The Supreme Court (“the Court”) heard oral arguments last Monday in the matter of In re Bilski. For those not familiar with the case, Bilski applied for a patent with the U.S. Patent Office (“PTO”) claiming a method for commodities trading. The PTO rejected the claims on the theory they did not qualify as protectable subject matter under U.S. patent law. Following two appeals, ending with the Court of Appeals for the Federal Circuit (the country’s patent court), the PTO’s decision was upheld with Bilski’s claims ultimately failing the new “machine-or-transformation” test. As was expected, Bilski appealed to the Supreme Court. U.S. patent law says that “any new and useful process, machine, manufacture, or composition of matter” is entitled to a patent, provided it is novel and not obvious (two requirements not at issue in this case). The question for the Court in Bilski boils down to what is a “process”? The government’s position was that this question is adequately answered by the Federal Circuit’s “machine-or transformation” test. Additionally, the government advocated for restraint from the Court in making any broad pronouncements that might negatively affect process patents, such as finding all business methods not patentable. Bilski’s position was considerably different, taking the stance that the “machine-or-transformation” test has no statutory support or support in case law, and that it is obvious from the statute that “process” is meant to mean any process.
The Court did not seem happy with either of these positions during oral argument, causing two themes to emerge during questioning: (1) the justices were highly skeptical of Bilski’s invention; and (2) the justices were extremely bewildered as to what the test for a patenteligible process should be. Despite the Court’s confusion, the Court is almost guaranteed to deny Bilski a patent. The real mystery is on what basis will the Court do so? While the Court, overall, seemed less concerned with the “machine-or-transformation” test than with the subject matter of Bilski’s claims, there was apprehension expressed over the apparent rigidity of the test; in particular, how will it affect future technologies. The worry is that there may be unforeseen consequences that could stifle future innovation under the “machine-or-transformation” test. But this concern paled in comparison to the tough, and sometimes sarcastic, questions directed to Bilski’s commodities trading invention
The questions at argument strongly hint at the end result in the justices’ minds for t hi s case. Unfortunately, there were no such hints for what the basis will be for denying Bilski a patent. One option is to stick with the “machine-or transformation” test, but wait for a more “appropriate” case to answer the question of what is a “process” under the statute. The Court may alternatively put forth a new test, with such tests as a “useful arts” test or “no abstract ideas or laws of nature” test popping up at argument. The Court may also just do away with business method patents altogether and deal with other process patents, such as software or diagnostic treatments, in later cases.
It is impossible to predict how the Court will rule in this case and what new test, if any, will come down. But going on the theory that sweeping pronouncements that will have large impacts, such as completely banning business methods, are not something the Supreme Court does often, a limited and even narrow ruling is likely the result. So, for now it should be business as usual. Innovations in processes, such as software, diagnostic testing, and even business methods should continue to be patented, but with an eye towards careful and robust patent application drafting.
