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06.29.10

Bilski Case Analyses: Good News, Bad News

Posted in Courtroom, Law, Microsoft, Patents at 3:48 am by Dr. Roy Schestowitz

Supreme Court US, 2009

Summary: The Supreme Court of the United States (SCOTUS) provides ruling on the Bilski case; we take a preliminary look at the apparent outcome, with particular emphasis on the impact when it comes to software

YESTERDAY evening we posted the full text of the SCOTUS ruling regarding Bilski and added some immediate commentary. We assume that the huge number of analyses have been read by now and since we are not lawyers, we cannot offer anything too valuable or novel. Instead, here is a rundown encompassing some more coverage and opinions.

Over the weekend, just before this decision came, we found some of the following articles that are relevant to the subject:

i. Decision about the Second Amendment Case to be Ruled Today

After the decision of U.S. Supreme Court to regulate the Second Amendment case, Carl Bindenagel revealed the court’s record on earlier gun rights cases.

ii. Supreme Court Finale

Tom Goldstein of scotusblog.com believes that the Constitution will win out, but isn’t sure how far the Court will go in terms of raising questions about firearms regulations.

That will be an important part of today’s decision.

Three other cases will be decided today on student religious organizations on college campuses, a major case on software patents and whether a key part of the Sarbanes-Oxley (post Enron) law is constitutional.

iii. Will The Supreme Court Clean Up the Patent Mess?

I did my original patent posts in 2008, shortly after the Federal Circuit heard oral arguments in In Re Bilski, a case involving a “business method” patent. There was a growing consensus that the patent system was broken, and high expectations that the court would use it as an opportunity to reform the rules for patent eligibility. The decision was released later in the year, and it did just that, overturning the extremely permissive standard for patentability that had applied for the preceding decade.

The case is now before the Supreme Court, which is due to hand down its decison on Monday. Virtually everyone expects the high to affirm the Federal Circuit’s rejection of Mr. Bilski’s patent, but as always the important question is what’s in the accompanying opinion. A narrow holding could simply rule out the most egregiously abstract business method patents (Mr. Bilski’s “invention” consisted entirely of mental steps) while leaving the bulk of software and business method patents untouched. But if the Supreme Court is feeling more ambitious, it may try to draw a new line that invalidates many existing business method and maybe even deal with the sotware controversy.

iv. Patent Litigation Weekly: With Bilski, the Waiting Is the Hardest Part

Patent Watchtroll, a rude lawyer who has been lobbying for software patents, wrote about it and he seems to be supporting his position by warping/faking the oppositions’ point of view or avoiding the mainstream opinion and instead asking a student. The headline says “Programmers Perspective”, not “Programmer’s Perspective” (making it seem like a talk on behalf of many). As the first comment says: “im calling you out, your a patent lawyer trying to support your position as a “programmer” using the pseudonym “andrew cole””

There are other legal types who crave positive perspectives on monopoly (that’s what a patent is). It is abundantly clear that lawyers are ruining science through the patent system, which to them is a form of tax on science.

Patently-O, which mostly attracts the legal types (with bias), ran this Bilski poll just before the decision arrived. When the decision finally came it correctly stated that:

The result is that the scope of patentable subject matter is certainly narrowed from its 1998 high-water-mark.

Yes, this is true and that’s good news. Here is another take:

Supreme Court Rules Narrowly In Bilski; Business Method & Software Patents Survive

As I expected it appears that the Supreme Court has ruled somewhat narrowly in the Bilski case (pdf), which many had hoped would end the scourge of business method and software patents. Instead, the court effectively punted the issue. Technically it affirmed the overall decision from the Federal Circuit that Bilski’s specific patent was invalid for being way too broad, but much more importantly for everyone else, it rolled back the Federal Circuit’s “machine-or-transformation” test, which many believed effectively ruled out pure software patents. Instead, the court said that the courts “should not read into the patent laws limitations and condi-tions which the legislature has not expressed.” In other words, business method and software patents survive.

The good news is that the “Supreme Court Throws Out Bilski Patent,” as Ciaran/Slashdot summarised it.

ciaran_o_riordan writes “The US Supreme Court has finally decided the Bilski case (PDF). We’ve known that Bilski’s patent would get thrown out; that was clear from the open mockery from the judges during last November’s hearing. The big question is, since rejecting a particular patent requires providing a general test and explaining why this patent fails that test, how broad will their test be? Will it try to kill the plague of software patents? And is their test designed well enough to stand up to the army of patent lawyers who’ll be making a science (and a career) of minimizing and circumventing it? The judges have created a new test, so this will take some reading before any degree of victory can be declared. The important part is pages 5-16 of the PDF, which is the majority opinion. The End Software Patents campaign is already analyzing the decision, and collecting other analyses. Some background is available at Late-comers guide: What is Bilski anyway?”

An interesting but forgotten fact is that Ginsburg attended the Bilski hearing despite her husband’s death the prior day. This was pointed out by Groklaw, which offers an extensive summary (news survey) and links to coverage excepting news sources.

Anti-IBM lobbyist Florian Müller says that “the US Supreme Court accepts only one way to limit software patentability: new legislation from Congress [...] Only a decision to grant a patent on the Bilski application could have been any less restrictive”

Müller mass-mailed journalists (as usual) to spread his point of view. He wrote:

Please feel free to use in your reporting on the Bilski decision any of these comments. I’m the author of the FOSS Patents blog (and founder and former director of the NoSoftwarePatents campaign) on the Bilski decision and what it means for the patentability of software.

Here are a few select quotes, and further below the URL of my posting and the complete text.

“Unfortunately, the Supreme Court delivered an opinion that doesn’t help the cause of partial or complete abolition of software patents at all.”

“[T]he court’s majority position is about the most liberal reasoning that it could have been. Only a decision to uphold the Bilski patent could have been any less restrictive.

“Simply put, the Supreme Court’s decision does not do away with even one software patent that already exists, nor does it raise the bar for the future.”

“The decision announced today makes it clear that a majority of the Supreme Court wanted to give the abolition of even only a small percentage of all software patents the widest berth possible.”

“This US decision is even more disappointing when taking into account the global trend.” [then mentions political process in New Zealand and court decision in Germany]

“The position that software patents should be abolished isn’t nearly as popular among judges and politicians as it is in the free and open source software community.”

The upcoming Defensive Patent License (DPL) is recommended at the end of the blog posting.

Here’s the URL and the full text:

http://fosspatents.blogspot.com/2010/06/bilski-decision-major-disappointment.html

We still urge Müller to stop mass-mailing journalists. If you find the quotes above in some news articles, you’ll know why. He tries using shortcuts to get his point heard and inject his name into articles (which he later cites with pride). We especially oppose his illusion that IBM is the root of all evil.

“I mentioned Microsoft in the same lobbying contexts as IBM,” he told us separately, “on EU patent reform and today the reference to New Zealand. Plus I link in the righthand column to a slashdot op-ed that mentions Steve Ballmer.

“I also think(not at PC, writing this on phone, can’t check) in a posting that I don’t like their lobbying for software patents. Maybe the one on LinuxTag.”

“Hopes and Dreams of “IP Sucks” Crowd Shattered – Cheers!”
      –ACT, Microsoft lobbyist
That hardly changes anything. In his book he wrote about Microsoft’s lobbyists, but now he’s just ignoring them for the most part (or ignoring their ties). But anyway, let’s get back to In Re Bilski

Müller showed us that Microsoft lobbying group ACT is “jubilant over SCOTUS decision” (he didn’t mention the Microsoft connection)

ACT wrote: “#SCOTUS Upholds Software Patents. Hopes and Dreams of “IP Sucks” Crowd Shattered – Cheers! – ACT Blog – http://bit.ly/dkzLay #bilski”

One reader showed us that ACT's Mike Sax (seen here) has just had an article published about him in Standaard. He admits being supported by Microsoft (while evidently pretending to serve small businesses).

Het dunbevolkte Oregon met zijn wilde natuur en wouden is niet meteen de meest voor de handliggende locatie voor een technologiebedrijf. Maar Sax is niet van plan te verhuizen. ‘Het zegt veel over technologie dat je niet vanuit een metropool hoeft te werken om toch succesvol te zijn. Idealiter heb je dan ook werknemers die op afstand werken en die daardoor een hoge levenskwaliteit behalen omdat ze in kleine steden wonen, dicht bij hun familie, zonder dat ze hun carrière moeten opgeven.’ Een betoog dat niet toevallig aansluit bij dat van de Association for Competitive Technology (ACT), een organisatie die Sax in 1998 oprichtte en die streeft voor de belangen van kleinere technologiebedrijven -al zijn ook grotere ondernemingen zoals Oracle en Microsoft steunend lid. Het is voor ACT dat Sax opnieuw Brussel bezoekt, om bij Europarlementsleden te pleiten voor een geharmoniseerde privacy- en arbeidswetgeving en een Europees patent.

The last sentence says that Sax is visiting Brussels again, pushing for MEPs to call for the back door to software patents (‘harmonisation’ or ‘European patent’). Who are they kidding? They are Microsoft’s lobbyists and they push for software patents in Europe. Is Müller paying attention at all? Nope. His blog post about the Bilski decision is a defeatist one and it’s titled “Bilski decision a major disappointment: doesn’t invalidate even one software patent”

The Supreme Court of the United States (SCOTUS) has finally handed down its opinion in re Bilski, a business method patent case.

Here is more from Patently-O:

Although Bilski’s claims were held unpatentably abstract, the Supreme Court has re-affirmed that the door to patent eligibility should remain broad and open.

The FFII writes that “Bilski’s business patent [is] rejected by the Supreme Court but no MoT-Test for the rest of US” (machine-or-transformation test).

We’ve been sent a lot of E-mail following this milestone decision and one of them sought publication that related to the MoT-Test:

I know you’ve been actively following the Bilski case on TechRights. In the wake of this morning’s decision, I wanted to pass on some commentary from Barbara Rogan, the Chief Legal Counsel for LogLogic. Barbara has been closely monitoring the decision due to its implications on the tech industry and startups. While the Supreme Court’s decision affirms the Federal Court’s ruling, it also raises a number of other questions in the area of process patents.

Barbara’s commentary below:

What’s Still To Be Decided:

What is a Machine?

  • The Supreme Court agrees with the Federal Circuit that merely using an abstract idea in “a particular technological environment” or by adding “insignificant postsolution [sic] activity” does not transform an otherwise unpatentable invention into a patentable invention.
    • In Bilski, the Federal Circuit ruled that the connection of the process to a machine or apparatus must be more than just “insignificant extra-solution activity” meaning that the machine must be more than a “throw-in” to make the process patentable.
    • In its brief to the Supreme Court, the Respondents argue that using a general purpose machine (i.e. a calculator or a telephone) would not be sufficient for to turn an otherwise non-patentable process into a patentable process.
  • In Yahoo!’s Amicus Curiae brief, Yahoo! Worries that with the Machine or Transformation, processes which are carried out over the Internet (a general purpose series of machines) may fail this test, thus leaving out from patent protection all Internet based processes.
  • Yahoo!’s concern is not theoretical. While the Bilski case was pending in the Supreme Court, the District Court in Northern California in Cybersource Corporation v. Retail Decisions, used the Machine or Transformation Test to find that the defendant’s motion for summary judgment in a patent infringement suit should be granted because the patent was likely on unpatentable subject matter. The process patent in question was an Internet based process patent.
    • In light of Bilski decision, it would seem that the District Court should re-examine its ruling as the Supreme Court indicated the Machine or Transformation test is NOT the exclusive test for determining process invention patentability.
  • Another question that is open and needs to be decided is whether programming a general purpose machine to do a specific task is sufficient to overcome the requirement that the machine not contribute in an “insignificant extra-solution activity” manner.

What is “Transformation” in the Digital Age?

  • The meaning of transformation as it applies to digital information has yet to be decided. In oral arguments, Justice Sotomayor suggests that electronic signals may be a “substance” which would differentiate it from a pure process completed outside of a computer. Based on this reasoning, a viable argument could be made that the electronic processes transform the information from one type or state into another type or state. This would free digital technology patents from the need to be tied to a machine for the purposes of obtaining a patent.

What inventions might be still be patentable if they fail the Machine or Transformation Test?

Justice Stevens tried to do that right thing, but upon his retirement there is generally a feeling that he didn’t have enough power to counter his peers and knock out software patents.

In April, the Supreme Court’s most senior justice, John Paul Stevens, announced his retirement. Since then, hundreds of articles have been written about his career and his legacy. While most articles focus on “hot button” issues such as flag burning, terrorism, and affirmative action, Stevens’s tech policy record has largely been ignored.

When Justice Stevens joined the court, many of the technologies we now take for granted—the PC, packet-switched networks, home video recording—were in their infancy. During his 35-year tenure on the bench, Stevens penned decisions that laid the foundation for the tremendous innovations that followed in each of these areas.

[...]

The high court took a renewed interest in patent issues when John Roberts was elevated to Chief Justice, but the court hasn’t squarely addressed the software patent issue. The closest they came was in today’s Bilski decision, in which the majority handed down a narrow ruling that invalidated the specific patent at issue in the case but declined to articulate a clear standard for patent eligibility.

It is possible to see Stevens’ portions in this ruling. The following Bilski analysis highlights a portion that says: “But this fact does not mean that unforeseen innovations such as computer programs are always unpatentable” (covered in [1, 2, 3]). The bottom line is — as Stephen Shankland put it — the Supreme Court sidesteps software patent issue. But it doesn’t make it a loss for software freedom; it just leaves the USPTO in a limbo.

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