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Supreme Court Balks at Redrawing Patent Rules

The Supreme Court on Monday struck down a patent for a method to hedge weather-related financial risk, but declined to make it more difficult to patent “business methods” or software. The unanimous court found the patent too “abstract,” but emphasized that its ruling was intended neither to narrow nor widen patent law. “It’s a pretty […]

The Supreme Court on Monday struck down a patent for a method to hedge weather-related financial risk, but declined to make it more difficult to patent "business methods" or software.

The unanimous court found the patent too "abstract," but emphasized that its ruling was intended neither to narrow nor widen patent law.

"It's a pretty disappointing decision," says Ciaran O'Riordan, executive director of the End Software Patents campaign. "The judgment rearranges the deck chairs a little bit, but does not make substantial changes to patent law. It's a wasted opportunity. The positive side is they didn't make things worse."

Critics of software patents were hoping the court would endorse the analysis of the Federal Circuit Court of Appeals in the same case, which would have dramatically narrowed patent protection for business methods and software techniques. But though the Supreme Court reached the same result, the justices concluded the lower court's analysis was flawed and "would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals." (.pdf)

It is important to emphasize that the court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection. This age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.

The case was brought by Bernard Bilski and Rand Warsaw, who were attempting to patent a method to hedge against bad weather in commodities and energy markets. "This is an unpatentable abstract idea," Justice Anthony Kennedy wrote for the court.

Their lawyer, Michael Jakes, said he was disappointed with the result but happy with the court's analysis. "The Court rejected the federal circuit’s very limiting ‘machine-or-transformation’ test and confirmed that business methods are not excluded from patenting," he said in an e-mail.

Jakes said Bilski and Warsaw would continue their fight to win a patent, in what has become a 10-year intellectual property battle.

The decision comes three months after a federal judge said human gene patents, about 2,000 of them, were "products of nature" and "do not constitute patentable subject matter." That March decision is on appeal and could reach the high court perhaps as early as next year.

Thomas Sydnor II, director of the Center for the Study of Digital Property at the Progress & Freedom Foundation, said in a statement that the decision "should promote innovation by ensuring that patents can still protect a broad range of American creativity."

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