Bilski v. Kappos., & After….
- Srividhya Ragavan
Professor of Law, University of Oklahoma College of Law
Much has been already said about the Bilski patent application, its fate, its journey to the Court of Appeals for the Federal Circuit (hereinafter, CAFC) and the grand finale at the Supreme Court. This post hopes to relook at the decision (Bilski v. Kappos, 561 U.S (2010) and its impact on patent eligibility.
As an introduction, the Supreme Court picked up the Bilski decision on certiorari to review the decision of the Federal Circuit. When the United States Supreme Court picks up a case on certiorari, it generally indicates that the Court would have something to contribute to that issue (that the Federal Circuit has presumably not done already). The Bilski decision was no different. The Supreme Court, in a 5-4 vote, overturned the Federal Circuit’s en banc “machine-or-transformation” test as the sole test for compliance with patent-eligibility under 35 USC § 101. Note though that the Supreme Court affirmed the Federal Circuit’s conclusion that the Bilski application which was for a method of protecting commodities trading from the associated market risks lacks patent-eligibility on the basis that the invention in question is no more than an “abstract idea”. Thus, the Supreme Court agreed with the conclusion but clarified that the test used by the Federal Circuit need not be the sole to make the patent eligibility determination.
To recapitulate the Bilski history, in 2006, Bilski and Warsaw applied for a patent on a method of hedging risk in the field of commodities trading (hereinafter, the Bilski patent application). Generally, in commodity trading both the consumers and suppliers are exposed to the market risks. The Bilski patent application created an intermediary, the “commodity provider”, who would procure “rights” to both sell and buy the commodity at a particular price and within a given timeframe. Thus, the commodity provider acts as a buffer reducing the risks of the seller and the buyer from the market while at the same time getting automatically risk-insured himself. The Bilski patent application consisted of 11 method claims, disclosing the various (generic) steps of a transaction that will help the intermediary to secure options (right to sell and buy at a predetermined price and within a predetermined timeframe) in any commodity.
At the USPTO, the examiner rejected (and the Board affirmed) the patent application as being an abstract idea not directed towards technological arts. On appeal, the Federal Circuit sua sponte ordered an en banc review. The CAFC clarified that the controlling test to determine a patent eligible “process” in claim is the machine-transformation test.
The Supreme Court affirmed the USPTO’s and the CAFC’s decision that the claims in the Bilski application are not patent eligible. In considering the patent eligibility of the claimed invention, the Court recapitulated the breadth of patent eligibility in §101 along with the three precedential exceptions being abstract ideas, laws of nature and physical phenomena. The Court reiterated the CAFC’s statement that the § 101 enquiry is a threshold enquiry requiring applications to also fulfill other statutory requirements in order to be granted patent protection. However, the Court differed from the CAFC’s ruling that the machine-transformation test is the sole test for determining patent eligibility. Instead, the court ruled that the test is an “important investigative tool” to determine whether a claimed invention is a patent eligible process but by no means the only test to make the determination.
Meanwhile, following the Supreme Court Bilski verdict, Robert Bahr, the Acting Associate Commissioner for Patent Examination Policy issued a memorandum to provide interim guidance to the patent examiners. The memorandum indicates during patent prosecution, a claimed method meeting the machine-transformation test will be considered patent eligible unless there is a strong indication that the method directed to an abstract idea. If the method fails the machine-transformation test, the claim should be rejected by the examiner unless there is a strong indication that the method is not for an abstract idea. If the method is rejected as claiming an abstract idea, the applicant has the burden to disprove the examiner.
So, what next? Well, the Bilski has explicitly left the larger question of patent eligibility of business method patents open. It is unclear how this case can provide guidance for patent eligibility of diagnostic methods, which has also been an unresolved issue.
Interestingly, the very next day after the Bilski opinion (June 29, 2010), the Supreme Court granted, vacated and remanded another case on patent eligibility – Mayo v. Prometheus – to the Federal Circuit for reconsideration in light of Bilski. And, this case related to patent eligibility of a diagnostic method for increasing the therapeutic efficacy for treatment of gastrointestinal disorder. The burden is now on the Federal Circuit to use Bilski as a guidepost to (re)consider Prometheus and other patent eligibility questions.
