My friend and fellow NYU Law alumnus Keith Takeda emailed me yesterday with news of In re Bilski. Given I was flying home from Microsoft PDC, I didn't see it until today.
As soon as I saw it though, I alerted my Gartner colleagues that a major shift in patent law had just taken place. Now that I've had more time to read the decision closely, I'm even more convinced of it.
[Of course, now that I am no longer a bar-certified IP litigator these opinions are only the opinions of a lay person. For a legal opinion, speak with your attorney. Now with that legal boilerplate out of the way, on to the discussion.]
In its densely reasoned opinion, the CAFC did one thing quite clearly. It (re)established a single test of patentability to apply to applications for software or business method patents -- the so-called machine-or-transformation test:
A claimed process is surely patent-eligible ... if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.
In doing so the court invalidated several other tests, especially the test used in the (in)famous State Street decision: a "useful, concrete, and tangible result".
Many commentators have already opined that Bilski did not significantly impact software patents because the court explicitly chose not to address the machine aspect of the machine-or-transformation test:
As a result, issues specific to the machine implementation part of the test are not before us today. We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine. [emphasis added]
Accordingly, such commentators appear to reason that so long as a patent application ties the software to a computer, it may pass the test. This would leave most software patents intact.
I find this reasoning completely unpersuasive in the face of the ample dicta the court provided to signal its likely approach to the machine test. The requirement that software be "tied to a particular machine or apparatus" is not satisfied by merely reciting that the software is tied to a "general-purpose digital computer". Here is just one example: "However, in Benson, the limitations tying the process to a computer were not actually limiting because the fundamental principle at issue, a particular algorithm, had no utility other than operating on a digital computer." [emphasis added]
Clearly the CAFC will require that the machine being tied to is either some type of special-purpose computer, or a general-purpose computer embedded in some type of special-purpose device. So unless the transformation test (which we turn to next) leaves a loophole, the particular machine test will greatly restrict the scope of software patents.
My reading of the court's discussion of the transformation test convinces me that it offers no loophole either. While the court does not go so far as to require that the article being transformed be a physical object, it does require that the article being transformed be at least a representation of a physical object: "Purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances." [emphasis added]
So some software and business method patents survive, but only a select few. Restating the machine-or-transformation test with the restrictions impose in Bilski will make this clear:
A claimed process is surely patent-eligible ... if: (1) it is tied to a special-purpose computer, or a general-purpose computer embedded in a special purpose device, or (2) it transforms a physical object or substance, or a representation of such, into a different state or thing.
IMLayO, this new test will invalidate thousands of patents. A list of some potentially invalidated patents has been produced by Gene Quinn: Say Goodby to These Patents. Let the litigation begin!