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Supreme Court Hears Critical Case on Patentability
The U.S. Supreme Court, on November 9th, heard oral arguments in the case of Bernard L. Bilski and Rand A. Warsaw v. David J. Kappos, Under Secretary of Commerce. This case may well determine the future of patentability, particularly of abstract inventions. Bilski and Warsaw developed a method to hedge risks in commodities trading and applied for a patent back in 1997. The USPTO rejected the patent application and the applicants appealed in May of 2000 to the patent office's Board of Patent Appeals and Interferences (BPAI). In 2006, the BPAI upheld the rejection and Bilski and Warsaw's next step was to pursue the case to the Federal Circuit Court of Appeals. In October 2008, the court of appeals upheld the USPTO decision and ruled that a method patent "should be tied to a particular machine or apparatus" or be one that would transform something "into a different state or thing". The patent applicants' court of last resort was the U.S. Supreme Court and they filed their petition for a writ of certiorari in January 2009.
Although the court granted certiorari to the case, the justices' questions seem to scoff at the very notion of an abstract method patent. Justice Breyer suggested a "really original method of teaching antitrust law" that would keep students awake, while Justice Scalia compared allowing the Bilsi/Warsaw patent to granting a patent for "somebody who writes a book on how to win friends and influence people." Freshman Justice Sotomayor questioned whether using the plaintiff's argument, a "method of speed dating" would be patentable. The justices' line of questioning often elicited laughter from the gallery.
Counsel for the plaintiffs J. Michael Jakes argued that some of the suggestions made by the justices might be patentable and that "the Federal Circuit's rigid and narrow machine-or-transformation test for all patent-eligible methods should be reversed." Defendant's counsel Stewart, on behalf of USPTO head Kappos refutes this saying, "we would fairly vigorously resist the notion that the rule that was announced by the Federal circuit is rigid or inflexible."
John Duffy, George Washington University Law School professor, says that this "is the case of the century for patent law." This may well be true because although the Court granted certiorari, the justices seemed at times to be unconvinced by the plaintiff's arguments. Justices also took the respondent to task. The respondent's brief, on behalf of Kappos, had argued at length why the method was not patentable and that simply adding a computer to calculate a fixed rate or email replacing a telephone or face to face transaction would be insignificant to Bilski and Warsaw's case for patentability. Yet, one page before its conclusion, footnote 30 stated an example that could make the method patentable which seemed to turn its argument on a dime.
For example, the method might be patentable 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.
Chief Justice Roberts criticized the inclusion of the footnote saying it "takes away everything you spent 53 pages establishing."
Industry leaders await the verdict wondering what it will mean for them and their future interests in intellectual property. Also at risk is the validity of many pre-existing business method patents. More than 65 amicus briefs have been filed in the case, by individuals, corporations, universities and non-profits – representing those supporting the petitioner, the respondent or neither, but otherwise invested in the outcome.
IP Advocate will update this story as events unfold and the Supreme Court's ruling is released. Listed and linked below for the IPAO community are all of the amicus briefs currently filed with the court.
