In re Bilski and Computer Software Patents

The In re Bilski decision establishes a new test for determining whether a process or method is eligible for patenting. Under Bilski, a process is eligible for patent protection if it either (1) is tied to a particular machine or apparatus, or (2) transforms a particular article into a different state or thing.[1] Although the Court was asked by several financial companies and the Free Software Foundation to rule that business methods and computer software can never be patented, the Court refused to do so.[2] Instead, the Court ruled that both business methods and software are eligible for patent protection if they meet the machine-or-transformation test announced by the Court.

Section 101 of the Patent Act lists the types of inventions and discoveries that can be patented. It says "whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore."[3] The Court noted that the meaning of the word "process" for purposes of patentability is narrower than the ordinary meaning of process.[4] Mr. Bilski filed a patent application for a "method for managing the consumption of risk costs of a commodity sold by a commodity provider at a fixed price". The patent examiner assigned to evaluate Mr. Bilski's patent application rejected it as falling outside of the "processes" covered by Section 101. The Board of Patent Appeals and Interferences agreed, and Mr. Bilski appealed the rejection of his patent application to the Federal Circuit Court of Appeals in Washington DC, which hears appeals from the Patent Office as well as appeals of patent cases from the federal district courts around the country.

Citing to several Supreme Court decisions, the Bilski Court reiterated that laws of nature, natural phenomena and abstract ideas, which the court collectively called "fundamental principles", are not patentable.[5] To determine whether a claimed process, such as Mr. Bilski's method, is directed to a fundamental principle, the Bilski court held that the machine-or-transformation test must be applied.[6] As justification for its machine-or-transformation test, the Bilski court noted that a fundamental principle, if tied to a particular machine, doesn't preempt other uses of the principle. Likewise, the application of a fundamental principle to transform an article to a different state or thing doesn't preempt use of that fundamental principle to transform other articles, or to transform the same article but in a different way.[7]

The Bilski Court also threw out several tests previously used to determine whether a process is patent-eligible. In particular, the court held that the "useful, concrete and tangible result" test, which had been used in the State Street decision, and was often applied by patent examiners to software and business method patent applications, is no longer a proper test.[8] The court also held that the Freeman-Walter-Abele test, which looked to see whether a patent claim that recites an algorithm also applies the algorithm to physical elements or to process steps, is no longer a proper test.[9] Finally, the court rejected both the "technological arts" and the "physical steps" tests.[10]

For a computer software process to be patent eligible, in light of Bilski, the method claim should written such that the method is tied to a particular machine, or performs a transformation of an article. Mr. Bilski's patent claim was not tied to a computer or other machine, and Mr. Bilski admitted as much.[11] Accordingly, the Bilski decision unfortunately provides no guidance as to how a process, such as computer software, may be tied to a particular machine in order for the process to be found patent-eligible. Indeed, the Bilski court specifically stated it was leaving to future decisions the question whether simply reciting a computer is sufficient to meet the machine-part of the test.[12]

Nonetheless, the Bilski court did provide some guidance with regard to the transformation-part of the test. First, with regard to what constitutes an "article" whose transformation can lead to patentable subject matter, the Bilski court held that physical objects or substances clearly constitute sufficient articles.[13] More relevant to computer software, the court also noted that electronic data or signals that are representative of physical objects or substances are sufficient articles.[14] In contrast, public or private legal obligations or relationships, business risks, or other such abstractions, like the 'options' recited in Mr. Bilski's patent application, are not 'articles' capable of being transformed for patent eligibility.[15] Second, with regard to what constitutes a sufficient transformation, the Bilski court acknowledged that the transformation of electronic data into a visual depiction can be sufficient, provided the patent claim also specifies how or from where the data was obtained or what it represents.[16] For example, a statement that the data is X-ray data produced in a 2-D field by a CT scanner, or that the data represents some underlying physical object, is sufficient.[17] On the other hand, gathering data is not a transformation of any article, and is thus not sufficient to render a patent claim eligible for protection.[18] Similarly, the recording of information does not constitute a sufficient transformation of an article.[19]

In sum, a computer software patent that specifies how or from where data or signals are obtained or what physical objects or substances they represent, and that also transforms the data or signals in some way other than by simply gathering or recording the data, such as creating a visual depiction, appears to meet Bilski's transformation test.

© 2008 Michael Reinemann