October 30, 2008
The U.S. Court of Appeals for the Federal Circuit affirmed today the U.S. Patent and Trademark Office's decision in the “Bilski” case. In doing so, it could be the first nail in the coffin of what are often called “software patents”. However, the ruling is narrow and does not completely eliminate the vagueness in patent-eligibility that has exacerbated the threat of patents to software freedom.
Specifically, the decision discards many of the confusing tests of patent-elegibility under Section 101 of the Patent Act that have lead to the proliferation of business method patents that read on software, including those contained in the Court's decision in State Street. The Court limited the inquiry for patents on processes to a single patent eligibility test — the “machine-or-transformation” test. (The case did not address the other three categories of patent eligible subject matter: machines, manufacturers and compositions of matter.)
Under Section 101, the Court said, a process meets this requirement for patent eligibility if: “(1) [the process] is tied to a particular machine or apparatus, or (2) [the process] transforms a particular article into a different state or thing”. We now have a single narrow and more easily stated test for considering the patentability of software.
Of course, patent applications for many software systems will meet this test, and we have only minimal guidance from Bilski on how the test should be applied. However, SFLC believes that this decision takes us one step further toward freeing the United States from “software patents”. The SFLC hopes and expects that this case will lead to fewer patent grants that stand in the way of advancing software freedom.