{
  "id": "R40803",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R40803",
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  "source": "EveryCRSReport.com",
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      "source": "EveryCRSReport.com",
      "id": 370658,
      "date": "2010-09-17",
      "retrieved": "2016-04-07T01:29:01.360692",
      "title": "Patent-Eligibility of Process Claims Under Section 101 of the Patent Act: Bilski v. Kappos",
      "summary": "The source of federal patent law originates with the Patent Clause of the U.S. Constitution, which authorizes Congress: \u201cTo promote the Progress of ... useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their respective ... Discoveries.\u201d Section 101 of the Patent Act describes the subject matter that is eligible for patent protection, which may be divided into four categories: processes, machines, manufactures, and compositions of matter. The U.S. Court of Appeals for the Federal Circuit issued two decisions in the 1990s, In re Alappat and State Street Bank & Trust Co. v. Signature Financial Group, that had expanded the scope of patent-eligible subject matter to include any process that produces a \u201cuseful, concrete and tangible result.\u201d In October 2008, the Federal Circuit issued an en banc opinion, In re Bilski, that expressly overruled those earlier decisions. The Federal Circuit\u2019s Bilski opinion articulated a new legal standard governing the eligibility of process claims for patent protection under \u00a7 101 of the Patent Act: if the process is tied to a particular machine or apparatus, or if it transforms a particular article into a different state or thing. Some observers and patent practitioners criticized this \u201cmachine-or-transformation\u201d standard as being too rigid and not in compliance with Supreme Court precedent concerning patentable subject matter eligibility. They raised concerns that the test potentially restricts patent protection for new innovations in business methods and software, and that it called into question the validity of already-issued patents that claim information-based and computer-managed processes.\nOn June 28, 2010, the Supreme Court issued its opinion in Bilski v. Kappos, representing the first time that the Court has ruled on the scope of patentable subject matter since its last decision on this topic, the 1981 decision Diamond v. Diehr. At the outset of the opinion, the Court emphasized that its precedents already provide limits to patent eligibility under \u00a7 101\u2014laws of nature, physical phenomena, and abstract ideas may not be patented. Indeed, the Supreme Court rejected Bilski\u2019s patent application (regarding a commodities trading risk-hedging method) without using any \u201ctest\u201d that may have been developed by the Federal Circuit; rather, the Court relied on its precedents in declaring that the processes that were claimed in Bilski\u2019s patent application are unpatentable abstract ideas.\nThe Court ruled that the Federal Circuit was incorrect in holding that the \u201cmachine-or-transformation\u201d standard is the sole test for showing patent eligibility of process claims; however, the Court acknowledged that the test is a \u201cuseful and important clue, an investigative tool,\u201d for determining whether a particular process is patentable. Thus, the Court did not invalidate the test, but rather rejected the Federal Circuit\u2019s conclusion that the test is the exclusive one that governs the analysis for process patent eligibility under \u00a7 101 of the Patent Act. However, the Court did not articulate a different test or adopt new categorical rules for process patent eligibility, nor did it provide much guidance to the lower courts on this matter. Instead, the Court invited the Federal Circuit to develop additional tests and other limiting criteria regarding what constitutes a patentable process.\nThe Bilski Court also ruled that some business methods may be patentable, because (1) the Patent Act\u2019s definition of \u201cprocess\u201d does not categorically exclude business methods; and (2) \u00a7 273 of the Patent Act contemplates the possibility that some business methods, at least in some circumstances, may be eligible for patenting.",
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