IP Advisory: Federal Circuit Narrows Scope of Patentable Business Methods

On October 30, 2008, the United States Court of Appeals for the Federal Circuit issued a long-anticipated en banc decision in the In re Bernard L. Bilski and Rand A. Warsaw appeal. As expected, the Federal Circuit retreated from its broad holding in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), which put the judicial stamp of approval on so called ?business method? patents. While the court upheld the overall viability of claims for business methods (as well as ?all process claims? in general), it replaced the broader ?useful, concrete and tangible result? test articulated in the State Street Bank decision with a ?machine-or-transformation? test for determining the usefulness of processes under 35 U.S.C. § 101. While the holding of Bilski narrows the scope of patentability for business-method (and, to a lesser extent, software) patents, the constriction likely will not prove to be too great going forward, as the machine-or-transformation test itself should not significantly raise the threshold for patentability of process claims. Existing business-method and software claims that were drafted according to the broader ?useful, concrete, and tangible result? test of State Street Bank could face additional hurdles to enforcement, however, as defendants now have a new Section 101 invalidity argument to use against them.

See full advisory for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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