Bilski’s hearing and software patents

At Monday’s hearing (court transcript), neither party had the objective of abolishing software patents. The Bilski case is about a business method patent, so there was Mr. Jakes arguing that business methods should be patentable, and Mr. Stewart arguing that they shouldn’t. For software to be excluded, we’re relying on the judges (to whom we wrote an amicus brief, as did many others). There’re a few worrying statements, but there’s also a lot of hope.

On the issue of business methods, the judges were very sceptical but mentioned many times that they don’t see an obvious place to draw the line. Indeed, they seemed to find Jakes’ position comical at times, and also found Stewart not going far enough and said that with his proposed interpretation, a computer could be added to any idea to make a patentable “machine”, thus also failing to exclude business method patents. There are also some worrying statements in there, like Justice Sotomayor calling the 2008 CAFC in re Bilski ruling “extreme“.

• Justice Scalia
• Justice Breyer
• Justice Kennedy
• Justice Sotomayor
• Chief Justice Roberts
• Justice Stevens
• Mr. Stewart (USPTO)
• Mr. Jakes (Bilksi and Warsaw)
• Conclusion

WHAT THE JUDGES SAID

Of the nine justices that make up the court, only Justice Thomas made no remark.

Justice Scalia

Scalia seemed to place a lot of importance on the requirement of physical or even mechanical aspects – “the term useful arts […] meant, originally, and still means manufacturing arts, arts dealing with workmen” – but went on to note three times that the Morse Code patent should remain valid.

“it was transforming sound into electrical current and then at the other end electrical current back into sound. I mean it met the transformation test, didn’t it? … It clearly did.” Scalia points out that although sound isn’t physical, the sound is converted to electricity, which is, and says “I think it clearly – clearly would have been covered by — by the test the government” [the “test” seems to refer to the particular-machine-or-transformation test, which was suggested to the USPTO by the government]

Stewart agrees that Morse’s patent should be valid, but says it would be valid as a machine, not because of a sound-electricity transformation – “it’s certainly our view that those would come out the same way under our test as — as they actually did in practice” – to which Scalia replies “I certainly hope so“. Stewart later argues “it wouldn’t naturally be characterized as transformation of matter. Those things were held to be patent eligible not because they transformed matter, but because they involved the use of a machine.”

Given the importance that Scalia sees in maintaining the Morse code patent, it’s worth checking our proposals to see if they include or exclude Morse’s ideas, and being ready to defend that outcome.

Justice Breyer

Questioning the value of patents for “information”, Breyer commented “In the nineteenth century, they made it one way with respect to machines. Now you’re telling us: Make it today in respect to information. And if you ask me as a person how to make that balance in respect to information, if I am honest, I have to tell you: I don’t know. And I don’t know whether across the board or in this area or that area patent protection will do no harm or more harm than good.”

Seeming to joke, Breyer asked about the patentability of “a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake“. Jakes answers that it should be patentable.

For context, Mr. Stewart had earlier expressed the preference for avoiding the topic of software patents: I guess the point I’m trying to make is simply that we don’t want the Court, for instance, in the area of software innovations or medical diagnostic techniques to be trying to use this case as the vehicle for identifying the circumstances in which innovations of that sort would and would not be patent eligible, because the case really doesn’t present any — any question regarding those technologies.

Justice Breyer: “But then all we do is every example that I just gave, that I thought were examples that certainly would not be patented, you simply patent them. All you do is just have a set of instructions for saying how to set a computer to do it. Anyone can do that. Now, it’s a machine.”

Justice Kennedy

Kennedy points out that insurance was once new (in 1680, in England), and would thus be have been patentable by Jakes’ view, and says that “it’s difficult for me to think that Congress would want to — would have wanted to give only one person the capacity to issue insurance.”

About Diehr, Kennedy highlights the touchably physical aspects: “that looked like a machine, the substance was different before the process and after the process. And — and none of that’s applicable here.” (Jakes responds: “But today the raw materials are just as likely to be information or electronic signals, and to simply root us in the industrial era because that’s what we knew I think would be wrong and contrary to the forward-looking aspect of the patent law.“)

Justice Sotomayor

Maybe the first statement which addresses data processing: “Well, isn’t the manipulation of electronic signals a substance that is different in kind from just a method of how to go about doing business or a method of how to approach a particular problem? Isn’t there — isn’t that what the Federal Circuit was trying to explain, which is that there has to be something more substantive than the mere exchange of information; that it has to involve — it used the word “transformation.” It hasn’t defined the outer limits of what it means by that.”

This comment is worrying. She seems to say that “electronic signals” make an idea “substantive” enough to pass the transformation test. And her following comment is also worrying:

“So help us with a test that doesn’t go to the extreme the Federal Circuit did, which is to preclude any other items, something we held open explicitly in two other cases [context: the Benson and Flook cases] , so we would have to backtrack and say now we are ruling that we were wrong”

Chief Justice Roberts

Mr. Stewart shows how minimalist an interpretation of the CAFC ruling he’s seeking when he says that the Bilski method would be patentable if there was an “interactive website in which people — parties and counterparties could essentially find each other by the computer and could agree to terms“.

To this, Roberts replies: “No, no. That’s just saying instead of looking at the — in the Yellow Pages, you look on the computer; and that makes all the difference to you? […] that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable. […] If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it — then it is?”

Justice Stevens

I don’t understand why that isn’t just the application of a process, which – which is not itself patentable subject matter, to a particular machine that can use process –

Justice Stevens points out the difference between a new DVD player or TV and a computer programmed for a new task: “It’s not on a computer, which the only difference from the old computer is it’s using a new program. You can’t say that’s a new machine.”

Stewart avoids software patents

Stewart is rumbled trying to avoid the software topic without saying why it’s avoided:

MR. STEWART: “Well, first of all the only ruling that we’re — backtrack a bit, to say, we oppose, sir, in this case because we recognize that there are difficult problems out there in terms of patentability of software innovations and medical diagnostics.”

JUSTICE KENNEDY: “You thought we — you thought we would mess it up.”

MR. STEWART: “I didn’t think –”

(Laughter.)

MR. STEWART: “We didn’t think the Court would mess it up. We thought that this case would provide an unsuitable vehicle for resolving the hard questions because the case doesn’t involve computer software or medical diagnostic techniques, and therefore, we thought the Court would arrive at the position that I think, at least some members are feeling that you have arrived at, that you will decide this case, and most of the hard questions remain unresolved.”

Stewart on the limits of the CAFC ruling

Stewart: “all that the Federal circuit has really said is that to have a patent-eligible process you have to identify some link to a machine or a transformation of matter. And the Federal circuit has said with respect to some processes the link to the machine may be so attenuated, the machine part of the process may be such a small segment of the process as a whole, that this wouldn’t be enough. But the Federal circuit said: We leave for another day the hard questions that will arise when part of the process is machine-implemented and another part is not.”

Stewart: “[State Street] under our test, we would come out the same way because the computer would be a machine.”

Mr. Jakes’ general position

Arguing for Bilksi and Warsaw, Mr. Jakes advocated a very broad interpretation and would include an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, and, for a business, “a new way to organize” or “a new thing to say on the telephone”. On exclusions from “useful arts” does acknowledge that “[s]peaking, literature, poems, I think we all agree that those are not included, and there are other things as well.” Jakes argues that it’s contrary to Section 101 because it prevents a broad, open-ended reading which is necessary for inclusion of innovations in domains that don’t exist year.

If the judges held a view similar to Jakes, then our remaining option would be to liken writing software to writing literature, but hearing the jokes made by the judges, it’s very unlikely they share Jakes’ view.

Conclusion

Sotomayor’s comments are worrying.

Roberts, Breyer, Kennedy, and Stevens can all be interpreted as doubting, or at least questioning the patentability of software. Scalia’s comments are not worrying, but it’s hard to place his comments.

And there’s nothing really to say regarding software patents when reading the input from Justices Ginsburg, and Alito and Thomas didn’t make any comments.