On June 28, 2010, the United States Supreme Court handed down its long-awaited decision in
Bilski v. Kappos, 561 U.S. __, 130 S. Ct. 3218, 177 L. Ed. 2d 792 (2010). The case specifically addressed
whether a method for hedging risks in commodities was patentable subject matter under 35 U.S.C. §
101, which provides that “[w]hoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a
patent.” While the Court affirmed the Federal Circuit’s rejection of the claims-at-issue under § 101, it
rejected the appellate court’s ruling that the “machine or transformation” test was the sole test for
determining whether method claims were patentable subject matter.
More than the ruling on the particular method claimed in Bilski, the patent community anxiously
awaited the Supreme Court’s answer to the question restated in Justice Kennedy’s opening line: “The
question in this case turns on whether a patent can be issued for a claimed invention designed for the
business world.”
Id. at 799.
Noting that it was unaware of any argument that the common
understanding of “method” excluded business methods, the Court went on to find that the “argument
that business methods are categorically outside of § 101’s scope is further undermined by the fact that
federal law explicitly contemplates the existence of at least some business method patents.” Id. at 804.
In endorsing the viability of business method patents, the Court affirmed its own precedent regarding
the broad scope of § 101 that furthered Congress’s “permissive approach to patent eligibility to ensure
that ‘ingenuity should receive a liberal encouragement.’” Bilski, 177 L. Ed. 2d at 801 (quoting Diamond v.
Chakrabarty, 447 U.S. 303, 308 (1980) (quoting 5 WRITINGS OF THOMAS JEFFERSON 75-76 (H. Washington
ed. 1871)).
Prior to the Supreme Court’s Bilski decision, the Federal Circuit had held that the “machine or
transformation test,” which requires that method claims either be tied to a particular machine or
transform a particular article into a different state or thing, was the sole test for determining whether a
method claim constituted patentable subject matter. The Supreme Court rejected this ruling, noting
that the “Court’s precedents establish that the machine-or-transformation test is a useful and important
clue, an investigative tool, for determining whether some claimed inventions are processes under §
101,” but not the exclusive test. Id. at 803. The Court also reiterated that under its own precedent the
only broad exclusions of patentable subject matter are laws of nature, physical phenomena, and
abstract ideas. Id. at 803. Moreover, along the same lines as its opinion in KSR Int’l v. Teleflex, 550 U.S.
398 (2007), where the Court rejected a rigid approach to assess obviousness, the Bilski Court rejected a
rigid approach to determining patentability, stating: “Section 101 is a ‘dynamic provision designed to
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encompass new and unforeseen inventions.’” Id. at 803 (quoting J.E.M. Ag Supply, Inc. v. Pioneer HiBred Int’l, Inc., 534 U.S. 124, 135 (2001)).
The key question now is how the United States Patent and Trademark Office and lower federal
courts will apply the Supreme Court’s Bilski opinion. For its part, the Federal Circuit has stated: “[w]e
therefore understand the Supreme Court to have rejected the exclusive nature of our [“machine or
transformation”] test, but not necessarily the wisdom behind it.” King Pharm., Inc. v. Eon Labs., Inc.,
2010 U.S. App. Lexis 15947 (Fed. Cir. Aug. 2, 2010). The USPTO has issued new “Interim Guidance for
Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos.”
75 Fed. Reg.
43922 (July 27, 2010). These guidelines stress that although “no court, presented with a subject matter
eligibility issue, has ever ruled that a method claim that lacked a machine or a transformation was
patent-eligible … Bilski held open the possibility that some claims that do not meet the test might
nevertheless be patent-eligible.” Id. at 43924. With that being said, the USPTO’s Interim Guidance
appears to focus on the restriction against patenting abstract ideas by laying out three primary factors
to assist examiners, including: 1) whether the method involves or is executed by a particular machine or
apparatus, 2) whether performance of claimed method results in or otherwise involves a transformation
of a particular article, and 3) whether performance of the claimed method involves an application of a
law of nature. Id. at 43925-6.
Based on these statements, it is apparent that the “machine or transformation” test will
continue to play a significant role in patentability determinations under § 101. Inventors and patent
attorneys alike should continue to keep the principles underlying the “machine or transformation” test
foremost in their mind when drafting claims describing their method or process claims. Although the
“machine or transformation” test is no longer considered the sole test of patentability under § 101,
courts and the USPTO are still likely to rely heavily on it in the foreseeable future.
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