Plus: Bilski-proof your claims
Attendees lined up outside the High Court early on the morning of November 9 to gain access to the 1:00 pm hearing in Bilski and Warsaw v Kappos. The Court was packed to capacity – about 400 people gathered to hear the controversial patent case, and many more were turned away. Bradley Wright of Banner & Witcoff was in line by 9:45 am and was still the 41st member of the Bar to be admitted to the court room.
Justice Scalia kicked off the questioning, interrupting Bilski's counsel, J Michael Jakes, when he asserted that the Federal Circuit's October 2008 decision promoting the so-called machine-or-transformation test as the proper test to apply in determining patent eligibility was too rigid. "What is wrong with [the] analysis that [the term] 'useful arts' always was thought to deal with machines and inventions?" asked Scalia.
Jakes replied that business has traditionally been considered to be within the realm of the so-called useful arts, but Justice Ginsburg seemed sceptical about that analysis, asking: "So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury; all of those are patentable?" When Jakes replied affirmatively, Breyer pushed even further.
"Every successful businessman typically has something [patentable]," said Justice Breyer. "He thinks of a new way to organise. He thinks of a new thing to say on the telephone. And your view would be anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?"
Justice Sonia Sotomayor, who began her term with the Court in October and has tried several notable IP cases throughout her career, seemed most concerned with determining what the proper test should be, if not the machine-or-transformation test.
"So how do we limit it to something that is reasonable?" Sotomayor asked Jakes. "If we don't limit it to technology, as some amici have, or to some tie or tether, borrowing the Solicitor General's phraseology, then why not patent a method of speaking?"
Chief Justice Roberts focused on whether the Bilski invention was abstract, pressing Jakes to articulate the "concrete set of steps" that he argued distinguished his client's method of hedging consumption risk from an abstract and therefore unpatentable idea. However, neither he nor Justice Kennedy seemed satisfied by Jakes' assertion that steps such as "initiating a series of transactions between a commodity provider and market participants" sufficed to ground the invention in the realm of the physical.
Department of Justice deputy solicitor general Malcolm Stewart seemed to be having better luck with the panel during his argument, until Justice Roberts questioned the last footnote in the USPTO's brief.
That footnote suggests that Bilski's invention might be patent eligible "if it conducted hedging transactions online, using a computer network to identify counterparties and initiate the transactions, and a microprocessor to calculate the fixed purchase price".
"That's like saying if you use a typewriter to type out the process, then it is patentable," said Roberts. "That takes away everything that you spent 53 pages establishing," he added.
The hard questions
Stewart stumbled, but said that the case at hand was not the appropriate vehicle to solve "the hard questions". "It is both a virtue and a vice of the test that the Federal Circuit has announced and that we are advocating that it doesn't solve all the hard questions," he said.
He continued: "The Federal Circuit has said since this particular patent applicant didn't identify any machine or any transformation that would be necessary to the accomplishment of its method, and therefore, it's inappropriate for us to go on to decide kind of the precise level of substantiality that a machine-or-transformation must play."
Speaking to Managing IP after the hearing, Wright of Banner & Witcoff predicted, based on the Justices' line of questioning, that the Court may keep the machine-or-transformation test, though that would be surprising considering the number of amici who opposed the test.
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Collection of the Supreme Court of the United States |
More than 65 amicus briefs were submitted to the Court: 17 in favour of Bilski, 24 in support of the USPTO and 26 backing neither party.
Interim advice
It is unknown how long the Court may take to announce its decision. In the meantime, patent practitioners have developed guidelines to navigate the machine-or-transformation test.
For instance, Charles Macedo of Amster Rothstein & Ebenstein said that he advises clients to disclose information about the specifics that tie an invention to a computer and to claim software as "programming stored on a computer readable medium that is run on one or more processors", rather than as software (see box for additional drafting tips).
"The Court may end up adopting a variant of the Federal Circuit's machine-or-transformation test that leaves open the possibility for patenting future forms of technology that would not otherwise satisfy that test," said Wright.
But Robert Greene Sterne of Sterne Kessler Goldstein & Fox said that it is not clear from the arguments which side prevailed. "There were very thoughtful questions by a lot of the justices," said Greene Sterne.
He noted that the issue raised by Roberts in his questioning of the USPTO's footnote represents "a big dilemma that's been present in patent law my whole career. The Court has to be very careful about whatever they do, so as not to create unintended consequences", he said.
At one point during the hearing, Justice Kennedy joked that the USPTO's assertion that it opposed the Court using the case to make more far-reaching decisions about patent law was because "you thought we would mess it up", which was met with much laughter from the court room.
But the possibility that the Court might get it wrong is no laughing matter in the eyes of many in the patent Bar. "Kennedy alluded to a fear that many people have," said Greene Sterne.
Later in the hearing, Justices Kennedy, Stevens and Breyer somewhat disconcertingly expressed confusion over the difference between claiming a machine and claiming the implementation of a process on a machine – a concept many would consider fundamental to the case at hand and to patent law in general.
But Justice Sotomayor seemed to recognise the potential dangers of the machine-or-transformation test outlined by many amici, giving some hope that the Court will reject the Federal Circuit's reasoning.
"Once you announce an exclusive test, you're shoe-horning technologies that might be different," said Sotomayor.
Bilski-proof your claims |
David Heckadon explains how you should draft patents following the Bilski hearingsFirst: Be aware that the Supreme Court is hostile to patenting abstract business methods, and appears to be searching for a clearly defined (and likely restrictive) test of what methods are patent-eligible subject matter. From Bilski's oral arguments, it is clear that the Supreme Court is looking for a way to restrict patentable method claims to transformations of tangible things in the physical world. Also, claims that are science or technology based appear to be regarded more favourably by the court. Second: Be aware that there is a lot of confusion in the Patent Office and differences of opinion between Examiners as to how to handle Bilski. Third: In view of the above uncertainties before Bilski is decided, draft your claims as follows:
David R Heckadon is a partner with Gordon & Rees |
Bilski: What would you have said? |
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The Supreme Court posed several hypothetical questions in the Bilski case that had the IP world abuzz following the hearing. Here, two practitioners, an in-house counsel and a law professor offer their own responses.
Justice Stephen Breyer: "You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80% of the students awake. It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?"What would you have said?CK: It's not patentable subject matter. Even if it was, there would likely be no need to patent it, because students are staying awake due to the fact that their teacher is Justice Breyer, and there is only one Justice Breyer. SS: The patent system is designed to reward innovation by giving exclusive rights for limited duration to inventions, not to ideas themselves. In fact, the patent system is designed to enhance, not restrict, the flow of ideas via the publication of the patent document. This boundary between ideas and inventions finds some analogy to the idea/expression dichotomy in copyright law. JS: No. It also raises different kinds of constitutional concerns. They may violate the "promote the Progress" language in the preamble to the Constitution and may exceed legislative power. And the method of teaching antitrust law may reflect an ineligible discovery of a teacher rather than a patent eligible discovery of an inventor - particularly if the new method contains no inventive creativity beyond the actual idea of teaching well. Justice Antonin Scalia: "Let's take training horses. Don't you think that some people, horse whisperers or others, had some insights into the best way to train horses? And that should have been patentable on your theory.... Why didn't anybody patent those things?"What would you have said?CK: No one patented such a method because no one needed to. The whisperer's success is due to personal skill and experience, not to innovation. Horse whispering is conveyed through teaching and mentoring, not through simply disclosing. Many people know how to hit a baseball, but only a few people really know how to hit a baseball. SS: That is the problem with trying to control and limit innovation. One never knows where the next big development or improvement will come from. It is totally unpredictable and, accordingly, we should encourage innovation, not try to constrain it. JS: Some [such patents] may have been issued, but they should not have been. Such methods may neither promote progress nor lie in the useful arts, and may not be creative technological advances even if they involve some degree of novelty or even creativity. Not all creative human activity does or should fall within the patent system. Justice Breyer "Every successful businessman typically has something. He thinks of a new way to organise. He thinks of a new thing to say on the telephone. That's how he made his money. And your view would be anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?"What would you have said?CM: Most likely, a process which merely involves oral discussions would not be concrete enough to be patent-eligible subject matter. This was a point that the test enunciated in cases such as Alappat, State Street and AT&T was trying to get at by requiring patent-eligible subject matter to produce a "useful, concrete and tangible result". SS: Disembodied or so-called abstract ideas are not themselves patentable. So it would not be accurate to say that any businessman's good idea is patentable. On the other hand, a good idea that is developed and reduced to practice as a process with practical real-world application is eligible. The idea of a clean, renewable energy source, such as cold fusion, is a businessman's dream ¬¬- but it is not patentable as such. If the businessman hires a physicist that perfects a process that can actually produce cold fusion, that is patentable. JS: It depends on what is the actual invention claimed, and whether there is any creativity beyond merely applying an abstract idea to a particular context. To the extent that a businessman invents an object (whether a machine or a manufactured article) or a process where the creativity lies in the application itself, and not merely in the identification of a result to be accomplished or a scientific principle to be applied, then it may be patent eligible, although it may still fail other tests for patentability (including that the creativity involved is so minimal that the invention is obvious). Justice Sotomayor: "How about if we say something as simple as patent law doesn't cover business matters instead of what the Federal Circuit has begun to say, which is technology is tied to a machine or a transformation of the substance, but I have no idea what the limits of that ruling will impose in the computer world, in the biomedical world, all of the amici who are talking about how it will destroy industries? If we are unsure about that, wouldn't the safer practice be simply to say it doesn't involve business methods?"What would you have said?CM: Some thought that there was business method exception to patent eligibility based on vague dicta from 1927, but Judge Rich, the author of the Patent Act, confirmed in State Street that this was an "ill-conceived exception". 35 USC § 273 specifically says that "method[s] of doing or conducting business" are encompassed within patent-eligible subject matter, since there are special types of defence available to those types of patents. Readopting such an exception would cause tremendous amount of uncertainty and likely do the exact opposite of your stated goal of not imposing limitations on the computer world and biomedical world. CK: In theory, I'm not opposed to that approach. But first we would need to agree on what does and what does not constitute a business method. SS: If a piece of software is patentable because it does something amazing, why should the amazing software become unpatentable if it relates to a business matter? For the sake of argument, even if there was a basis for exclusion, the term "business method" is not easily defined and applied. If the real concern is weeding out bad patents for intangible inventions, rigorous application of the abstract ideas exception and novelty/obviousness standards is the best approach. JS: The machine-or-transformation precedents at most impose a necessary but not a sufficient condition for patent eligibility, so the Court needs to be clearer about what kind of creative advance qualifies for patents, and why. Simply stating that business methods are outside the patent system would not tell us why that is the case, and whatever rationale is adopted is unlikely to be confined to business methods. Chief Justice John Roberts: "Mr. Stewart ... You say the method isn't patentable because it doesn't involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the process then it is patentable. That takes away everything that you spent 53 pages establishing."What would you have said?CM: I think the law has long recognised that when a process is tied to a computer or other machine it is patent-eligible. That would be consistent with the Court's holding in Diehr and many other cases. The problem with the Federal Circuit's machine-or-transformation test is not that it is over-inclusive of patent-eligible subject matter, but to the contrary it is under-inclusive. Any process which does not pre-empt a fundamental principle should be considered worthy of further consideration for patentability. CK: You left out the remainder of the footnote, which stated that the method is patentable if it affects innovation upon the computer and microprocessor instead of merely using the computer and processor to implement an allegedly innovative method. SS: The purpose of the machine-or-transformation test is to anchor process inventions to some sort of real world application. Thus, the process must be tied to a machine. Or the process must cause some physical transformation of subject matter. If not tied to a machine or transforming something, the process is too much of an abstraction. If it is tied to a machine, the process becomes patent-eligible - but that does not mean patent-worthy. JS: The examples cited by the government's brief are truly "insignificant post-solution activity", and thus do not supply the requisite additional inventive concept that would confer patent eligibility to the abstract idea (result) of hedging risk. The government should have repudiated the footnote in which it suggested that such trivial machine implementation would have made the Bilski and Warsaw claim patent eligible, and also should not have asked the Court to ratify the machine-or-transformation test. That test is simply unhelpful for explaining the kind of creativity that suffices for a patent-eligible invention. |
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