The Court of Appeals for the Federal Circuit (last stop before the Supreme Court) ruled that a process, i.e., method of performing a function, could be patentable if the process included use of a machine or there was a resulting transformation of a particular article into a different state or thing. Keep in mind this standard pertains to whether a new process is patentable subject matter (statutory subject matter under 35 U.S.C. Section 101). There are the separate tests of whether the development is novel or whether the development would be obvious to a person skilled in the art. Note also that the use of the machine or transformation of the state or thing can not be merely an “add-on” to an otherwise ineligible claim.

What this Court decision signifies is a pulling back on the patentability of business methods. For example, it is unclear whether a standard computer processing unit (CPU) constitutes a machine. Some commentators have already expressed the belief that the Court of Appeals for the Federal Circuit has indicated that a “general purpose computer” is not a machine within the meaning of the machine or transformation test. A more specialized computer (or computer software?) must be used. The alternative is to rely on the transformation branch of the test.

Under the specific facts of the recent case (In re Bilski) “the transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test (machine or transformation test) because they are not physical objects or substances, and they are not representative of physical objects or substances. As discussed earlier, the process as claimed encompasses the exchange of only options, which are simply legal rights to purchase some commodity at a given price in a given time period.”

Software remains patentable if part of a process meeting the machine or transformation test. The Court adopted earlier rationale that the transformation of data may be sufficient. A physically perceivable transformation of data (computer display) may be an example.