The Supreme Court rules about software patents and business method patents (kind of)

Many in the intellectual property business have been holding their breath waiting for this case to be decided. Many countries don’t allow software patents at all and most countries don’t allow business method patents. The United States allows both, but the lines, limits, and legality have been changing over the past years. The Court of Appeals for the Federal Circuit (CAFC) decided that Bilski’s patent on a method for handling energy hedge funds was not patentable because patents must be tied to a particular machine or transform an article from one thing or state to another. This “machine-or-transformation test” is probably as confusing to you as it is to the thousand of inventors and attorneys who had to understand it. Bilski appealed to the Supreme Court and on Monday the Supreme Court decided. Bilski loses his patent, but not because of the machine-or-transformation test. Abstract ideas have never been patentable and that’s what Bilski’s patent is, according to the Supreme Court. They also ruled that the machine-or-transformation test is only one test for patentability, not the only test as the CAFC had stated. They also ruled that business methods are patentable, as long as they are not abstract ideas.

Still confused? So are many others. Except for Bilski who now knows for sure that he doesn’t have a patent. Looking at it as an inventor, I see that the court has broadened the scope of patentable materials, which is good, but has made the test for patentability muddier which means I will spend even more time and more money arguing with patent examiners. Looking at it as an expert witness for patent litigation, this ruling is sure to cause a lot more disagreements, which means a lot more litigation, which means a lot more business for me.

An excellent discussion of the Bilski ruling can be found at Patently-O, written by Dennis Crouch, Associate Professor at the University of Missouri School of Law. His regular columns on patents are the best ones available anywhere.

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