JURIST - Paper Chase: Supreme Court to rule on business method patent case

[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday granted certiorari [order list, PDF] in Bilski v. Doll [docket; cert. petition, PDF] to review the scope of patentable subject matter. The Court will review a US Court of Appeals for the Federal Circuit [official website] en banc ruling [opinion, PDF; JURIST report] which affirmed a Board of Patent Appeals and Interferences [official website] rejection of the eligibility of a business method patent [Jones Day backgrounder] seeking protection for a method of hedging risks in commodities trading. While the Federal Circuit did not rule out business method patents altogether, they narrowly defined the "machine-or-transformation" test to be used in determining the eligibility of such patents under federal patent law [35 USC § 101 text]. The appeals court found that the patent in question failed this test because it was not tied to any machine and because there was no transformation of physical matter, affirming the lower court's holding that the transformation of "non-physical financial risks and legal liabilities of the commodity provider, the consumer, and the market participants" was not eligible subject matter. Additionally, the appeals court affirmed the finding that the process was only an abstract idea and did not produce a "useful, concrete and tangible result." Specifically, the Court will decide whether § 101 requires a process to be tied to a particular machine or apparatus, or transform a particular article into a different state in order to be patentable. The petitioners claim that the Federal Circuit's test to make this determination contradicts congressional intent [35 USC § 273 text] to provide patent protection to "method[s] of doing or conducting business" and effectively forecloses protection to many business methods.

The patentability of business methods is a controversial subject among practitioners. The Court's ruling could affect the validity of many business method patents including those involving financial services and software. The "machine-or-transformation" test in question was originally established by the Supreme Court in the 1972 case Gottschalk v. Benson [opinion text].

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