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Supreme Court 'Bilski' ruling doesn't rule out software, business-method patents

The Supreme Court had an easy call to make in a patent-law case and took the easy way out -- leaving problems with software and business-method patents for another court or Congress to solve.

The case in question, Bilski v. Kappos, involved an infuriating sort of intellectual-property overreach: The petitioners wanted to patent a way for companies to hedge against swings in the price of or demand for energy. This is the kind of thing that people have been doing for centuries and which, as a form of math, shouldn't deserve any patent protection.

In this case, though, the system worked. The U.S. Patent and Trademark Office rejected the original application, as did its appeals body and a federal appeals court asked to review the issue.

The Supreme Court gave this would-be patent a final thumbs-down in a 9-0 ruling. But it passed on the chance to offer broader judgments about the legal worthiness of patents on business methods and software, once widely seen as unpatentable.

Justice Anthony Kennedy's opinion (PDF) found that while earlier decisions went too far in rejecting any patent claims governing only business practices, the Bilski "invention" still flunked the test by being built solely on abstract math.

Kennedy did not find reasons to think that Congress wanted to exclude business methods or software from patents, although in one sentence he suggested there was little room for them. A 1999 law, he wrote, "does not suggest broad patentability of such claimed inventions."

But if the law should be narrow in that respect, how narrow? The court did not feel compelled to resolve that -- though retiring Justice John Paul Stevens, in a concurring opinion, argued that the court should have struck down business-method and software patents in general.

The Business Software Alliance, a Washington trade group representing commercial software firms, called the ruling a "pro-innovation decision,", while open-source advocates of ending software patents sounded much less thrilled.

It's easy to see why those two sides would disagree. If you're a company with the resources to keep good intellectual-property lawyers around, you can accumulate a sizable portfolio of patents that can be used offensively, to launch patent suits against competitors, or defensively, to negotiate "cross-licensing agreement" settlements with rivals who sue first.

If, however, you're a startup company, good luck finding out whether your source code or business practices infringe on any of the ever-increasing number of patents in your field -- much less defending yourself against a larger firm's lawsuit should you do well enough to attract its attention.

(Note that many of the most questionable patents around were issued before a 2007 Supreme Court ruling that required patents to meet a higher, more sensible standard of "non-obviousness." Unfortunately, getting a flawed patent yanked is itself a less-than-obvious process.)

Does an increasingly dense thicket of patents "promote the Progress of Science and useful Arts" -- the reason the Constitution gives for issuing copyrights and patents and trademarks? The Supreme Court didn't speak to that argument Monday.

So it looks like the only way to settle this issue -- a longtime annoyance of mine -- will be through further court rulings. Or maybe Congress will defy the usual logic of money and politics and pass patent reforms likely to hurt companies most invested in the current system. Good luck with that.

By Rob Pegoraro  |  June 28, 2010; 5:28 PM ET
Categories:  Policy and politics  
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We have a 4-4-1 opinion, and no legal test to apply... but thus is the game of abstract data. In any case, software and business methods are patentable, and they are patentable wider than the the appellate court stated. For some salient quotes from the case, take a look at

Posted by: tostien | June 28, 2010 6:03 PM | Report abuse

My view is consistent with that of Thomas D. Sydnor II, Senior Fellow and Director of the Center for the Study of Digital Property at the Progress & Freedom Foundation. I excerpt comments of him, from their web site, here:

"The Court's decision in Bilski adopted the sort of moderate, sensible position that many had expected. The Court thus rejected implausible bright-line rules that would prohibit the patenting of any subject matter—be it a business method or software—that otherwise satisfies the requirements for patentability.

The flexibility that the Bilski ruling preserves should promote innovation by ensuring that patents can still protect a broad range of American creativity. Bilski also reminds us of the critical role of the U.S. Patent & Trademark Office: Flexibility requires careful examination of patent applications, particularly in areas, like business methods, in which prior art may be incompletely collected or indexed.

In Bilski, the Court also re-affirmed its commitment to interpreting intellectual-property laws according to the usual rules of statutory interpretation and warned judges not to read into them 'limitations and conditions which the legislature has not expressed.' That timely warning should prompt an immediate reconsideration of Judge Stanton's erroneous summary-judgment ruling in Viacom v. YouTube."

Posted by: ObamasGulfResponseIsMuchWorseThanKatrina | June 28, 2010 6:32 PM | Report abuse

Good post. I would have liked the US Supreme Court to have invalidated the patentibility of business methods and software. But at least there was a reaffirmation that abstract concepts cannot be patented.

Posted by: SteveR1 | June 28, 2010 6:37 PM | Report abuse

Statements from the Progress & Freedom Foundation should be viewed very sceptically. The patentibility of business methods and software is a recent "land grab" by the corporate world.

Up until recently the court system rejected the concept of patents for business methods and software. The court system needs to return to the original intent of copyright/patent law as expressed in the Constitution and reject business patents and software patents.

Posted by: SteveR1 | June 28, 2010 7:01 PM | Report abuse

It is regrettable that since "the high court said they did not need to make a broad sweeping decision", they do not take their own advice more frequently.

Posted by: 54Stratocaster | June 28, 2010 10:27 PM | Report abuse

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