It’s an idea before it’s time; one that may not ultimately make it off the ground. In terms of being novel though, it gives the legal system pause for thought.

Bernard Bilski and Rand Warsaw, previously two rather unknown men carrying on a small business, achieved something of a celebrity status for their drive to get a patent for a system letting utility customers pay a fixed and pre-calculated amount of money every month. “Not a bad idea as it stands, but the US patent office turned its nose up at the idea and said it was an ‘abstract idea that simply solves a mathematical problem.’ That’s when a very long legal battle got started,” outlined David Erikson, attorney at law, Los Angeles.

Thirteen years later, the idea hit the US Supreme Court, which may make one think it had enough merit to get that far. Legal pundits, however, largely figured the case was doomed to die where it stood. The Supreme Court justices viewed the case with a sense of humor, but were of the opinion that if this particular idea to patent a method of payment for people to pay utility bills was actually approved for a patent, that other ludicrous patents would follow.

“Bilski’s lawyer held his ground and insisted that other ideas could possibly be patented provided they were novel, not simply an abstract idea and were not obvious. For those wondering about the value of abstract ideas, this was a rather gutsy argument to propose, since it could be argued that the idea of having utility customers pay a fixed fee every month was certainly an abstract idea,” Erikson added.

Why did this case make it to the Supreme Court in the first place? It got that far because of a decision made in a lower court. “The case went to the Court of Appeals for the Federal Circuit, who concluded the patent office was correct in dismissing the patent application. However, part of the opinion said that a patent should be “tied to a particular machine or apparatus” or “transforms a particular article into a different state or thing,” explained Erikson.

The “machine-or-transformation test” has rocked boats in the IT industry for years. This is because there are IT applications (software and biotech advances) that are considered machine-like but that’s where it ends because nothing else happens to transform the innovations. “A good example of such a process would be the patented I-Click process people go through when ordering something online from a company like Amazon. The I-Click process is a form of business-method patent. The idea of having people pay a set amount each month for their utility bills is likely not and therefore won’t be eligible for a patent,” Erikson commented.

Although a decision on this particular case isn’t expected until 2010, the current “machine-or-transformation” test is what the general rule of thumb happens to be and that is what the patent office is using as a guideline to accept or reject applications. “Technology companies have their ear to the ground over this case as they fear the decision may block an entire class of patents that deal with business methods,” said David Erikson, attorney at law, Los Angeles. Ultimately, no one knows which way the court will decide and in the meantime, those who bite their nails will wait patiently to find out if it will affect their business or not.