Friday, July 02, 2010

The United States Supreme Court Passes the Buck in the Bilski Patent Case : Business Methods are Patentable : Abstract Ideas are Unpatentable

The long awaited U.S. Supreme Court (SCOTUS) patent law decision in Bilski v. Kappos, 561 U. S. ____ (slip opinion, 2010), was issued last week. Much ado about nothing? Did the Supremes merely pass the buck in this decision?

In the wake of the Supreme Court decision in Bilski -- which denies the Bilski patent as being too abstract, the New York Times reports that "the patent application from Mr. Bilski and Mr. Warsaw would be reworked and resubmitted to the patent office," post-decision, mind you, non-abstracting their way into patentdom.

Carl Sandburg wrote in How They Broke Away to Go to the Rootabaga Country that:

"The chimney sits on top of the house and lets the smoke out, the doorknobs open the doors, the windows are always either open or shut, we are always either upstairs or downstairs—everything is the same as it always was."

Has anything really changed through Bilski?

The Supremes affirmed the Federal Circuit judgment in Bilski 9-0 but split 5-4 on the legal reasoning, as the Court effectively OK'd business method patents and rejected the exclusivity of the Federal Circuit's "machine or transformation" test, holding that the test functions as a "clue" to patentability but does not exclude other possible tests of such patentability.

Accordingly, the Supreme Court denied Bilski's patent on the alternative ground that it was an "abstract idea", pursuant to the Supreme Court's earlier precedents, which hold that "laws of nature, physical phenomena, and abstract ideas" are not patentable subject matter. Just how the Court determined what an abstract idea is and what it is not not, is not clear from the opinion.

The majority refused to strike down Bilski's patent on the grounds that it was a business method, indicating instead that a patent-eligible "business method" might be patentable as a "process" within the meaning of the statute -- thus possibly opening up a new Pandora's Box for the patent world, much to the consternation of Justice Stevens, concurring in judgment, who wrote:
"The Court correctly holds that the machine-or-transformation test is not the sole test for what constitutes a patentable process; rather, it is a critical clue. [footnote 1] But the Court is quite wrong, in my view, to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a “process” within the meaning of §101. The language in the Court’s opinion to this effect can only cause mischief." [emphasis added by LawPundit]
Indeed, in his majority opinion, "swing Justice" Kennedy acknowledged as much, writing:
"[W]hile §273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions....

Interpreting §101 to exclude all business methods simply because business method patents were rarely issued until modern times revives many of the previously discussed difficulties. See supra, at 8–9. At the same time, some business method patents raise special problems in terms of vagueness and suspect validity. See eBay Inc. v. MercExchange, L. L. C., 547 U. S. 388, 397 (2006) (KENNEDY, J., concurring). The Information Age empowers people with new capacities to perform statistical analyses and mathematical calculations with a speed and sophistication that enable the design of protocols for more efficient performance of a vast number of business tasks. If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change." [emphasis added by LawPundit]
Justice Kennedy, however, found "a limiting principle" in the Supreme Court's own precedents, which are to be used as "tools" for the task:
"In searching for a limiting principle, this Court’s precedents on the unpatentability of abstract ideas provide useful tools. See infra, at 12–15. Indeed, if the Court of Appeals were to succeed in defining a narrower category or class of patent applications that claim to instruct how business should be conducted, and then rule that the category is unpatentable because, for instance, it represents an attempt to patent abstract ideas, this conclusion might well be in accord with controlling precedent. See ibid. But beyond this or some other limitation consistent with the statutory text, the Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under §101.

Finally, even if a particular business method fits into the statutory definition of a “process,” that does not mean that the application claiming that method should be granted. In order to receive patent protection, any claimed invention must be novel, §102, nonobvious, §103, and fully and particularly described, §112. These limitations serve a critical role in adjusting the tension, ever present in patent law, between stimulating innovation by protecting inventors and impeding progress by granting patents when not justified by the statutory design."
 Kennedy then tossed the patent ball back into the "court" of the legal community:
"It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection. This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck." [emphasis added by LawPundit]
Justice Kennedy concluded the majority opinion as follows:
"Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas.The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.
And nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357. It may be that the Court of Appeals thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text. The judgment of the Court of Appeals is affirmed."
Justice Breyer in his concurring opinion tried to show a badly needed common line of reasoning:
"I write separately ... in order to highlight the substantial agreement among many Members of the Court on many of the fundamental issues of patent law raised by this case. In light of the need for clarity and settled law in this highly technical area, I think it appropriate to do so....
[Breyer then  lists four points of alleged agreement between the Justices].
In sum, it is my view that, in reemphasizing that the “machine-or-transformation” test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach."
There you have it. There may be a line to be drawn somewhere but the Supremes do not know where it is. We will now get some indication of where to draw the line from two cases sent back to the Federal Circuit in the wake of the Bilski opinion. As Kevin E. Noonan writes at Patent Docs:
"Against this backdrop, the Court decided on Tuesday to grant certiorari, vacate the Federal Circuit's decision below, and remand to the appellate court two cases related to medical diagnostic claims:  Prometheus Laboratories, Inc.  v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec....

The Supreme Court's Bilski decision provides no clear instruction for resolving the different results in the Prometheus and Classen cases; indeed, the Court (for the first time since the Hilton Davis case) appears content to let the Federal Circuit develop its case law on the extent to which tests other than the MOT test are used to determine patent-eligibility."

Commentary on the case:

Kevin E. Noonan at Patent Docs in Bilski v. Kappos: What Effects on Biotechnology Patents?:
"Although long-anticipated, the Supreme Court's opinion in Bilski v. Kappos did not provide much in terms of "pellucid" teachings regarding the metes and bounds of patent-eligible subject matter."
John 'Schwartz at the New York Times in Justices Take Broad View of Business Method Patents reports:
"The court, by pursuing a moderate path, has left much unresolved, said James R. Myers, an intellectual property lawyer in Washington. “The Supreme Court’s division generates a significant set of disputes about where the boundaries ought to be drawn,” he said, “and this case does not — and explicitly refuses — to draw the boundary.”"
Natasha Watkins at Microsoft Certified Professionals Online in Supreme Court Bilski Ruling Keeps Patent Law Vague reports:
"The Computer & Communications Industry Association, a trade group that represents both Microsoft and Google, issued a statement critical of the ruling. "Ultimately, today's decision benefits few except patent lawyers," said Edward Black, president of the CCIA, in a statement. "Absent action by Congress, the patent lottery will inhibit business and create no jobs -- except for within the patent bar.""
 In Supreme Court Compounds Uncertainty For Business Method Patents the CCIA writes:
"The following quotes can be attributed to CCIA Senior Fellow Brian Kahin, a principal author of CCIA’s amicus briefs in the Bilski case.

“By concluding that the hedging technique was no more than an abstract idea, the Court breathes new life into the abstract idea exclusion, but does not offer new guidance on just what that is. The opinion is fairly clear about what it isn’t doing. It is not clear about what it is doing."
Robert Ambrogi at :
"Having finally issued its much-anticipated patent ruling in Bilski v. Kappos, the Supreme Court ended its term with a whimper, not a bang...

If the majority and concurring opinions reveal anything conclusive, it is that the waters of patent law remain murky as ever. That said, the one clear lesson of Bilski is that a business method that is too abstract will not be given a patent....

This much is certain: Bilski opens the floodgates to new torrents of litigation over how abstract is too abstract. For all those who hoped the Supreme Court would use this case to offer clarity, well, there's always next time."
Courtney Rubin at in Supreme Court Ruling Could Boost Software writes:
"The U.S. is one of the few countries that grants business method patents, so the case also has been watched closely from overseas.

"This will likely lead to increased uncertainty among industry professionals and practitioners," said
John Collins, a partner at the London law firm of Merks and Clark. "The floodgates have been opened, but it is far from clear where the waters will settle.""
 Steve Lohr at Bits at the New York Times in Bilski Ruling: The Patent Wars Untouched writes:
"The court issued its much-anticipated ruling in the big patent case — Bilski and Warsaw v. Kappos — and it was anything but a landmark decision."
Groklaw in Here's Bilski: It's Affirmed, But . . .No Decision on Software Patentability - Updated

Steven J. Vaughan-Nichols, Bilski loses, but the patent madness continues

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