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Federal Circuit Appeals Court Limits Business-Method Patents
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."
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To those interested, here it is as HTML and here it is as a more complex HTML version with images.
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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.
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here.
you had me at #!
$10 he's a free-loader .. give a man $700 billion he's a captain of industry ...
Those two are not mutual exclusive...
The problem is that Congress decided not to fund the USPTO and allow it to fund itself through application fees, processing fees, and all whatever other fees the USPTO wants to charge. So, the more patents they review and grant, the more money they make. This was the primary cause of the patent explosion - it suddenly became in the Patent and Trademark Office's best interests to allow and grant as many patents as possible. Take the $500 application fee (or whatever it is), charge a review fee, charge a patent issuance fee, and leave it up to the courts sort out whether or not a patent on a method of removing snot from a nose with a finger is a valid patent or not. That's what's been going on. My solution is for congress to fund the USPTO, but that they should only be allowed to issue, say, 100 patents per year. All patent applications are held and reviewed and at the end of the year, the top 100 are granted patents. Frankly, 100 is too generous, I'd rather it be 20 to 30. These days there are nowhere close to 100 truly innovative and nonobvious inventions per year. Maybe 5 or 6, at the most. So 20 patents per year is more than adequate, and 100 is allowing crap that shouldn't otherwise be patentable. Once new patents become a rarity, the number of patent applications will drop exponentially. It should not be a valid business model to own a portfolio of ridiculous patents and sit around waiting for someone to infringe them. That does not foster innovation - quite the opposite.
So, give the USPTO $100,000 or so in federal funding, grant 100 patents per year (a board can pick the top 100), and by all means don't give the USPTO financial incentives to grant as many patents as it can, only to leave the actual work of determining patent validity up to the judiciary. Our courts are clogged enough without people suing over patent infringement for nosepicking methods.
Stupid people make stupid things profitable.
There is some more legally (as opposed to policy) oriented coverage of the decision at Patently-O.
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.