Justices Show Supreme Skepticism About Broad Business Model Patents

Legal Issues

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.

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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.

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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.

Filed Under: bilski, business model patents, patents, software patents, supreme court