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En Banc Federal Circuit Restricts Business Method Patents

Posted Oct 31, 2008 6:36 AM CDT
By Debra Cassens Weiss

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In a closely watched case, the U.S. Court of Appeals for the Federal Circuit has restricted business method patents.

The 9-3 en banc ruling holds that a business method cannot be patented unless it is tied to a machine or involves a physical transformation, Legal Times reports.

The decision, In re Bilski (PDF), rejected a patent application by Bernard Bilski for a method of hedging risk in commodities trading. Bilski is expected to reduce the number of business method patents, several lawyers told the Daily Journal (sub. req.). It is also expected to produce new challenges to patented business methods, according to Reuters.

Many expect the decision to be appealed to the U.S. Supreme Court, according to Reuters. Its story says one of the best known examples of a business method patent protects Amazon.com’s one-click process to buy items on the Internet.

James Myers, a partner at Ropes & Gray, told Legal Times the Bilski decision is a shift away from the circuit’s 1998 decision on business methods, State Street Bank & Trust Co. v. Signature Financial Group Inc. The prior decision said processes could be patented as long as they produced useful, concrete and tangible results.

Myers, who filed an amicus brief urging the court to deny the patent, told Legal Times that the decision brings the Federal Circuit “more in alignment with the Supreme Court." He predicted that new litigation will focus "on what degree of computerized involvement you have to have in order to meet the threshold."

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