The biotechnology industry breathed a sigh of relief when the Supreme Court struck down the Federal Circuit's narrow test of what kind of processes may be patented.

In its June 28 decision in Bilski v. Kappos, the court unanimously found that a process need not be tied to a machine or apparatus, or transform an article into a different state in order to be patented. The U.S. Court of Appeals for the Federal Circuit had set forth this new machine-or-transformation test for patentability in its ruling on Bilski two years ago ('The Pink Sheet,' Nov. 12, 2008).

"This court's precedents establish that the machine-or-transformation test is a useful and important clue, and investigative tool, for determining whether some claimed inventions are processes" under the Patent Act, Justice Anthony Kennedy wrote in the opinion for the court. "The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible 'process.'"

The court also found that the Patent Act may include some methods of doing business methods. In this case, inventors Bernard Bilski and Rand Warsaw obtained a patent on a method of hedging risk in commodities trading. The justices agreed that the claims are unpatentable abstract ideas.

Patent lawyers had been concerned that the Federal Circuit's rigid rules for determining patentability would close the door to some technologies. BIO was particularly concerned that diagnostic methods might be precluded from being patented. It had submitted an amicus brief asking the court to set aside the machine-or-transformation test and affirm that only claims to abstract ideas, laws of nature and natural phenomena are not patentable ('The Pink Sheet' DAILY, Nov. 9. 2009).

Industrial Age v. Information Age

The association was pleased with the court's decision. "I think biotech is going to be just fine under this opinion," said Hans Sauer, BIO's deputy general counsel for intellectual property. "The Supreme Court clarified that patent law was always meant to be open and inclusive of new technologies."

Justice Kennedy suggested that new technologies may not fit the Federal Circuit's rule for determining what is patentable. "The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age - for example, inventions grounded in a physical or other tangible form," he stated. "But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age."

"As numerous amicus briefs argue," he continued, "the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals."

What Constitutes An Abstract Idea Remains Uncertain

Sauer said the court did not answer some questions, such as what it means to be an abstract process, so no one knows if a given method would be considered abstract. But if the decision "means we preserve openness and inclusiveness for new technologies, at the cost of having to live with ambiguities around the margin so be it," he said.

Barbara Caulfield, a partner at Dewey & LeBoeuf and former general counsel of Affymetrix, said that for biotech and pharma the ruling "means that method patents are alive and well unless they are an abstract idea."

Caulfield said the justices seem to be divided into two camps on the question of what constitutes an abstract idea, with Kennedy's group looking to the plain language of the patent law and Justice John Paul Stevens' group looking at the history of what is a patentable process.

In a concurring opinion Justice Stevens said the court was quite wrong "to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a 'process'" within the meaning of the Patent Act. He was joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor.

"The court, in sum, never provides a satisfying account of what constitutes an unpatentable abstract idea," Stevens wrote. "This mode of analysis (or lack thereof) may have led to the correct outcome in this case, but it also means that the court's musings on this issue stand for very little."

Justice Breyer also wrote a concurring opinion in which he was joined by Justice Antonin Scalia. He said he would decide the case solely on the ground that business methods are not patentable. He stated that "although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a 'useful, concrete, and tangible result' is patentable."

The Federal Circuit may soon have the opportunity to apply the Bilski decision in two biotech cases. Petitions for certiorari in Prometheus Laboratories v. Mayo Collaborative Clinic and Classen Immunotherapies v. Biogen Idec are pending before the Supreme Court. The court may grant one or both petitions and remand them to the Federal Circuit for reconsideration in light of the Bilski opinion.

Last year the Federal Circuit ruled in Prometheus that a test to measure a drug's metabolite in order to determine the proper drug dosage is patentable. In the Classen case, which involves a method of determining the administration schedule of vaccines, the court affirmed a district court's finding that the claims were invalid since they did not meet the machine-or-transformation test.

Sen. Leahy Touts Need For Patent Reform Legislation

Sen. Patrick Leahy, chairman of the Senate Judiciary Committee, also weighed in on the court's decision, saying it indicated the need for passage of patent reform legislation.

"Since the debate over comprehensive patent reform began many years ago, the Supreme Court has demonstrated an increased interest in patent law cases," Leahy, D-Vt., said in a statement. "While today's decision will take time to analyze and may not have advanced the law and created the stability and certainty that it could have, it appears to continue this trend, which is consistent with the goal of patent reform legislation pending in Congress. The courts, however, are constrained by the text of our outdated statutes, and it is time for Congress to act."

-Brenda Sandburg (b.sandburg@elsevier.com)

Supreme Court Loosens Rule On What Processes Can Be Patented

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