Are methods for doing business eligible for patent protection?

Business method inventions are eligible for patent protection

Yes.  In a recent case, the United States Supreme Court held that business methods are eligible for patent protection.  Bilski v. Kappos (2010).  However, it was a close call since the 9 Supreme Court Justices were divided 5-4 in the decision. .

Decision based on statutory construction

The Bilski case involved a method for hedging risk.  Although the justices agreed that this particular method is not eligible for patent protection as being directed to an abstract idea, five of nine Justices voted that business methods are patent-eligible.  The majority arrived at its conclusion through construction of the relevant patent statutes.  In particular, the majority reasoned that Congress must have intended business methods to be eligible for patent protection since 35 USC 273 allows a defense of prior use to be made against claims of infringement of a business method.

Limits on eligibility for patent protection

But there are limits on what methods are patentable.  Before the Bilski decision, the United States Patent and Trademark Office determined whether a business method was patentable subject matter solely under a machine or transformation test.  Under this test, the invention for which patent protection was sought must be tied to a particular machine or must transform a particular article into a different state or thing.  In  Bilski, the Supreme Court held that the machine-or-transformation test can be used, but that it is not the sole test under which patent eligibility is determined.  Although this Bilski decision was related to business methods (evaluating risk in hedge funds), it has been applied to other methods such as medical diagnostic methods, computer implemented methods, etc.

Factors for determining eligibility for patent protection

Based on Bilski, the US  Patent Office produced guidelines for its examiners on how to make patent elibility determinations.  A number of factors are now reviewed to determine whether the invention is eligible for patent protection.  The machine or transformation test is now just one of the factors considered, but it appears to weigh heavily in the Patent Office’s analysis of whether the invention is eligible for patent protection.  As such, method claims should still be written to meet the machine or transformation test, if possible.  If not, then the claim is not fatally defective but it appears that the claim will most likely be rejected by the Patent Office.

I invite you to contact me with your patent questions at (949) 433-0900 or James@OCPatentLawyer.com. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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James Yang is a patent attorney whose practice encompasses all areas of intellectual property law including patents, trademarks, copyrights and trade secrets.

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