Not only were Wall Street's risk-hedging strategies and other so-called business-process ideas woefully unsuccessful, a federal appeals court has ruled that they're not really property that can be patented.

Rejecting a landmark 1998 case that allowed financial firms and others to patent ideas and processes in addition to things and machines, the U.S. Court of Appeals for the Federal Circuit, in Washington, voted 9-3 that patents should be limited to "physical objects or substances" and not be awarded to "abstractions" like a bank's risk-hedging strategy.

The court upheld a decision by the Board of Patent Appeals and Inferences to deny a patent for an approach to hedging energy costs. The court concluded that the section of patent law allowing people and companies to patent industrial processes doesn't apply to abstract ideas..

In its 132-page decision, the court said a patent can cover a "process that transforms a particular article to a specified different state or thing by applying a fundamental principle" but cannot cover the principle itself.

Patents must pass a " machine-or-transformation test" to be valid, the court said. In the case it was reviewing, In Re Bilski, the court concluded that "purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances."

The decision will have its greatest effect on the financial-services industry, which has used similar business-process patents to protect all manner of proprietary trading, hedging, and fund-management strategies.

Technology companies have also used such patents widely, to cover everything from types of software to checkout processes on websites.

It's not immediately clear what will happen to the hundreds of business process and similar patents that have been granted since another federal court accepted the idea in 1998. In that case, State Street Bank v. Signature Financial, a court found that Signature's method for managing mutual funds was patentable.