1. Spotts Fain IP Team Client Alert July 2010
'Much Ado About Nothing'
Bilski v. Kappos, No. 08-964 (U.S. June 28, 2010)
By Bob Barrett
It has been almost two weeks since the world of business method patents did not come to an
end. After months of fretting by patent attorneys, the Supreme Court finally delivered its decision
in Bilski, and it was a yawner.
In Bilski v. Kappos, No. 08-964 (U.S. June 28, 2010), the Supreme Court unanimously
affirmed the Federal Circuit's decision rejecting Mr. Bilski's process claims as being unpatentable.
The Court's holding surprised no one. What was somewhat interesting was the way the Court split
its decision. The majority opinion, written by Justice Kennedy and joined in full by Chief Justice
Roberts, Justice Thomas, and Justice Alito, and joined in part by Justice Scalia, held that the
"machine-or-transformation" test applied by the Federal Circuit to reject Bilski's claims is not the
sole test to be considered when determining whether a claimed process is patent eligible. The
Court rejected the outright exclusion of process claims directed to so-called "business methods"
Bob Barrett and held that its precedent provides "three specific exceptions to § 101's broad patent-eligibility
principles: 'laws of nature, physical phenomena, and abstract ideas.'"
The Court relied on previous cases to find that Bilski's claims were directed to non-patentable subject matter, and
specifically looked at its previous decisions in Benson, Flook, and Diehr for guidance. After reviewing the claims at issue, the
Court found that the limitations added in the dependent claims did not make the claims patent-eligible. The Court remarked that
"nothing in today's opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit
has used in the past." The Court encouraged the Federal Circuit to try again, however, and noted that "we by no means foreclose
the Federal Circuit's development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent
with its text."
In his concurrence, Justice Stevens argued that the Court should have struck down all business method patents. Justice
Stevens, who was joined by Justices Breyer, Ginsburg, and Sotomayor, wrote that "although a process is not patent-eligible
simply because it is useful for conducting business, a claim that merely describes a method of doing business does not qualify as
a 'process' under § 101." One of Justice Stevens's biggest concerns was that the costs associated with business method patents are
higher than the benefits, as business method patents are "patents on business itself, [and] are by their very nature likely to depress
the dynamism of the marketplace."
So what are the takeaways from the Bilski decision? While the Court did not make a groundbreaking decision as far as
patent-eligibility, Justice Breyer summarized four points of agreement between Justice Kennedy's majority opinion and Justice
Stevens's concurrence. Justice Breyer's concurrence, which was joined in part by Justice Scalia, first noted that the Court does not

2. consider § 101 to be "without limit." Second, the "so-called" machine or transformation test has repeatedly been "the clue" that
has helped the Court determine what is a patentable process. Nevertheless, "while the machine-or-transformation test has always
been a 'useful and important clue,' it has never been the 'sole test' for determining patentability." And finally, Justice Breyer
noted, the holding does not mean that "anything which produces a 'useful, concrete, and tangible result' is patentable."
While the Court's decision does not provide much guidance about the future of business method patents, some upcoming
cases at the Federal Circuit and their eventual appeal to the Supreme Court might provide further clarification on what is the
appropriate test to determine patent-eligible subject matter. The Supreme Court remanded two cases to the Federal Circuit when
it released the Bilski decision with an order to construe these cases in light of the Court's holding in Bilski. Moreover, the Court's
invitation to the Federal Circuit to further clarify the boundaries of patentable subject matter suggests that the Court thinks there
might be a better case to refine the contours of the law in this area. For now, it appears that the Court has relaxed the standards
for patent eligibility and will address this issue again when the time, and the case, is right.
For additional information, please contact the author, Bob Barrett at (804) 697-2017 or rbarrett@spottsfain.com.