As one would expect, the questioning seemed to be more extensive during the petitioner’s argument than during the government’s argument. As feared, Chief Justice Roberts, and several others, had difficulty focusing on the statutory subject matter question and leaving aside whether the invention is novel and non-obvious.
CHIEF JUSTICE ROBERTS: Well, but your Claim 1 it seems to me is classic commodity hedging that has been going on for centuries.
Justice Ginsburg asked several questions about a technological arts test. She noted that they use such a test in Europe to exclude patenting of business methods, so maybe the US should do something similar. The petitioner answered the question by noting the “technology” is specifically defined in the European statute to exclude business methods; such is not the case here.
Much of the petitioner’s argument focused on the fact that while industrial processes had been the most important innovations in the past, now information and electronic signals have overtaken machines as the new currency of business. Justice Scalia asked why there weren’t patents on methods of training horses in the past when the US economy was based on horses. Jakes answered that he didn’t know, but there may have been concerns with enforcement of such patents.
Interestingly, Justice Stevens noted an admiration for the late Federal Circuit Judge Giles Rich, who wrote the original State Street Bank opinion. He inquired as to Judge Rich’s writings on these issues. Jakes pointed him to that opinion and the In re Alappat opinion that noted that there is no statutory exception to patenting business methods.
Justice Breyer gave a rather lengthy diatribe on his take of the patent system. He sees two positive and two negative results of patents. The positive results are that by granting a monopoly, the patentee will produce more, and that the patentee must disclose the invention. The negatives are that the patent results in monopoly pricing and that requiring others to get permission from the patentee to practice an invention slows or destroys further advances in the field.
Finally, at the conclusion of the petitioner’s argument, Justices Sotomayor and Scalia had a lengthy discussion with Jakes regarding the patentability of patents relating to Morse Code and telegraphy.
Perhaps surprisingly, the PTO is seeking a narrow ruling in this case. The PTO argued that they did not want the Supreme Court to use this case for a rule that all business methods, all software, all diagnostic methods are unpatentable. Several of the justices seemed surprised by this position, they seemed to hope the PTO would go farther in its position.
Chief Justice Roberts demonstrated that he doesn’t fully understand computers or computer-implemented methods. He seems to think that an interactive website where parties are matched together for a common transaction is no more than looking in the yellow pages. Similarly, a computer programmed with new software to perform new functions is no more than using a calculator to perform the functions.
Finally, Justices Stevens, Kennedy, and Breyer tried to get the PTO to agree that the State Street Bank case should come out differently under the machine-or-transformation test. They didn’t understand the PTO’s position that State Street did not involve a process, but instead involved a machine, a programmed computer. These justices do not understand how a programmed computer can be a new machine; they believe that because a computer is old that only the novel process could make it patentable. The PTO did not take this position.
It’s hard to make a prediction about how the case will come out based on the argument. Some of the justices clearly espouse a view that patentability of these types of methods should be further limited, perhaps even limiting software patents. On the other hand, there was also some discussion that the some justices do not want to foreclose patentability of future processes that are not yet known. Thus, a narrower decision may be warranted.
A decision should be forthcoming in the spring of 2010, and in any event by the end of the current term in June.