Supreme Court Hears Bilski Case

The Supreme Court heard arguments Nov. 9 in a case the technology industry is closely watching to clarify the patentability of business methods. The case—Bilski and Warsaw v. Kappos—specifically involves a method of hedging the risk associated with commodities, but it has implications that reach deep into the software industry.

The Patent and Trademark Office refused to grant a patent for the business method in 1999, just a year after a court ruled business methods and, by extension, software processes are eligible for patents if they produce a "useful, concrete and tangible result." The PTO, though, denied the Bilski patent because it was "not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem."

The Bilski patent denial has been in litigation ever since. If the high court upholds the PTO in Bilski, thousands of software patents could be held invalid.

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As usual in Supreme Court hearings, the justices peppered lawyers from both sides with numerous questions that both encouraged and discouraged all parties, often wandering far afield as they probed the various aspects of the case. The justices are expected to issue a ruling in June.

"What if we say something as simple as patent law does not protect business methods?” Associate Justice Sonia Sotomayor asked Deputy Solicitor General Malcolm Stewart, who was representing the PTO in the case. "How do we limit it to something that is reasonable?”

Associate Justice Stephen Breyer questioned that "anything that helps a businessman succeed would be patentable" if the court rules on Bilski's side.

Michael Jakes, representing Bilski, faced equally tough questions as Chief Justice John Roberts pointed out the government has insisted a business method might be patentable if it uses a computer to achieve its purpose. Associate Justice Antonin Scalia wondered aloud whether the matter could be settled by saying "business methods apart from machines could not be patentable."

In a friend-of-the-court brief on behalf of the PTO, the Electronic Frontier Foundation wrote, "EFF believes that patents should only be granted for technological processes. Congress never intended the strong protections of the patent monopoly to be available for mere services and methods of doing business."

The EFF added, "There is already plenty of incentive for innovation in those areas without the need for patents, driven by a variety of forces, such as establishing and maintaining first-mover advantages and establishing reputational capital that cannot be stolen by competitors."

Google also jumped in, not only filing a brief in the case but also blogging on it Nov. 9.

"This case is critical to the future of innovation in the United States. A recent flood of patents on business methods and abstract software processes has contributed to uncertainty and an explosion of expensive lawsuits," Michelle Lee, Google's deputy general counsel, wrote in the blog posting. "The Constitution permits Congress to create patent laws 'to promote the progress of science and the useful arts,' and we support patent rules that effectively further that goal. But awarding patents on abstract ideas and processes, like the claim at issue in the Bilski case, poses a serious threat to innovation, job creation, and economic growth."

Ed Black, president and CEO of the Computer & Communications Industry Association, was equally adamant in a statement.

"The unprecedented expansion of the patent system and the ensuing virtual land-rush that it created put lawyers in charge of innovation and enabled opportunism to trump opportunity," Black said. "All of this has produced a crisis of credibility in our intellectual property system. It is time to get back to basics, where our IP law promotes progress, not patenting, and where discovery is what inventors do—instead of what lawyers do."