In what has been termed the Bilski Case (or simply "Bilski"), a U.S. Federal Circuit Court of Appeals handed down a ruling that redefined how software can be patented. The case surrounded how far a marketable idea can be protected, based on the patent filing of Bernard Bilski and Rand Warsaw, who had founded a company named Weatherwise and wanted to protect their ideas on processing weather risk data. Some patent lawyers considered the case similar to one involving software. To present just such an argument in terms of Free and Open Source Software (FOSS), U.S. Linux distributor Red Hat submitted an amicus curiae brief in response to the appeal, with the American Civil Liberties Union (ACLU) following up closely behind. In the opinion of the law platform Groklaw, these briefs contributed considerably to the Bilski appeal ruling, with positive ramifications for free and open source software.

The Appeals Court rejected the Bilski appeal by ruling that the patent idea did not produce "useful, concrete and tangible results" and used this as a gauge for future patent considerations. FOSS representatives (Red Hat lawyers among them) have felt that a lack of this gauge has led to countless frivolous patent applications in the past. Although the court did not settle the issue specifically of how or when software is patentable, it did pave the way by setting some new guidelines and criteria. Red Hat responded to the court decision and described its consequences for the FOSS community in a press release.

The court dropped the previous software patent criteria (which had produced a wave of claims in the late 1990s) in favor of two new ones. To make a process patentable, they ruled, it must be "tied to a particular machine or apparatus" or it must "transform a particular article into a different state or thing." Depending on how broadly "tied to a particular machine" is interpreted, the effect could be significant for future patentability claims. If interpreted too broadly, tenuous ties between software and a general purpose computer would do little to discourage future patent claims. However, FOSS advocates cited past patent cases where the "particular machine" argument as related to a general purpose computer failed to hold up in court. In the dissenting opinion of Bilski Judge Newman, "For the thousands of inventors who obtained patents under the court’s now-discarded criteria, their property rights are now vulnerable."

Nevertheless, FOSS lawyers see the decision as a good basis for changes to patent laws. They caution, however, that the software world will have to figure on increasing lobbying efforts from past patent seekers and "beneficiaries of the status quo." The Red Hat press release ends on a positive note with "We have a battle before us, but it is a battle we can win."