In Re Bilski - Impact

Impact

Prior to the Supreme Court's decision on appeal, it was widely reported that the Bilski decision would call into question the validity of many already issued business method patents. This issue has received global news coverage with a generally favorable assessment of the judgment. According to The Associated Press, the decision "could reshape the way banks and high-tech firms protect their intellectual property." Moreover, as a result of the decision, according to The Washington Post and others, many business method patents, possibly thousands, may now be invalid.

Recent decisions by the BPAI have used Bilski to overturn claims related to more traditional computer implemented inventions. Four out of five of the initial Bilski rejections, for example, were to IBM patent applications not in the business method area.

In January 2009, Bilski and Warsaw petitioned the U.S. Supreme Court for a writ of certiorari, seeking to overturn the Federal Circuit decision. It was granted on June 1, 2009.

In March 2009, a Federal Circuit panel split over what Bilski had held. For In re Ferguson the majority opinion (per Judge Gajarsa, joined by Judge Mayer) stated that Bilski has held that the "useful, concrete and tangible result test" "is insufficient to determine whether a claim is patent-eligible under § 101," that it "is inadequate," and that "those portions of our opinions in State Street and AT&T Corp. v. Excel Communications, Inc. relying on a 'useful, concrete and tangible result' analysis should not longer be relied on." In addition, the Ferguson majority said, "In Bilski, this court also rejected the so-called Freeman-Walter-Abele test, the "technological arts" test, and the "physical steps" test." In her dissenting opinion, Judge Newman took issue with the majority opinion as an erroneous "sweeping rejection of precedent." She insisted that Bilski had left State Street partly in effect. She argued that Bilski had "recognized that the State Street Bank test was directed to processes performed by computer, "thus meeting the Bilski test" and pointed to note 18 of the Bilski opinion, which stated, "In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine."

A March 2009 district court opinion interpreting Bilski "ponder whether the end has arrived for business method patents." The court then observed:

Without expressly overruling State Street, the Bilski majority struck down its underpinnings. This caused one dissenter, Judge Newman, to write that State Street "is left hanging," while another dissenter, Judge Mayer, registered "an emphatic 'yes'" to rejecting State Street.... Although the majority declined to say so explicitly, Bilski's holding suggests a perilous future for most business method patents.

The court concluded, "The closing bell may be ringing for business method patents, and their patentees may find they have become bagholders."