Bilski & the Definition of Things That “Are Free for All to Use”

by Nicholas Bramble | June 28, 2010 | cases, patents, supreme court | 2 Comments

The Supreme Court today issued its long-anticipated opinion in the Bilski patent case, regarding a rejected application for patent protection over a method for hedging against the risk of price changes in the energy market. Hot off the presses: http://www.supremecourt.gov/opinions/09pdf/08-964.pdf.

And at first glance, this complex mix of opinions seems rather inconclusive. Basically, Justice Kennedy’s majority opinion—which was joined by Alito, Thomas, and Roberts in full, and Scalia in part—affirmed that the specific business method at issue in Bilski was not patentable. But Kennedy rejected any categorical rule saying that business methods in general could not be patentable processes. This conclusion was reached through a somewhat confusing attempt to read out a plain-language definition of “process” based on the different uses of this term in the Patent Act, and then a rejection of the Bilski patent on the separate grounds that it was too abstract to be patentable.

In contrast, Justice Stevens’ much longer concurrence would create a categorical prohibition on business method patents: “Methods of doing business are not, in themselves, covered by the [Patent Act].” Stevens suggests that both the USPTO respondent and the Kennedy majority failed to develop a successful overarching definition of the word “process,” despite their attempts to reconcile the various appearances of the word in the Patent Act. Stevens argues that the Patent Act simply has too “many moving parts” to be amenable to the government’s attempt to define “process” solely by how it is used in one section of the Act. On the other hand, Stevens rejects the majority’s attempt to derive an expansive plain-text understanding of the word “process.” He argues that “posit[ing] that the word ‘process’ must be understood in light of its ‘ordinary, contemporary, common meaning’ . . . is a deeply flawed approach to a statute that relies on complex terms of art developed against a particular historical background.” As a result, Stevens spends much of the rest of his concurrence reviewing the history of patent law, which he concludes “yields a much more straightforward answer to this case.”

Finally, a short concurrence by Breyer and Scalia (Part II) seems, theoretically at least, to hedge towards Justice Stevens’ idea of creating categorical conceptions of “certain things [that] are free for all to use.” It looks as if Scalia was the likely swing vote in this case, but wasn’t fully satisfied with either Kennedy’s or Stevens’ opinion. This concurrence pushes more heavily on the “machine or transformation” test downplayed by the majority opinion, and emphasizes both “the restrictive effect of the limited patent monopoly” and the costs of patents on “the public’s access to the basic tools of scientific and technological work.”

It’s similarly notable that Kennedy (in the majority opinion) succinctly describes an essential tension in the innovation incentives that patent law tries to foster: “The Information 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.”

Still, for all the theoretical work being done in this set of opinions, it’s hard to state with clarity what rule ultimately emerges from these general principles and dicta, and what the continued relevance of the “machine or transformation” test might be. For instance, in the sentence after his description of patent law’s “great challenge,” Justice Kennedy notes that the Court in Bilski has not actually addressed this policy question: “Nothing in this opinion should be read to take a position on where that balance ought to be struck.” As a result, I’m initially tempted to agree with some others that this is an instance of the Court punting on a set of difficult questions in an area where the clear judicial articulation of a rule might have been helpful to innovators, lower courts, and the legislative process. In the absence of a categorical rule, we will instead continue to rely on case-by-case patentability determinations regarding the scope of property rights in business methods, software, diagnostic tools, and other applications which downstream innovators hope to build upon and transform.

In some ways, Justice Kennedy’s reluctance to determine whether “software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals” should receive patent protection mirrors Justice Souter’s admonition in Denver Area that “we should be shy about saying the final word today about what will be accepted as reasonable tomorrow.” But it’s harder to maintain this position of judicial minimalism in a situation where the continuance of the status quo can so limit the scope of what can be built and transformed today, and thus also limit the scope of what has a chance to become accepted as “reasonable” tomorrow.

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