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A US court, commonly known as Patents Court, has ruled that business concepts are not valid for patent protection calling them ‘too vague’.

According to a report in New York Times, the United States Court of Appeals for the Federal Circuit ruled against Bernard Bilski, who had attempted to patent a method for managing weather-related risk through commodities trading. The Patent and Trademark Office had already rejected his application on the premise that it did not involve a particular machine and did not physically transform anything.

The court said that there’s a two-pronged test to determine whether a software of business method process patent is valid: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In other words, pure software or business method patents that are neither tied to a specific machine nor change something into a different state are not patentable.

The decision has blurred the definitions of patenting especially with respect to IT and software industry. It will definitely apply brakes to hundreds and thousands of software patents and will affect the startups as well. Mike Masnick wrote that the decision will put an end to bogus patenting and will allow an innovative and restrictions-free dynamism.

Startups, especially, are expected to fare badly in particular as they’ll not be able to protect the intellectual property rights, among other things. The consequences of this ‘fair trade’ can be highly counter-productive, critics are saying. An appeal against the decision is expected soon.