CASE: Bilski v. Kappos 561 U.S.

593 (2014)

TOPIC: Test for patent eligibility

FACTS:

Petitioners developed a method to hedge against price fluctuations in the energy market, which included
a simple mathematical concept and familiar statistical approaches. Petitioners applied for a patent on
their claimed invention, but the patent examiner rejected the application, claiming it involved an abstract
idea and was not implemented on a specific apparatus. Petitioners appealed and the Federal Circuit
affirmed. The Federal Circuit held the test for patentability under § 101 was the machine-or-
transformation test: (1) the claimed process was tied to a particular machine; or (2) the process
transformed an article into something else. One of the dissenting judges argued it failed because it was a
method of conduction business. A second dissenting judge argued the invention was an abstract idea and
therefore unpatentable. A third dissenter would have remanded to determine patentability under other
provisions. Petitioners appealed and the United States Supreme Court granted certiorari.

ISSUE:

Whether or not the machine-or-transformation test the only test for patent eligibility under Section 101
of the Patent Act?

HELD:

NO.

The machine-or-transformation test is not the only test for patent eligibility under Sec. 101 of the Patent
Act. The Patent Act Sec. 101 defines patent eligibility with exceptions for “laws of nature, physical
phenomena, and abstract ideas.” Section 101 is a threshold test and the claimed invention must also be
novel, nonobvious, and fully described. The invention here is claimed to be a “process” under Sec. 101.
“Process” is defined within the Patent Act at Sec. 101(b). The Federal Circuit adopted the machine-or-
transformation test as the sole test for what constitutes a “process.” Section 100(b) explicitly defines
“process,” so the Federal Circuit’s further definition and limitation is unnecessary and does not apply here.
Adopting such an exclusionary rule creates uncertainty for the patentability of computer software and
other emerging technologies. Similarly, the definition of “process” does not exclude business methods.
Federal law explicitly contemplates at least some business method patents as a “method” eligible for a
patent under Sec. 101. The limitations of novelty, nonobviousness, and full description protects against
unjustified patents. Petitioners’ process, however, may not be a “process” under Sec. 101 because it
claims an abstract idea.