With approximately one month left in the current Supreme Court term, it is likely that the highly anticipated decision in Bilski v. Kappos (formerly Bilski v. Doll) will be issued soon. This may occur as soon as Monday June 7, when the next round of opinions is scheduled to be released, and almost certainly will occur by the end of the month, when the Court recesses for the summer.
The decision may be one of the most important intellectual property law opinions in years, and could have far reaching ramifications for the software, IT, and financial services industries among others. Indeed, more than forty companies and organizations filed amicus briefs to advance their respective positions – including a brief I filed on behalf of SIIA and the software industry. At issue in the case is perhaps the most fundamental of questions in IP law: what things and activities are eligible to be patented.
The SIIA’s brief argued that software should remain eligible for patent protection, as it has for the past several decades. The industry has grown, thrived, and matured during that time, and patent protection and eligibility has played a role in that success. While problems with the patent system remain, those problems relate to other aspects of the law, and/or its application, such as weeding out purported inventions that are obvious in light of the prior art. Problems also exist in the examination system itself, including the fact that the Patent & Trademark Office is widely believed to be underfunded, resulting in long delays in examination, and limited time and expertise that can be spent on any single application. An ongoing concern of the patent law community is that Congress annually diverts a substantial portion of PTO user fees for unrelated purposes. Patent Reform debate and proposed legislation have occupied Congress for the past several years.
Bilski’s invention is a “business method,” claimed as a series of steps to “hedge options and risk in commodities trading,” and does not expressly require software or any machine. The U.S. Patent Office rejected the application, and the Court of Appeals for the Federal Circuit upheld the Office’s rejection. In attempting to define the boundary between patentable and non-patentable subject matter, the appeals court ruled that a process or method must (1) be tied to a particular machine or apparatus, or (2) transform an article into a different state or thing, in order to be patentable.
The Supreme Court seems likely to eschew the bright-line rule imposed by the Federal Circuit, and perhaps return to a more general inquiry as described in its 1981 opinion Diamond v. Diehr. In that and prior opinions, the Court held that an invention purporting to claim laws of nature, physical phenomena, or abstract ideas was not eligible for patent protection. That test had proved difficult to implement in practice, leading to the Federal Circuit’s attempt to create a more bright-line rule. However, a similar theme has played out recently in other patent cases working their way up to the Supreme Court. In both eBay v. MercExchange (injunctions) and KSR v. Teleflex (obviousness), the Supreme Court rejected bright-line tests developed by the Federal Circuit and instead reiterated more fundamental holdings of its own prior cases.
Whatever test is employed by the Court, it would be surprising if Bilski’s purported invention were deemed patentable subject matter. The Court may simply deem Bilski’s claims to be too abstract. But whatever the case may be, thousands of patent owners, licensees, and would-be patent applicants await the Court’s decision. A broad holding that strikes down Bilski’s application might embolden challenges to other “business method” patents, such as declaratory actions as to existing patents. Depending on the scope of the holding, software patents could be affected. On the flip side, if Bilski’s invention is deemed eligible for patenting, one can expect a massive flood of new applications to the patent office. It would be interesting, to say the least, to see how an already backlogged PTO would handle such a challenge.
By Scott Bain, SIIA Litigation Counsel