The long awaited U.S. Supreme Court decision on Bilski v. Kappos was issued on Monday, June 28th, 2010.[1] This case was closely followed and the decision eagerly anticipated because it had the potential to limit patent-eligible subject matter regarding processes, which could negatively impact numerous industries. Bilski was seeking to patent a process for hedging risk in trading on the energy commodities market.[2] After a rejection by both the patent examiner and the Board of Patent Appeals and Inferences based on finding the process merely an abstract idea, the Court of Appeals for the Federal Circuit held that since the process was neither coupled with a machine nor transformed an article into another state or thing (i.e. it failed the machine-or-transformation test) the process was not patent-eligible subject matter. Further, the Federal Circuit took the bold step of holding that the machine-or-transformation test is the sole test to determine whether a process is patent-eligible.[3]

With regard to the machine-or-transformation test, the Supreme Court reiterated the standard practice in statutory construction that unless otherwise specifically defined, words must be accorded their “ordinary, contemporary, common meaning.”[4] The Court stated that it was unaware of any “ordinary, contemporary, common meaning” of the word “process” to support tying its meaning to the machine-or-transformation test.[5] Therefore, they rejected the machine-or-transformation test as the sole test for determining the patent-eligibility of a process.[6] However, the Court did state that the machine-or-transformation test can be a useful tool in determining process patent-eligibility.[7]

The Supreme Court’s analysis then turned to addressing whether the Patent Act can allow for a categorical exception to patent-eligible subject matter for business methods. Particularly, they began by referencing Section 101 of the Patent Act which defines patent-eligible process subject matter as “any new and useful process.”[8] The Court reasoned that using an open-ended term such as “process”[9] modified by the expansive word “any” served to project Congressional intent to provide generous latitude for patent-eligible subject matter.[10] However, the Court acknowledged that certain limitations on this latitude are recognized in the case law. Specifically, they pointed to the three canonical exceptions to patent eligibility, namely abstract ideas, laws of nature, and physical phenomena; and, then addressed whether a fourth such exception can be made for business methods.[11]

Particularly, the Court pointed to Section 273(b) which explicitly creates a defense to infringement of method patents based on prior commercial use.[12] The Supreme Court stated that, “by allowing this defense the statute itself acknowledges that there may be business method patents.”[13] Furthermore, the Court said that adopting the business method exception would render Section 273 meaningless, which “would violate the canon against interpreting any statutory provision in a manner that would render another provision superfluous.”[14] Thus, the Court rejected the idea of a business method exception to process patent-eligibility.

Finally, with regard to the Bilski application, while the Court considered the machine-or-transformation test they ultimately decided that it did not apply to the issue at hand and instead reached back to three pivotal Supreme Court decisions to resolve the present case: Benson,[15] Flook,[16] and Diehr.[17] Using these decisions, the Court concluded that Bilski was seeking to patent an abstract idea, and, therefore, the process therein was not patent-eligible.[18] [19] [20]

By Dominic A. Frisina JD, MA
Direct: (330)777-0063 x100


[1] Bilski v. Kappos, No. 08-964 (U.S. June 28, 2010).

[2] Bilski v. Kappos, No. 08-964, slip op. at 2.

[3] Id. at 3.

[4] Id. at 6.

[5] Id. at 7.

[6] Id. at 8.

[7] Id. at 7-8.

[8] 35 U.S.C. §101; “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

[9] 35 U.S.C. §100(b); “Process” is defined as a “process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”

[10] Bilski v. Kappos, No. 08-964, slip op. at 4.

[11] Id. at 5.

[12] Id. at 11; 35 U.S.C. 273(b)(1) “IN GENERAL.- It shall be a defense to an action for infringement under section 271 of this title with respect to any subject matter that would otherwise infringe one or more claims for a method in the patent being asserted against a person, if such person had, acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.”

[13] Bilski v. Kappos, No. 08-964, slip op. at 11.

[14] Id.

[15] Gottschalk v. Benson, 409 U.S. 63 (1972).

[16] Parker v. Flook, 437 U.S. 584 (1978).

[17] Diamond v. Diehr, 450 U.S. 175 (1981).

[18] Bilski v. Kappos, No. 08-964, slip op. at 15-16.

[19] The Supreme Court also discussed the pivotal case of State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), which coined the standard of “useful, concrete, and tangible result” for process patent-eligibility. The Federal Circuit, in its Bilski opinion, rejected that standard. Bilski v. Kappos, No. 08-964, slip op. at 3. In its opinion, the Supreme Court explicitly states, “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past.” Bilski v. Kappos, No. 08-964, slip op. at 16.

[20] Two concurring opinions accompanied the majority opinion, one by Justice Stevens and one by Justice Breyer. In short, Justice Stevens and Justice Breyer’s concurring opinions both hold that business method patents should not be patent-eligible.