Supreme Court Hears Bilski Arguments

On November 9, 2009 the Supreme Court heard oral arguments in the case of Bilski v. Kappos. This case is appealed from a 2008 Federal Circuit decision (In re Bilski, 545 F.3d 943) that stated that for a process to be patentable under 35 U.S.C. § 101 the process must be tied to a particular machine or apparatus, or transform an article into a new state or thing (otherwise known as the "machine-or-transformation" test). As a result of the Patent Office's using the machine-or-transformation test it could be more difficult to gain patents on intangible processes.

Bilski was a departure from an earlier Federal Circuit decision, State Street Bank v. Signature Financial Group (149 F.3d 1368), that allowed patents for methods/processes as long as they produced useful, concrete, and tangible results. State Street pertained to a patent on processing mutual fund data, while Bilski involved an attempt to patent a method of hedging risks in commodities trading. Notably, this case has received briefing and input from a variety of industries outside the financial realm including biotechnology, pharmaceuticals, and technology companies such as Microsoft and Google. The Government contends that this narrow patent and case are not suitable vehicles to decide a broad rule affecting all the interested industries and so argued against certiorari by the Supreme Court.

During oral arguments, the Justices seemed unreceptive to the patent in question. The Justices posed many questions, including questions about whether methods of teaching law school, horse training, methods of gaining friends, methods of tax evasion, estate planning, or speed dating would be allowed under the rules proposed by Bilski’s counsel. The Government argued that patents should be kept to the realm of the physical (possibly even if just linked to a computer), while attorneys for Bilski argued that existing limitations on patents, such as novelty and obviousness, were safeguards enough without the machine-or-transformation test and that methods that are new and useful should be patentable. The Justices in the end seemed very aware that their ruling in this case, if not crafted carefully, could have wide ranging effects and that too rigid of a rule might exclude properly patentable material. Justice Sotomayor went so far as to say, “I have no idea what the limits of that ruling will impose in the computer world, in the biomedical world, all of the amici who are talking about how it will destroy industries. If we are unsure about that, wouldn’t the safer practice be simply to say it doesn’t involve business methods?” A ruling on this case is expected by July 2010.