John Palfrey

The CAFC today decided a much-anticipated patent law case, In re Bilski.  The opinion: PDF and html.  At issue was the patentability of a method for hedging risk in the trading of commodities.

- If upheld (i.e., presuming the Supreme Court doesn’t grant cert and then overrule the CAFC’s opinion here), it could mean a significant narrowing of what constitutes patentable subject matter as a business methods patent.

- At issue: “The question before us then is whether Applicants’ claim recites a fundamental principle and, if so, whether it would pre-empt substantially all uses of that fundamental principle if allowed.” (p. 10) 

- The State Street formulation might be out in the process (pages 19-20 of the opinion; on p. 20: “Therefore, we also conclude that the ‘useful, concrete and tangible result’ inquiry is inadequate and reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply.”).

- The court makes plain that some business methods and software patents can still issue, but they’d need to meet the machine-or-transformation test.  (Fn. 23, e.g.: “Therefore, although invited to do so by several amici, we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court.”)

- The CAFC didn’t seem to think much of the claim itself, making this a great set of facts for anyone wishing to shrink what is patentable and to take a crack at eliminating business methods patents altogether.  One gets a hint of the court’s view of the claim in the description of the invention: “…Applicants here seek to claim a non-transformative process that encompasses a purely mental process of performing requisite mathematical calculations without the aid of a computer or any other device, mentally identifying those transactions that the calculations have revealed would hedge each other’s risks, and performing the post-solution step of consummating those transactions. … [W]hile the claimed process contains physical steps (initiating, identifying), it does not involve transforming an article into a different state or thing. Therefore, Applicants’ claim is not drawn to patent-eligible subject matter under § 101.”  (p. 32) 

What others are saying: Patently-O has a nice explication, as always, plus an extraordinary set of comments.  (Man, is that an impressive community of blog readers and commenters.  Not your usual comment spam.)  There’s a Slashdot thread.  The WSJ Law Blog was very quick to cover it.  And I found the Patent Baristas’ review of how we got to this point to be a useful background read.