U nder Bilski, business methods remain patentable but, as described below, the standard for granting such patents has now been limited. Bernard L. Bilski and Rand A. Warsaw’s application to patent a method of hedging risk in the commodities market was rejected by the U.S. Patent and Trademark Office, and the Board of Patent Appeals and Interferences. The Applicants claimed a process that mentally and mathematically identified transactions that would hedge risk without the aid of a computer or any other device. Since the claimed method did not involve machines, the Federal Circuit analyzed the business method under only the transformation prong of the machine-or-transformation test. The court stated that the transformation must be central to the purpose of the claimed process and only specific types of articles may be transformed. Applying the transformation prong, the Federal Circuit affirmed the Board of Patent Appeals and Interferences because the Applicants’ method did not transform any article to a different state or thing. The court explained that transformations of legal obligations or relationships, business risks, or other such abstractions are not eligible transformations under the test because they are not physical objects or substances and are not representative of physical objects or substances. A process claim may still be patent-eligible if it lacks physical steps, but the process must be tied to a machine or achieve an eligible transformation.

A petition for a writ of certiorari was filed with the U.S. Supreme Court January 28, 2009 in the case of In re Bilski. Although the Supreme Court may grant certiorari, patent owners and applicants will be reviewing the strength of their business method portfolios in light of the Bilski decision.