Redefining Eligibility for Business Method Patents in the US

For those familiar with the patenting of business methods, they know the key role that the case of State Street & Trust Co. v. Signature Financial Group played in deeming certain business methods patent ineligible. This litigation was heard by the United States Court of Appeals for the Federal Circuit (CAFC) where State Street & Trust claimed that their business method patent application produced “useful, concrete and tangible result(s)”, and was hence patentable.

However, this was not the case in the court’s decision in the case of Bilski vs. Kappos. In this litigation, the court ruled that business methods that transformed an article into a different state or product with the use of a particular type of machine or apparatus could be eligible for a patent grant. The case in point was that a general purpose computer was not eligible for the status of a “particular type of machine”. This posed the threat of invalidity for claims of several software implemented process patents.

Twelve years after the State Street case, business method patent eligibility was readdressed in Bilski v. Kappos where the Supreme Court affirmed that the “machine-or-transformation” test was not the sole test for determining the processes of claimed inventions under 35 U.S.C. § 101.

It stated that processes that transform an article from one state or thing to another are patent eligible regardless of whether they leverage a machine for the purpose. It added that processes that do not make patent-eligible transformations are patent eligible only if they claim to be processed with a “particular type of machine.” For instance, a programmed general-purpose digital computer is not a particular machine for this purpose. Such a determination and decision that was made in the case of re Bilski, brought into question the future of not only business method patents, but also the future of software patents.

Four years hence, in 2014 the Supreme Court again addressed the patent eligibility of computer implemented business and software methods in the famous Alice v. CLS Bank. It charted strict rules to determine the patent eligibility of inventions in computer software technology.

While a clear line has not been drawn yet to determine the eligibility of software and business method patents, the fact that there is some clarity has now thrown up the challenge to patent practitioners to provide “useful, concrete and tangible” advice to clients about their inventions that may relate to “machine-or-transformation test”. It will be interesting to note how this pans out and which other case will further help strengthen this definition.

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Shailesh Kandpal
Shailesh Kandpal

Shailesh's passion for new technologies in mobile communication, user interface and automobiles, and his expertise in patent analytics make his blog posts interesting reads.

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