Bilski Supreme Court Decision – Summary of Key Points and Analysis
Kelley Drye Client Advisory
June 29, 2010
Summary

On an issue of crucial importance to pharma and biotech companies, the "machine-or-transformation test" was held by the Bilski Court in a plurality decision not to be the exclusive or sole test for deciding whether a process is patentable under § 101.  No categorical rule was adopted by the Supreme Court that would preclude patenting: (a) business methods; (b) diagnostic methods correlating biomarkers with a particular disease or condition; (c) medical treatment methods optimizing therapeutic treatments based on analytical measurements or detection of aberrant DNA, proteins, or other biomarkers; or (d) other medical treatment or diagnostic processes that are discovered with the use of emerging technologies. Bilski offers no new guidance or test for determining whether a process or method may be patented under § 101, but simply restores the existing state of the law.  The patentability of all such new medical treatment or diagnostic methods or processes will be dealt with on a case by case base under the Supreme Court precedent established in Chakrabarty, Flook, and Diehr. In short, the uncertainty as to whether new medical or diagnostic processes qualify for patent protection is not resolved by Bilski, which simply holds that the machine-or-transformation test is an important clue, but not the exclusive test for deciding if new processes or methods are patentable.

Analysis of Bilski Decision

No five justices agreed on how much importance should be attached to the "machine-or-transformation test" in deciding the patentability of processes or methods in future cases.  While all nine justices concurred that the Federal Circuit was right in affirming the denial of Bilski's application to patent a method of hedging risk in commodities trading, Justice Kennedy, in an opinion for the Court joined by Justices Roberts, Thomas, and Alito, wrote that the machine-or-transformation test was best suited for evaluating the patentability of processes similar to those in the Industrial Age (i.e., inventions grounded in a physical or other tangible form), but with regard to emerging technologies, including expressly advanced diagnostic medicine techniques, it may not make sense to require courts to confine themselves to asking the questions posed by the machine-or-transformation test.  In Justice Kennedy's words "Section 101's terms suggest new technologies may call for new inquiries." (Slip. Op., at 9). 

However, Justice Scalia declined to join in this portion of Justice Kennedy's opinion and Justice Stevens wrote a lengthy concurrence joined by Justices Ginsburg, Breyer, and Sotomayor, which, while conceding that machine-or-transformation test was not the exclusive test for determining whether a process was patentable under § 101, endorsed a different, less flexible approach to deciding the patentability of process claims.  Stevens thought that the Court's opinion was unclear in more than one respect and could, if misunderstood, result in confusion or upset settled legal precedent.  Stevens disputes the suggestion that the machine-or-transformation test might not apply to emerging technologies.  Stevens wrote "I understand the Court's opinion to hold only that the machine-or-transformation test remains an important test for patentability.  Few, if any, processes cannot effectively be evaluated using these criteria" (Stevens Slip. Op., at 8).  It is clear that Justice Stevens and the three other justices who joined his concurrence would have adopted a black letter rule holding that a business method is not a "process" under § 101.  Stevens' opinion further hints that patenting methods of doing business may exceed the constitutional grant of authority to Congress to exercise its patent power to promote innovation.

Justice Breyer, in a separate concurrence joined by Scalia, tried to distill the decision down to four points.  First, though § 101 is broad, the Court must also define what is free for all to use as well as what inventions may be protected by a patent monopoly.  Second, application of the machine-or-transformation test has repeatedly helped the Supreme Court decide what is a patentable process.  Third, while the machine-or-transformation test is a valuable and useful clue, it has never been the sole test for determining patentability.  Fourth, the Court's decision cannot be read as reviving the discredited patentability test of whether a process produces "a useful, concrete, and tangible result."  Breyer concluded by pointing out that "in reemphasizing that the machine-or-transformation test is not necessarily the sole test of patentability, the Court intends neither to deemphasize the test's usefulness, nor to suggest that many patentable processes lie beyond its reach."  (Breyer Slip. Op. p. 4).

While Bilski does not preclude the patentability of all business methods in the future, on fair reading the decision does indicate that most business methods are unlikely to be eligible for patent protection.  While the justices all agreed that the claims at issue were unpatentable abstract ideas, Bilski offers no sign posts for deciding what claims are drawn to abstract ideas, rules of nature or natural phenomena.  Nor is there any agreement as to how the statutory language in § 101 should be interpreted.  Nonetheless, the Bilski decision rejects a single test for patentability and leaves the question of additional limiting criteria for process or method claims for a future decision.

Justice Stevens' concurrence is much longer that Justice Kennedy's opinion.  This suggests that Justice Stevens' opinion was written as the majority opinion, but, upon review, the Stevens' opinion could not get the crucial fifth vote necessary for a majority from among those justices who favored a narrower holding.