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Landmark case on the scope of protection afforded by US patents.

Written by Joanna Welch on 19 November 2009

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For the first time in over twenty years, the US Supreme Court recently considered the extent to which abstract inventions, referred to as business method patents, are entitled to receive protection under U.S patent law.

The case, involves the patent applicant Bernard Bilski, who is seeking to patent a device which allows the user to "hedge" or manage weather-related risk in the purchase and sale of energy at a fixed price.

The effect of the Court's ruling is predicted to have a wide spread affect on patent rights running into billion of dollars.

In covering the case, Bloomberg reported that the court received 68 briefs from third parties, including Bank of America, Google Inc and Microsoft Corp, who have all argued for more stringent rules in registering patents, as has the Obama administration.

The US Patent and Trademark Office reported that the number of business method patents applications has increased from 974 in 1997 to 14,364 in 2008.

In a possible indication of the court's unwillingness to expand the scope of patent protection Chief Justice John Roberts, suggested that what the applicant was seeking to protect amounted to "classic commodity hedging that had been going on for centuries."

A further four members of the USA's highest court - Justices Bryer, Scalia, Kennedy and Sotomayor - opined about their desire to restrict the scope of US Patent law to those inventions that displayed a "physical element."

The case is being reviewed from the U.S Court of Appeals for the Federal Circuit. The lower court ruled against the applicant, Bilski, arguing that a business method patent must either have a connection to a machine or the power to transform an item into a something else. The "machine or transformation test" has been endorsed by the US Patents Office since the 1970s.

The Supreme Court is expected to rule on the case by July 2010.

WHAT IS A BUSINESS METHOD PATENT?

A Business Method Patent, also referred to as a Process Patent, is a class of patents that seeks to protect new methods of doing business. A relatively new and increasingly controversial type of patent, the focus is in the fields of e--commerce, insurance, banking and tax compliance products.

The debate over the merits and extent to which the law is willing to protect a Business Method Patent is expected to have greatest ramifications on the software industry. The majority of BMPs are also software patents.

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