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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. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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