The U.S. Suprement Court Rules on Bilski: Business Methods May Fall Within Patentable Subject Matter

Bilski v. Kappos, No. 08-964 (S.Ct. June 28, 2010).

Justice Kennedy authored the opinion of the Court, concluding that petitioners’ claimed invention is not patent eligible. The Court held, however, that business methods could fall within patentable subject matter under Section 101.

Holdings:

(a) Section 101 specifies four independent categories of inventionsor discoveries that are patent eligible: “process[es],” “machin[es],”“manufactur[es],” and “composition[s] of matter.” The invention at issue is claimed to be a “process,” which §100(b) defines as a “proc-ess, art or method, and includes a new use of a known process, ma-chine, manufacture, composition of matter, or material.”

(b) The machine-or-transformation test is not the sole test for patent eligibility under §101.

(c) Section 101 similarly precludes a reading of the term “process” that would categorically exclude business methods.

(d) Even though petitioners’ application is not categorically outside of §101 under the two atextual approaches the Court rejects today,that does not mean it is a “process” under §101. Petitioners seek to patent both the concept of hedging risk and the application of that concept to energy markets. Under Benson, Flook, and Diehr, how-ever, these are not patentable processes but attempts to patent abstract ideas. Claims 1 and 4 explain the basic concept of hedging and reduce that concept to a mathematical formula. This is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook.