Now that the dust has somewhat settled following the U.S. Court of Appeals for the Federal Circuit’s October 30, 2008 decision in In Re Bilski, what seems apparent is that business method patents are here to stay – at least for now. To be sure, the Court made clear that a process-related patent will qualify as patent-eligible subject matter if it meets a more strict application of a longstanding rule known as the “machine-or-transformation” test.

When applied to a process-related patent claim, the “machine-or-transformation” test means that a claimed process will be patent-eligible subject matter under 35 U.S.C. §101 if: (1) the process is tied to a particular machine or apparatus, or (2) the process transforms a particular article into a different state or thing. The use of a specific machine or transformation of an article, however, must impose meaningful limits on the claim’s scope to meet the minimum threshold for patent eligibility under §101, and the involvement of the machine or transformation in the claimed process must constitute something more than “insignificant extra-solution activity.” An example of “insignificant extra-solution activity” includes merely gathering data for inputting into a software algorithm executing within a computer as the only step tied to a machine or having transformative characteristics.

Although the Court declined to address what specifically qualifies as meeting the “machine implementation” branch of the test, the Court did provide guidance on the “transformation” branch. First, a transformation of a particular article into a different state or thing must be central to the purpose of the claimed process. Second, in most cases, merely gathering data for input into a computer program, without more, does not constitute a transformation of an article. Third, chemical or physical transformations of tangible objects, and transformation of raw data into a particular visual depiction of a physical object on a display, are patent-eligible subject matter. Lastly, the Court opined that simple transformations or manipulations of public or private legal obligations or relationships, business risks or other similar “abstract” concepts cannot alone satisfy the “transformation” branch of the test because, according to the Court, they are not physical objects or substances and are not representative of physical objects or substances, and can be carried out with nothing more than the human mind. However, the Court did not say that transformations or manipulations of public or private legal obligations or relationships, or business risks, by machines, such as by computer programs executing within computer systems, are not patentable. Indeed, such implementations may certainly still be patentable subject matter.

The Court also stresses that the “machine-or-transformation” test is the only test that Patent Examiners must use to determine whether a process claim is patent-eligible subject matter. This approach differs from the familiar “useful, concrete, tangible result” test that practitioners and Examiners have used for many years until now, which essentially meant that a process-related claim was patent-eligible under §101 as long as the result of the claimed process was “useful, concrete, and tangible.” Although the Court states that Examiners can still use the “useful, concrete, tangible result” test to help determine whether a claim is drawn to patentable subject matter or only “fundamental principles” (such as “laws of nature,” “natural phenomena” or “abstract ideas”), this test can no longer be relied upon as the sole basis for determining whether a claimed process is patent-eligible subject matter.

So what does In re Bilski mean to those seeking process-related patents? For one, practitioners and applicants must attempt to tie a claimed process to a particular machine or apparatus, or claim a process that transforms a particular article into a different state or thing. Specifically, patent applicants should particularize the machine to which the claimed process is tied and impose meaningful limits on the claim; applicants must add more than insignificant “extra solution activity” to the claimed invention. When dealing with processes that manipulate public or private legal obligations, business risks or other similar concepts, applicants should attempt to incorporate meaningful claim limitations where such processes are either tied to a particular machine, or transform a particular article concerning the obligation, risk, etc. to a different state or thing, although the latter may be difficult to achieve. Applicants should also avoid claims where all of the process steps may be performed entirely in the human mind, as such processes are not likely to be considered as being tied to a particular machine or transformative of a particular article. By clearly tying a process invention to a particular machine or apparatus, or transforming a particular article within a claimed process invention, applicants will avoid the appearance of claiming fundamental principles, such as “laws of nature,” “natural phenomena” or “abstract ideas.”