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Thoughts on the implications of the Supreme Court’s decision on software and business methods patents.

The Practical Implications of Bilski v. Kappos

by: Charlie Bieneman 

What is patentable and what is not patentable? Today, the United States Supreme Court offered a frustratingly vague answer to this question in its long-awaited decision in Bilski v. Kappos (No. 08-964.) Many of you have probably already been bombarded with reports and commentary concerning today’s decision. We would like to offer you some thoughts on its practical effects.  In particular, how are you affected if you own patents or patent applications that claim business methods? How does Bilski affect software claims? And how should Bilski affect your plans to file patent applications in the future?

Bilski concerned a patent application for a method of hedging risk. The Court held that Bilski’s method is not patentable subject matter, a result in which all justices agreed. However, a majority of the Court stated that it is possible for a business method to be patentable. The majority held that Bilski’s method was unpatentable because it was directed toward an “abstract idea.” Unfortunately, the Court did not clearly draw the line between ideas that are abstract and ideas that are not abstract. The Court’s decision in Bilski is therefore pretty limited to the facts of the case.

Thus, our general reaction to Bilski is that the answer to questions about how the decision affects existing portfolios and plans is “not much.” That is, we believe that Bilski is going to turn out to be fairly limited to its facts, and that the decision is unlikely to have a broad impact on existing or planned patent portfolios. Bilski’s claims truly were abstract, in the sense that they could have been carried out solely in the human mind, without affecting or transforming any physical matter, and without the aid of any computer or other machine. Claims that either do not have any physical element at all, or that are not carried out on a machine such as a computer, though not unheard of, are relatively rare.

In particular, Bilski does not appear to pose much threat to claims directed toward computer software. The Court actually rejected a rigid test adopted by a lower court in part because the Court felt that the rigid test would improperly create uncertainty as to whether certain software claims were patentable.

In short, Bilski does not, as some had predicted, turn the world upside down. Most claims that were patentable yesterday will still be patentable tomorrow. Unfortunately, however, the Bilski Court did not articulate a test for patentability that can be used to predict whether claims other than Bilski’s are patentable. As Justice Stevens put it in his opinion concurring in the Court’s result:

The Court . . . never provides a satisfying account of what constitutes an unpatentable abstract idea. . . . The Court essentially asserts its conclusion that [Bilski's] application claims an abstract idea. This mode of analysis (or lack thereof) may have led to the correct outcome in this case, but it also means that the Court’s musings on this issue stand for very little.

Harsh words, perhaps, but probably correct. Thus, the Patent Office is going to be scrambling in the days to come to articulate a standard for patentability that examiners can apply, and that applicants can understand. Expect, therefore, that for some time to come we will be living with a certain degree of unpredictability and uncertainty when dealing with both the Patent Office and courts on the issue of patentable subject matter.

In sum, as a practical matter, Bilski appears to be somewhat of an anticlimax. The law in this area will doubtless continue to develop and evolve. For now, at least, the business of obtaining patents directed to various processes, including software processes, seems likely to continue much as it has been.

If you have any questions concerning the Bilski decision, software and business method patents, or patentable subject matter in general, please contact Charles Bieneman (cab@raderfishman.com ; 248-594-0648) or any attorney at Rader Fishman & Grauer PLLC.