Bilski: The Landmark Case That Wasn't ... Helpful?
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We recently wrote about the recent Bilski holding, and how the narrow decision seemed to do little, except for increase the confusion about business method and software patents. The issue is understandably complicated (likely why the Supreme court punted this decision), and the holding is evidence of that. As I was reading Techdirt, I saw The IEEE recently released a press release that illustrated how confusing the recent decision actually was. The IEEE reported, "The U.S. Supreme Court ruled 5-4 Monday that a new method of doing business can be patented, and that the ability to patent software should not be limited." As Techdirt points out, this is not exactly the case. It was not a 5-4 decision, but a 9-0 with a split majority, and the holding did not succinctly state “that a new method of doing business can be patented.”
In an attempt to help clear up some of the confusion, we spoke with Bob Villhard, a local Austinite patent attorney (who we also work with quite a bit), about the Bilski holding. Our discussion turned into a brief summary by Villhard on the subject. In a much more eloquent manner than myself, here is Villhard’s insightful interpretation of Bilski:
Back to Business: The Supreme Court Decides That Some Business Methods Can Receive Patent Protection
In a landmark decision on June 28, 2010, the Supreme Court ruled that some business method patents can be eligible for patent protection. This ruling comes as a great relief to many entrepreneurs who (during the lengthy pendency of the Bilski case) found the U.S. Patent Office unwilling to protect their new business methods with patent protection. The Bilski ruling changes that for many entrepreneurs.
In a nutshell, the claims of the Bilski patent application claimed a method of hedging market positions. Notably, the Bilski claims failed to include a description of a computer for performing the hedging method. Thus, Bilski was claiming a “raw” business method. In considering the validity of these claims, the Court held that while some business methods can receive patent protection, those methods which merely express an abstract idea cannot.
However, the Court left many questions un-answered.
For instance, prior to this ruling, method claims had to pass an exclusive “machine or transformation” test in which the method had to 1) be tied to a particular machine or 2) transform an article into a different state or thing. In the Bilski opinion, the Supreme Court stated that, “In disapproving an exclusive (emphasis added) machine-or-transformation test, we by no means foreclose … development of other limiting criteria.” The Court also stated that therefore we “need not define further what constitutes a patentable ‘process.’”
Thus, the machine or transformation test is no longer the exclusive test for determining patent eligibility. Rather, the Patent Office is free to develop new tests for patent eligibility. This result is unfortunate for entrepreneurs because the Court offered no guidance as to what these new tests might be. As a result we can expect more litigation before this question is settled. However, this result is also good news for entrepreneurs because if their method claims pass muster under the machine or transformation test, they are eligible for patent protection. Plus, the possibility now exists that claims passing other tests (albeit tests that have yet to be developed) can also receive patent protection.
It is worth noting, though, that business method patent applications still pose special problems for entrepreneurs. For instance, the Court explicitly stated that, “In order to receive patent protection, any claimed invention must be novel, non-obvious, and fully and particularly described” in accordance with the relevant patent laws. Furthermore, the Court stated that, “Business method patents raise special problems in terms of vagueness and suspect validity.” In other words, entrepreneurs should beware that the Patent Office remains likely to treat business method patent applications with a great deal of skepticism and scrutiny.
As a result, while some business methods can now receive patent protection, entrepreneurs should take care to obtain the services of a skilled Patent Attorney to navigate the complex legal requirements imposed on patent applications.
The lead author, Robert Villhard, has over eight years of legal experience, is the Founder and CEO of The Villhard Patent Group, and has over fifteen years of experience as a rocket scientist. Those interested in obtaining more information can contact Bob at (512) 897-0399 or visit www.villhardpatents.com.
