Supreme Court to Hear Bilski, Make or Break for Many Patents

(MoneyWatch)  Yesterday, the U.S. Supreme Court agreed to hear Bilski v. Doll, which means that virtually every industry, and especially high tech, will be waiting to see how the United States will handle method patents. If the court upholds the ruling of the Court of Appeals for the Federal Circuit, an untold number of patents could become instantly invalid.

The Bilski case is one that has centered on whether a "method" is an appropriate subject matter for a patent. Last October, the Court of Appeals of the Federal Circuit (CAFC) didn't overrule the possibility of method being proper subject matter for patenting; business methods are central to many software patents. But it did set a test a firm test that any patented method "had to be tied to a specific machine or transform [something]," explains Michael Jakes, a partner with Finnegan, Henderson, Farabow, Garrett & Dunner and the lawyer that will argue the case, on behalf of the patent applicants, in front of the Supreme Court.

The narrow grounds of the specific machine or transformation test could remove the basis for many software patents, which often are embodiments of methods to accomplish a given task. For example, any software running on a general purpose computer already has one strike against it. And this wouldn't be true only for future patents. The ruling would invalidate any such granted patent, which means that tech-related companies would be sent scrambling to assess the potential damage to their IP portfolios.

"There's been a running battle between the federal circuit and the supreme court for years," says Stuart Meyer, a partner with Fenwick & West representing some large names in high tech. "The Supreme Court rarely took up patents and the Federal Circuit was the last word. But in the last few years, the Supreme Court has been taking up some cases." For example, the Supreme Court's decision in KSR v. Teleflex had enormous reach and impact. For the high tech industry, at least, a decision in Bilski has the potential to have an even larger impact. Of course, the Supreme Court could also completely overturn the decision, find some middle ground, or even say that method patents are allowable under U.S. law, but offer a different test to determine whether a specific method would pass muster.

The main thrust of the Bilski appeal will be the argument that "business method patents were contemplated by Congress as being patentable, and [the CAFC Bilski] decision for the most part makes many business method patents, which people thought were patentable, unpatentable."

However, from another view, many companies and patent lawyers will be happy to have any final decision on the subject. " It is reassuring that the U.S. Supreme Court is taking up this issue, since regardless of what it decides, it will lessen the uncertainty that we currently have about what types of inventions are patentable," says Meyer.

Gavel image via Flickr user Thomas Roche, CC 2.0.