Supreme Court Says No to Bilski Decision, Yes to Software Patents

(MoneyWatch)  High tech firms and patent lawyers have closely watched the Bilski case, which had the potential to completely disrupt software patents as the U.S. has come to know them. The Supreme Court has finally issued its decision on Bilski, having agreed to hear it over a year ago. The bottom line: contrary to some reports, experts say that the 5-4 ruling offers little to no change in business method and software patents.

"It was a rather uneventful opinion and kind of what we asked for," said Scott Bain, litigation counsel of the Software & Information Industry Association, when I spoke to him earlier. "Things are pretty similar if not the same as before Bilski. The Supreme Court decided this single case on these facts, but didn't give much guidance on how other cases will come out." Bain says that patent lawyers will likely approach writing software patent applications as they did before, and that no change is good news for people and companies that currently hold software patents.

Raymond Van Dyke, an independent software patent attorney, told me that the Court "affirmed the judgment, but not necessarily the reasoning" of the lower courts. One issue in the case was the so-called machine-or-transformation test, under which a software patent application, to prove that it was not an abstract matter disallowed by under section 101 of the applicable patent law, would have to show either that the code was tied to a specific type of machine, rather than a general computer, or that it performed some sort of transformation on data. Here is the part of the decision that addresses the test:

The machine-or-transformation test is not the sole test for patent eligibility under §101. The Court's precedents establish that although that test may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible "process" under §101. In holding to the contrary, the Federal Circuit violated two principles of statutory interpretation: Courts " 'should not read into the patent laws limitations and conditions which the legislature has not expressed,' " Diamond v. Diehr, 450 U. S. 175, 182, and, "[u]nless otherwise defined, 'words will be interpreted as taking their ordinary, contemporary, common meaning,' " ibid. The Court is unaware of any ordinary, contemporary, common meaning of "process" that would require it to be tied to a machine or the transformation of an article.

The Court was splintered on the decision, with one of the more complicated sets of alliances, as evidenced through who wrote what parts of the decision and other opinions:

KENNEDY, J., delivered the opinion of the Court, except for Parts II?€"B?€"2 and II?€"C?€"2. ROBERTS, C. J., and THOMAS and ALITO, JJ., joined the opinion in full, and SCALIA, J., joined except for Parts II?€"B?€"2 and II?€"C?€"2. STEVENS, J., filed an opinion concurring in the judgment, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined. BREYER, J., filed an opinion concurring in the judgment, in which SCALIA, J., joined as to Part II.

The specifics of the Bilski case were about a patent for "how buyers and sellers of commodities in the energy market can protect, or hedge, against the risk of price changes." Bernard Bilski and Rand Warsaw filed their patent application in 1997, and it took over 13 years to reach final resolution.

Related:

• Bilski Q&A with Foley & Lardner's C. Edward Polk
• Supreme Court to Hear Bilski, Make or Break for Many Patents
• Opposition in Bilski Targets Business Method Patents Test
• Supreme Court Bilski Hearing: Potential Danger for Software Firms
• New Patent Test for Machines Using Mathematical Algorithms

Image, courtesy U.S. Supreme Court.