Supreme Court Bilski Hearing: Potential Danger for Software Firms

Last Updated Nov 9, 2009 8:45 PM EST

The Bilski case -- which could affect business method patents -- is often conflated with the idea of software patents, leading to the conclusion that a loss for inventor Bilski is identical to a loss for all software companies. That isn't exactly the case, but from what I heard today, from someone who was in the courtroom, of the Supreme Court hearing on the appeal should make a lot of companies that depend on software patents pretty nervous.

Up through the decision by the Court of Appeals for the Federal District, things have not looked good for business method patents. Method patents are important to software companies because the technologies are often nothing more than automated implementations of business methods. Bilski's appeal to the Supreme Court has raised the question of how much security such patents might have. In June I spoke with Stuart Meyer, a partner with Fenwick & West representing some large names in high tech, who said, "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."

He was in the courtroom today during the oral arguments and went through the reactions the justices seemed to have by their lines of questioning. Here's a summary of what he heard:

  • Justice Sonia Sotomayor asked many questions, particularly why there couldn't be a clear test of whether business method patents passed muster and what would be wrong with simply saying that business methods weren't patentable.
  • Justice Stephen Breyer said that if Congress wanted business methods to be patentable, it could explicitly add that to the current statute.
  • Chief Justice John Roberts pushed on the question of to what degree the technology was intrinsic to what was being patented. For example, if you could have someone using a calculator rather than a computer, even if that were slower, then there wouldn't be enough involvement of technology to be sufficient for a patent. Neither Justice Anthony Kennedy nor Justice John Paul Stevens seemed satisfied with the tie between business methods and computers.
  • At one point, the lawyers for the US Patent and Trademark Office said that they didn't see the case as a vehicle to decide whether software patents were allowable. Justice Samuel Alito said something to the effect of, "You're worried that we would screw it up."
The last remark got a laugh, but it's the critical one. This decision could easily put much of software patents into an untenable position, and the court literally could rule in such a way that software loses patent protection.

Given what Meyer heard -- and, granted, that is one person's impression -- I see the count as at least five to four (if not more decisively) coming down against business method patents. And that's all it would take.

Software vendors -- and any companies in any industries depending on business methods, for that matter -- might well talk to their patent attorneys, see where they might stand, and start developing some alternative strategies for protecting their intellectual property.

Gavel image via Flickr user Thomas Roche, CC 2.0.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.