At 2pm ET on November 9, 2009, Chief Justice John Roberts gaveled the session to a close announcing that the case had now been submitted. The arguments were good, and the Court was most assuredly hot, peppering both sides with question after question seeking to probe the issues. It is clear that the Supreme Court did their homework and spent no time gravitating to the weak points of the parties. Representing Bernard Bilski was Michael Jakes, who was continually questioned about business methods in general and whether the framers or the authors of the 1952 Patent Act could have ever contemplated business methods being patentable. Representing the United States Patent Office, Deputy Solicitor General Malcolm Stewart was questioned repeatedly with respect to the “extreme” decision reached by the Federal Circuit, not to mention the fact that the government’s position is that an old computer running new software could somehow potentially be patented as a new machine. At the end of the day I have to think that it does not bode well for Bilski and his method, but if the questions raised by the Supreme Court are any indication it seems like the Federal Circuit will be overruled and the software and medical industries will dodge a Bilski bullet. For more analysis be sure and check back in the coming days, weeks and months, and join me for a PLI Bilski briefing on Wednesday, November 11 at 1pm ET.
Now as I was ushered into the courtroom with other members of the press I was surprised to see that myself, and about ten others, were given limited view seating, sitting behind Romanesque columns adorned with velvet maroon drapes with gold braided strands touching the floor. There were ornate golden lattice doors about 8 feet tall between the columns, but most were at least open. I never expected my first Supreme Court argument to be viewed from such a place, particularly when there were numerous reserved press seats open, unclaimed and with full view of the courtroom. So the report that follows is accurate with respect to what was said, and for the most part I know which Justices asked which questions, but will follow up with any additions or modifications when I get an advance copy of the oral argument transcript. Who knew watching the Supreme Court would be akin to watching the Boston Celtics at the old Boston Garden!
Jakes started his presentation by explaining that the Federal Circuit ruling does not find any basis in Section 101, anywhere in the Patent Act and is inconsistent with Supreme Court precedent. That was the last time he would get out an offensive presentation until his rebuttal, some 55 minutes later. Jakes was cordial, knowledgeable and professional and gave an excellent presentation, but was kicked around Justice by Justice who seemed very uncomfortable with the patentability of business methods, or at least the patentability of this particular business method.
Justice Ginsberg seemed to me to be the most openly hostile toward business methods, as well as the US patent system in general. She mentioned with a certain incredulous attitude the thought of patenting tax avoidance methods, estate planning, how to resist a corporate takeover and how to select a jury. Ginsberg then several times later kept asking about how other countries handle this type of invention, noting that other systems work with a technology requirement and do not accept these types of processes as patentable. Jakes correctly pointed out that other systems follow that approach, but there is no support in US law for that approach to be followed here.
Justice Breyer also seemed unfavorable toward business methods being patentable, but seemed to genuinely be trying to figure out where to draw the line, even one time admitting that if he is honest with himself he does not know what the answer is at this point. Breyer did have difficulty with the thought that “anything that helps a businessman succeed would be patentable” if the Supreme Court were to adopt the Bilski proffered approach.
The most junior member of the Supreme Court, Justice Sotomayor, seemed openly hostile toward the Federal Circuit decision in this case. At several times throughout the argument she made her opinion clear that she thought the Federal Circuit had gone too far in its decision, a theme that was picked up on and echoed by several of the other Justices. Specifically, Sotomayor asked: “How do we limit it to something that is reasonable?” She also later asked Stewart: “Help us with a test that does not go to the extreme that the Federal Circuit did.”
At one point Justice Breyer jokingly probing to see where the limits on business method patents should be explained that he himself had devised an “original method to teach antitrust law that kept 80% of the students away.” As you can imagine, the gallery erupted with laughter. Justice Breyer then followed up explaining that he is nonetheless “a little nervous about the Circuit’s decision.” This being uncomfortable with the Federal Circuit is really the norm here at the Supreme Court, who rarely if ever any longer take a case from the Federal Circuit to explain that they got it right. Quite to the contrary, the Supreme Court seems to take case after case in the patent area to fix a wrong perpetrated by the Federal Circuit, and I do not expect that trend to stop here with Bilski, although Bilski may, himself, still find that his application is rejected under 101.
Justice Scalia continued his typical approach to patent law by seeming to not really take the issues very seriously, as if they are not particularly important. You may recall that during the KSR oral argument Scalia called patents and patent law “gobbledygook.” Today there was no talk of “gobbledygook”, but Scalia noted at one point that there are certain endeavors of the past that do not exist today, and suggested that certainly there must have been a “horse whisperer” at some point in time that would have liked a patent. Scalia then asked “why didn’t anyone patent that?” Jakes pointed out that the economy at the time was different and steeped in the industrial revolution, to which Scalia replied “our economy was based on horses for Pete’s sake!” The courtroom again erupted in laughter. I just shook my head. I am sure Justice Scalia thinks that horse whispering is important on some level, or perhaps getting the approval via laughter from the gallery is more appropriate than probing the issues.
Justices Kennedy, Scalia and Sotomayor spent time with Jakes asking about the Morse code patent and the core Alexander Graham Bell patent. The exchange was an interesting one, but deserving of some detailed treatment, so I will save that for a follow up post once I have the official transcript and can dig into the briefs in some detail.
When Stewart took the podium to begin his presentation it seemed that the Court was leaning heavily against Bilski, which was the tone right up until they started leaning heavily against the Patent Office position. Justice Sotomayor, picking up on Judge Rader’s dissent without specifically mentioning Judge Rader by name, said “what if we say something as simple as patent law does not protect business methods?” She then went on to explain how she is uncomfortable with a ruling in a business method case that calls into question the continued viability of software and medical innovations. She then explained in a strong declarative statement: “No ruling in this case will change State Street.” Stewart then pointed out that saying no to all business methods would call into question software, and that is not what the government wants to do. Justice Scalia then offered that why not say “business methods apart from machines could not be patentable.”
Justice Roberts then lead Stewart into the thicket where he most certainly did not want to go. Roberts pointed out that the government in its brief acknowledged that a process might be patentable if it uses a computer or a microprocessor. Roberts said: “that takes away everything you spent 53 pages establishing.” This line of questioning dominated the remainder of Stewart’s presentation. Roberts explained that the government’s position suggests that even a tangential use of a machine makes something patentable, to which Stewart replied that it might indeed.
Justice Kennedy (I think, but not sure given my obstructed view seats) then started probing the State Street decision and whether it would come out the same under the Bilski standard announced by the Federal Circuit. Stewart explained that it would come out the same because it was not a process but a computer. One of the Justices then asked “what did that transform,” to which Stewart replied “nothing,” going on to say that the machine or transformation test applies only to processes. One of the Justices, perhaps Justice Stevens, asked: “How can you say it is to a machine when it is the process that is new, not the machine?” This then became the new focus for the Court, eventually leading Justice Stevens (I believe) to say “you cannot say a computer using new software is a new machine.”
Justice Breyer then chimed in noting that if all you have to do is define a computer that engages a process all business method patents are back in, which demonstrates that Justice Breyer does well understand the issues, and perhaps the reality of what is done by patent attorneys. The reality is that if Bilski stands as it is today software is still patentable, although we have to play in the fictitious world where the machine is “new” despite being the same old machine just operating new software.
As this exchange unfolded it started to take on Abbot and Costello familiarity; tangential use of a computer being enough to transform a new process into a new machine simply because the new process is carried out on an old machine. This lead Stewart to remark that this is why the government opposed the granting of cert by the Supreme Court, to which Kennedy said: “because you thought we would mess it up.” The courtroom erupted in laughter. That is exactly what every patent attorney fears, and I suppose there is at least some comfort knowing that the Supreme Court understands that there is a lot at stake and no one wants to make matters worse, although it is hard to imagine that we could get anything worse than the Federal Circuit Bilski majority.
The most persuasive part of the presentation made by Jakes was his rebuttal. He reserved 4 minutes, but did not take all of his time. He was short, sweet and to the point, making his best, most forceful points of the afternoon; a perfect rebuttal stylistically. Jakes explained that the Federal Circuit did announce a rigid test that is the sole test, which is obviously pandering to the Supreme Court insistence in the patent realm that rigid tests not be applied (see KSR). For the first time 35 USC 273 was raised, pointing out that Congress knew about business method patents and chose not to prohibit them, but rather chose to create a prior user defense to infringement. Jakes explained that the question that should be asked was whether Bilski was seeking to patent an abstract idea and whether the process in question has a practical application. Jakes also pointed out that there are physical steps associated with the Bilski process. He had previously been asked whether picking up the phone and making calls was the physical step he was referring to, and he had said “yes, possibly.” He again made that point but this time also said that ultimately there is a purchase and sale of a commodity, which is itself, within the physical realm. While your mileage may vary, that is the best physical step he could point to, and being delivered last and then giving up his remaining time that might weigh in the mind of the Court.
Who knows what will happen for sure, but I think we will get a reprieve from the extreme Federal Circuit decision, I think Bilski will still be out of luck and the Supreme Court opinion will look something like the Newman and Rader dissents. Whatever happens, it will be interesting for sure. On a personal note, it sure was cool being granted press credentials to the Supreme Court, and my press credentials were waiting for me under the name IPWatchdog, so maybe bloggers and online reporters are making it into the mainstream, which would be a nice development indeed.