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Bilski ruling by US Supreme Court on 28 June 2010

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The official decision for Bilski v. Kappos (2010, USA) is at: http://www.supremecourt.gov/opinions/09pdf/08-964.pdf

At the end of this page you can find a list of links to third-party analyses.

For info about the effects of Bilski, see Patentability in the USA after Bilski.

Contents

Summary of the decision

The important part to read is pages 5-20 of the PDF (minus the sections II–B–2 and II–C–2, explained below). This is the opinion of the court, written by Justice Kennedy.

In general, the decision is narrower than most expected. Bilski's patent has been rejected (no surprise), but the judges used old rulings (Diehr, Benson, Flook), so there's no new test, and they didn't even offer much in the way of clarifying those old rulings. They narrowed patent law in some ways, by saying that the machine-or-transformation test is not the only test, but they also broadened patent law in other ways, saying that failing the machine-or-transformation doesn't mean an idea is completely unpatentable.

On the positive side, they rejected two of the CAFC's worst rulings:

nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp.

End Software Patents' amicus brief argued that these cases were based on mis-application of the Supreme Court's Diehr ruling, so I hope we had something to do with getting these rulings rejected.

Which pages are the core decision?

This ruling is a little more complicated than usual. The core or "controlling" part is contained in the "opinion of the court", on pages 5-20 of the PDF. However, sections II–B–2 and II–C–2 are not part of the controlling opinion. Justice Scalia did not support these sections, so they only had the support of four out of the nine judges.

Here's the full description of who supported what (from PDF page 4 of the decision):

KENNEDY, J., delivered the opinion of the Court, except for Parts II–B–2 and II–C–2. ROBERTS, C. J., and THOMAS and ALITO, JJ., joined the opinion in full, and SCALIA, J., joined except for Parts II–B–2 and II–C–2. STEVENS, J., filed an opinion concurring in the judgment, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined. BREYER, J., filed an opinion concurring in the judgment, in which SCALIA, J., joined as to Part II.

Background

This case is about a business method patent. It's been obvious since the start that the Bilski patent would get rejected, but what's really important is the reasoning, and how that reasoning will affect software patents.

Excerpts

The purpose of this case is to decide the validity of a business method patent, so the effects on the patentability of software will be found only indirectly.

Passages that might narrow patent law

Closing paragraph (2nd last), distances the court from the CAFC's State Street v. Signature Group (1999, USA) and AT&T Corp. v. Excel Communications Inc. (1999, USA) rulings:

nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357.

This suggests the Supreme Court wants to exclude more than just what the CAFC's test excludes:

Adopting the machine-or-transformation test as the sole test for what constitutes a “process” (as opposed to just an important and useful clue) violates these statutory interpretation principles.

This narrows the scope for patenting if the emphasis is put on "sole", but in context, it can also be read to exclude less than machine-or-transformation. I.e., if something fails the machine-or-transformation test, it may (in some unspecified but probably rare cases) still be patentable.

Passages that suggest broad patent law

The opinion says that Gottschalk v. Benson (1972, USA):

explicitly declined to “hold that no process patent could ever qualify if it did not meet [machine or transformation] requirements.”

Does that mean they're weakening the test?

The following text is worrying, but they use Diamond v. Diehr as their example, so they probably mean an innovative device that happens to be controlled by a computer:

But times change. Technology and other innovations progress in unexpected ways. For example, it was once forcefully argued that until recent times, “well-established principles of patent law probably would have prevented the issuance of a valid patent on almost any conceivable computer program.” Diehr, 450 U. S., at 195 (STEVENS, J., dissenting). But this fact does not mean that unforeseen innovations such as computer programs are always unpatentable.

(Note that the preceding quote is from part II-B-2, which Scalia did not join, and therefore it is not controlling.)

This text leaves the door open for allowing business method patents, but it might be out of context:

The Court is unaware of any argument that the “ ‘ordinary, contemporary, common meaning,’ ” Diehr, supra, at 182, of “method” excludes business methods

Pages 10,10 (PDF pages 14,15):

The argument that business methods are categorically outside of §101’s scope is further undermined by the fact that federal law explicitly contemplates the existence of at least some business method patents. Under 35 U. S. C. §273(b)(1), if a patent-holder claims infringement based on “a method in [a] patent,” the alleged infringer can assert a defense of prior use.

Page 12 (PDF page 16):

the Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under §101.

Other bits that seem important

"process" cannot be defined by a court, because:

§100(b) already explicitly defines the term “process.”
The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.”

Page 10 (PDF page 14). Have they decided to leave the software question for another day?:

This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.

Section VI of the concurring opinion written by Judge Steven (DF p. 58-67) quotes many studies and statements supported by swpats opponents, a must-read!

Reaction from the USPTO

A USPTO official circulated the following memo a few hours after the Bilski decision.[1]

Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.
[emphasis added]

Related pages on en.swpat.org

External links (other people's analyses)

Post-Bilski patent policy in the USA

References

  1. http://ipwatchdog.com/blog/USPTO_bilski_memo_6-28-2010.PDF


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