Supreme Court Decision Raises Software Patent Questions

Yesterday, the Supreme Court handed down a long awaited decision on a patent case that could have changed how or whether software patents are granted. Ultimately, little changed, except that the Court’s decision was at odds with 150 years of patent law, says a legal expert.

The Court’s Bilski v. Kappos decision could have invalidated many software patents had it accepted a Federal circuit court’s “machine or transformation” test for what is patentable. Proponents of the lower court’s decision had hoped that the high court would finally bring an end to excessive patent litigation and eliminate questionable patents that they say can slow the pace of innovation in technology.

The Bilski case involved a patent claim for a business method for hedging risks in commodities trading. The Justices affirmed the lower court’s decision that the Bilski patent was too abstract and therefore un-patentable. However, it did not accept the machine or transformation test, thus failing to provide any guidance to government patent examiners, defendants, or patent filers.

Some people claim that all software is an abstract idea, because programming is just a form of mathematics, while others believe that computers that control other machinery, or software that has very specific algorithms is not abstract at all, said James Grimmelmann, an associate professor at New York Law School. The machine or transformation test would have helped patent issuers determine what is patentable and what is not.

The test has always been recognized as how patents are interpreted with very rare exceptions, and both the lower court and dissenting Justices were in line with existing law, said Richard Field, a past chair of the American Bar Association’s section of science and technology law. The Supreme Court’s majority decision not to use that machine and transformation test, and to instead leave it up to the lower court to define a new test, was an activist position, he added.

One could interpret the majority’s decision as chiding the lower court for “creating the law,” but the Justices were in fact leaving the wording of the test open in anticipation of new technology, Field said. Although no one in 150 years has defined the test to include things that might be coming up in the next 20 years, the Court essentially said, “We should keep those words open just in case,” he explained. “That to me is the definition of activists.”

Fields found it bizarre that the Supreme Court’s majority was willing to allow a lower court to outline a new test while simultaneously chiding it being too activist. The minority suggested that the Court use the established test and said, “Let Congress cover those new technologies. Don’t ask us how new technologies should apply to old words,” he noted.

The Court was clearly struggling with its opinion on whether business method patents were good or bad, Field acknowledged, but sent mixed messages in its decision. The likely result will be a surge in applications for business process patents. “What a patent examiner is supposed to do…I have no idea.”

Unlike Field, I am not a lawyer, but I cannot help but think that the Court’s decision may make it more difficult for new technology to come to market. In that case, consumers lose.

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