In the eyes of the law

 The U.S. Supreme Court recently heard arguments in the case of Bilski v. Kappos No. 08-964 (Supreme Court 2009). This decision could help determine whether software can be patented. The question in the lower court was whether a process can be patented. The lower court expanded its inquiry to whether or not software can be patented. Although this Federal Court did not rule that software cannot be patented, it apparently overruled the State Street decision. In State Street Bank & Trust v. Signature Financial Group, 149 F.3d 1368 (1998), the court determined that software programs that “transform data” are patentable subject matter even when there is no physical transformation of an article. The State Street court held that software or other processes that yield a “useful, concrete and tangible result” should be considered patentable and this rule has been followed, more or less, by the Patent Office ever since.

In Bilski the lower court indicated that the “useful, concrete and tangible result” inquiry should no longer be used to determine whether a process can be patented. Because this was the inquiry used to grant many software patents in the past, the Federal Court’s decision has called into question the validity of these existing software patents. The new test stated for determining that a process is patentable is if “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”  The lower court ruling did not explain whether a software process operating on a computer is considered to be tied to a “particular machine or apparatus.”  If a computer is not deemed to be a particular machine, then many existing software process patent claims could be in jeopardy.  

The Supreme Court also took up the question of whether the lower court’s new “machine-or-transformation” test for patent eligibility, which eliminates patent protection for many business methods, including software, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business” in 35 U.S.C. § 273. During the arguments some of the Justices seemed to imply that siding with Bilski could open the door too wide for further patent applications, while other Justices felt the new test was too limiting. Regardless of how the decision comes out, at some point either the courts or the legislature need to clear up the confusion surrounding the ability to patent business process and computer software.