Just a quick note of reaction to the long-awaited Bilski case that came out today. If you have a software invention this really only affects how the claims are drafted. Most patent attorneys changed their practice some time ago from claiming simply "a method" to claiming a "computer-implemented method," and after this decision it will be interesting to see if the Patent Office treats that as enough or if more is needed such as tying each step to system components.
The cases in this area like to talk a lot about purely mental processes or steps that can be performed entirely in one's head as being unpatentable. I always think of the example of popular cryptographic algorithms like SHA, MD5, and RC4, and wonder if they would be patentable under these standards. My opinion is that these are ingenious algorithms, they take a lot of work and investment to come up with, and they should be patentable. And while these algorithms would be difficult to perform in your head, that is due more to how much you would have to remember than any one step being that hard (the assembly code for SHA fits on a page, for example). If people can spout off a thousand digits of pi, I am sure someone out there could do a round or two of the RC4 cipher in their head. However, in practice I am sure RSA (if they were my client) would be happy enough to corner the market on computer-based implementations of their algorithms and leave the market open for all those would-be mechanical or paper-based competitors:). Still, why should they not have a patent on the use of the algorithms in any form when they went through all of the trouble to discover them?
For business method patents I think the ruling is more dire. Even though the court would not explicitly exclude them from patentability, I have been struggling to come up with a good business method example that would fit the court's new test of including a machine or transformation. Maybe what is considered a "transformation" will become looser over time to include some of the results of business methods. It does seem like the net effect will be that getting a business method patent through the Patent Office will be very hard in the coming years. Even so, for those that are basing a new venture entirely on a novel business method, patents are still one of the best deals going. If your company plans to make several million of revenue based on a novel business method, then paying tens of thousands to potentially get a patent on it (i.e., a 20 year government backed monopoly) is not a bad deal. Therefore, I am sure many in that position will still try to get business method patents. Otherwise, the court just put a whole examination group at the Patent Office out of work.