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U.S. Appellate Court Deals Blow to Business Method Patents
The U.S. Court of Appeals for the Federal Circuit has recently reached its decision in In Re Bilski, clarifying the limit to the patentability of business methods in the United States and providing a basis for attacking issued business method patents.
The number of business method patents filed in the U.S. exploded following this same court’s 1998 decision in State Street Bank v. Signature Financial Group, Inc. Since the State Street decision, the U.S. Patent Office went from issuing 120 such patents in 1997 to issuing 1330 in 2007.
The business method under consideration in In re Bilski claimed a method for managing the risk of sudden movements in energy costs; however, the method did not require the use of a computer. A majority of the 12-member en banc panel found that the claimed subject matter was not patentable. In revisiting the patentability of business methods, the Court expressed concern over patents which would have the effect of pre-empting all uses of a fundamental principle. Consequently, they held that to be a patentable invention and not merely a principle, a business method must either: (1) be tied to a particular machine or apparatus, or (2) transform an article to a different state or thing. The Court found that, in this case, the claimed method could not meet this test because it operated on mere abstractions, and not on physical objects or substances. The Court acknowledged that this machine-or-transformation test may prove challenging as more work is conducted in the abstract world of computers and networks, and invited the Supreme Court to reconsider this test to accommodate emerging technologies.
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