The Federal Circuit in Bilski : The Machine-or-Transformation Test

In a much anticipated judgment, the Federal Circuit has sought to clarify the standards applicable in determining whether a claimed method constitutes patent-eligible subject matter. In Bilski, the Federal Circuit identified a test to determine whether a patentee has made claims that pre-empt the use of a fundamental principle or an abstract idea or whether those claims cover only a particular application of a fundamental principle or abstract idea. It held that the sole test for determining subject matter eligibility for a claimed process under § 101 is that: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. The court termed this the “machine-or-transformation test.” In so doing it overruled its earlier State Street decision to the extent that it deemed its “useful, tangible and concrete result” test as inadequate to determine whether an alleged invention recites patent-eligible subject matter. The Federal Circuit affirmed the finding of the Board of Patent Appeals and Interferences below that Bilski’s claimed invention, a method of hedging risk, does not satisfy the patentable subject matter requirements of 35 USC § 101 on the grounds that the claim does not satisfy the machine-or-transformation test