The Roller Coaster Journey of Business Method Patent: The Case of Bilski [Part 1]

I propose to cover this post in three parts. First, I would give a prologue to the issues involved in Bilski case. Secondly I would delve into the remarkable opinion of Judge STEVENS and the thirdly I shall briefly review the possible outcomes Bilski judgment.

Part I- Overview oF The Case

In a landmark judgement of the US Supreme Court in Bilski V Kappoa (28th June, 2010) the court held that the “machine or transformation” test, laid down by the US Court of Appeals for the Federal District (CAFD) in the In Re Bilski case (2008), is not the sole test for deciding whether a process is an eligible patent set forth in 36 U.S.C. section 101. The petitioners sought to patent an invention that explains how commodity buyers and sellers in the energy market can be protected, or hedged, against the risk of price changes. The patent examiner rejected the petitioners’ application on the ground that it was not directed to the technological arts and that it merely manipulates an abstract idea. The BPAI affirmed the examiner’s decision on the grounds that the patent in question involved only mental step which does not transform physical subject matter and that it was directed to an abstract idea. The petitioners then preferred an appeal to the CAFD and after briefing, the court decided to hear the case en banc. The CAFD reviewed its earlier decisions in the State Street (1998) and the AT&T Corp (1998) case and held that the “useful, concrete, and tangible result” test set forth in the above two decisions were inadequate and that the sole test for determining subject matter of patentability was the “machine or transformation” test. According to the above mentioned test a claimed process is patentable if the following conditions are fulfilled. (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Applying the test the court held that Bilski’s claim was not limited to a specific machine or apparatus nor did the process in question transformed any article into a different state of thing. Hence the process as claimed was held to be outside the boundaries of statutory subject matter and therefore was declared non-patentable.

Bilski then petitioned the US Supreme Court for a review which was granted. The only question that was sought to be decided by the court was whether the so-called machine-or- transformation test is the exclusive test for what constitutes a patentable “process” under 35 U. S. C. §101. The Court ruled unanimously that the machine or transformation test was reliable in most cases but was not the exclusive test. The Court categorically declined to read limitations into the patent act which is inconsistent with the Act’s text. The court reaffirmed its earlier decision in the Benson (1972), Flook (1978) and Diehrs (1981) case and held that the court had always kept the “Constitutional Standard” in mind when deciding what is patentable and non-patentable, a reference to the “laws of nature, natural phenomena, and abstract ideas” which are considered exceptions to patents.

Kanad Bagchi

(To be continued)