Bilski v. Kappos: A Breath of Fresh Air or Resuscitating Uncertainty for Business Process Method Patents in the Information Age?

• Author: Rob D. Powell
• Position: Graduated from Capital University Law School in 2011 and received a B.B.A. from Ohio University College of Business in 1999
• Pages: 741-771

BILSKI V. KAPPOS:

A BREATH OF FRESH AIR OR RESUSCITATING

UNCERTAINTY FOR BUSINESS PROCESS METHOD PATENTS

IN THE INFORMATION AGE?

ROB D. POWELL*

I. INTRODUCTION

Tasked with the promotion of “Science and useful Arts” under the

United States Constitution,1 Congress developed a patent system which

balances the interest of rewarding and inspiring innovation with the need to

provide for the free flow of ideas.2 Section 101 of the Patent Act serves as

a gatekeeper for patent claims, ensuring that only claims eligible for patent

protection are considered.3 Section 101 provides that claims for processes

Copyright © 2012, Rob D. Powell.

* I graduated from Capital University Law School in 2011 and received a B.B.A. from

Ohio University College of Business in 1999. My interest in the protection of business

process methods and technological innovation is rooted in a decade spent consulting

corporations in business management and information technology integration. While I

would not argue that the applicant’s cl aims in Bilski v. Kappos rise to a level of innovation

worth protecting, many implementations of business processes into and through the use of

technology do. It is unfortunate that the claims in this case did not present more of a

challenge and further stress the Court’s interpretati on of its precedent into a more definite

method for dealing with today’s business process method patent applications. Nonetheless,

the Court’s discussion of claims in the In formation Age encouraged and inspired me to

write this note. I would like to thank Professor Don Hughes and Cris Thomas for their

suggestions, guidance, and expertise throughout the writing of this note.

1 U.S. CONST. art. I, § 8, cl. 8 (“To promote the Progress of Science and useful Arts, by

securing for limited Times to Authors and Inventors the exclusive Right to their respective

Writings and Discoveries.”).

2 Bilski v. Kappos, 130 S. Ct. 3218, 3228 (2010). The Bilski Court stated: “With ever

more people trying to innovate and thus seeking patent protections for their inventions, the

patent law faces a great challenge in striking the balance between protecting inventors and

not granting monopolies over procedures that others would discover by independent,

creative application of general principles.” Id.

3 See U.S. Patent Act, 35 U.S.C. §§ 1–376 (2006); Bilski, 130 S. Ct. at 3225 (“Section

101 thus specifies four independent categories of inventions or discoveries that are eligible

for protection . . . .”).

742 CAPITAL UNIVERSITY LAW REVIEW [40:741

are patent eligible.4 In an era of evolving technology, innovation, and

ideas, the need to control the volume of eligible applications through this

section is substantial.

The Supreme Court in Bilski v. Kappos5 considered the proper standard

to determine the patent eligibility of business process methods.6 The

claims at issue in Bilski v. Kappos laid out methods to hedge the risk of

fluctuations in prices when trading commodities or options, which

resembled a commonsense “sell high, buy low” strategy and included some

well-known statistical approaches.7 The central question was whether the

method qualified as a process under the threshold requirement for

consideration found in Section 101 of the Patent Act.8 Precedent by the

Supreme Court and the lower courts have established tests to determine

whether an invention qualifies as a process and is subject to the additional

requirements imposed via Section 101.9 The United States Court of

Appeals for the Federal Circuit in In re Bilski rejected application of prior

precedent and adopted the machine-or-transformation test as the sole test in

affirming the denial of the patent application.10 The Supreme Court in

Bilski v. Kappos affirmed the appellate judgment denying the patent

application, but on a different basis (i.e., that that proposed business

process method was abstract).11 The Court held that the machine-or-

transformation test is not the sole test but “is a useful and important clue,

an investigative tool” for the courts to evaluate a process in addition to

4 Bilski, 130 S. Ct. at 3225. Notably, however, the “patent-eligibility inquiry is only a

threshold test.” Id.

5 130 S. Ct. 3218 (2010).

6 Id. at 3223.

7 See id.

8 Id. (“The question in this case turns on whether a patent can be issued for a claimed

invention designed for the business world.”). See also 35 U.S.C. § 101 (“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 therefor, subject to the

conditions and requirements of this title.”).

9 See generally In re Bilski, 545 F.3d 943, 951–56 (Fed. Cir. 2008) (discussing prior

case law and standards that the courts have applied).

10 Id. at 956 (“We . . . reaffirm that the machine-or-transformation test, properly

applied, is the governing test for determining patent eligibility of a process under § 101.”).

11 Bilski, 130 S. Ct. at 3229–30 (“Indeed, all members of the Court agree that the patent

application at issue here falls outside of § 101 because i t claims an abstract idea.”).