The United States Supreme Court issued an order yesterday granting certiorari in Bilski v. Doll, a case that tests the limits of patenting business methods and other processes, including some software-related inventions. The order comes as a surprise to many experts in the patent law and technology communities, and the Bilski case will be one of the more closely watched IP cases in the Supreme Court in recent memory.

The U.S. Patent and Trademark Office had rejected Bernard Bilski’s application on a “method of hedging options to manage commodities trading risk,” and the Court of Appeals for the Federal Circuit upheld the Office’s rejection. That court ruled that Bilski’s invention did not fall within the categories of “patentable subject matter” allowed under U.S. law, and therefore could not be patented even if it were found to be a novel, non-obvious invention. In attempting to define the boundary between patentable and non-patentable subject matter, the court ruled that a process or method must (1) be tied to a particular machine or apparatus, or (2) transform an article into a different state or thing, in order to be patentable. Thus, methods involving “pure thought” or mental steps, such as Bilski’s method, were not patentable under U.S. law. This was the view supported by SIIA in the amicus brief it filed. In a lengthy opinion, the court also attempted to explain how these criteria should be applied, but left open a number of questions, including whether and when particular software related inventions would qualify.

Bilski argues that any new and useful process is eligible for patent protection, except laws of nature, physical phenomena, or abstract ideas. The aforementioned three exceptions were announced in a 1981 Supreme Court decision, Diamond v. Diehr, but have proven difficult to apply in practice.

The Supreme Court’s grant of cert surprised many, because Bilski was not seen as an ideal case to test the limits of business method patentability. The method at issue seems obvious (to many) on its face. Notably, the fact that the Supreme Court granted cert does not necessarily mean it will overturn the appeals court’s decision or expand business method patenting. It could reject Bilski’s arguments on a different basis. Indeed, one concurring judge in the Bilski case (Judge Rader) stated that he thought Bilski’s invention was an unpatentable “abstract idea” under Diehr. It would not be surprising for the Supreme Court to expand upon that concept.

If, however, the Supreme Court were to rule that Bilski’s invention is patentable subject matter, a flood of new “business method” and software patent applications is foreseeable. It would be interesting to see how an already-backlogged U.S. Patent and Trademark Office would deal with such a challenge.

The parties’ briefing on the case will begin in approximately forty-five days. The case presumably will be heard by the Court sometime during its fall term this year. It is likely to draw amicus briefs from many interested observers. This blog will include further discussion of the case as briefing progresses.