The Bilski case upholds the patent office’s rejection of an invention as patentable; it was not decided in the context of the assertion of a patent against an alleged infringer.  However, the basics principles in the case would seem also to be applicable to issued patents.

The full impact of the case needs to be considered — it is not in itself a rejection of the possibility of software having patent protection, but instead a very significant restriction on the kinds of software that can be protected by patents in the United States.  Patent protection for software in the EU has (since rejection of legislation on the subject in 2005) been subject to greater limitations than in the United States.

This case has obvious implications for the open source software movement, as the possibility of patent problems with open source software has been a cause of uncertainty in many situations.

This could become an important open source/licensing case.  Resolution of the issues raised could result either in stopping open source developments of competitive products or holding “no reverse engineering” clauses unenforceable, either of which would cause a lot of chaos in the software community.

Cases can end up be resolved on other grounds.  For example, because the case takes place at a state university, the court might dismiss it on grounds of sovereign immunity — see for example, this article discussing a case in California (Marketing Information Masters v. The Trustees of the California State University) which held that state universities and employees were immune from claims for copyright infringement.

See also “Microsoft taints open source CodePlex well” on theregister.co.uk.