On June 28, 2010, the U.S. Supreme Court, in a highly anticipated decision, affirmed the U.S. Court of Appeals for the Federal Circuit in Bilski v. Kappos[2] while ruling that business methods and various technologies from the “Information Age” remain eligible for patent protection. The Supreme Court ruled that Bilski’s method for a risk-management invention was not patentable because the method was abstract.  However, the Supreme Court rejected the Federal Circuit’s “machine-or-transformation test” as the sole test for determining patent eligibility, and expressly declined to further define what constitutes a patentable process other than not being an abstract idea. 

Bilski’s patent application sought protection for an invention that provided a method for commodities buyers and sellers to hedge risks in order to protect against the risk of price fluctuations in the energy market.

The Federal Circuit, in 2008, concluded that the “machine-or-transformation test” was the sole test for determining patent eligibility of a process under 35 U.S.C. § 101 of the Patent Act, and affirmed the U.S. Patent and Trademark Office’s rejection of Bilski’s application on the grounds that Bilski’s claimed invention was not implemented on a specific apparatus, merely manipulated an abstract idea, and solved a purely mathematical problem. The Federal Circuit’s machine-or-transformation test said that a claimed process is patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

Thereafter, Bilski appealed to the Supreme Court and presented the Court with the question of whether a patent can be issued for a claimed invention for a method in the business world. The Supreme Court ruled that a patent can be issued for a business method invention so long as the application did not attempt to patent an abstract idea.  Specifically, the Supreme Court disapproved the Federal Circuit’s exclusive machine-or-transformation test while ruling that Bilski’s claimed invention is not patentable because it attempted to patent the use of the abstract idea of hedging risk in the energy market and then employ well-known random analysis techniques to help input data into the equation.

By disapproving the Federal Circuit’s exclusive machine-or-transformation test, the Supreme Court declined to impose limitations on the Patent Act which provides patent protection of any new and useful process. By not stating any particular rule or test for determining whether a particular invention is eligible for patenting under § 101, the Supreme Court did not foreclose the Federal Circuit from developing other limiting criteria in the future that further the purpose of the Patent Act.

Although the facts of the Bilski case relate to an invention in the business world, the Supreme Court’s decision allows for patentability of inventions in other technologies of the “Information Age.” For example, the decision allows for patentability of advancements of software, diagnostic medicine techniques, linear programming, data compression, manipulations of data signals, and any other revelations of new, onrushing technologies. Based on this decision, so long as an invention is not abstract, it may be eligible for patent protection.