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January 21, 2009

U.S. Ruling on Business Method Patents

In October, the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled that business methods which are not tied to a specific machine or which do not perform a physical transformation cannot be patented.  The case was closely watched and has been heralded by some as the death knell for software patents.

Those who interpret Bilski to render software unpatentable must have read a different opinion than I did.  Does the following sound like a court that has decided that software is not patentable?

  • "[A]lthough invited to do so by several amici, we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court."
  • "[T]the process claim at issue in this appeal is not, in any event, a software claim. Thus, the facts here would be largely unhelpful in illuminating the distinctions between those software claims that are patent-eligible and those that are not."
The Bilski case did not involve a software patent claim.  Instead, the case involved a claim (for a method for "managing the consumption risk costs of a commodity") which did not specify that a computer or other machine performed the method.  Therefore, the primary issue before the CAFC was whether such a claim could qualify as patentable subject matter.  The CAFC concluded that it could not because the subject matter of the claim was not "tied to a particular machine" and did not "transform a particular article into a different state or thing."

There is substantial precedent from both the CAFC and the U.S. Supreme Court which is consistent with the conclusion that a wide variety of software patent claims satisfy this "machine or transformation" test.  That is not to say that all software patent claims qualify as patentable subject matter or that the Bilski opinion will not be interpreted within the CAFC, in the district courts, or within the U.S. Patent and Trademark Office to modify the standard of patentability for software.  Such changes, however, will likely be subtle and play out over time in a wide variety of cases, despite what recent press reports to the contrary would lead you to believe.

Posted by BlogAuthor1 at January 21, 2009 7:06 PM
category: Software Patents

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