Well, that was anti-climactic! The most anticipated Supreme Court patent decision in a number of years turned out to be a bit of a letdown. Don’t get me wrong, I was expecting a much worse opinion for patent owners and applicants, but we really waited this long for this opinion?
This is really an instance of bad facts making bad law. As previously noted, Bilski’s invention is not a compelling one for Supreme Court review, as the invention sought to patent an application of a method for hedging. The Court was unanimous in holding that Bilski’s claims were not directed to patentable subject matter. The separate opinions differed as to the reasoning for this holding.
Justice Kennedy’s Opinion
Justice Kennedy chastised the Federal Circuit, writing for the Court that “[t]oday, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text.” The Court held that the statutory text of § 101 and the definition of “process” in § 100(d) do not limit processes to those that pass the Federal Circuit’s machine-or-transformation test.
The majority opinion instead mirrored Judge Rader’s opinion from the Federal Circuit, where he would hold the claims to be unpatentable simply because they are directed to abstract ideas.
So, what test did the Supreme Court give us to use in place of the machine-or-transformation test? None! That’s right. All the Supreme Court did was reiterate that abstract ideas are not patentable. The Court provided no additional guidance as to how to determine patent eligibility. Only the old “laws of nature, physical phenomena, and abstract ideas” are expressly prohibited by Supreme Court precedent.
Justice Stevens, in a separate opinion discussed below, sought to conduct an exhaustive study of English and US judicial precedent to justify that business methods have never been and never will be (?) patentable. A plurality of the Court chides him for not recognizing that the Patent Act is directed to newly emerging technologies. It doesn’t make sense to cut off entire fields from patent eligibility ahead of time. Who knows where the next innovations will come from? This section of the Court’s opinion only garnered 4 votes and is not precedential. Justice Scalia declined to join the majority in this section.
The majority’s opinion also justified patents for business methods based on the enactment of the prior use defense in § 273. Justice Stevens responded to this position by arguing that this statute was only a stopgap and was only enacted by Congress in response to his perceived legislation by the Federal Circuit of the patentability of business method patents in State Street Bank. He also argued that since the statutes were written nearly 50 years apart, the latter cannot possibly be read to help interpret the former.
Justice Stevens’ Opinion
Justice Stevens wrote for a 4 member minority of the Court that concurred in the judgment but would have categorically banned business method patents. His opinion on the matter was extensive and included an exhaustive (exhausting) review of precedent discussed above.
Justice Stevens disagreed with the majority that the term “process” in the Patent Act should be defined as an ordinary reader would understand that term. Instead, he argued that the Patent Act is much more complex and that “process” means something special and entirely different from how a member of the public would understand it.
He does rightly criticize the majority on one point: if the word “process” means what it says, why is there an exception for abstract ideas and laws of nature? I agree: why indeed? These issues could be covered by other sections of the Patent Act dealing with prior art, enablement, and definiteness.
Justice Stevens next cites a number of anti-patent commentators to recite a parade of horribles that permitting business methods will cause: they are not necessary to promote innovation or disclosure, they are subject to ambiguity, they impede rather than promote American business, they inhibit legitimate competition and innovation, they cannot be properly examined by the PTO because there is no body of prior art, etc., etc.
Some of the language of his opinion is interesting:
If business methods could be patented, then many business decisions, no matter how small, could be potential patent violations.
Isn’t this exactly what the majority did, permit the patenting of business methods?
Justice Breyer’s Opinion
Justice Breyer also wrote separately, concurring in the judgment. He joined Justice Stevens’ opinion, but wrote separately to garner Justice Scalia’s vote. His opinion emphasized four points:
- § 101 is broad, but not limitless;
- the machine-or-transformation test has been repeatedly used by the Supreme Court to determine patent eligibility;
- the machine-or-transformation test has never been the sole test for patent eligibility; and
- State Street‘s “useful, tangible result” test was never endorsed by the Supreme Court.
Business method patents just dodged a bullet. Many had speculated that Justice Stevens would write the opinion and that it would be devastating to patentees and patent applicants.
I believe that was what was about to happen. Justice Stevens’ opinion appears to have been written as a majority opinion. He appears to have lost the fifth vote, as demonstrated by his statement that “if business methods could be patented.” Perhaps Justice Scalia change his mind? Why? We will probably never know if this is even true, much less which justice changed position or why.
After reading the opinion of the Court one wonders why it even took the case. Perhaps the anti-business method side could only garner the four necessary votes to grant cert and expected to get a fifth going forward.
At the end of the day, we are nearly at the status quo that we were prior to Bilski. Perhaps things are a bit tighter because business method patents and applications may get a bit more scrutiny.
The machine-or-transformation test was a test, but not the sole test, prior to this case. It is again a test, but not the sole test, to determine patent eligibility.
All that we know with certainty is that “laws of nature, physical phenomena, and abstract ideas” are not eligible for patents. Thanks, we knew that before.