In Bilskiv. Kappos, the U.S. Supreme Court finallyheard oral arguments in a case addressing the limitations on patentable subjectmatter in the context of a business method invention, analyzing a body of caselaw in such a way that some say could wrongly call into question the validityof many other patents, while others argue it is not restrictive enough. Theoral argument—and the subsequent decision—will be scrutinized to determine itseffects on innovation, prosecution, licensing and litigation.
Here,the court was asked to consider whether the Federal Circuit erred by holdingthat a "process" must be tied to a particular machine or apparatus, ortransform a particular article into a different state or thing("machine-or-transformation" test), to be eligible for patenting under Section101 of the patent laws. The court was also asked to consider whether thecircuit court's "machine-or-transformation" test contradicts Congressionalintent that patents protect "method[s] of doing or conducting business."
TheSupreme Court has not considered what is patentable subject matter since 1981,so it is no surprise that the case has garnered 65 amicus curiae briefs, whichbreak down as 17 supporting the Federal Circuit decision, 22 against and 26supporting neither.
The enbanc Federal Circuit held that Bilski'sclaims are not eligible for patenting and set out a single, "definitive" testfor determining whether a process is patent-eligible under §101. That is, aprocess is patent-eligible only if "(1) it is tied to a particular machine or apparatus, or (2) ittransforms a particular article into a different state or thing." In Bilski,the Federal Circuit seized on a sentence from Diamond v. Diehr, which stated that "[t]ransformation and reductionof an article 'to a different state or thing' is the clue to the patentabilityof a process claim that does not include particular machines," (emphasisadded).
Themajority held that this test was not "optional or merely advisory," but rather,the only applicable test for patent-eligible processes. In doing so, theFederal Circuit majority overruled its earlier decisions in State StreetBank v. Signature Financial Group and AT&TCorp. v. Excel Communications Inc. to theextent they relied on a "useful, concrete, and tangible result" as the test forpatent eligibility under §101. The problem with saying that methods must betied to a specific machine or have a transformation is not solely related tobusiness methods. What about a method for medical diagnostics or seismicexploration?
Onits face, the court's justices appear unwilling to allow the patent claims fora strategy of hedging risk in buying energy, but also reluctant to use this asthe definitive case for deciding what should or should not fall within allpatentable subject matter.
While we can't predict how the Supreme Court willultimately rule in this particular case, we can take a moment to reflect onsome of the wonderful quotes batted around by the court:
JUSTICESONIA SOTOMAYOR: So how do we limit it tosomething that is reasonable? Meaning, if we don't limit it to inventions or totechnology, as some amici have, or to some tie or tether, borrowing theSolicitor General's phraseology, to the sciences, to the useful arts, then whynot patent the method of speed dating?
JUSTICERUTH BADER GINSBURG: Isn't that the basison which the patent law rests in Europe, in other countries? They do not permitbusiness method patents. It has to be tied to technology, to science ortechnology. So if other systems are able to work with the notion oftechnology-based, why not ours?
Thequality of the science is not a good measure of what is patentable. While thereare plenty of ridiculous business method patents, plenty of devices would meetthe "not-worthy" test, too. See U.S. Pat. No. 5,443,036 for a method ofinducing aerobic exercise in an unrestrained cat [using] a hand-held laserapparatus. Other questions looked at whether there is a real shift in what ispatentable, or whether certain patentable subject matter just didn't existbefore.
JUSTICEANTONIN SCALIA: Don't you think that—thatsome people, horse whisperers or others, had some, you know, some insights intothe best 8 way to train horses? And that should have been patentable on yourtheory.
BILSKIATTORNEY MICHAEL JAKES: They might have,yes.
SCALIA: Well, why didn't anybody patent those things?
JAKES: I think our economy was based on industrialprocess.
SCALIA: It was based on horses, for Pete's sake. You—Iwould really have thought somebody would have patented that.
Inthe end, the justices seemed to be conflicted between wanting to limit patenteligible subject matter to exclude frivolous matters but not wanting to cut outvaluable technological advances that happened to be unconnected to a machine ortransformation. Whether the courtwill make a narrow ruling on that the claim at issue is not patent-eligiblesubject matter rather than some broad ruling that would cover all methodspatents is certainly likely, but not guaranteed.
Is Bilski important? Some estimates say as many as 200,000patents could be invalidated if Bilski is held to strictly apply to all method patents. For the biotechindustry, the decision has significant ramifications for the patentability ofmany inventions, particularly diagnostics and personalized medicine. If the Bilski approach is upheld, patentees might need to includea method of treatment step in order to render a diagnostic claimpatent-eligible. However, including such a treatment limitation can make itdifficult to enforce the patent because there may not be a single entity thatinfringes all of the claim limitations.
Whilethe Bilski decision has already beenused to invalidate patent claims reciting a method for providing an improvedvaccination protocol in Classen v. Biogen, it is doubtful that this will be the seminal case for biotech anddiagnostics. For that, we may have to wait to see if the court takes up thebiotech-specific invention in Prometheus v. Mayo.