Posts Tagged “Bilski”

I have never liked so-called business methods patents (in fact, I dislike a majority of “methods” patents). Today the Supreme Court hand down its ruling on the Bilski case, upholding the USPTO’s rejection of Bilski’s patent application on “101” grounds. That is, the PTO rejected the application because the claimed invention did not address a patentable subject. Specifically the Court ruled that Bilski’s application was an attempt to patent an abstract idea – a catagory that has long been ruled not subject to patenting.

Many people, myself included, had been hoping that the Supreme Court would address the patentablity of software and business methods at a broader level since there has been much huffing and puffing on the topic of should business methods as a class and should software as a class be patent eligible. Unfortunately we will have to wait until, perhaps, the Congress acts since the Court explicitly said it:

… declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected underour precedents on the unpatentability of abstract ideas.The Court, therefore, need not define further what constitutes a patentable “process”…

In effect, the Court said that if Congress didn’t like the way the PTO was defining a patentable process then Congress can amend the patent statutes.

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Like a vampire rising again from the grave, “business method” patents don’t want to go away without a fight.  It was just a year ago that the Court of Appeals [CAFC] ruled that Bilski’s “business method” for hedging commodities was not patentable subject matter. As much as I wished that the matter was dead, there are too many business method zombies, sucking the blood out of the patent system with their “inventions”, to let it go.

Last week the Supreme Court heard arguments in the matter of “Bilski” and it seemed to observers of the Court that Bilski may finally be dead but that the contorted CAFC reasoning may be thrown out as well. As I wrote last November (IP Directions 11/2/08), the very basis of the US patent system is the Constitutional phrase: “Congress shall have power … to promote the progress of science and useful arts…” Frankly, I doubt the founders would consider hedging risk in commodity trading part of science and the useful arts.

But the CAFC didn’t want to use such a subjective criterion in their decisions, so what is the test of process patentability? According to the Bilski decision, there is a two-part “machine-or-transformation test” for eligibility of process claims. First, eligibility may be demonstrated if a claim “is tied to a particular machine or apparatus.” Second, and alternatively, eligibility may be shown if a claim “transforms a particular article into a different state or thing.” Also note that the “tie” to a machine or apparatus must be a meaningful limitation in the claim.

I would have preferred to see methods of performing business/financial operations per se be declared unpatentable as not being part of science or the “useful arts” and damn the subjectivity torpedoes. As with “obviousness”, the courts will never produce a objective definition of an inherently subjective issue, so why try. If a patent applicant feels the patent office has inappropriately reject his or her application over a subjective issue, well, that’s why we pay the justices the big bucks – to apply their “wisdom”.

How about you – any blood-sucking business methods in your patent plans?

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Thought I’d pass along a link to eWeek contributor Jim Rapoza’s commentary on the “in re Bilski” ruling. While Jim conflates trolls, obviousness, and the real topic of Bilski (business methods/software), it’s still worth a quick read.

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With last week’s announcement of the CAFC’s decision in in re Belski you might asked an Emily Litella question, “Who is Ray Bilski and why is the court deciding what’s in him?”. Emily, upon learning that it’s a court case “in re” Bilski would have said “Never mind”, but for us it’s worth thinking about.

Bilski was at the wrong place at the wrong time with the wrong “invention”. On April 10, 1997 (yes, 11.5 years ago) Bernard Bilski and Rand Warsaw filed a patent application for method of hedging risk in commodities trading – that is, a business method. Claim 1 read:

 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

The PTO rejected this application as not being directed to patentable subject matter.  The CAFC concurred with this decision. So, after previously opening the door to a flood of business method patents with the so called State Street decision, the CAFC has tried to jam the door at least partially closed.

I’ve never been a fan of “methods” claims in general and of business methods claims in particular. Bilski, it seems, is the poster child for everything wrong with these patent applications.

First, the very basis of the US patent system is the Constitutional phrase: “Congress shall have power … to promote the progress of science and useful arts…” Frankly, I doubt the founders would consider hedging risk in commodity trading part of science and the useful arts.

Second, the patent law drafted on the basis of this power lists the patentable invention subject matter to be a “useful process, machine, manufacture, or composition of matter.” Now I may be old fashioned, but I think a patentable process has to be more than just an activity that can be described by a series of steps; everything we do can be broken down into a series of steps – A method of blogging comprising the steps of a) logging on to a blog site, b) placing fingers on a computer keyboard, c) initiating a series of keystrokes wherein the keystrokes form known words, wherein further the words are sequenced and punctuated in accordance to the know rules of a pre-selected language. You get the idea!

So what is the test of process patentability? According to the Bilski decision, there is a two-part “machine-or-transformation test” for eligibility of process claims. First, eligibility may be demonstrated if a claim “is tied to a particular machine or apparatus.” Second, and alternatively, eligibility may be shown if a claim “transforms a particular article into a different state or thing.” Also note that the “tie” to a machine or apparatus must be a meaningful limitation in the claim.

I would have preferred to see methods of performing business/financial operations per se be declared unpatentable as not being part of science or the “useful arts”, as was urged by some.

The bottom line for most of my clients is “very little impact”, since I focus on hardware/device IP, but if you are in the financial or software industries, a consultation with your IP attorney may be in order.

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