U.S. Appeals Court Hands Down Landmark Patent Ruling

WASHINGTON — The U.S. Court of Appeals for the Federal Circuit has ruled that software must affect the physical world in some way in order to be eligible for a patent.

The decision overruled an earlier case, State Street vs. Signature Financial, which gave companies the ability to patent a piece of software provided it met certain requirements for being useful and innovative.

The new decision, referred to as In Re Bilski, overturned the provisions of that case, including:

  • The existing test called for software to produce a "useful, concrete and tangible result." The court rejected that.
  • In order to be eligible for a patent, a piece of software must operate a machine or otherwise transform something from one state into another.
  • Software patents issued under the previous standard are no longer valid.
Opponents of the decision lamented that the court has sabotaged the ability of businesses to make money from useful software.

"This decision is not only intellectually dishonest, but it is also straight-up stupid," said Gene Quinn of the Practicing Law Institute. "At a time when our economy is on the brink of a collapse that none of us have ever witnessed during our lifetime an activist court ought not to be legislating from the bench, far overstepping any legitimate boundaries of appellate practice and rendering a decision that will cost U.S. companies billions of dollars. That's right – billions of dollars. In one fell swoop much of the Microsoft patent portfolio has gone up in smoke."

But proponents of open-source software see the decision as a major victory.

Jason Schultz, acting director of The Samuelson Law, Technology and Public Policy Clinic at UC Berkeley, said that software companies will see fewer "frivolous" lawsuits in the future.

"We've seen a rise in the number of lawsuits against tech companies in the IT area specifically," he said. "Many are very questionable patents, and the patent office is overwhelmed. It will reduce the number of patent applications, which are filed in the IT space –especially by these questionable entities or companies trying to patent trivial things."

Related:  

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

SWR Data Publishes 'Creator Income' Report

Adult industry market research firm SWR Data has published a report on creator incomes.

Pineapple Support to Host 'Neurodivergent Performers' Support Group

Pineapple Support is hosting a free online support group for neurodivergent performers.

'Legal Impact' Webinar Unpacks North Carolina's New Consent Law

Industry attorney Corey D. Silverstein on Thursday held a webinar focused on North Carolina’s HB 805, a new law that has significantly altered performer consent requirements in the state.

FSC Launches Privacy-First Age Verification Solution for Members

The Free Speech Coalition (FSC) announced today that it has granted members exclusive access to the PrivateAV age verification solution.

Brazil: New AV Requirements Set to Take Effect March 17

President Luiz Inácio Lula da Silva this week gave final approval to new regulations requiring adult websites to age-verify users located in Brazil starting March 17.

FSC Recommends Platforms Integrate StopNCII.org Tool

In a blog post, Free Speech Coalition (FSC) has recommended that platforms integrate the StopNCII.org tool to prevent the sharing of non-consensual intimate imagery (NCII).

Utah 'Porn Tax' Bill With VPN Provisions Passes State Senate

The Utah state Senate has passed a bill that would impose a 2% tax on the revenues of adult websites doing business in that state, and make sites liable if Utah minors use VPNs to circumvent geolocation.

Fast-Tracked Arizona Bill Includes Consent 'Catch-22' for Adult Sites

A bill advancing rapidly through the Arizona state legislature would impose new requirements for adult content uploaded online, including seemingly contradictory provisions that could effectively make it impossible for adult sites to operate in the state.

VirtualRealPorn Launches WebXR-Enabled Site

VirtualRealPorn has officially launched its new site, built on Web Extended Reality (WebXR) technology.

Show More