US Business Method Patents After Bilski

On 28 June 2010, the US Supreme Court handed down a much anticipated decision involving the patentability of business method patents in the United States. The full decision is available here.

The decision held that the method for hedging risk as claimed in the Bilski application was not patentable as it was considered to be merely an “abstract idea”. Importantly however, the Court clarified that US patent law does not exclude business methods per se and that the usual criteria for patentability should apply equally to process inventions.

This is somewhat of a departure from the earlier Federal Circuit decision invoking the “machine or transformation” test, which requied that there be the transformation of a physical article (or data relating to a physical article), or that the invention was performed by a particular machine (not just a general purpose computer). The Supreme Court has now clarified that while this test is a useful investigative tool, it should not be the only test for patentability of process claims.

Since the decision, the USPTO has maintained its practice of rejecting claims that fail the “machine or transformation” test, with the onus then on the applicant to argue that the claims define more than a mere “abstract idea”.

This decision is encouraging for the patentability of business methods in the US, particularly considering the majority’s reference to the new “information age” and the need for the patent system to adapt with the changing times.

The landscape for business method patents in Australia is similar to that in the US, with the current consensus being that business methods will continue to be granted patents, at least when they are implemented by a computer.

Please contact Cotters if you would like any further information about the changes or if you wish to request examination on any pending patent applications.

By Paul Mahony and Marcus Dalton
Cotters Patent & Trade Mark Attorneys
12 July 2010