Bilski Claims Fail As Attempt To Claim “Abstract Idea” – Future Of Business Method Patents Cloudy

Today, the Supreme Court affirmed the rejection of Bilski’s claims. (Attached at end of posting.)  The 16 page Opinion of the Court was authored by Justice Kennedy, joined in full by Justices Thomas, Roberts, and Alito.  The opinion held that the Bilski claims were directed to an abstract idea, and thus were not directed to a method or process within the scope of the statute. However, in dicta, Kennedy et al. stated that the Fed. Cir.’s “machine or transformation” test was too restrictive, and that some business methods might be patentable subject matter.

Justice Stevens, joined by Ginsberg, Breyer, and Sotomayor, authored a 47 page concurrence arguing that s. 101 should be interpreted to categorically exclude patenting business methods. Justice Breyer wrote a brief concurrence, joined by Scalia, in an attempt to summarize points of agreement among the Justices: (a) Patentable subject matter does not include natural phenomena, mental processes, and abstract intellectual concepts, (b) The M or T test may not be the sole test but it is still of great value in resolving the patentability of processes, and (3) the Fed. Cir. should not revert to  the “useful, concrete and tangible” standard of State Street Bank.

Justice Scalia concurred but did not join in parts II-B-2 and II-C-2 of the Opinion of the Court. These sections are dicta, and posit that flexibility is necessary to consider proper application of the patent laws to new technologies (and both approving of Judge Bader’s dissent in Bilski and criticizing Justice Stevens opinion that software should have been ruled unpatentable), and that some business methods may well be  patentable processes under s. 101.

Given its complexity, it is not surprising that it was released at the very end of the session. Justice Stevens clearly came close to assembling a majority that would ban business method patents outright (whatever a business method IS) but Justice Kennedy had three other votes that would not absolutely shut the door on this type of invention. When Justice Scalia concurred, Justice Kennedy had five votes to sink the Bilski claims as completely (and traditionally) outside of s. 101: “These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation.” Kennedy saw this as an easier case than Flook.

This is supposed to be a pharma/biotech blog, but there is little in the Court’s opinion referencing these areas of invention. In Section II-B-2, the section Scalia would not join, Kennedy wrote:

“Section 101 is a dynamic provision designed to encompass new and unforeseen inventions. [citing JEM Ag Supply v. Pioneer Hi-Bred, which held that plants can be the subject of utility patents.]…As numerous amicus briefs argue, the [M or T] test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression and the manipulation of digital signals [citing BIO’s amicus brief].”

This is hopeful, but remember, Stevens, Breyer, and Souter dissented from the dismissal  of cert. in Metabolite Labs., and would have ruled that diagnostic methods that involve measuring levels of an analyte and then making a diagnosis are unpatentable laws of nature. So, while Bilski provides little guidance as to what business method claims would be within the ambit of patentable subject matter, we have even less guidance as to biotechnological inventions.  The Court will need to decide Prometheus v. Mayo to blaze a path toward patentability of “new and unforeseen inventions” in that area.

Bilski SC opinion 6-28-2010

For BIO’s response to this decision, click here.

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