Second Thoughts On Bilski: Could Another Case Get A Direct Ruling On Business Method Patentability?
from the not-done-yet dept
So, I already wrote one initial post on the Bilski ruling, where the court basically seems to punt on the larger questions of the patentability of business methods by focusing very narrowly on whether or not Bilski's specific patent is valid. However, as you read through the "concurring" rulings (pdf), it does seem like many members of the court want, very badly, to outlaw business method patents, but weren't able to do so this time around. The court really had one clear question to look at here: whether or not the Federal Circuit's "machine or transformation" test for patents made sense. The court ruled that this was not the only test, so the Federal Circuit erred on that part, even if there were plenty of other reasons to reject Bilski's specific patent. The majority opinion by Kennedy makes it clear that the court is not making any statements on what is "excluded" from patentability. But the concurring opinions seem to have a serious problem with this. There are two concurring opinions and both express concerns about business method patents.The first is by Justice Stevens, joined by Justices Breyer, Ginsburg and Sotomayor. The second is written by Justice Breyer and joined by Justice Scalia. That makes five out of the nine justices expressing concern over why the court finds business method patents allowable. I'm certainly not an expert on the Supreme Court and how it works, but
However, in recognizing that five out of the nine Justices do, in fact, see problems in allowing business method patents, it does appear that the court is very much open to potentially rejecting them in a future case. The Justices appeared to note that the court wasn't really asked to rule on business method patents as a whole in this case, and so it did not. But that doesn't mean a different case might not get a clearer ruling on the patentability of business methods (and, potentially, software).
The first (long, and well worth reading) concurring opinion from Stevens, joined by Breyer, Ginsburg and Sotomayor, indicate that they don't believe business methods should, in fact, be patentable, and highlight a variety of problems with business method patents:
Since at least the days of Assyrian merchants, people have devised better and better ways to conduct business. Yet it appears that neither the Patent Clause, nor early patent law, nor the current §101 contemplated or was publicly understood to mean that such innovations are patentable. Although it may be difficult to define with precision what is a patentable "process" under §101, the historical clues converge on one conclusion: A business method is not a "process."Stevens takes serious issue with the fact that the majority opinion relies on the fact that, following the Federal Circuit's ruling in State Street, Congress passed the First Inventor Defense Act, as proof that Congress says business method patents are okay. The First Inventor Defense Act basically said that because most people didn't think business methods were patentable, they shouldn't be punished if they were already using a business method and someone else later patented it after the courts said it was patentable. To the majority, this is seen as evidence that Congress recognizes business method patents. Stevens finds that reasoning to be hard to swallow, as the whole point of the First Inventor Defense Act was to protect businesses from the harm of business method patents.
He then goes on to discuss how the patent system is supposed to be a balance and have limitations, which the majority opinion seems to ignore. He quotes recent research suggesting patents in certain areas may do more harm than good, and notes how many businesses did fine at creating new business methods without relying on patents, and expresses skepticism that business method patents do anything to promote progress (footnotes, and other citations edited out):
Many have expressed serious doubts about whether patents are necessary to encourage business innovation. Despite the fact that we have long assumed business methods could not be patented, it has been remarked that "the chief business of the American people, is business." Federal Express developed an overnight delivery service and a variety of specific methods (including shipping through a central hub and online package tracking) without a patent. Although counterfactuals are a dubious form of analysis, I find it hard to believe that many of our entrepreneurs forwent business innovation because they could not claim a patent on their new methods.Breyer
"[C]ompanies have ample incentives to develop business methods even without patent protection, because the competitive marketplace rewards companies that use more efficient business methods." Burk & Lemley... Innovators often capture advantages from new business methods notwithstanding the risk of others copying their innovation. Some business methods occur in secret and therefore can be protected with trade secrecy. And for those methods that occur in public, firms that innovate often capture long-term benefits from doing so, thanks to various first mover advantages, including lockins, branding, and networking effects. Business innovation, moreover, generally does not entail the same kinds of risk as does more traditional, technological innovation. It generally does not require the same "enormous costs in terms of time, research, and development," and thus does not require the same kind of "compensation to [innovators] for their labor, toil, and expense."
Nor, in many cases, would patents on business methods promote progress by encouraging "public disclosure." ... Many business methods are practiced in public, and therefore a patent does not necessarily encourage the dissemination of anything not already known. And for the methods practiced in private, the benefits of disclosure may be small: Many such methods are distributive, not productive--that is, they do not generate any efficiency but only provide a means for competitors to one-up each other in a battle for pieces of the pie. And as the Court has explained, "it is hard to see how the public would be benefited by disclosure" of certain business tools, since the nondisclosure of these tools "encourages businesses to initiate new and individualized plans of operation," which "in turn, leads to a greater variety of business methods."
In any event, even if patents on business methods were useful for encouraging innovation and disclosure, it would still be questionable whether they would, on balance, facilitate or impede the progress of American business. For even when patents encourage innovation and disclosure, "too much patent protection can impede rather than 'promote the Progress of . . . useful Arts.'" ... Patents "can discourage research by impeding the free exchange of information," for example, by forcing people to "avoid the use of potentially patented ideas, by leading them to conduct costly and time-consuming searches of existing or pending patents, by requiring complex licensing arrangements, and by raising the costs of using the patented" methods. Although "[e]very patent is the grant of a privilege of exacting tolls from the public," .... the tolls of patents on business methods may be especially high.
This Court has never before held that so-called "business methods" are patentable, and, in my view, the text, history, and purposes of the Patent Act make clear that they are not.Basically, it looks like some of the Justices really badly want to make it clear that business method patents go way too far, beyond what the Constitution allows, but they came up just short (somehow) of being able to do that in this case (which, again, was really tasked only with reviewing whether or not the Federal Circuit's "machine or transformation" test made sense). For whatever reason, they were unable to get that into the majority opinion. But that doesn't mean they couldn't potentially do so in the future.
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Filed Under: bilski, business method patents, patents, software patents, supreme court
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Business Method Patents live on
For further analysis, see http://patentlawny.com/index.php/business-method-patents---bilski-supreme-court-decision
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Re: Business Method Patents live on
http://www.groklaw.net/comment.php?mode=display&sid=20100628100422167&title=Here%27 s+Bilski%3A+It%27s+Affirmed%2C+But+.+.+.No+Decision+on+Software+Patentability&type=article&o rder=&hideanonymous=0&pid=858577#c858615
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Re: Business Method Patents live on
It would be interesting to see Steve Jobs take one of his patent claims to court against say Google or a Google partner and persist.
More likely today's ruling will have taken leverage away from Jobs and many other large entities trying to keep the markets to themselves (and to other giants that can pay the high fees for playing).
Anyway, if you are that certain of the strength of software patents, allow me to point you to sourceforge.com. Go there and start writing up a list of open source software projects you will sue.
Of course, more likely, some of your clients are well familiar with sourceforge.com and go there to get ideas for patents.
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Re: Business Method Patents live on
Um. Yeah, we already said that. Did you have something new to say or did you just want to spam the comments?
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Re: Business Method Patents live on
Based on pieces I have read, I think the ruling added clarity to the matter that would make it a little difficult to argue that "drafted properly" is enough to fix an existing or future software patent attempt.
You can't effectively patent abstractions simply by tying them to a physical object somehow. This was championed in the FFII brief (and was used also in the EU).
>> As the Supreme Court also made clear, however, physical limitations do not necessarily satisfy Section 101, if the practical effect of allowing the claim, viewed as a whole, would be to grant patent rights on an abstract idea or fundamental principle.
...
>> Nevertheless, Flook rejected “[t]he notion that post-solution activity, no matter how conventional or obvious in itself, can transform an unpatentable principle into a patentable process. Id., at 590. The Court concluded that the process at issue there was “unpatentable under §101, not because it contain[ed] a mathematical algorithm as one component, but because once that algorithm [wa]s assumed to be within the prior art, the application, considered as a whole, contain[ed] no patentable invention.”
...
>> Finally, in Diehr, the Court established a limitation on the principles articulated in Benson and Flook. The application in Diehr claimed a previously unknown method for “molding raw, uncured synthetic rubber into cured precision products,” using a mathematical formula to complete some of its several steps by way of a computer. 450 U. S., at 177. Diehr explained that while an abstract idea, law of nature, or mathematical formula could not be patented, “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” Id., at 187. Diehr emphasized the need to consider the invention as a whole, rather than “dissect[ing] the claims into old and new elements and then . . . ignor[ing] the presence of the old elements in the analysis.” Id., at 188. Finally, the Court concluded that because the claim was not “an attempt to patent a mathematical formula, but rather [was] an industrial process for the molding of rubber products,” it fell within §101’s patentable subject matter. Id., at 192–193.
>> In light of these precedents, it is clear that petitioners’ application is not a patentable “process.”
...
>> 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.
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Breyer's Concurring Opinion
One crucial flaw in your analysis: you quoted from Part I of the Breyer concurring opinion, which Justice Scalia didn't join. He joined only in Part II. Only 4 justices want to eliminate business method patents as a rule. Justice Scalia was not persuaded to join that side. I think that undermines the premise of your entire post, but I agree it will be interesting to see what happens with future cases.
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Re: Breyer's Concurring Opinion
Aha! Thanks for pointing that out. Updated...
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Long Sea Vovage Business Method Never Patented - Be the First!
"Also noteworthy is what was not patented under the English system. During the 17th and 18th centuries, Great Britain saw innovations in business organization, business models, management techniques,19 and novel solutions to the challenges of operating global firms in which subordinate managers could be reached only by a long sea voyage. Few if any of these methods of conducting business were patented." (emphasis added)
Steven's remarks highlights how the scope of what people believe can be patented has been stretched to the point of absurdity and to the fact that progress can still be achieved without the "benefit" of so-called patent protection.
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in simpler terms, the relief that you and your ilk seek will be found in the halls of congress, where laws are written.
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Re:
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A bit more complicated
"As the Court has explained, “Congress agreed with Jefferson . . . that the courts should develop additional conditions for patentability.” Graham, 383 U. S., at 10. Thus “[a]lthough the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear” of adding statutory requirements of patentability. Ibid. For nearly 160 years, Congress retained the term “useful arts,” see, e.g., Act of July 4, 1836, ch. 357, 5 Stat. 117, leaving “wide latitude for judicial construction . . . to keep pacewith industrial development,” Berman, Method Claims, 17 J. Pat. Off. Soc. 713, 714 (1935) (hereinafter Berman)."
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Re:
I also think they effectively re-iterated in the ruling today that they weren't going to accept an invention that used software where the novel elements were simply the software.
Do you know of a single software patent (eg, that would apply to application or system software for a consumer device or PC) that the SCOTUS or a federal appeals court has ruled to be legit?
[I don't read court rulings so perhaps there are thousands, but I'd like to see a link to one so I could look at that ruling more closely as it compares to the high courts ruling here.]
They also said:
> 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.
And as a further contrast to the greater uncertainty of the world of the 1980s and 90s:
> 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.
They said this perhaps despite not realizing just how much innovation is not patented today and how much patent authors are able to copy and use as inspiration such unpatented innovation.
They now seem to be directing their glance towards potential Constitutional questions, eg, of promoting the progress and free speech.
Like PJ (from groklaw) stated, this is a step in the right direction.
[She also wrote this some weeks back: http://www.groklaw.net/articlebasic.php?story=20100522202326865 about how it might take a long time, but eventually gross mistakes are recognized and fixed.]
>> in the end mike, what the justices appear to be saying is that the law does not forbid these types of patents, so until the law changes, they are not going to rule against them
It's possible they would already rule just about any software patent to be dead in the water (as concerns implementations on a PC or consumer device, say); however, referring to business method patents, they said:
> 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.
So they are more than willing to consider more tests today (with the law as is) that would rule out classes of patents.
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Re: Re:
the best way to change what the law allows as written is to change the law. taking things to court and trying to push ideals through rulings is a painful process that often does not give either side much of what it wants.
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Re: Re: Re:
Believe it or not, we agree on this. I'm not a fan of doing everything through the courts, even though folks like Mark Lemley believe that's more effective. Like him, I worry that Congress' attempt to "fix" things won't actually fix anything (which seems pretty clear from all attempts at patent reform in the last decade).
That said, there's nothing wrong with hoping that the Supreme Court would fix things in the meantime. And, I should say that, contrary to your comment, the SC didn't exactly say that Congress needs to decide this. It simply chose not to make a broad enough ruling to discuss that point. It left the door wide open to doing so in the future.
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i think it is safe to say that it might take another 5 years to get a similar sort of case in front of the sc, by which time much of the software and business model patents that we are so worried about will have expired. i think this is the reason that the government isnt in a rush to rock the boat, most of this will settle out in the wash over time.
remember, the amazon 1 click patent is already 11 years old. the clock is ticking!
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Re: Re: Re:
This was not addressed by this ruling directly. In any case, who says that there is any further need then current law to have a future ruling rule all or most software patents void?
I agree with you I think that the best path forward for most software developers and users now is to have confidence and to keep raising awareness of this problem so that the number of people who write to their public representatives on a repeated basis over this stifling and costly situation continues to grow. Everyone that has felt pressured to sign a patent license agreement or has received a cease and desist should be writing their government reps periodically. Convince the masses and you get patent law changed to explicitly recognize more stifling scenarios -- and this may very well coincide with when SCOTUS makes such a ruling that recognizes the unconstitutionality of many more specific types of patents.
Few people who meet patent trolls like them, and there is currently significant anger among the constituency at our government for its support of large corporations over the "little people". We just have to communicate how pervasive software is and how the many freebies from the open source world can disappear or become expensive to use if patent supporters keep pushing their agenda. Actually, spread open source more (and there are great apps for doing just about anything) and it will be much easier to spread the anti-software patent message.
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At least they got right what they did rule on.
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Not a surprising ruling, and should probably be seen as Round #1
Appellant court judges hate to be overturned. A 9-0 decision in this case sends a pretty clear message to the appeals courts, even if it was decided narrowly. I read the opinions as an instruction to the lower courts to figure out a better standard. In the meantime, it is going to be hard to find an appeals court that is going to issue a strong ruling in favor of business methods patents, and there is probably going to be a reluctance to support software patents.
I think this ruling will blend over into other IP issues, not just patents.
I was very encouraged by the opinions discussing the social purpose of patents. We have seen a lot of lower courts talking about IP as property rights. The opinions make it clear that the justices are concerned with the purpose of promoting progress in patent law. Strong IP proponents have been trying to blur the lines between different types of IP. Viewed through the lens of blurred lines it isn't hard to extend the opinions in this case to support stronger fair use.
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Loo king at the history of software patents one can see a pattern over the 30 years or so, the more it became medieval the less the U.S. became productive to the point where they risk ceding their position to others in the world.
Basically patents tame competitors, one can see what it will happen if those things continue, innovation will shift to other places where people need to work hard to be successful and come up with not only a product but a business model and funds to put it on the market this seems harsh but it weeds out the unimaginative and incompetent from the mix leaving only the hardcore business people that will find ways to be better than the competition.
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Bleak
"[C]ompanies have ample incentives to develop business methods even without patent protection, because the competitive marketplace rewards companies that use more efficient business methods." Burk & Lemley... Innovators often capture advantages from new business methods notwithstanding the risk of others copying their innovation. Some business methods occur in secret and therefore can be protected with trade secrecy. And for those methods that occur in public, firms that innovate often capture long-term benefits from doing so, thanks to various first mover advantages, including lockins, branding, and networking effects.
Seriously, replace "business methods" with anything else and that sentence becomes an accurate summary of more than a few Masnick posts. I realize he restricts it in the immediate following sentence, but the glimmer of reasonable logic is there.
It's a sad day indeed that this is the man we're losing on the bench.
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Re: Bleak
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How About Suing the Patent Office.
http://www.techdirt.com/articles/20100502/2145409269.shtml
http://www.groklaw.net/ar ticle.php?story=20100430223358785
http://www.groklaw.net/article.php?story=20071016234739918
I did a little work for Pamela Jones on this matter, back in 2007, and came to know something about the case. In granting the underlying patents, the Patent Office displayed a completely reckless disregard for truth, even raising questions about whether the Patent Office was intentionally conspiring to grant fraudulent patents. I mean that they ignored prior art which took the form of cover articles in BYTE Magazine. Jack Tramiel, the father of the Commodore Amiga and the Atari ST-series machines, tooted his own horn with considerable vigor. He really got on Apple's nerves. The Patent Office turned a blind eye.
It wasn't particularly surprising that Red Hat won its case by bringing a surviving Amiga into court. The surprising thing, perhaps, is that there was still a working Amiga to be found. Finding the necessary spare parts, etc., to keep it working must be a bit of a chore.
If Bernard Bilski can sue the Patent Office for failing to grant him a patent, then surely Red Hat can sue the Patent Office for recklessly granting spurious patents, and causing damage to Red Hat thereby. I think they could easily make a case for ten billion dollars of economic damages. They would have had the chance to grow much faster, if prospective customers had not been scared off by the lawsuits. The upper scale of damages is to be measured against Microsoft's revenues-- which are, um, considerable.
The name of the game is to enforce re-organization of the patent office, with judges giving orders about how patent examiners are to be rated, that kind of thing. A model would be school desegregation, back from the 1950's to the 1970's. Faced with massive resistance, judges like W. Arthur Garrity moved in and acted as a kind of "government of occupation." The public school systems were required to do things like creating "magnet schools," to attract students who might otherwise have gone to private schools, and to induce them to go to schools where they would improve the racial balance. The judges' supervision went to the heart of the authority of the school principals and the school superintendents.
By law, patent re-examinations are supposed to take precedence over the granting of new patents, for obvious reasons. In the ordinary understanding, that would mean that they are supposed to drop whatever they are doing, and clear off the re-examinations, starting with those involved in court cases. The patent office, quite illegally, and bureaucratically, ignores this law. "I obey but I do not comply," as the Spanish saying goes. That is the sort of thing the superintending judges can fix. They can work out a system of time-stamping, in which every minute of delay in a re-examination required for a court case is some particular individual's fault, and issue reprimands accordingly.
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Business method patents
Both as an IP attorney and a history buff (especially IP history), I am totally opposed to business method, software, and the continuation process (so-called Llemelson methods). I also am very opposed to so-called "defensive" patents, the basis for "patent trolling").
I believe in IP as the founding fathers intended it, in fact, if you know the history you have to favor it; but it is very rarely practiced today (who besides me? Don't know!).
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