Business patents are dead. Or not.

The United States Court of Appeals for the Federal Circuit wasn’t thinking of headline writers when it ruled against a man who wanted to patent a method as opposed to something that “involve(s) a particular machine” or “physically transform(s) anything,” basically saying that patenting something it deemed abstract stifles innovation. Headlines such as The End of Business Process Patents and Patent Court: You Can No Longer Patent Thin Air need some qualification, because in the 132-page ruling (which includes two dissenting opinions), Chief Judge Paul Michel also wrote:

We agree that future developments in technology and the sciences
may present difficult challenges to the machine-or-transformation test. … Thus, we recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies.

How’s that for putting your foot down? In other words, it ain’t over till it’s over, and in a world full of lawyers, when is it really over? (We at GMSV do not pretend to have passed the LSAT. In fact, by page 14 of the ruling, our eyes were glazed over and we had a sudden urge to do something mindless, like eat ice cream while watching HGTV.) This much we can discern: Yes, the ruling could have a huge impact on tech companies. But the ruling doesn’t kill business patents — it tightens the criteria patent applicants must meet. Also, tech companies in Silicon Valley and elsewhere will most likely start to lobby like crazy — if they aren’t already — for Congress to make changes to patent laws.


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  • Yes, they did indeed acknowledge that their test s-… is lacking. This is a better news article on the case than most of the big outlets are providing. I think someone read my own post on my website which happens to have the exact same quote…

  • The biggest winners from the Bilski decision might be technology consultants. As a US patent agent specializing in business method patents, one of the strategies I’ve emphasized for financial professionals seeking a patent is for them to spend a little extra money to hire a technology consultant (e.g. actuary, IT professional, etc.) to spec out the technical implementation of their inventions. We then include those specifications in the patent application with the tech consultant as a coinventor.

    The strategy has been very successful and with Bilski taking such a strong stand on the importance of tying a new financial invention to a “particular machine”, it should be even more so in the future.

  • This case rejects State Street, a case that opened the door to business method patents. The court also turned back the clock 40 years with respect to what test should be used in determining when software inventions are capable of patent protection. This cases also leaves open the possibility of further closing the door on software patents. This is on the heels of the Supreme Court decision in KSR that substantially changes the standards for patentability such that many more inventions are obvious and comes at a time when we have record low patent allowance rates. Start-up software companies should be very worried. Companies with natural monopolies should be happy as they tend to be on the receiving end of patent infringement lawsuits and have been lobbying hard for “patent reforms” to weaken the patent system.

  • JumbaFig

    So, the search technologies does not “involve(s) a particular machine” nor “physically transform(s) anything” , now therefore, no patents is valid for search technology?? How about any computational algorithm, including security and encryptions? Wow, that is so cool!! Finally, EVERY know-how is free on internet….