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On October 30, the Court of Appeals for the Federal Circuit delivered its long-awaited decision in In re Bilski. The expectation was that the panel of all 12 judges of the patent specialty court would provide a consensus clarification regarding the patenting of business methods and computer/Internet-related inventions. For the most part, this did not happen. Although the court was essentially unanimous in concluding that Bilski's method (of hedging risk in commodities trading) was ineligible for patenting, the majority opinion leaves many questions unresolved. One aspect of the opinion seems clear, however: The court reaffirmed its previous holding that "business method claims" are not, per se, ineligible for patent protection. The question remains as to whether eligibility will continue to turn on the craft of the claims draftsperson, now redirected by the implications of Bilski.

The nine-judge majority synthesized a generalized test for eligibility from a group of Supreme Court decisions, all of which are at least 25 years old (i.e., early computer era/pre-Internet). The test is the "machine or transformation" test. It is satisfied either by showing that the claimed method "is tied to a particular machine, or by showing that [the claimed method] transforms an article." The use "of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility." Further, "the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity." The test leaves many significant questions unanswered. For example the majority declined to speak directly to the eligibility of "software claims." Also explicitly left open is the question of "whether or when the recitation of a computer suffices to tie a process claim to a particular machine."

In sum the decision contracts the field of patent-eligible subject matter to at least some extent. It casts further doubt as how and whether the manipulation of "abstract constructs such as legal obligations, organizational relationships, and business risks" can claimed in a way that will satisfy the machine or transformation test. The decision will also likely provide a further basis for invalidating already issued business method claims, drafted before Bilski.

We expect that the Patent Office will immediately apply the "machine or transformation" test to pending applications, particularly those involving business methods. If a patent examiner rejects claims as being directed to non-statutory subject matter, we may be able to overcome the rejection by including in the claim a use of a machine or specifying some physical transformation as a result of the method.
The Patent Office has a procedure called reexamination that can be used to determine whether the claims of any issued patent are patentable. Parties with patents directed to business methods or those who have concerns about any patents issued to a third party that involves a business method should consider anew whether the patent is valid and whether a request for reexamination should be filed.