This article was written by Jim Fulton, SCORE Orange County Management Counselor
On 30 October, 2008, the U. S. Court of Appeals for the Washington Circuit (which handles all Patent appeals) substantially reversed the position it had adopted in 1998 with regard to Business Practice Patents. As a result, Business Practice Patents will be harder to acquire. The Court upheld the position taken recently by the U. S. Patent and Trademark Office in the matter of Bilski & Warsaw vs. the USPTO.
The Court essentially returned to the pre-1998 position by reversing its “State Street decision.” The “State Street decision” had caused great controversy due to its vague wording. It said in that case “business practices were patentable so long as they’re useful, concrete and tangible.” This language is no longer effective. The Court, in a 9-3 decision, wrote that in order for a process to receive patent protection, it has to either “transform an article to a different state or thing” or be “tied to a particular machine.” This places the Business Process Patent in parallel with previous process patents found most often in chemistry.
It is clear that it will be more difficult to obtain business practice patents in the fields of accounting, banking, insurance and software in general. It also opens the way to litigation related to patents issued during the interim period.
The decision is subject to appeal to the U. S. Supreme Court. However, that Court is notoriously reluctant to become involved in the technical details of patent matters. It specifically formed the above named Court to handle such matters for it.