Justices Show Supreme Skepticism About Broad Business Model Patents

from the good-for-them dept

You never know how they’ll actually rule, but in hearing the oral arguments in the Bilski case over the patentability of business models (and, most likely, software), one thing became quite clear: nearly every Supreme Court Justice was seriously skeptical of outlandish patent claims. We’ve noted, of course, that the Supreme Court over the past few years has taken a renewed interest in patent law, pushing back time and time again against the Federal Circuit (CAFC), who in the 80s and 90s seemed to take the position that more patents was always a good thing. Sensing that, with Bilski, CAFC even pushed back on its own earlier rules, and it appears that the Supreme Court at least agrees that the era of crazy business model patents should end now. The full transcript is worth reading, but Justin Levine did a nice job summarizing some of the highlights in the questioning by the Justices:

JUSTICE GINSBURG: But you say you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable?

MR. JAKES: They are eligible for patenting as processes, assuming they meet the other statutory requirements.

JUSTICE BREYER: So that would mean that every — every businessman — perhaps not every, but every successful businessman typically has something. His firm wouldn’t be successful if he didn’t have anything that others didn’t have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That’s how he made his money. And your view would be — and it’s new, too, and it’s useful, made him a fortune — anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.

JUSTICE BREYER: You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things.[Audience laughter.] It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

MR. JAKES: Potentially.

JUSTICE SCALIA: You know, you mention that there are all these — these new areas that didn’t exist in the past because of modern business and what-not, but there are also areas that existed in the past that don’t exist today. Let’s take training horses. Don’t you think that — that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory.

MR. JAKES: They might have, yes.

JUSTICE SCALIA: Well, why didn’t anybody patent those things?

MR. JAKES: I think our economy was based on industrial process.

JUSTICE SCALIA: It was based on horses, for Pete’s sake. You — I would really have thought somebody would have patented that.

Of course, these are the same Justices that have been pushing back on the patent world for quite some time. What about the newer Justices? Turns out they were pretty skeptical as well. There were some questions about new Justice Sotomayor, who had been an IP litigator at one point, but seemed pretty skeptical of these sorts of patents:

JUSTICE SOTOMAYOR: So how do we limit it to something that is reasonable? Meaning, if we don’t limit it to inventions or to technology, as some amici have, or to some tie or tether, borrowing the Solicitor General’s phraseology, to the sciences, to the useful arts, then why not patent the method of speed dating?

MR. JAKES: Well, first of all, I think, looking at what are useful arts, it does exclude some things. It does exclude the fine arts. Speaking, literature, poems, I think we all agree that those are not included, and there are other things as well. For example, a corporation, a human being, these are things that are not covered by the statutory categories.

JUSTICE SOTOMAYOR: So why are human activities covered by useful arts?

MR. JAKES: Human activities are covered.

Chief Justice Roberts dug into the Bilski patent in question, and noted how ridiculously broad the claims were:

CHIEF JUSTICE ROBERTS: What — I’m looking at your Claim 1, in Joint Appendix page 19 to 20. How is that not an abstract idea? You initiate a series of transactions between commodity providers and commodity consumers. You set a fixed price at the consumer end, you set a fixed price at the other end, and that’s it.

I mean, I could patent a process where I do the same thing. I initiate a series of transactions with sellers. I initiate a series of transactions with buyers. I buy low and sell high. That’s my patent for maximizing wealth.

I don’t see how that’s different than your claim number 1.

He went on to point out that some of what the patent seems to cover has been around since the 17th century (history buff, apparently). Anyway, you never know how the Justices will actually rule — and there are big questions well beyond just “allow/don’t allow” that will be the really important thing to watch for in the decision. Will they set up a new “test” for patentability? Will they exclude certain areas (business models? software?) from patent coverage? Will they come out with a very narrow ruling that just focuses on Bilski’s patent and leave the bigger questions for another day? That’s where things will get interesting. But, at the very least, it seems likely that the worst case scenario of saying a patent like Bilski’s is valid is quite unlikely to be the end result.

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Comments on “Justices Show Supreme Skepticism About Broad Business Model Patents”

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Ima Fish (profile) says:

MR. JAKES: I think our economy was based on industrial process.

That was a very telling quote. Jakes is acknowledging that corporations do not make money by inventing and building physical things anymore, but by shifting money around in such a way that the corporations end up with more than the average citizen. The need for such asinine patents is to ensure that no one else follows your method for ripping people off.

Jason (profile) says:

Re: Re:

The only problem is that Stewart is completely opposed to it. Yeah you’ve got to read the full transcript. At times funny as hell and at other times just plain scary.

The justices themselves seem to be completely at odds on this. They seem to be interested in clarifying how software can be patentable, but a business method cannot. But they don’t seem to be able to make themselves to do it.

Simply put, if processes are not patentable apart from application, then what is being patented is the process-application in se, the processes notwithstanding. Since the computer itself is an application machine, the only patentable part of the endeavor, i.e compiling the instructions into an application, is automated, fast, and cheap. In this case, this small detail of compilation was so tiny that no one in the case could aptly recall that it occurred. Certainly none could put their finger upon something so small as compiling as being the HUGE KEY DIFFERENCE between textual instructions and an encoded application.

I say, “Rightly so.”

In Clarkeian terms, it’s magic. At least in terms of the purpose of a patent – remember you patent the material application and not the process – the technology for turning a description into an application is sufficiently advanced that it simply makes no sense to protect the applicational endeavors toward any species within this entire class of applications.

Lester A Jones (profile) says:

As a software developer this argument is of concern to me. I am against broad patents but i would like to profit from my work and not have it copied by a competitor.

But when Mr Jakes says that our economy is based on industrial process i wonder what is going to happen when he realizes that we have moved to depending more on information processes to generate wealth.

I have to wonder what would have happened if the spread sheet or the word processor were patented (i dont think that they were).

Should we discard all patents and just persecute cases of industrial espionage and blatant idea thief instead.

I dont know what to do…

ChurchHatesTucker (profile) says:

Re: Re:

“As a software developer this argument is of concern to me. I am against broad patents but i would like to profit from my work and not have it copied by a competitor. “

Software is already covered by copyright. If you’re worried about someone making something functionally equivalent, I suggest you look at your own work with a critical (lawyer’s) eye.

John Doe says:

Re: Re: Re:

I am going to patent flipping a bit from 1 to 0 and back again. Then all software will be infringing!

Seriously though, I doubt you could write a line of code without infringing on some patent or another. And as Lester said, where would we be if spreadsheets and word processors had been patented? Probably stuck with an archaic version of each or paying through the nose for versions that licensed the technology for huge sums of money.

Tor (profile) says:

Re: Re:

“Should we discard all patents and just persecute cases of industrial espionage and blatant idea thief instead.”

That’s not a very accurate description of what is most often patented common knowledge or completely independant “inventions” (if you can call abstract algorithms that), but basically yes. If we cannot prove that software patents are good for the progress of society, then we should of course not allow them.

Vincent Clement says:

Re: Re:

What is the difference between a “blatant idea thief” and say a “not-so blatant idea thief”? Last I looked, an idea is an idea and ideas can’t be patented.

If someone’s “idea” or “invention” is easily copied or replicated, then perhaps it should have never been granted patent protection in the first place.

Lawrence D'Oliveiro says:

Re: Anti-Competition

Lester A Jones wrote:

I am against broad patents but i would like to profit from my work and not have it copied by a competitor.

If you are are successful, you will attract competition. That’s an inevitable law of the marketplace. You didn’t start your career by doing wholly original things: you were copying and (at least in your own opinion) improving the work of others, were you not? So your competition will do the same to you.

That’s life. Deal with it.

Doug B (profile) says:

Patent failure made it "very difficult"?

From the original article:

“I was completely awed and impressed by the whole process,” Bilski said. “I couldn’t tell you what the outcome will be. But not getting this patent made it very difficult to get this service out to many customers.”

I don’t understand how the patent process hindered getting a service to a customer. Can someone enlighten me? If it was so difficult, why bother to begin with?

Anonymous Coward says:

Hopefully the Court will arrive at the conclusion that dependency on holding a patent in order to monetize the implementation of a process through licensing is not sufficient grounds for awarding a patent. I mean, that doesn’t really enter into the existing conditions that need to be met.

The argument that not having a patent means you can’t implement the process is disingenuous. Of course you can. You just can’t make someone else pay you for the privilege of using it, in and of itself. This is not the USPTO’s (and by convoluted extension, my) problem.

Steve R. (profile) says:

Patents promote progress but not for you.

Here’s a tid-bit that seems to have been overlooked in patent arguments.

“MR. JAKES: It’s very much related to our current economy and state of technology, with computers and the Internet and the free flow of information. But that’s what —

JUSTICE SOTOMAYOR: But a patent limits the free flow of information. It requires licensing fees and other steps, legal steps. So you can’t argue that your definition is improving the free flow of information.”


So Jakes claims patents are useful to society, because patents makes the technology “visible”. The only problem, society is not able to freely use the technology. So how does that constitute progress?

also Posted on Against Monopoly

Mike says:

Kill bad patents, but keep the good.

Bilski is a bad case for this argument. Clearly the Bilski claims are too broad. Hopefully the Supreme will get the right balance. Remember software patents cover software for INNOVATIVE software for medical devices, technical equipment and other complex processes, not just simple iPhone apps.

If you kill all patents Microsoft will be the only provider. Microsoft copies everything it can. Files bad patents, cries about bad patents, and screws everyone in between It started when they stole DOS and rented it to IBM. They’ve been copying ever since.

If there were a good annotated, dated and accurate database of software and business methods, bad patents would be killed. The prior art would be placed in the daylight. Someone needs to start an annotated database of software and business methods.

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