Bilski’s Lessons: Three Months Later


Kenneth W. Brothers, a Partner at Dickstein Shapiro LLP and a presenter at PLI’s upcoming 5th Annual Patent Law Institute, sent in this article he wrote along with Philip G. Hampton, II wherein they discuss what has happened since the Supreme Court’s Bilski decision.  Here is an excerpt and a link to the full article.

After the Supreme Court issued its decision on Bilski v. Kappos, we predicted that much ink would be spilled analyzing the fractured opinions and opaque basis for the majority decision.  While the PTO has issued interim guidelines, since June, only one district court has attempted to apply the Bilski decision and the decision has only been mentioned in two Federal Circuit decisions.

Applying Bilski. The patent bar will devote years deciphering this decision, since the majority decision failed to enunciate either a clear standard for patentability under §101 or clear guidelines for determining what is a valid business method patent.  We expect that lower court decisions likely will fall into three general categories:  (1) adherence to the Federal Circuit’s machine-or-transformation test; (2) seat-of-the-pants determinations of whether the patent-in-suit is directed to abstract; or (3) a genuine attempt to weigh multiple factors to determine patentability.

The Courts. As of September 29, 2010, the Court’s Bilski decision has been directly applied in one district court decision, and referenced in two Federal Circuit decisions.  In Ultramercial, LLC et al. v. Hulu, LLC, et al. 2010 U.S. Dist. Lexis 93453 (C.D. Cal. Aug. 13, 2010), the patent in suit claimed a method of paying copyright fees for audio or visual products distributed over the internet.

Applying the Supreme Court’s Bilski decision, the District Court held that the claims of the patent were unpatentable, since the claims failed the “machine-or-transformation” test and were directed to an abstract idea.  The District Court specifically pointed out that the claimed method was not connected to a machine of any kind and did not transform any material.  In acknowledging that Bilski held that the “machine-or-transformation” test was not dispositive of the issue of patentable subject matter, the District Court went on to compare the method described in the ‘595 patent and the hedge fund analysis described in Bilski’s method.  Since the District Court found that both methods described basic ideas that may be applied in many different situations, it found that the method claimed in the ‘595 patent was an abstract idea and was not patentable subject matter.

In King Pharms., Inc. v. Eon Labs., 2010 U.S. App. Lexis 15947 (Fed Cir. Aug. 4, 2010), the Federal Circuit Court found that the district court’s analysis, in which it found that three patent claims did not contain patentable subject matter, was flawed.  The patent claims were directed to medical treatment methods, which previously the Federal Circuit found patentable under the “machine-or-transformation” test.  The Federal Circuit, after noting that the machine-or-transformation test was still valuable and that the Supreme Court had recognized the “wisdom behind it,”  Id. at 26-27, did not decide whether the claims presented patentable subject matter, but instead resolved the case on novelty grounds.

On the same day the Federal Circuit released its King Pharms decision, Judge Dyk referenced Bilski in a dissenting opinion, arguing that isolated DNA molecules are not patentable.  Intervet Inc. v. Merial Ltd., 2010 U.S. App. Lexis 16104 (Fed Cir. Aug. 4, 2010), at 30-31.  Interestingly, the majority decision did not discuss §101.

Interim Patent Office Guidelines. On July 27, 2010, the PTO released interim guidelines detailing the appropriate steps for determining whether process claims are patentable material under Bilski.  These guidelines provide a basic overview and summary of the Bilski decision, guidance on the abstract idea exception to subject matter eligibility as set forth in Bilski, and specific factors relevant to reviewing method claims for subject matter eligibility in view of Bilski.

In the interim guidelines, the PTO reminds its examiners that, instead of a single test for determining patentability of a method patent, the Bilski decision suggests that many factors should be weighed in determining whether the method patent is an abstract idea, and thus not patentable.  The PTO further reminded its examiners that Bilski held that business methods are not “categorically outside of §101’s scope.”

The PTO acknowledged that the “machine-or-transformation” test is no longer the test for determining whether method patents were within the scope of §101, but one of several factors to be considered.  In its interim guidelines, the PTO provided its examiners with several other factors to consider when evaluating method claims for subject matter eligibility in view of Bilski:

  • Whether the method involves or is executed by a particular machine or apparatus. Association with a machine weighs towards patentability.
  • Whether performance of the claimed method results in or otherwise involves a transformation of a particular article.  Transformation of an article weighs towards patentability.
  • Whether performance of the claimed method involves an application of a law of nature.  Such application of a law of nature weighs towards patentability.
  • Whether a general concept is involved in executing the steps of the method. If a general concept is present, it weighs against patentability.

Click here for the full article Bilski’s Lessons- Three Months Later.

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One Response to “Bilski’s Lessons: Three Months Later”

  1. patent_litigation says:

    In the wake of the Bilski patent litigation and the quite-vague opinion issued by the Supreme Court in that case, it’s helpful that we have obtained a little more clarification from the courts regarding the “abstract idea” exception to patent-eligibility. However, I anticipate that this issue will continue to be litigated, and (hopefully) further clarified, for years to come.

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