On October 30, 2008, the Court of Appeals for the Federal Circuit in a nine-to-three decision in a case entitled In Re Bernard L. Bilski and Rand A. Warsaw, affirmed a decision by the U.S. Patent and Trademark Office Board of Appeals and Interferences that a process patent directed to a method of managing risk in the commodities market is not subject matter that patent laws have been designed to protect.

Under § 101 of the Patent Statute:

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

The Court effectively held that the word “process” used in the statute must involve “a transformation of an article to a different state or thing”, and that purported transformations of business risks in the commodities market does not involve physical objects or substances.  As such, the Court determined that the claims in the Bilski patent application did not define a process that constituted patentable subject matter.

The dissenting opinions were critical of the legal analysis by the majority, but did not differ on the outcome that precludes Bilski from securing a patent on his particular method for hedging risk in commodities trading.

Tom Nikolai                 (612) 392-7307           Tom.Nikolai@nm-iplaw.com