Supreme Court Rules on Business Method Patents in Bilski v. Kappos


On June 28, 2010, the Supreme Court issued its long-awaited decision on business method patents in Bilski v. Kappos, No. 08-964. The Court unanimously agreed that Bilski’s invention, which was a process directed toward “how buyers and sellers of commodities in the energy market protect, or hedge, against the risk of price change,” was an abstract idea and thus not a patent-eligible process under 35 U.S.C. § 101.

The Court began its analysis with the long-held interpretation that 35 U.S.C. § 101 does not include laws of nature, physical phenomena, and abstract ideas. After discussing its decisions in Benson, Flook, and Diehr, the Court ultimately found Bilski’s invention for hedging risk to be an abstract idea not eligible for patenting under § 101.

Many patent practitioners and patent owners were concerned with the potentially broader implications of the exclusive machine-or-transformation test propounded by the Federal Circuit, believing that such a test would signal the demise of the patent eligibility of far more than business methods. While its decision alleviates these concerns, the Court refrained from providing any new guidance as to what does constitute patent-eligible subject matter.

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