Supreme Court Rejects Business Method Patent

The Supreme Court on June 28 unanimously rejected a business method patent that would have explained how commodities buyers and sellers in the energy market could hedge against the risk of price changes.

The Supreme Court on June 28 unanimously rejected a business method patent that would have explained how commodities buyers and sellers in the energy market could hedge against the risk of price changes.

The Supreme Court's ruling in Bilski v. Kappos ultimately upheld the patent examiner's determination. It also determined "machine-or-transformation" process — requiring something either be tied to a machine or apparatus, or is a transformative process — is not the sole test for determining patent eligibility, though it did not clarify what other factors should determine patent eligibility.

"With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles," Justice Anthony Kennedy said in the opinion of the court. "Nothing in this opinion should be read to take a position on where that balance ought to be struck."

When the case was first argued before the Supreme Court last November, the justices seemed reluctant to grant patents to business methods. The court's unanimous ruling Monday all but confirmed this stance.

Though the patent was denied in Bilski v. Kappos, under the ruling business method patents in general are not affected. The machine-or-transformation process, the court said, is still an effective tool in determining patentability, though there was no movement toward further definition of how business processes can gain patents.