The U.S. Supreme Court has granted a writ of certiorari in the case of Bilski v. Doll, S. Ct. Dkt. No. 08-964. The Court agreed to review the Federal Circuit’s earlier decision in the case and possibly put to rest the question of when business methods are eligible for patent protection.
In October 2008, the Federal Circuit ruled that to be patentable a business process must meet a “machine or transformation” test (In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)). The Federal Circuit held that only a business method that is tied to a particular machine or apparatus or that “transforms a particular article into a different state of things” is eligible for patent protection. In so holding, the Federal Circuit expressly rejected its earlier State Street Bank decision, which was the first case to establish that business methods are patentable (State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998)). (See News Notes, 40 The Tax Adviser 5 (January 2009).)
Bilski involves commodities trading, but the Supreme Court’s holding in the case could have a significant impact on the area of tax strategy patents because those patents are a type of business methods patent.
For more on the patenting of tax strategies in general, see Ransome and Sherr, “Patenting Tax Ideas,” 38 The Tax Adviser 456 (August 2007).