Bilski Business Method Patents Decision is Out

[patentsusa]

The Bilski Supreme Court Decision is out.  The invalidity of Bilski's claims to a method of hedging was affirmed.  The Supreme Court declined to generally invalidate software patents and instead held that the Federal Circuit's Machine-or-Transformation test is not the exclusive test to determining if a method is statutory.

My summary is here:  http://patentsusa.blogspot.com/

[ChiefJRoberts]

The Bilski Supreme Court Decision is out.  The invalidity of Bilski's claims to a method of hedging was affirmed.  The Supreme Court declined to generally invalidate software patents and instead held that the Federal Circuit's Machine-or-Transformation test is not the exclusive test to determining if a method is statutory.

http://www.supremecourt.gov/opinions/09pdf/08-964.pdf

[nummo]

the bilski opinion helped clarify that business method patents are not "unpatentable" and clarified that the machine/transformation test is not the SOLE test for determination of patentability.

However, the bilski opinion has really raised some uncertainty as to what "process" really means.  Justice Stevens said it best that the definition of process is somewhat circular, since the term that is to be defined is used in the definition itself.

Any thoughts on best practices in light of this opinion?

[Robert K S]

That's a pretty good summary, patentsusa.  In other words, the Supreme Court took a long time to say nothing much.  I look forward to the PTO memo, if any.

[khazzah]

 I look forward to the PTO memo, if any.

I look forward to Fed Cir decisions providing some guidance on "particular machine". 

There are a number of district court decisions from the last two years which hold that a general purpose computer is not a "particular machine" under the Fed Cir Bilski test. Several of those district court decisions have been appealed to the Fed Cir. The Fed Cir stayed the cases awaiting the Supreme Bilski. Thus, they should be un-stayed now.

[JimIvey]

I like the opinion; it reversed the CAFC in more or less all the ways I said it would -- primarily machine/transformation as the sole test.  I also like all the dicta recognizing that our patent system was really designed to work with innovations of the Industrial Age and faces new challenges in the Information Age.

The only thing I didn't like was the amorphous test for "abstract idea" -- some amount of abstraction between Flook and Benson on one side and Diehr on the other.  I guess they really laid the question out very well and then laid down a very weak, loose, and wobbly test as an answer:  "not too abstract."

I can see it now, arguing with examiners and the Office about Section 101:  It's too abstract!  Nuh-uh!  Uh-huh!  Nuh-uh!  Uh-huh! ....

Moreover, I sort of expect examiners to keep citing the Fed Cir opinion of Bilski since it was technically affirmed (though in result only).

Any thoughts on best practices in light of this opinion?

No changes for me, pretty much. 

Like Robert, I'd like to see the PTO memo before changing much.  I'm not sure how the arguments for rejection will look and haven't really thought about how to counter them.

Regards.

[nummo]

on a separate note, how are you addressing the "non-transitory" claim language?  are u including it in the claims or making a statement in the response to suggest that the claim is intended to extend to any subject matter that is patentable.

[patentsusa]

That's a pretty good summary, patentsusa.  In other words, the Supreme Court took a long time to say nothing much.  I look forward to the PTO memo, if any.

It reminds me of the KSR decision.  Machine or transformation is not the test but we are not saying what the real test is.

Instead, Bilski's claims are invalid because Bilski attempted to patent an abstract idea. 

They did make a point of saying that business method patents are contemplated by the patent laws.  I wasn't expecting that.  I thought there was a risk that they would throw out business method patents altogether.  Of course, there is no clear definition available as to what a business method patent is.

I posted a more detailed summary of the Bilski decision here:
http://patentsusa.blogspot.com/2010/06/june-28-2010-bilski.html

[patentsusa]

Any thoughts on best practices in light of this opinion?

Since they stated that the machine-or-transformation test provides a useful clue, I will do my best to include a machine or transformation in my method claims. 

[dablueman]

I like the opinion; it reversed the CAFC in more or less all the ways I said it would -- primarily machine/transformation as the sole test.  I also like all the dicta recognizing that our patent system was really designed to work with innovations of the Industrial Age and faces new challenges in the Information Age.

I can see it now, arguing with examiners and the Office about Section 101:  It's too abstract!  Nuh-uh!  Uh-huh!  Nuh-uh!  Uh-huh! ....

I'm not sure you'll like it once everything is said and done. The case said that the machine-or-transformation test is still "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101". Basically they said that Bilski was too abstract (with no really reasoning as to why) and said "see our previous cases". It is also very important to note which parts Scalia did and did not sign onto (including the "information age" sections), making some parts of the opinion of the court into a plurality opinion.

Well, for software and business methods alike that leaves examiners still using the machine-or-transformation test and adding Benson and Flook arguments to be "safe".  Nothing in this opinion reverses the applicability of the machine-or-transformation test, and I also foresee a lot of "Nuh-uh!  Uh-huh!  Nuh-uh!  Uh-huh! " regarding 101, but not just about the claims being too abstract. I can forsee applicants citing Diehr and the PTO citing Benson, Flook, and now Bilski (affirming the use of the MorT test as a useful and important clue). I don't see this opinion as really settling anything.

I'm not sure how the arguments for rejection will look and haven't really thought about how to counter them.

that's a universal feeling on both sides.

Hypo Future Argument:
Examiner: rejected under 101 using the M or T test
Applicant: So what, the M or T test isn't the "sole" test. Besides "“an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”
Examiner: that "may well be", but it doesn't meet the "important and useful" M or T test, and there is no real alternative provided by the courts so if you don't like it appeal. Given the previous history (Benson, Flook, Bliski) of shooting down processes and software I'll take my chances.
Applicant: throws hands up in the air realizing nothing has changed.

[JimIvey]

They did make a point of saying that business method patents are contemplated by the patent laws.  I wasn't expecting that. 

I wasn't expecting it either, but I was half expecting some sort of straight-on addressing of "business method" patents. 

And, the point was so good that I'm annoyed that I didn't think of it -- if Section 273 presupposes the existence of "business method" patents, how can you interpret a different section of the same Code to ensure that "business method" patents would never exist?  Congress has spoken and, implicitly at least, indicated that our patent system accommodates "business method" patents.

Hypo Future Argument:
Examiner: rejected under 101 using the M or T test
Applicant: So what, the M or T test isn't the "sole" test. Besides "“an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”
Examiner: that "may well be", but it doesn't meet the "important and useful" M or T test, and there is no real alternative provided by the courts so if you don't like it appeal. Given the previous history (Benson, Flook, Bliski) of shooting down processes and software I'll take my chances.
Applicant: throws hands up in the air realizing nothing has changed.

I'm thinking more along the lines as to how the various tests inter-relate to one another.  I expect examiners to reject under Section 101 any claims that fail under any individual test, including T|M.  My view is that a claim need only to pass muster under one test to be statutory.

In other words, which is right?

• Fail any test --> non-statutory.
• Pass any test --> statutory.

What I really worry about seeing is a rejection under Section 101 saying little more than the claim covers an abstract idea, see, e.g., Bilski, Flook, Benson.  If the SCt can just declare claims too abstract without saying more (other than the claims are more like Benson and Flook than like Diehr), why couldn't an examiner.  That's the part that really worries me.

I'm also really curious to see about if and under what circumstances a computer is a "particular machine."  I have a hard-time reconciling with Benson.  I might read it over with Flook.  Perhaps it's that there's really only one way to convert EBCDIC to/from ASCII and it's more or less straight-forward.  Hmmm.... Benson makes a lot more sense under Walter-Freeman-Abele than under T|M.

Regards.

[Yak]

I look forward to the PTO memo, if any.

This was the first memo released to examiners yesterday.  I am sure there will be more to follow as the decision is examined more thoroughly. 

http://ipwatchdog.com/blog/USPTO_bilski_memo_6-28-2010.PDF

[patentsusa]

I look forward to the PTO memo, if any.

This was the first memo released to examiners yesterday.  I am sure there will be more to follow as the decision is examined more thoroughly. 

http://ipwatchdog.com/blog/USPTO_bilski_memo_6-28-2010.PDF

Thanks, had not seen this.

"Significantly, the Supreme Court also indicated that a business method is, at least in some circumstances, eligible for patenting under section 101."

"Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101.  If a claimed method meets the machine-or-transformation test, the method is likely patent-eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea."

So far so good, I guess.  Nothing too harmful in there other than the risk associated with how examiners define "abstract ideas."

[patentsusa]

how can you interpret a different section of the same Code to ensure that "business method" patents would never exist?  Congress has spoken and, implicitly at least, indicated that our patent system accommodates "business method" patents.

Of course, there is an open question as to how one defines "business method."  Most clients who think they have business methods really have software that can be implemented in a specific machine.  My definition of "pure business method" is a method that relates to a business transaction but is not implemented in a computer.  But nobody asked me.

I agree there is a risk that examiners will go overboard rejecting claims as being too abstract.  I would expect that pointing out that a claim meets the machine or transformation test would overcome such a rejection, based on the current memo. 

[TataBox]

I guess what I am not too clear about is how did we get from Bilski's hedge fund, basically a pure business method, to software?  Is this just the fact that some business methods can be implemented on CRM?  So, the supremes figured they would tackle that too?

It seemed the supremes said pure business methods are out as abstract, but if you have one that can be implementated on a CRM and it falls close in Dier meeting the MT test (not sure how far away you can be), then you are probably ok.  But if you get too close to Flook and Benson you are toast.