GO
Loading...

Justices Poke Fun at Patents for the Abstract

John Schwartz|The New York Times
Tuesday, 10 Nov 2009 | 8:11 AM ET

Supreme Court justices took up a case on Monday that could reshape the realm of what can be patented, and expressed skepticism about giving protection to abstract business innovations.

During arguments, several justices, including the court’s newest member, Sonia M. Sotomayor,

AP

seemed to disagree with arguments advocating a patent for a method of hedging.

The case, Bilski and Warsaw v. Kappos, concerned a business method patent that had been denied to Bernard Bilski and Rand Warsaw, who in 1997 applied for a process that could help institutions like utilities, or even factories and schools, have more predictable energy costs.

The justices peppered J. Michael Jakes, a lawyer for Mr. Bilski and Mr. Warsaw, with hypothetical patents that they clearly found ludicrous.

Justice Antonin Scalia suggested that under Mr. Jakes’s argument, a patent for “somebody who writes a book on how to win friends and influence people” might be allowed, while Justice Sotomayor suggested a “method of speed dating.”

Justice Stephen G. Breyer set off a ripple of laughter when he brought up his “great, wonderful, really original method of teaching antitrust law” — one in which 80 percent of students actually stayed awake — and asked if that could be patented.

Mr. Jakes argued that some of the examples were potentially patentable, though other considerations would be brought to bear by examiners, including the question of whether the method was obvious.

The patent process is a balancing act with origins in the United States Constitution, which called for legal protection for authors and inventors “to promote the progress of science and useful arts” for a limited time.

Initially, patents chiefly concerned tangible things like new machines and novel chemical compounds. Over time, the rules about what could be patented have come to include increasingly abstract business methods — roughly, ways of doing things.

The high-water mark for such patents was a 1998 ruling by the United States Court of Appeals for the Federal Circuit, State Street Bank v. Signature Financial Group, which has led to the issuance of thousands of business method patents. In that case, the court ruled that a method of processing mutual fund data could be patented.

In the Bilski case, the Patent and Trademark Office, pulling back from the realms of abstraction, denied the patent. The United States Court of Appeals for the Federal Circuit upheld the patent office’s decision, writing that such patents should be “tied to a particular machine or apparatus” or transform something “into a different state or thing.”

The case has drawn intense interest, and nearly 70 amicus briefs by interested parties, including Microsoft, Google, Bank of America and the American Civil Liberties Union.

“I think this case is the case of the century for patent law,” said John F. Duffy, a professor at the George Washington University Law School. Mr. Duffy, who was co-author of a brief on behalf of several technology companies, favors a broad reading of patent law for financial engineering tools and other emerging technologies.

“There’s a tremendous public benefit that could come from encouraging innovation in this space,” he said. Similar views have been advocated in briefs from the biotechnology and pharmaceutical industries, as well as technology companies like Yahoo.

Pamela Samuelson, a professor at the University of California, Berkeley, School of Law, said, “It’s not very often that some obscure issue of patent law can excite so much attention.”

Want a Patent? Ask Supreme Court
The Supreme Court is considering a case today that questions when a business method can be patented. The case is being closely followed by some of the world's biggest companies, and Edward Reines, a patent attorney at Weil, Gotshal & Manges, shares his insight.

Professor Samuelson, who was an author of a brief on behalf of the Electronic Frontier Foundation, an online civil liberties group, and others, said it was time for the court to tap the brakes on the business patents rush. The earlier State Street decision, her brief stated, had the effect of “knocking patent law loose from its historical moorings and improperly injecting patents into business areas where they were neither needed nor wanted.”

Briefs from technology companies like Microsoft and Google also recommended greater restrictions on business method patents.

During the one-hour oral argument on Monday afternoon, the Bilski patent and its ilk also seemed to sit poorly with Justice Anthony M. Kennedy and Chief Justice John G. Roberts Jr., who raised questions that suggested an interest in narrowing the scope of patents to more squarely focus on physical inventions and not abstract ideas and processes.

Justice Kennedy described the beginnings of the insurance industry in the late 17th century, thanks to the development of calculus and the ability to create actuarial tables. “It’s difficult for me to think Congress would have wanted to give only one person the capacity to issue insurance,” he said.

Chief Justice Roberts wrangled with the lawyer for the government, Deputy Solicitor General Malcolm L. Stewart, over the final footnote in the government’s brief, which conceded that a business method might be fit for patenting if it was tied to a computer. Chief Justice Roberts said that that footnote “takes away everything you spent 53 pages establishing.”

Mr. Stewart noted that the government had actually argued against having the court take up the case, since there were “difficult problems out there” in areas like software innovation and medical diagnostics that have yet to be satisfactorily worked through.

Justice Kennedy broke in and joked that the government “thought we would mess it up,” eliciting laughter from the gallery. Mr. Stewart said instead that the patent at issue in this case was simply “an unsuitable vehicle for resolving the hard questions,” and that those were likely to remain unresolved at the end of the day.

“But this case could be decided without making any bold steps” that would complicate future decisions, Justice Ruth Bader Ginsburg interjected.

CNBC.com Technology Coverage ...

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video