June 2, 2009Client Alert

United States Supreme Court to Hear Bilski v. Doll Case Regarding Business Method Patents

On Monday, June 1, 2009, the United States Supreme Court granted certiorari in a case focused on the patentability of business methods. In October 2008, the United States Court of Appeals for the Federal Circuit decided the case of In re Bilski, which dealt a blow to business method patents by adopting the “machine-or-transformation” test as a threshold question of patentability of processes. The Federal Circuit held that a newly invented process is only patentable if it is implemented using a particular machine or apparatus or operates to transform a tangible article, or data representative of a tangible article, into a different state or thing. Using this test, the Federal Circuit found that Bilski’s method of hedging losses in commodity trading was not patentable. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008). Following the Bilski decision, a federal district court recently held that a process for automatically transferring change into a savings account is not patentable subject matter. Every Penny Counts Inc. v. Bank of America Corp., No. 2-07-cv-00042 (M.D. Fla. May 27, 2009).

The Supreme Court granted certiorari on two questions: (i) does the Federal Circuit’s holding conflict with the Supreme Court’s holding in Diamond v. Diehr where the Court held that the only non-patentable subject matter are “laws of nature, physical phenomena and abstract ideas;” and (ii) does the “machine-or-transformation” test conflict with Congress’ intent that business methods are patentable?

If the Supreme Court finds that the “machine-or-transformation” test is consistent with both the Court’s precedent and Congressional intent, there may be no further change in the patentability of business methods. On the other hand, if the Court finds that there is a conflict with the present test, the Court may alter how the test is administered or adopt another test altogether.

Bilski v. Doll, case number 08-964, is scheduled for oral argument when the Court reconvenes in October 2009.

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