The Supreme Court granted
certiorari today in
Bilski v. Doll. (All of the court filings, as well as the docket and the Federal Circuit's decision below, are available
here via SCOTUSblog.) Accordingly, the Supreme Court will hear the case in its upcoming term that begins in the fall. This is significant, especially if the Supreme Court issues a ruling broader than did the Court of Appeals for the Federal Circuit when it ruled
en banc in October 2008. Specifically, the Federal Circuit avoided the question that parties and
amici put to it: whether and when software patents are allowable.
Bilksi was (and is) a patent applicant (
i.e., inventor) whose patent claims were
rejected by the U.S. Patent & Trademark Office. The Federal
Circuit appeal was Bilski's appeal of the administrative decision, and
Doll is the acting director of the PTO. Bilski's claims were for a
method of hedging risk in commodities trading. A representative claim follows:
A
method for managing the consumption risk costs of a commodity sold by a
commodity provider at a fixed price comprising the steps of:
(a)
initiating a series of transactions between said commodity provider and
consumers of said commodity wherein said consumers purchase said
commodity at a fixed rate based upon historical averages, said fixed
rate corresponding to a risk position of said
consumer;
(b) identifying market participants for said commodity having a counter risk position to said consumers; and
(c)
initiating a series of transactions between said commodity provider and
said market participants at a second fixed rate such that said series
of market participant transactions balances the risk position of said
series of consumer transactions.
′892 application cl.1.
This
type of patent claim is fairly unusual. Despite the fuss over
business-method patents (i.e., patents that cover methods of conducting
business), there are far more patents sought and granted on methods of
controlling the operation of a computer. Put differently, the Bilski
patent claim above purports to cover activities that occur on or off a
computer whereas there are far more patents that seek to protect the
operation of computer software alone.
Without getting into the
nitty-gritty history of business-method patents (or of
section 101 of the Patent Act), their relative
scarcity may be due in part to historical antipathy toward such patents
by the law. That changed about a decade ago as a result of the Federal
Circuit's
State Street Bank case,
which for all intents and purposes allowed business method patents.
Tens of thousands of pages of commentary have been written about the
merits and drawbacks of such patent protection, and the Federal Circuit narrowed the scope of allowable patentable subject matter in
Bilski from what it had been in
State Street.
The
Supreme Court has not in the past always been clear about the exact
scope of patentable subject matter, and the Federal Circuit in
Bilski
struggled to come up with a test. In an odd sequence of legal reasoning,
the Federal Circuit cobbled together portions of Supreme Court
opinions, cleaved what it believed to be dicta from what it believed to
be holding, and arrived at a test that covered the old cases. That
test is: "A claimed process is surely patent eligible . . . if: (1) it
is tied to a particular machine or apparatus
or (2) it
transforms a particular article into a different state or thing." The
Federal Circuit, realizing that all it had done was patch together a
safe-harbor, disclaimed the forward-looking effect of its test: "We
recognize that the Supreme Court may ultimately decide to alter or
perhaps even set aside this test to accommodate emerging technologies.
And we certainly do not rule out the possibility that this court may in
the future refine or augment the test or how it is applied. At
present, however, and certainly for the present case, we see no need
for such a departure . . . ." How very unsatisfying!
That the
Federal Circuit abdicated its decision-making function in favor of a
case-by-case analysis was and is exceptionally troubling because of
what's at stake. Specifically all software patents that can run on a
variety of computers and which, therefore, are arguably not "tied to a
particular machine." The Federal Circuit expressly dodged this
question in
Bilski: "We leave to future cases the elaboration
of the precise contours of machine implementation, as well as the
answers to particular questions, such as whether or when recitation of
a computer [in the text of the claim] suffices to tie a process claim
to a particular machine." Judges Newman and Rader, in separate
dissents faulted the majority for introducing such uncertainty to the
law. That the public expected the Federal Circuit to clarify rather
than cloud the issue of software patents is reflected by the fact that
the Business Software Alliance, the Computer & Communications
Industry Association, Dell, IBM, Philips, Red Hat, SAP, the Software
and Information Industry Association, and Yahoo! all filed separate
amicus briefs in the Federal Circuit and have nothing to show for it.
Without
getting into the pros and cons of software patents here, it would be in
everyone's best interest for the Supreme Court to tackle the scope of
patentable subject matter in a way that resolves what is and is not
patentable for more than Bilski himself. I don't hold out great hope
for such a broad holding given the Supreme Court's recent track record
in patent cases. The last time the Supreme Court had a chance to
resolve issues of allowable subject matter -- in the
Metabolite case --
it played a game of chicken and flinched at the last minute,
leaving the issue unresolved. And the last time the Supreme Court had a chance to simplify another
complex patent-law test, it only made things more complicated. In
KSR v. Teleflex (2007),
the Supreme Court, while maintaining the jury's job of stepping back in
time and analyzing scientific references as they would be understood by
scientists with a particular level of skill in a particular field --
good luck with that! -- held that such analyses should "not be confined
within a test or formulation too constrained to serve its purpose."
After the Supreme Court repudiated the Federal Circuit's test, it
offered no legally adequate test of its own.
Maybe I'll be proven wrong and maybe the Supreme Court will provide
broad guidance to broad swaths of the nation's industries. I'll keep
my fingers crossed.