Bilski v. Kappos

561 U.S. 593, 130 S. Ct. 3218, 177 L. Ed. 2d 792, 22 Fla. L. Weekly Fed. S 703, 2010 U.S. LEXIS 5521, 78 U.S.L.W. 4802, 95 U.S.P.Q. 2d (BNA) 1001
Supreme Court of the United States·Decided June 28, 2010·No. No. 08-964·Published·Cited by 559 cases

Opinions

[799] OPINION OF THE COURT

[561 U.S. 597]

Justice Kennedy

delivered the opinion of the Court, except as to Parts II-B-2 and II-C-2.*

The question in this case turns on whether a patent can be issued for a claimed invention designed for the business

[561 U.S. 598]

world. The patent application claims a procedure for instructing buyers and sellers how to protect against the risk of price fluctuations in a discrete section of the economy. Three arguments are advanced for the proposition that the claimed invention is outside the scope of patent law: (1) It is not tied to a machine and does not transform an article; (2) it involves a method of conducting business; and (3) it is merely an abstract idea. The Court of Appeals ruled that the first mentioned of these, the so-called machine-or-transformation test, was the sole test to be used for determining the patent-ability of a “process” under the Patent Act, 35 U.S.C. § 101.

[561 U.S. 599]

I

Petitioners’ application seeks patent protection for a claimed invention that explains how buyers and sellers of commodities in the energy market can protect, or hedge, against the risk of price changes. The key claims are claims 1 and 4. Claim 1 describes a series of steps instructing how to hedge risk. Claim 4 puts the concept articulated in claim 1 into a simple mathematical formula. Claim 1 consists of the following steps:

“(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumers;
“(b) identifying market participants for said commodity having a counter-risk position to said consumers; and
“(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.” App. 19-20.

The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to minimize the risks resulting from fluctuations in market demand for energy. For example, claim 2 claims “ [t]he method of claim 1 wherein said commodity is energy and said market participants are transmission distributors.” Id., at 20. Some of these claims also suggest familiar statistical approaches to determine the inputs to use in claim 4’s equation. For example, claim 7 advises using well-known random analysis techniques to determine how much a seller will gain “from each transaction under each historical weather pattern.” Id., at 21.

The patent examiner rejected petitioners’ application, explaining that it “ ‘is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely

[561 U.S. 600]

mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.’ ” App. to Pet. for Cert. 148a. The Board [800] of Patent Appeals and Interferences affirmed, concluding that the application involved only mental steps that do not transform physical matter and was directed to an abstract idea. Id., at 181a-186a.

The United States Court of Appeals for the Federal Circuit heard the case en banc and affirmed. The case produced five different opinions. Students of patent law would be well advised to study these scholarly opinions.

Chief Judge Michel wrote the opinion of the court. The court rejected its prior test for determining whether a claimed invention was a patentable “process” under § 101—whether it produces a “ ‘useful, concrete and tangible result’ ”—as articulated in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, 1373 (1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1357 (1999). See In re Bilski, 545 F.3d 943, 959-960, and n. 19 (CA Fed. 2008) (en banc). The court held that “[a] claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” Id., at 954. The court concluded this “machine-or-transformation test” is “the sole test governing § 101 analy-ses,” id., at 955, and thus the “test for determining patent eligibility of a process under § 101,” id., at 956. Applying the machine-or-transformation test, the court held that petitioners’ application was not patent eligible. Id., at 963-966. Judge Dyk wrote a separate concurring opinion, providing historical support for the court’s approach. Id., at 966-976.

Three judges wrote dissenting opinions. Judge Mayer argued that petitioners’ application was “not eligible for patent protection because it is directed to a method of conducting business.” Id., at 998. He urged the adoption of a “technological standard for patentability.” Id., at 1010. Judge

[561 U.S. 601]

Rader would have found petitioners’ claims were an unpatentable abstract idea. Id., at 1011. Only Judge Newman disagreed with the court’s conclusion that petitioners’ application was outside of the reach of § 101. She did not say that the application should have been granted but only that the issue should be remanded for further proceedings to determine whether the application qualified as patentable under other provisions. Id., at 997.

This Court granted certiorari. 556 U.S. 1268, 129 S. Ct. 2735, 174 L. Ed. 2d 246 (2009).

II

A

Section 101 defines the subject matter that may be patented under the Patent Act:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

Section 101 thus specifies four independent categories of inventions or discoveries that are eligible for protection: processes, machines, manufactures, and compositions of matter. “In choosing such expansive terms . . . modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope.” Diamond v. Chakrabarty, 447 [801] U.S. 303, 308, 100 S. Ct. 2204, 65 L. Ed. 2d 144 (1980). Congress took this permissive approach to patent eligibility to ensure that “ ‘ingenuity should receive a liberal encouragement.’” Id., at 308-309, 100 S. Ct. 2204, 65 L. Ed. 2d 144 (quoting 5 Writings of Thomas Jefferson 75-76 (H. Washington ed. 1871)).

The Court’s precedents provide three specific exceptions to § 101’s broad patent-eligibility principles: “laws of nature, physical phenomena, and abstract ideas.” Chakrabarty, supra, at 309, 100 S. Ct. 2204, 65 L. Ed. 2d 144. While these exceptions are not required by the statutory text, they are consistent with the notion that

Free access — add to your briefcase to read the full text and ask questions with AI

Bilski v. Kappos, 561 U.S. 593, 130 S. Ct. 3218, 177 L. Ed. 2d 792, 22 Fla. L. Weekly Fed. S 703, 2010 U.S. LEXIS 5521, 78 U.S.L.W. 4802, 95 U.S.P.Q. 2d (BNA) 1001 (2010).

561 U.S. 593 (Bilski v. Kappos) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

J.U. v. Maldonado, Jr.
E.D. New York, 2025
Snipr Technologies Limited v. Rockefeller University
72 F.4th 1372 (Federal Circuit, 2023)
Lockheed Martin Aeronautics Company
Armed Services Board of Contract Appeals, 2022
Ocado Innovation, Ltd., et al., v. AutoStore AS, et al.
2021 DNH 129P (D. New Hampshire, 2021)
Cardionet, LLC v. Infobionic, Inc
955 F.3d 1358 (Federal Circuit, 2020)
FTC v. At&t Mobility LLC
883 F.3d 848 (Ninth Circuit, 2018)
United States v. Taylor
289 F. Supp. 3d 55 (D.C. Circuit, 2018)
Appistry, Inc. v. Amazon.Com, Inc.
195 F. Supp. 3d 1176 (W.D. Washington, 2016)
Racetech, LLC v. Kentucky Downs, LLC
167 F. Supp. 3d 853 (W.D. Kentucky, 2016)
Encyclopedia Britannica, Inc. v. Dickstein Shapiro, LLP
128 F. Supp. 3d 103 (District of Columbia, 2015)