Supreme Court's Bilski decision provides little guidance on patent eligibility: Supreme Court ruling provides no guidance on the question of what qualifies as a patent-eligible process that is not tied to a computer

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Date: Dec. 2010
From: Bank Accounting & Finance(Vol. 24, Issue 1)
Publisher: CCH, Inc.
Document Type: Article
Length: 8,072 words
Lexile Measure: 1600L

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In its recent Bilski v. Kappos decision, the U.S. Supreme Court upheld the U.S. Patent Office s denial of Bernard Bilski and Rand Warsaw s patent application directed to a method of hedging risk in weather-related energy prices but overturned an appellate court's restrictive requirement that method patents be tied into a "machine or transformation." Thus, the decision appears firmly to establish software-based financial innovations as patent eligible. The Court, however, provided no guidance on the lingering question of what qualifies as a patent-eligible process that is not tied to a computer.

Some Patent Basics

To understand the implications of the Bilski v. Kappos decision, some patent fundamentals are helpful. To be eligible for patent protection, an innovation must meet two basic requirements: It must be the type of innovation for which patents are permitted, (1) and it must be sufficiently inventive--in the language of patents, nonobvious. (2) While real questions exist as to the nonobviousness of the Bilski risk-hedging method before the Court, that issue was not addressed as the case appeared in the guise of patent eligibility.

A patent document consists of a specification and claims. (3) The specification--a technical article describing the invention--provides a detailed description of a specific embodiment of the invention, including drawings, if helpful. The specification must satisfy "enablement" and "best-mode" requirements. (4) To satisfy the enablement requirement, the description must be in such full, clear and concise terms as to enable a hypothetical person of ordinary skill in the art to make and use the invention. (5) To satisfy the best-mode requirement, the specification must contain a description of what the inventor believes to be the best form or embodiment of the invention at the time the application is filed; (6) in other words, the inventor must completely describe the invention. Once a decision is made to file a patent application, information about the invention cannot be held back.

While the specification describes the invention, the claims define the scope of the patent owner's rights. (7) A claim sets the bounds of the area within which the patent owner has the right to exclude others from making, having made, using and selling the invention. (8) Thus, the claims of the patent define the exclusivity reserved to the patent owner in the same way as metes and bounds of a real estate deed spell out the dimensions of a piece of real property. Like a deed for land, each patent varies in scope, with narrow patents covering only the specific functional aspects of the invention while broad patents cover a broad range of functional equivalents.

State Street Bank v. Signature Financial Group

The roots of the Bilski controversy extend to March 1991, when Signature Financial Group filed a patent application directed toward a computerized system for managing a mutual fund investment structure. (9) In this "hub-and-spoke" arrangement, mutual fund spokes pooled their assets in an investment portfolio hub. The hub holding the investment portfolio qualified as a partnership for federal income tax purposes; the...

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Gale Document Number: GALE|A248093674