Today, the Supreme Court of the United States issued its opinion in Bilski v. Kappos, finding that Bilski’s patent was not valid, but reaffirming the patentability of methods and software. In response to the decision, ACT executive director Morgan Reed said:

“The Supreme Court reaffirmed what we have always known: the world of software is filled with inventions deserving of protection through the patent system.  Just a few minutes playing with a Tivo, an iPhone, or Adobe Photoshop proves that beyond a shadow of a doubt.

Patent quality is still clearly a problem for PTO on software and other method patents, but the Supreme Court rightfully chose not to throw the baby out with the bathwater. Bad patents are the problem, not the patentability of methods and software. What is needed is real effort to reform the system and prevent bad patents from ever being granted.”

Some key lines from the decision include:

In discussing the foundations of patent law:

Section 101 specifies four independent categories of inventions or discoveries that are patent eligible: “process[es],” “machin[es],” “manufactur[es],” and “composition[s] of matter.” “In choosing such expansive terms, . . . Congress plainly contemplated that the patent laws would be given wide scope,” Diamond v. Chakrabarty, 447 U. S. 303, 308, in order to ensure that “ ‘ingenuity should receive a liberal encouragement,’ ” id., at 308–309.

An invention need not be a machine or create physical transformation:

The machine-or-transformation test is not the sole test for patent eligibility under §101.

The Court is unaware of any ordinary, contemporary, common meaning of “process” that would require it to be tied to a machine or the transformation of an article.

Patent Law Does Not Exclude Business Methods or Software Patents:

(c) Section 101 similarly precludes a reading of the term “process” that would categorically exclude business methods. The term “method” within §100(b)’s “process” definition, at least as a textual matter and before other consulting other Patent Act limitations and this Court’s precedents, may include at least some methods of doing business. The Court is unaware of any argument that the “ordinary, contemporary, common meaning,” Diehr, supra, at 182, of “method” excludes business methods. Nor is it clear what a business method exception would sweep in and whether it would exclude technologies for conducting a business more efficiently. The categorical exclusion argument is further undermined by the fact that federal law explicitly contemplates the existence of at least some business method patents: