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Wednesday June 10, 2009
Supreme Court to Review In Re Bilski
The Supreme Court agreed to review In re Bilski, a current holding by the Federal Circuit, which recently opined on subject matter eligibility. The Supreme Court case is now referred to as Bilski v. Doll.
Bilski's invention was for a risk hedging method for managing the consumption risk costs of a commodity provider at a fixed price. The Examiner rejected the invention as merely manipulating an abstract idea to solve a purely mathematical problem. The Examiner also argued that it was not directed toward the technological arts. In contrast to other business methods, Bilski's invention was not tied to a specific apparatus, such as a computer.
At the heart of the matter is, whether or not business method patents are eligible for patent under 35 U.S.C. § 101. Although Bilski's invention involved hedging in commodities trading, the aftermath of the decision had far sweeping implications that touch all computer related inventions, software and method patents in general.
Not surprisingly, the In re Bilski decision caused quite a stir for patent holders and the patent bar alike. In the decision, the Federal Circuit attempted to reconcile years of case law and a multitude of tests, while trying to adhere to previous holdings by the Supreme Court. Knowing that finding a common ground from the multitude of prior tests was impossible, the Federal Circuit decided to affirmatively nullify all previous tests and create a new "one-fits-all" test.
The new test, known as the "machine-or-transformation" test, was supposed to clarify the muddy waters, while allegedly still adhering to prior Supreme Court precedent. In the Federal Court's decision, analysis was limited to the "transformation" prong, and the "machine" prong was not addressed. Unfortunately, the Federal Circuit's decision that all prior tests for patentability were null and void, cast a cloud upon the thousands of issued patents and decisions that based patentability on one or more of the previously used tests. Still further, the "transformation" test, being the only test that was supposedly defined, provided a broad and subjective format for deciding whether or not a particular claim qualified for subject matter eligibility for obtaining a patent, under 35 U.S.C. § 101.
To further compound the uncertainty, the USPTO issued, to its Examiners, a number of inconsistent memos and guidelines for determining subject matter eligibility. While the USPTO may be attempting to clarify the holding by the Federal Circuit, in many ways the memos and guidelines go beyond the Federal Circuit holding.
Due to the subjective nature of the new "machine-or-transformation" test, it is not surprising that its application will be inconsistent. Based on our analysis of recent inconsistent decisions by The Board of Patent Appeals and Interferences (BPAI), it has become quite difficult to determine how the BPAI may rule on appealed cases. In essence, the broad nature of the test gives the USPTO more power, while providing less predictability to patent applicants. In the USPTO's opinion, the In Re Bilski decision was clear, and for this reason, the USPTO opposed the Applicant's request for Certiorari.
Although the Federal Circuit may have intended to provide clarity to what is or is not eligible, under 35 U.S.C. § 101, as patentable subject matter, the In re Bilski case has indeed created more uncertainty. The Supreme Court will now have to decide how the invention in Bilski reconciles with its 1998 State Street Bank decision, which allowed business method patents.
(1) Petition for Certiorari can be viewed:
http://www.patentlyo.com/bilskipetition.pdf
(2) The USPTO's Opposition to Certiorari can be viewed:
http://www.patentlyo.com/bilski.govt.pdf
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