Earlier today, the U.S. Supreme Court agreed to review the Federal Circuit’s controversial In Re Bilski decision. As reported in our October 30, 2008 KLIP Alert, the Federal Circuit held in the Bilski case that a method or process is patentable only if it (i) is tied to a particular machine or apparatus or (ii) transforms a particular article into a different state or thing. This decision was an about-face for the Federal Circuit, which had held a decade earlier in the State Street Bank case that business methods are patentable so long as they yield a “useful, concrete and tangible result.” The Bilski decision has since upset the expectations of patent owners and applicants. Just last week, the U.S. District Court for the Middle District of Florida, relying on Bilski, invalidated business method patent claims asserted against Bank of America’s patent pending “Keep the Change” program. Indeed, under Bilski, Bank of America’s own pending patent application for the “Keep the Change” program is at risk.
In our earlier KLIP Alert, we predicted that the Supreme Court would do just what it did today and grant judicial review of the Bilski decision, not only because the decision was extremely controversial and sparked strong dissenting opinions in the case (particularly, by Federal Circuit Judges Newman and Rader), but also because of the Supreme Court’s new-found interest in patent cases under Chief Justice Roberts. Interestingly, U.S. Solicitor General Elena Kagan, who had apparently been on the Obama administration’s short list to fill the impending Supreme Court vacancy (the nomination going instead to Second Circuit Judge Sotomayor who has a strong IP background but a sparse record on patent issues), submitted the Government’s brief in opposition to Bilski’s petition for a writ of certiorari—arguing, inter alia, that the Federal Circuit’s machineor- transformation test is merely a correct restatement of prior Supreme Court precedent.
To the chagrin of patent owners and licensing entities, the Bilski decision has scuttled patent protection for business methods. It is now up to the Supreme Court to either stem this tide or bless it. We will keep you posted on further developments.