Near-knockout: 10 takeaways from the Supreme Court's Bilski decision
by Robert J. Sayre
The US Supreme Court finally issued it's long-awaited decision in decision in Bilski v. Kappos earlier today. If this case was a World Cup match, I would say that the opinion represented a shot off the crossbar in terms of very nearly knocking off business-method patents. Nevertheless, opportunities for scoring a business-method patent appear to remain possible in at least some contexts.
The Court's decision was fractured, wherein Justice Kennedy wrote for the court in an opinion that only earned three full concurrences with Scalia joining parts of the opinion to form a majority for those parts. Justices Stevens and Breyer wrote separate concurring opinions.
Everyone expected that the majority opinion would be authored by departing Justice Stevens as his final decision, and it appears likely that the Court had earlier imagined that his opinion would collect majority approval; so it was a surprise, to me at least, that (a) Stevens' strike would have put the ball squarely in the net to knock out business method patents, though (b) his opinion fell one vote shy of a majority and therefore did not yield controlling law. Nevertheless, I urge you to read the entirety of the Stevens concurrence, as I expect it may provide a lasting influence on the continued development of caselaw in this realm.
The Court's decision resolved little, though here is what we can discern:
- The Federal Circuit's "machine or transformation" test is a "useful and important" standard for evaluating the patent eligibility of a process, though the Federal Circuit erred in using it as an exclusive test (Slip Op. at 8).
- 35 U.S.C. 101 does not categorically exclude business methods from patent eligibility--recognizing that at least some methods of doing business may be patent eligible (Slip Op. at 10).
- The Court rejected Bilski's claims (directed to methods for hedging risks in commodity transactions) under section 101 on the ground that they represent abstract ideas (Slip Op. at 13); though as Justice Stevens correctly notes in his concurrence (Slip Op. at 25), "[t]he Court . . . never provides a satisfying account of what constitutes an unpatentable abstract idea."
- Bilski's claims were deemed "abstract" (representing "the concept of hedging") (Slip Op. at 15) notwithstanding that they specified initiating transactions between a commodity provider and consumers and between the commodity provider and market participants and also specified that price is determined by real-world variables, such as weather conditions; in his concurrence (Slip Op. at 24), Justice Stevens suggests that the majority construes these components as "mere 'token postsolution components,'" which are deemed insufficient to save the claim from the forbidden territory of patent-ineligible abstraction.
- The Court approvingly cites its earlier decision in Parker v. Flook, 437 U. S. 584 (1978), holding "Flook stands for the proposition that the prohibition against patenting abstract ideas 'cannot be circumvented by attempting to limit the use of the formula to a particular technological environment' or adding 'insignificant postsolution activity'" (Slip Op. at 14 and 15).
- No indications of any new "safe harbors" for patenting processes were readily evident.
- Justice Stevens (joined by Justices Ginsberg, Breyer, and Sotomayor--i.e., one vote shy of a majority) wrote that "[t]he wiser course would have been to hold that . . . business methods are not patentable" (Slip Op. at 18); citing the grant of patent power in Art. I, Sec. 8, Cl. 8 in the US Constitution (granting Congress the power to "promote the Progress of . . . useful Arts"), Stevens further asserts that business methods cannot be deemed to qualify as "useful Arts" as that term should be understood in view of its historical context (Slip Op. at 38-40).
- Justice Stevens and his plurality of four suggest that it would be comical to render any of the following sorts of processes patent-eligible: "a process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds" (Slip Op. at 29); though those who follow patents closely recognize that many US patents have issued in recent years covering processes very similar to what he here characterizes as "comical"; Breyer also piles on, citing a lampoon of "ridiculous" and "absurd" patents such as a "method of training janitors to dust and vacuum using video displays," a "system for toilet reservations," and a "method of using color-coded bracelets to designate dating status in order to limit 'the embarrassment of rejection'" (Slip Op. at 70-71)
- In his concurrence, Stevens also appears to base his opinion, at least in part on "serious doubts about whether patents are necessary to encourage business innovation" in view of the competing and conflicting interests of promoting innovation and not unduly limiting the freedom of others via patents (Slip Op. at 57).
- The Court provides no direct (or even indirect) ruling on software patents or patents directed to anything other than processes; consequently, the Court's decision does not in any way appear to me to restrict the ability of inventors patent software (when framed, for example, as a computer-readable medium storing software code); and I accordingly believe that software remains safe for patenting (at least when framed as a product if not as a process) in the United States; not as clear is the potential impact on inventions relating to medical diagnostic techniques, such as that at issue in Mayo v. Prometheus.
In sum, business methods took a pounding today from the Court and very nearly were knocked out, though opportunities for patenting remain at least (a) if you can frame the process as being non-abstract or (b) if the process is computer-implemented, framing the invention as a product--e.g., as software stored on a computer-readable medium.