Bilski Aftermath: Will Europe’s “Technical Effect” Test Become the Law in the U.S.?


Robert Hulse, of Fenwick & West LLP, Practice Center Contributor and PLI Faculty member, discusses what the future may look like for business method patents:

I think most patent practitioners and applicants who have been following this case believe that we dodged a bullet, as the Court’s decision was about as good as could have been expected.  The Court removed the Federal Circuit’s overly rigid application of the machine-or-transformation (MOT) test as the sole test for patent eligible-subject matter, but it retained the test as a useful indication of whether a claim meets the subject matter requirement.  (In this respect, the Bilski decision is much like the Court’s decision in KSR a few years ago, where the court kept the teaching-suggestion-motivation (TSM) test, but held that it was just one of many useful ways to evaluate a claim for its compliance with the nonobviousness requirement.)  The benefit to applicants is that we can continue to rely on compliance with the MOT test by reciting a machine or transformation, subject to the “post solution activity” and “meaningful limits” considerations, while not being completely constrained by that test.

The Court also declined to exclude business methods from patent-eligible subject matter, although four justices (including Stevens, who is leaving the Court) would have done so.  This means that companies who innovate to create new ways of conducting business can continue to protect their inventions.  Excluding business methods for patent-eligible subject matter would have created more problems than it solved, not the least of which would have been how to define a “business method.”

One area where the Court could be criticized is how it applied the law to the patent claims.  In finding the claims unpatentable, the Court held that the claims essentially covered an abstract idea, and to the extent any other features in the claims were not merely an abstract idea, those features were not significant because they were merely known techniques.  Because the Court discounted other features because they were “known,” the Court’s approach could be construed as requiring that a claim involving an abstract idea must also recite non-abstract (i.e., tangible or technical) features that are themselves nonobvious.  This merger of patent-eligible subject matter with nonobviousness begins to look like Europe’s “technical effect” test, which exclude business methods where the only novelty is in the manner in which business is conducted.  This has never been the law in the U.S., but it remains to be seen whether the lower courts or the USPTO will apply this rationale to business method patents.

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