A decade ago in the State Street Bank case, the U.S. Court of Appeals for the Federal Circuit ruled that business methods were patentable so long as they yield a “useful, concrete and tangible result.” Today, in the Federal Circuit’s In Re Bilski decision, a majority of the Federal Circuit judges changed their minds, scrapped the State Street test, and, citing to U.S. Supreme Court precedent, decided that a different test should apply.

Under the new Federal Circuit test, a method or process (whether or not a business method) 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.While it remains to be seen whether tying the business method to a computer will satisfy these criteria, this test appears to sound the death knell for software and business method patents.

The Bilski business method considered by the Federal Circuit was directed to a method of hedging risk in the field of commodities trading, and was admittedly not tied to a particular machine, and certainly did not transform an article from one state to another. Applying the new test, the Federal Circuit held the Bilski business method to be unpatentable subject matter.

We have little doubt that the Supreme Court will take this case given its new-found interest in patent cases under Chief Justice Roberts, and the three strong separate dissenting opinions filed in the case. Stay tuned for further developments.