This was an appeal against a rejection of a business methods patent, and the appeals court has now agreed with the rejection. At issue was whether an abstract idea could be eligible for patent protection. The court says no. Buh-bye business methods patents!
While rulings over the years have used various tests to determine if a process qualifies for patenting, the Federal Circuit said the sole analysis should be the “machine-or-transformation” test – which requires showing that the claimed invention is either tied to a particular machine or that it transforms an “article” (such as a substance or data). At the same time, the majority opinion, joined by 9 of the 12 justices ruling in the case – acknowledged that “the widespread use of computers and the advent of the Internet” had begun to challenge the usefulness of such a test. The justices invited the U.S. Supreme Court to develop a new test for determining the kinds of inventions that should be eligible for patent protection, one that might better “accommodate emerging technologies.”
This effectively asks SCOTUS to overturn much of the State Street decision from 1998.
But in today’s ruling, the court largely disavowed the highly controversial 1998 decision, State Street Bank v. Signature Financial Group. That case had granted protection to a system for managing mutual fund accounts. The State Street decision was widely cheered by the financial-services and software industries, among others. But ever since its issuance, the State Street case has been a lightning rod among patent practitioners, with detractors largely arguing that it led to a glut of weak patents.