The Bilski Business Method Patent Decision

| Mon Jun. 28, 2010 11:42 AM EDT

On Monday, the Supreme Court affirmed a lower court ruling that struck down Bernard Bilski and Rand Warsaw's "business method" patent for hedging energy prices against the weather. Some observers had hoped that the court would issue a broad ruling rejecting many "business method" patents—such as Amazon.com's "one-click" purchasing—entirely. (Critics of business method patents argue that you shouldn't be able to get patent protection for something as supposedly "obvious" and vague as one-click ordering.) Instead, the court ruled narrowly, rejecting Bilski and Warsaw's patent but holding open the possibility that other, similar patents might be granted in the future—even if they, like Bilski and Warsaw's patent, didn't meet the generally accepted test of involving a "machine or transformation." Justice Anthony Kennedy, writing for the court, explains:

[I]n a series of cases that extend back over a century, the Court has stated that "[t]ransformation and reduction of an article to a different state or thing is the clue to the patentability of a process claim that does not include particular machines." Application of this test, the so-called "machine-or-transformation test," has thus repeatedly helped the Court to determine what is "a patentable 'process.'" 

[...]

[But] while the machine-or-transformation test has always been a "useful and important clue," it has never been the "sole test" for determining patentability.... The machine-or-transformation test is thus an important example of how a court can determine patentability..., but the Federal Circuit erred in this case by treating it as the exclusive test.

The Bilski/Warsaw patent failed because it involved an "abstract idea," not necessarily because it failed the "machine or transformation" test. That leaves the door open for the Patent Office to continue granting recognition to things like Amazon's one-click. The full decision is here (PDF).