Bilski v. Kappos: Supreme Court Refuses to Prohibit Software, Business Method, and Medical Diagnostic Method Patents

June 28, 2010

This morning, the Supreme Court issued its long awaited opinion in Bilski v. Kappos, a case which dealt with whether new processes were patentable only if they were performed with a specific machine, or resulted in a physical transformation of some article. In the run up to the decision, many commentators had predicted that the Court would issue a restrictive ruling, and that it might go so far as to declare that inventions in the fields of software and business methods could not be patented. The Supreme Court rejected both of those options. Instead, it stated that the language of the Patent Act precluded any rule that categorically excludes business method patents. The Court also explicitly rejected the argument that new technology areas, such as software and medical diagnostic methods, should be excluded from patentability, and stated that excluding such inventions would "frustrate the purposes of the patent law."

However, the Supreme Court did not indicate that there were no limits on the types of inventions that are eligible for patent protection. In its ruling, the Court reiterated its longstanding rules that laws of nature, physical phenomena and abstract ideas are not patent eligible. It then applied those principles to declare that the invention at issue in the case, which was directed to a method for hedging risk of price changes, was directed to an abstract idea, and therefore was unpatentable. The Court also stated that trying to patent an abstract idea in the limited context of a particular field was not sufficient to avoid the general prohibition on patents for abstract ideas. 

Going forward, the practical impact of this decision is that it opens the potential for patent protection for inventions that would not have qualified under the "machine or transformation" test. However, further decisions will be necessary to see exactly how lower courts will apply today's ruling. For further information, please contact William Morriss at wmorriss@fbtlaw.com, Ria Schalnat at rschalnat@fbtlaw.com, Ann Schoen at aschoen@fbtlaw.com, Steven  Goldstein at sgoldstein@fbtlaw.com, or any other attorney in Frost Brown Todd's Intellectual Property Practice Group.

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