangible result." The case resulted in a new standard for patents known as the machine-or-transformation test, one that the Supreme Court has used since 1972. The test outlines that a process is patentable if it is tied to a particular machine or it transforms a particular article into a different state or thing.

Bilski v. Kappos is important because it resolved that a patent should not be granted if it doesn't meet the machine-or-transformation test. The case is unsettling for patent lawyers because the Supreme Court ruled indecisively: The ruling failed to clarify if inventions like information, software or business tools are patentable. In other words, the Supreme Court hasn't altered the scope of what is patentable; it merely refers to current law and precedent as adequate guides.

"Remarkably, what has actually happened is that the Supreme Court has potentially broadened the path to patentability in the case of business method patents by rejecting the commonly used 'machine-or-transformation' test," said John Collins, a partner at Marks & Clerk, in a statement. "Whilst the opinion states that this test provides 'a useful clue' to patentability, it makes explicitly clear the possibility that a claim may fail this test and still be eligible for a patent."


Chelsea Hennessy

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