High Court Justices Greet 'Bilski' Arguments With Doubt, Disdain

• Tony Mauro, The National Law Journal
• On 3:03 am EST, Tuesday November 10, 2009

U.S. Supreme Court justices from across the spectrum voiced skepticism Monday about whether intangible business methods and other innovations untethered to machines deserved patent protection. The comments, some of which bordered on the derisive, came in the long-awaited argument in Bilski v. Kappos, touted by some as the most important patent case in decades.

The case involves a patent application by Pittsburgh businessmen Bernard Bilski and Rand Warsaw for a way to help utility companies and their customers to regularize costs by considering factors of supply, demand, and weather. No justice who spoke seemed to view the process as patent-eligible, but it was not certain that a vote against the Bilski-Warsaw patent would sweep away patents for computer software or medical diagnostics, as some have feared.

"It is conceivable that the Court will look for a narrow ground to reject Bilksi's patent without deciding the test for eligibility of all patents," said Deanne Maynard, head of the appellate practice at Morrison & Foerster, who attended the argument.

Day Pitney patent counsel Keith McWha was more direct after the argument: "Bilski is dead. It is clear from the questions that the Court is looking for some middle ground to filter business method patentability. Several of the justices seemed to be looking for a narrow ground for decision."

At one point during the hourlong argument, Justice Stephen Breyer said that if everything that "helps a businessman succeed" can be patented, it would "stop the wheels of progress" by granting exclusive rights to innovations that should be available to all.

Sarcastically, Breyer also wondered aloud whether a method he had developed for teaching antitrust law as a Harvard Law School professor that "kept 80 percent of students awake" could have been patented.

Early in the hour, Justice Antonin Scalia invoked a name probably lost on most in the audience -- Lorenzo Jones, a fictional madcap inventor on old-time radio -- to show the absurdity of a broad view of patent eligibility.

Scalia also said that when the American economy was "based on horses, for Pete's sake," someone could have patented a method for training horses -- but no such patents were awarded.

When J. Michael Jakes of Finnegan, Henderson, Farabow, Garrett & Dunner, arguing in favor of the patent at issue, said one benefit of patenting innovations is public disclosure, Justice Sonia Sotomayor countered that patents in fact "limit the free flow of information." Sotomayor, a onetime intellectual property lawyer in New York, was viewed as a potential pro-patent vote, but her comments suggested skepticism.

In face of the barrage, Bilksi's lawyer, Jakes, calmly held his ground with a broad view of eligibility, asserting that absurd claims would be weeded out by other factors used to determine patents, such as obviousness and originality.

Under the "machine or transformation" standard adopted by the U.S. Court of Appeals for the Federal Circuit in the Bilski case, Jakes argued, Alexander Graham Bell's patent for a telephone device might have been rejected. But justices did not appear to buy his argument.

A defeat for Bilski and Warsaw, however, did not seem to mean a warm embrace by the Court of the Federal Circuit's narrow view. Justice Ruth Bader Ginsburg and others voiced some concern about adopting a rigid rule that would fail to anticipate unknown kinds of innovations in the future.

Deputy Solicitor General Malcolm Stewart, defending the U.S. Patent and Trademark Office rejection of the Bilski patent, said the Federal Circuit's ruling left ample room for patenting 21st century post-industrial inventions. Stewart said the Federal Circuit test is not as "rigid or inflexible" as critics have made it out to be. Stewart also said he was not looking for a ruling that would flatly deny eligibility for all business method patent applications.

The dispute began in 1997 with the patent application by Bilski and Warsaw, self-described "math geeks."

A 1998 Federal Circuit ruling in State Street Bank v. Signature Financial Group seemed to bolster their view of eligibility by allowing patents for inventions that produce a "useful, concrete and tangible result," even if they were not traditional innovations like a new machine.

But the Bilski-Warsaw patent claim was rejected by the patent examiner and then through the patent appeals process as unrelated to any machine. The Federal Circuit also rejected the claim, adopting the "machine or transformation" test that was debated Monday by the high court. The Federal Circuit said it was adhering to Supreme Court precedents that have sought to tighten patent scope and eligibility.

A blizzard of amicus briefs was filed in the case, with critics of the Federal Circuit decision warning that if its test is upheld, thousands of existing, pending or future patents would be threatened.

 

Buzz up!