Federal Circuit Appeals Court Limits Business-Method Patents 73
Zordak writes "The Court of Appeals for the Federal Circuit has just issued its much-anticipated opinion in In Re Bilski [PDF]. This was a re-visit of the State Street issue of what constitutes patentable subject matter (including whether software and business methods are patentable). In summary, the court has affirmed and strengthened the 'machine-or-transformation' test, upholding the patent office's rejection of claims on a method for hedging risk in the field of commodities trading. Although the court refused to exclude software patents categorically, it is likely that the reasoning of this decision will be used to reject many software patents (note that some of the dissenting judges would have completely overturned State Street and tossed out all software and business method patents). Although not as sweeping as some had hoped for, it is certain that this decision, along with the Supreme Court's KSR decision last year, will lay a difficult mine field for those who want to patent software and business methods."
Full text as HTML (Score:4, Informative)
Champagne bottles popping at Groklaw (Score:4, Informative)
It's not a full victory, as mentioned. But it's a step in the direction of sanity versus a congress that's been overly influenced by the IP troll communities.
The victory seems solid, but SCOTUS has a different palette of judges to look at this with. We'll see if it becomes the law of the land or not, then, a few years from now should it be appealed-- and my guess is that it will be despite its strong tone.
Re:Champagne bottles popping at Groklaw (Score:4, Informative)
We'll see if it becomes the law of the land or not, then, a few years from now should it be appealed-- and my guess is that it will be despite its strong tone.
Or it could be something that they deliberately don't appeal, and they and other companies avoid going against in other cases so as to avoid an even stronger SCOTUS precedent. Kinda like when in Microsoft vs AT&T, they got close enough to the issue of software patent-ability that one of the Justices questioned whether they were assuming it to be the case, as they'd(SCOTUS) never held software to be patentable before, and the counsel for both sides backed way off so as to avoid any possible ruling for or against software patents. Seems especially prudent when the Justice semi-implies what the answer would be.
So it could go either way. Apparently the issue of whether software or business methods are patentable has never reached the Supreme Court before. It'd be rather sad if the whole software patent regime that's caused so many problems over the last couple decades was just a legal fluke that never should have happened. On the other hand, one of the main limits on Judicial power is that they can only rule on issues that come before them.
Groklaw link: (Score:4, Informative)
Re:Fund the US Patent office independently (Score:3, Informative)
That's not entirely true. All of the PTO's funding still has to be appropriated by Congress, but they generally give back roughly all the revenue that the PTO collects.
Also, since KSR v. Teleflex last year, allowance rates are down sharply.
A Poor Piece of Jurisprudence (Score:4, Informative)
There is some more legally (as opposed to policy) oriented coverage of the decision at Patently-O [patentlyo.com].
The majority decision introduces a new, complex, and vague test for patentability of business methods and software that raises more new questions than it answers. The end result will likely be the discovery of several 'magic words' that patent applicants can insert into their applications to ensure patentability without materially affecting what the claims cover. Unfortunately, those magic words will likely only be discovered after millions of dollars are wasted on expensive legal battles.
The new test states that a business method or software-implemented invention must be either "tied to a particular machine" or "transform a particular article." The court does not define what a 'particular machine' is. It is possible that a general purpose computer is sufficient, but it may not be. If it is not, it is unclear how specific the patent must be about what kind of computer it is tied to.
The court also failed to define what was a suitable level of transformation or what kinds of articles would suffice. Maybe the transformation must be significant, or maybe any change in state at all is enough. Maybe it will depend upon the nature of the invention. Maybe some articles are physical enough while others are not. All of these questions will require millions of dollars and years of litigation to answer. In the meanwhile, the value of thousands of patents will be called into question.
The court did point out that the article need not be physical, as in the example of a CT scanner which manipulates data representing a patient's body but not the body itself. So perhaps as long as there is some ultimate tie-in to a physical object, the invention is patentable. It is unclear why the manipulation of data representing a patient's body is adequately tied to a physical article but the manipulation of data representing commodities (which are ultimately very real barges full of coal, for example) is not. Figuring out exactly where that line is will be very difficult.
In my opinion (and in the opinion of Judge Rader, who wrote one of the three dissenting opinions) , the law already provided plenty of reasons to deny the application in the case as well as other overly broad or overly vague business method and software patents. Inventing complicated new tests will do more to provide employment for patent attorneys than it will to streamline business and encourage innovation.
Of course, I would also call into question the requirement for a physical tie-in of any kind. So long as the business method or software patent is limited to a specific, useful application (and is new, nonobvious, etc), I see no reason why we shouldn't encourage the development of such inventions. For example, better that a hedge fund patent a new kind of derivative and the world see what they are doing than they keep it an in-house trade secret. Assuming the Supreme Court or Congress does not overrule it, this decision will do much to drive such complex financial methods into the shadows.
One other very real concern. This decision could very well spell the end of Google's Page Rank and AdWords patents. If that happens, expect Microsoft and Yahoo to announce new, improved versions of their search engines and ad-delivery systems...and expect Google's stock to tank. Almost all of Google's value is tied up in its intellectual property. This decision weakens some of the fundamental parts of its business. Without software patents, it will be much harder for Google (or the next clever startup) to challenge more established companies.