Supreme Court Decides: Business Processes May Not Be Patentable

Back in June 2009, I blogged about Bilski v. Doll, a Supreme Court case to determine whether an abstract business process can be patented. In 1997, Bilski and Warsaw applied for a patent on a process to hedge risks in the sale of commodities. The patent examiner rejected the patent application on the grounds that “the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.” Bilski and Warsaw appealed; the appeals court affirmed the rejection, because the process failed to transform a physical substance into another state. In other words, the patent was an application for an abstract process, not a machine or a transformation, and thus was ineligible for patent protection.

On June 28, 2010, the Supreme Court upheld the rejection 9 to 3. Their decision stated that patent-eligible processes do not include “laws of nature, natural phenomena, [or] abstract ideas.” The method was not eligible for patent protection because it didn’t “transform any article to a different state or thing.” Options, futures contracts, and business risks “cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

7 thoughts on “Supreme Court Decides: Business Processes May Not Be Patentable

  1. The Bilski vs. Kappos decision didn’t declare business method patents invalid. To the contrary, the Court held business methods are patentable. The Court found Bilski’s claims unpatentable because they were directed toward an abstract idea.

    1. Yes, that’s why my blog post is titled “may not be valid.” The court upheld the “machine or transformation” test that I described in my earlier blog post. The detailed issues are perhaps too complex for a blog! In any case, the decision has not caused very much worry among corporations; the concern was initially that information technology method patents would be invalidated (e.g. the Amazon one-click patent), and the decision doesn’t seem to have done that.

  2. Hi Keith,
    I happen to read your blog today. I work for an insurance company in India. We have developed a process which facilitates the customer to buy insurance from the counter within few minutes. This is a one up on the traditional process which requires the customer to wait till the company conveyes their acceptance. Please can you opine if such a process can be patented/

    1. I think you would need an IP lawyer to make that determination, but it sounds like a wonderful innovation! What do you think about the “machine or transformation” test, as applied to your process?

  3. ‘Their decision stated that patent-eligible processes do not include “laws of nature, natural phenomena, [or] abstract ideas.”’
    Yeah? Tell that to the jerkwad drugs companies that hold patents on DNA!

    1. I am not aware of any patents on DNA, and I am pretty sure that would not be patentable. Can you provide a specific patent number that you’re referring to? They have lots of patents on proteins (for pharmaceuticals), but they are synthetic proteins and not naturally occuring in the body; at least that’s my impression.

  4. My blog post has an error; it was the Federal Appeals Court that rejected the appeal 9 to 3. Also, the quotations in my blog post are taken from the CACF decision. The Supreme Court decision upheld the rejection of Bilski’s application, this decision was unanimous 9-0. However, the decision also stated that the machine-or-transformation test is not the sole test for determining the patent eligibility of a process, but rather a useful tool. So, basically, nothing is really clarified for innovators–the machine-or-transformation test seems to be moderated somewhat, but the decision did not provide any guidance, explicit or implicit, on what that “moderation” would look like. Everyone is just as confused as they were before, and it seems companies will proceed as if the Supreme Court decision never happened: “business as usual” as some experts have said.

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