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.”