Bilski v. Kappos
Encyclopedia
Bilski v. Kappos, 130 S. Ct. 3218, 561 US __, 177 L. Ed. 2d 792 (2010), was a case decided by the Supreme Court of the United States
holding that the machine-or-transformation test
is not the sole test for determining the patent eligibility of a process, but rather "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101." In so doing, the Supreme Court affirmed the rejection of an application for a patent
on a method of hedging losses in one segment of the energy industry by making investments in other segments of that industry, on the basis that the abstract investment strategy set forth in the application was simply not patentable subject matter.
in In re Bilski
, the case below. However, it rejected the machine-or-transformation test as a sole test of patentability based on an interpretation of the language of § 101. The Court rejected the Federal Circuit's statutory interpretation
regarding the word "process," finding the definition in § 100(b) to be sufficient without turning to the canon of noscitur a sociis. § 100(b) defines process as a "process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material."
The Court looked to Gottschalk v. Benson
and Parker v. Flook
, and noted that both had explicitly refused to rely on the machine-or-transformation test as the sole test for patent eligibility.
The Court also rejected a categorical exclusion of business method patents from eligibility, reasoning that the definition of "process" in § 100(b) includes the word "method," which appears to comprehend some forms of business method patents. 35 U.S.C. § 273(b)(1) also provides as a defense to patent infringement
prior use of a "method of conducting or doing business." By acknowledging the defense, the statute also acknowledged the possibility of business method patents.
Regarding Bilski's claimed subject matter, the Court found that his method of optimizing a fixed bill
system for energy markets was an unpatentable abstract idea. Despite taking a broader reading of patent eligibility for processes, according to the majority opinion "this Court by no means desires to preclude the Federal Circuit’s development of other limiting criteria that further the Patent Act’s purposes and are not inconsistent with its text."
In the plurality sections of Kennedy's opinion, an overall Court minority opinion as not joined by Scalia, he notes that strict adherence to only "the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals" but "the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection." Kennedy also suggests that a categorical exclusion of some types of business methods from patent eligibility might be legitimate if that rule was based on the idea that purely abstract ideas are not patentable.
' concurrence, joined by Justices Breyer
, Ginsburg
, and Sotomayor
, argues that the majority interpret the term "process" too broadly. Stevens rejected the majority's reliance on the mention of the word "method" in 35 U.S.C. § 273(b), saying that the statute, originally known as the First Inventors Defense Act of 1999
, was only passed by Congress in response to the confusion created by State Street Bank v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998). He would categorically exclude business methods from patentability, as they have not traditionally been patentable in the U.S., despite significant innovations in business methods.
It was the final opinion in Stevens' 35-year career on the Supreme Court. His retirement became effective the next day.
's concurrence began by agreeing with Justice Stevens "that a 'general method of engaging in business transactions' is not a patentable 'process'..." In a second part, joined by Justice Scalia
, Breyer highlighted four points which he felt were consistent with both the opinion of the Court and Justice Stevens' concurring opinion:
Part II sums up by stating "it is my view that, in reemphasizing that the 'machine-or-transformation' test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach."
requirement instated by the Federal Circuit
in In re Bilski
, while also leaving little guidance as to what should be considered patentable under § 101. "[T]he outcome from the decision might be best stated as 'business as usual.' "
In light of the decision in Bilski v. Kappos, the Supreme Court granted judicial review
, vacated the decisions of the Federal Circuit, and remanded to the Federal Circuit for reconsideration the cases of Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec. The two claims related to medical diagnostics, and the claims in Prometheus were found patentable under the machine-or-transformation test while the claims in Classen were not. In December 2010, the Federal Circuit applied the broad eligibility of Bilski in Research Corp. Technologies v. Microsoft Corp., which upheld the patent eligibility of a process for digital image halftoning.
Patent Examiners and Practitioners
were giving interim
instructions on the interpretation of Biski v. Kappos both during the appeal process (on Aug 29, 2009) and shortly after the decision (on Jul 27, 2010) in documents issued by the USPTO.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
holding that the machine-or-transformation test
Machine-or-transformation test
In United States patent law, the machine-or-transformation test is a test of patent eligibility under which a claim to a process qualifies to be considered for patenting if it is implemented with a particular machine, that is, one specifically devised and adapted to carry out the process in a way...
is not the sole test for determining the patent eligibility of a process, but rather "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101." In so doing, the Supreme Court affirmed the rejection of an application for a patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
on a method of hedging losses in one segment of the energy industry by making investments in other segments of that industry, on the basis that the abstract investment strategy set forth in the application was simply not patentable subject matter.
Majority opinion
The Court affirmed the judgment of the Federal CircuitUnited States Court of Appeals for the Federal Circuit
-Vacancies and pending nominations:-List of former judges:-Chief judges:Notwithstanding the foregoing, when the court was initially created, Congress had to resolve which chief judge of the predecessor courts would become the first chief judge...
in In re Bilski
In re Bilski
In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 , was an en banc decision of the United States Court of Appeals for the Federal Circuit on the patenting of method claims, particularly business methods. The Federal Circuit court affirmed the rejection of the patent claims involving a method of...
, the case below. However, it rejected the machine-or-transformation test as a sole test of patentability based on an interpretation of the language of § 101. The Court rejected the Federal Circuit's statutory interpretation
Statutory interpretation
Statutory interpretation is the process by which courts interpret and apply legislation. Some amount of interpretation is always necessary when a case involves a statute. Sometimes the words of a statute have a plain and straightforward meaning. But in many cases, there is some ambiguity or...
regarding the word "process," finding the definition in § 100(b) to be sufficient without turning to the canon of noscitur a sociis. § 100(b) defines process as a "process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material."
The Court looked to Gottschalk v. Benson
Gottschalk v. Benson
Gottschalk v. Benson, was a United States Supreme Court case in which the Court ruled that a process claim directed to a numerical algorithm, as such, was not patentable because "the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm...
and Parker v. Flook
Parker v. Flook
Parker v. Flook, was a 1978 United States Supreme Court decision that ruled that an invention that departs from the prior art only in its use of a mathematical algorithm is patent-eligible only if the implementation is novel and unobvious. The algorithm itself must be considered as if it were part...
, and noted that both had explicitly refused to rely on the machine-or-transformation test as the sole test for patent eligibility.
The Court also rejected a categorical exclusion of business method patents from eligibility, reasoning that the definition of "process" in § 100(b) includes the word "method," which appears to comprehend some forms of business method patents. 35 U.S.C. § 273(b)(1) also provides as a defense to patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
prior use of a "method of conducting or doing business." By acknowledging the defense, the statute also acknowledged the possibility of business method patents.
Regarding Bilski's claimed subject matter, the Court found that his method of optimizing a fixed bill
Fixed bill
Fixed Bill refers to an energy pricing program in which a consumer pays a predetermined amount for their total energy consumption for a given period. The price is independent of the amount of energy the customer uses or the unit price of the energy...
system for energy markets was an unpatentable abstract idea. Despite taking a broader reading of patent eligibility for processes, according to the majority opinion "this Court by no means desires to preclude the Federal Circuit’s development of other limiting criteria that further the Patent Act’s purposes and are not inconsistent with its text."
In the plurality sections of Kennedy's opinion, an overall Court minority opinion as not joined by Scalia, he notes that strict adherence to only "the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals" but "the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection." Kennedy also suggests that a categorical exclusion of some types of business methods from patent eligibility might be legitimate if that rule was based on the idea that purely abstract ideas are not patentable.
Concurrences
The holding of the Court was unanimous, but there were two concurring opinions, and no single opinion commanded a majority of the Court as to all parts.Stevens' concurrence
Justice StevensJohn Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
' concurrence, joined by Justices Breyer
Stephen Breyer
Stephen Gerald Breyer is an Associate Justice of the U.S. Supreme Court. Appointed by President Bill Clinton in 1994, and known for his pragmatic approach to constitutional law, Breyer is generally associated with the more liberal side of the Court....
, Ginsburg
Ruth Bader Ginsburg
Ruth Joan Bader Ginsburg is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993. She is the second female justice and the first Jewish female justice.She is generally viewed as belonging to...
, and Sotomayor
Sonia Sotomayor
Sonia Maria Sotomayor is an Associate Justice of the Supreme Court of the United States, serving since August 2009. Sotomayor is the Court's 111th justice, its first Hispanic justice, and its third female justice....
, argues that the majority interpret the term "process" too broadly. Stevens rejected the majority's reliance on the mention of the word "method" in 35 U.S.C. § 273(b), saying that the statute, originally known as the First Inventors Defense Act of 1999
American Inventors Protection Act
The American Inventors Protection Act is a United States federal law enacted on November 29, 1999 as Public Law 106-113. In 2002, the Intellectual Property and High Technology Technical Amendments Act of 2002, Public Law 107-273, amended AIPA....
, was only passed by Congress in response to the confusion created by State Street Bank v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998). He would categorically exclude business methods from patentability, as they have not traditionally been patentable in the U.S., despite significant innovations in business methods.
It was the final opinion in Stevens' 35-year career on the Supreme Court. His retirement became effective the next day.
Breyer's concurrence
Justice BreyerStephen Breyer
Stephen Gerald Breyer is an Associate Justice of the U.S. Supreme Court. Appointed by President Bill Clinton in 1994, and known for his pragmatic approach to constitutional law, Breyer is generally associated with the more liberal side of the Court....
's concurrence began by agreeing with Justice Stevens "that a 'general method of engaging in business transactions' is not a patentable 'process'..." In a second part, joined by Justice Scalia
Antonin Scalia
Antonin Gregory Scalia is an American jurist who serves as an Associate Justice of the Supreme Court of the United States. As the longest-serving justice on the Court, Scalia is the Senior Associate Justice...
, Breyer highlighted four points which he felt were consistent with both the opinion of the Court and Justice Stevens' concurring opinion:
- that although the law's description of what is patentable in §101 "is broad, it is not without limit."
- the Court has repeatedly stated that "transformation and reduction of an article to a different state or thing is the clue to the patentability of a process claim that does not include particular machines."
- "while the machine-or-transformation test has always been a 'useful and important clue,' it has never been the 'sole test' for determining patentability."
- "although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a 'useful, concrete, and tangible result,' [as held in State Street Bank v. Signature Financial Group] is patentable."
Part II sums up by stating "it is my view that, in reemphasizing that the 'machine-or-transformation' test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach."
Impact
The Court's opinion in this case is seen as moderating the machine-or-transformation testMachine-or-transformation test
In United States patent law, the machine-or-transformation test is a test of patent eligibility under which a claim to a process qualifies to be considered for patenting if it is implemented with a particular machine, that is, one specifically devised and adapted to carry out the process in a way...
requirement instated by the Federal Circuit
United States Court of Appeals for the Federal Circuit
-Vacancies and pending nominations:-List of former judges:-Chief judges:Notwithstanding the foregoing, when the court was initially created, Congress had to resolve which chief judge of the predecessor courts would become the first chief judge...
in In re Bilski
In re Bilski
In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 , was an en banc decision of the United States Court of Appeals for the Federal Circuit on the patenting of method claims, particularly business methods. The Federal Circuit court affirmed the rejection of the patent claims involving a method of...
, while also leaving little guidance as to what should be considered patentable under § 101. "[T]he outcome from the decision might be best stated as 'business as usual.' "
In light of the decision in Bilski v. Kappos, the Supreme Court granted judicial review
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
, vacated the decisions of the Federal Circuit, and remanded to the Federal Circuit for reconsideration the cases of Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec. The two claims related to medical diagnostics, and the claims in Prometheus were found patentable under the machine-or-transformation test while the claims in Classen were not. In December 2010, the Federal Circuit applied the broad eligibility of Bilski in Research Corp. Technologies v. Microsoft Corp., which upheld the patent eligibility of a process for digital image halftoning.
Patent Examiners and Practitioners
Patent attorney
A patent attorney is an attorney who has the specialized qualifications necessary for representing clients in obtaining patents and acting in all matters and procedures relating to patent law and practice, such as filing an opposition...
were giving interim
Interim
Interim is an album by British rock band The Fall, compiled from live and studio material and released in 2004. It features the first officially released versions of "Clasp Hands", "Blindness" and "What About Us?" — all of which were later included on the band's next studio album Fall Heads Roll —...
instructions on the interpretation of Biski v. Kappos both during the appeal process (on Aug 29, 2009) and shortly after the decision (on Jul 27, 2010) in documents issued by the USPTO.
Inventors’ comments
In response to the decision, the inventors, Bernard Bilski and Rand Warsaw made the following comments:- Bernard Bilski - “We are personally disappointed that the Supreme Court ruled against our claims. However, we are very pleased that the Court maintained the patentability of business methods and other new areas of development.”
- Rand Warsaw - “We are happy that the Court agreed with our arguments that the machine-or-transformation test is too narrow, but it would also have been nice to receive a patent after more than 10 years.”
External links
- Text of the Slip Opinion from supremecourt.gov
- Transcript of oral arguments of Bilski v. Kappos
- Links to Briefs, incl. amici, on Cert. petition and merits in Bilski v. Kappos (Retrieved November 10, 2009).
- Bilski v. Kappos at SCOTUSwiki
- Application of Bilski in Research Corp. Technologies v. Microsoft Corp.