Bilski v. Kappos, 130 S.Ct. 3218 (2010) Notes

Supreme Court of the United States

patent application for method of hedging risk in field of commodities trading in the energy market

• claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes.
• describes a series of steps instructing how to hedge risk
• places the claim 1 concept into a simple mathematical formula

basically some company with appropriate resources can guarantee cost of energy expenses over set period of time. this is advantageous for clients because it eliminates their risk faced due to price changes in the market.

The Federal Circuit, in turn, affirmed

• State Street Bank & Trust Co. v. Signature Financial Group, Inc - a claimed process is patent eligible if:
  • it is tied to a particular machine or apparatus, or
  • it transforms a particular article into a different state or thing
• says “machine-or-transformation test” is sole test for determining patent eligibility of a “process” under § 101

Supreme Court agrees with ruling, but not all reasoning

• The machine-or-transformation test is not the sole test for patent eligibility under § 101
• may include at least some methods of doing business
• attempts to patent abstract ideas

Reasoning of Courts:

patent examiner rejected petitioners' application

• 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

Board of Patent Appeals and Interferences affirmed

• involved only mental steps that do not transform physical matter and was directed to an abstract idea

United States Court of Appeals for the Federal Circuit affirmed

• rejected its prior test for determining whether a claimed invention was a patentable “process” under § 101-whether it produces a “ ‘useful, concrete, and tangible result’ ”-as articulated in State Street Bank
• claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”
  • sole test governing § 101 analyses
• dissenting opinions
  • “not eligible for patent protection because it is directed to a method of conducting business.”

SC

• assess machine-transformation and "no-business-models" arguments
  • machine-transformation:
    • courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’
    • explicitly declined to “hold that no process patent could ever qualify if it did not meet [machine or transformation] requirements
    • useful and important clue, an investigative tool, not the sole test
      • • • A categorical rule denying patent protection for “inventions in areas not contemplated by Congress ... would frustrate the purposes of the patent law.”
    • may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age-for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age
  • "cant patent business models":
    • not true:“ ‘ordinary, contemporary, common meaning,’ ”of “method” excludes business methods
    • If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change.
    • In searching for a limiting principle, this Court's precedents on the unpatentability of abstract ideas provide useful tools