The US patent community returns to relative uncertainty on the patentability of business and software methods after a record-setting 204 days anticipating the outcome of the Bilski case (Bilski v. Kappos, No. 08-964 (US June 28, 2010)). Hope was that the US Supreme Court (SCOTUS) would clarify the scope of eligible subject matter, though no clear guidance emerged. Rather, the decision marked a return to earlier precedents. Applicants must continue to tread cautiously.
Bilski’s claims, directed to a method of hedging risk in energy markets, were held to be abstract, and thus excluded from subject matter eligibility under the US Patent Act. SCOTUS went no further to define an eligible “method” apart from reiterating statutory categories and precedential exclusions. In this sense, SCOTUS seemed to follow the dissent in Bilski delivered by now Chief Judge Randall Rader of the Court of Appeals of the Federal Circuit (FC).
As some predicted based on recent trends, the “machine-or-transformation” (“MoT”) test, established by the FC majority in Bilksi to identify an eligible process was stricken down as the sole test. The MoT test was returned to its earlier precedential status as “a useful and important clue, an investigative tool” for determining eligibility. While the SCOTUS decision removed a degree of certainty afforded by MoT test, the decision confirmed that the subject matter door is a wide one. A business or software method can therefore be patentable, particularly where claims to purely abstract subject matter are avoided, although eligible matter must still clear novelty and non-obviousness hurdles.
Since the decision, the US Patent and Trademark Office (USPTO) has issued examination guidelines to reject a claim that does not meet the “machine-ortransformation test” unless the applicant can explain why the process is not directed to an abstract idea. Thus, the USPTO has kept the MoT test on life support and will provide further guidance in due course. Meanwhile, the community should view the decision with cautious optimism.