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Navigating the patent process

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Indiana Lawyer Focus

Attorneys in the intellectual property arena waited for “the case” to come down during the past year, but what they got June 28 was anything but the landmark decision so many lawyers expected.

Rather than an expansive or limiting holding about what a patentable “process” is, the Supreme Court of the United States issued a ruling that didn’t change much for IP attorneys throughout the country. With its decision in Bilski v. Kappos, No. 08-964, the court chose not to weigh in on much-debated issues affecting software patents and instead maintained the status quo.

Justices unanimously agreed with the result reached by the Federal Circuit Court of Appeals in affirming a lower court decision that rejected a patent for a type of business process that was at issue in this case.

Specifically, this case involved the founders of a Pittsburgh company that sells customized consumer energy products. The company requested a patent for how they hedged energy trade. But their request to patent this business “process” was repeatedly rejected because it was considered an abstract idea, not eligible for patent protection under §101 of the Patent Act.

With its en banc ruling in October 2008, the Federal Circuit held that a process for predicting and hedging risk in commodities markets did not deserve a patent because it was not tied to a machine and did not result in a physical transformation. In affirming the patent claims rejection, the federal appellate court also applied the “machine-or-transformation test” that had been in place for more than a century before 1998.

Leading up to the decision, IP attorneys, businesses, and inventors worried that the court could have upheld the ruling in a broad way that would have invalidated hundreds of software business patents already secured; or that it would have restricted or shifted the standard for how those types of patents are obtained in the future. The case could have had significant impact for Indiana, where pharmaceutical, life sciences, and bio-fuel industries have a large stake in securing patents for their devices and services – such as the impact on a company using a particular software program to analyze an X-ray image, or the makeup of a particular medicine.

But justices decided it wasn’t necessary to make broad sweeping decisions about patents to dispose of the case. They instead relied on existing precedent to make its decision and decided not to further define what constitutes a patentable process.

“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,” Justice Anthony Kennedy wrote. “Nothing in this opinion should be read to take a position on where that balance ought to be struck.”

The court largely relied on its landmark trilogy of patent cases that shaped what is eligible to receive a patent – Gottschalk v. Benson, 409 U.S. 63 (1972), Parker v. Flook, 437 U.S. 584 (1978), and Diamond v. Diehr, 450 U.S. 175 (1981).

“Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text,” Justice Kennedy wrote, referring to past precedent as the “guideposts” in this area.

Even though the justices agreed in result, they were divided 5-4 in their reasoning, and the majority’s view was that there needed to be a flexible test for emerging technologies. The main opinion is 16 pages, while the other justices penned two concurring opinions – one 47 pages and the other four pages – that delved into their views.

Justice Kennedy wrote that the court was not endorsing that idea of the “machine-or-transformation” test.

“There are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age,” he wrote. “In the course of applying the machine-or-transformation test to emerging technologies, courts may pose questions of such intricacy and refinement that they risk obscuring the larger object of securing patents for valuable inventions without transgressing the public domain.”

But in the 47-page concurring opinion joined by three of his colleagues, Justice John Paul Stevens – in one of his final actions on the court before his retirement – disagreed with the majority’s approach to a “process” as applied today.

“Although this is a fine approach to statutory interpretation in general, it is a deeply flawed approach to a statute that relies on complex terms of art developed against a particular historical background,” he wrote. “Indeed, the approach would render §101 almost comical. A process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds – all would be patent eligible. I am confident that the term ‘process’ in §101 is not nearly so capacious.”

Still, he wrote about the importance of keeping patent law stable and clear, and relying on precedent in restoring patent law to its historical and constitutional moorings. He analyzed the patent law history dating to England, the foundations of American patent law, and how it’s developed through the centuries to this point.

Overall, he wrote that “the scope of patentable subject matter ... is broad. But it is not endless.”•

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  1. Other than a complete lack of any verifiable and valid historical citations to back your wild context-free accusations, you also forget to allege "ate Native American children, ate slave children, ate their own children, and often did it all while using salad forks rather than dinner forks." (gasp)

  2. "So we broke with England for the right to "off" our preborn progeny at will, and allow the processing plant doing the dirty deeds (dirt cheap) to profit on the marketing of those "products of conception." I was completely maleducated on our nation's founding, it would seem. (But I know the ACLU is hard at work to remedy that, too.)" Well, you know, we're just following in the footsteps of our founders who raped women, raped slaves, raped children, maimed immigrants, sold children, stole property, broke promises, broke apart families, killed natives... You know, good God fearing down home Christian folk! :/

  3. Who gives a rats behind about all the fluffy ranking nonsense. What students having to pay off debt need to know is that all schools aren't created equal and students from many schools don't have a snowball's chance of getting a decent paying job straight out of law school. Their lowly ranked lawschool won't tell them that though. When schools start honestly (accurately) reporting *those numbers, things will get interesting real quick, and the looks on student's faces will be priceless!

  4. Whilst it may be true that Judges and Justices enjoy such freedom of time and effort, it certainly does not hold true for the average working person. To say that one must 1) take a day or a half day off work every 3 months, 2) gather a list of information including recent photographs, and 3) set up a time that is convenient for the local sheriff or other such office to complete the registry is more than a bit near-sighted. This may be procedural, and hence, in the near-sighted minds of the court, not 'punishment,' but it is in fact 'punishment.' The local sheriffs probably feel a little punished too by the overwork. Registries serve to punish the offender whilst simultaneously providing the public at large with a false sense of security. The false sense of security is dangerous to the public who may not exercise due diligence by thinking there are no offenders in their locale. In fact, the registry only informs them of those who have been convicted.

  5. Unfortunately, the court doesn't understand the difference between ebidta and adjusted ebidta as they clearly got the ruling wrong based on their misunderstanding

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