Dissecting Bilski: The Meaning of the Supreme Patent Decision

Having had some time, although admittedly not much time, to digest the Supreme Court’s decision in Bilski v. Kappos I am increasingly of the belief that the Supreme Court did an admirable job, at least insofar as they go. While I will reserve my right to change my mind, I am pleased by the Supreme Court decision, and bolstered in this belief by the fact that industry organizations such as BIO and LES are praising the decision, while at the same time anti-software patent advocates are apoplectic. So the Supreme Court must have done something right.

Yes, it certainly would have been nice for the Supreme Court to actually give us a test and not merely point out that the Federal Circuit got it wrong. We already knew the Supreme Court thought the Federal Circuit got it wrong when they granted cert. in the case. There is simply no other reason for the Supreme Court to choose to hear a case from the Federal Circuit given there could never be a split among the Circuits given that all patent cases go to the Federal Circuit. Having said that, I am glad the Supreme Court followed the physicians motto — do no harm — and if getting no test was required in order for there to be no harm then I suppose we ought to be well enough thankful. But what does the decision in Bilski v. Kappos actually mean?

Figuring out the meaning of the Supreme Court’s Bilski decision is complicated by the fact that Justice Scalia, who revels in being one who thinks the Constitution should mean what it meant in 1789, also seems to think that innovation ought to be what it was in 1789. Scalia has created a bit of confusion by not joining the majority opinion with respect to Sections II-B-2 and II-C-2, the sections that dealt with software, the fact that innovation progresses and the law cannot remain static and stagnant, and the desire not to destroy nascent technologies, and then joining Justice Breyers concurring opinion. This is compounded by the fact that Breyer clearly has open disdain for the State Street “useful, concrete and tangible result” test. So why then did Scalia join the majority with respect to business method patents?

Who knows what goes through the minds of anyone, let alone a cloistered Justice of the United States Supreme Court. What we do know, however, is that 5 Justices, namely Justices Kennedy, Roberts, Thomas, Alito and Scalia all agreed that business methods are patentable subject matter. All 9 Justices agreed that the Federal Circuit misread previous Supreme Court decisions when they mandated that the machine or transformation test be the only test for determining whether a process is patentable subject matter. All 9 Justices agreed that the Bilski application was properly rejected, with the majority agreeing that it was properly rejected because it was an abstract idea, and the concurring minority simply wanting to say that business methods are not patent eligible unless tied to an otherwise patentable invention (see Stevens footnote 40).

It is safe to say that business methods remain patentable subject matter, but potentially 5 Justices are either against or skeptical, which Justice Scalia being willing to tolerate some business method patents, but seemingly skeptical and wanting (or hoping) to stop the business method madness. With Justice Stevens now retired it is hard to see a shift in this balance in favor of doing away with business method patents in the foreseeable future, and with a chance that soon to be Justice Kagan may not share the same views as the other liberal members of the Court, particularly since this patent issue is not one of liberal vs. conservative, at least on the surface.

If I had to guess I think Justice Scalia was lamenting the fact that he had to accept at least some business methods, and even more upset that he couldn’t provide any guidance to get rid of the ridiculous business methods Justice Breyer seemed to loathe. Bilski was a horrible case for the Federal Circuit to reach the decision it did because it was so clearly going to be unpatentable subject matter, and it seems clear that Scalia and the other members of the Court likely agreed on that point, being very careful not to make this an expansive case or ruling like the Federal Circuit did and really going out of their way to limit the decision to business methods, at least directly.

Personally, rather than talking about Bilski being an “abstract idea” I would have said it was nothing more than a concept, which Kennedy did do at least once. It was clear, however, that Kennedy and the majority tried to pull over the well established “you can’t patent an abstract idea” blanket tight over the Bilski application. This was necessary really because Bilski was not one of those crazy business methods where you teach a janitor how to clean using a vacuum cleaner. Bilski just was not defined enough, or concrete enough, to be an invention at all.

This leads me to another observation. Initially I thought State Street has suffered a fatal blow, but the more I read, the more I think and the more I chat with others I am not convinced. I will confess to being the only one I have talked to that doesn’t think State Street it dead, and I understand why, but I can see the Federal Circuit breathing new life into State Street in a much more limited way; one that would lead to a test that blends patentability under 101 with the written description requirement of 112, which almost seems to be what the Supreme Court did in Bilski v. Kappos.

A fair reading of the Bilski case is that all 9 Justices said the claims in Bilski were not patentable because they did not represent an invention. The Bilski claims were nothing more than an abstract idea, or a concept. But could you have patented the Bilski process? Yes if there was a “there” there, which there was not unfortunately for Bilski.

Nevertheless, if a client came into your office could you get them a patent on the “innovation” present in Bilski? I think the answer is clearly yes. I said this to a former patent examiner I work with today and he initially laughed. By the end of the conversation I got him to come around to agreeing with me.

I’m not sure anyone could have saved the Bilski application, but if you could have written it yourself with an eye toward the Machine or Transformation test the specification would have been heavy on technology and processes that were tied to the technology. You would have made sure that there were process steps described in the specification and in the claims that could not have been carried out disembodied from the technology. In short, you would have removed the pen and paper argument by making sure that the innovation as described and claimed could not in any way be infringed by pen and paper only. So yes, I could have written an application that would have had patentable claims for Bilski, but it would have looked a lot different. I’m sure others could have done the same. The difference in the Bilski application as it was and the Bilski application as it could be is that it would have defined a concrete invention.

During the Bilski oral argument at the Federal Circuit then Chief Justice Michel kept asking what is meant by a “useful, concrete and tangible result.” A very good question really. Unfortunately the test uses the word “useful” and the word “result.” But utility is a separate requirement and doesn’t really belong in a patentable subject matter debate, and the word “result” focuses on the output only, almost in a product-by-process kind of way. The real magic and innovation that deserves to be patentable, if there is any, isn’t as a result of the output, and it is not because the output is useful. The magic of the innovation is in how a process achieves the result, and in order to satisfy the invention requirement that process needs to be concrete and tangible enough so that it can be defined with precision and comprehended by those of skill in the art.

Now I realize I have just done something I criticize many of doing, which is combining considerations under the patentability requirements to inform one particular requirement. I have criticized Justice Stevens for constantly trying to discuss whether something is new when he discusses patentable subject matter. I do think that makes no sense, but in the digital age where we deal with high tech processes isn’t the stumbling block whether there is an invention in the first place? If there is an invention then it ought to be patentable, right?

I think Sections II-B-2 and II-C-2 will soon enough become the law. There is no way but to recognize that patent laws need to advance and expansive views of the four categories of patentable subject matter is the only way to make sure we do not prevent unknown technologies from developing. But we are going to continue to be plagued with the question of whether or not there is an innovation in the first place, and the only way I can see to handle that is by borrowing concepts from 112 first paragraph and weaving them into the 101 patent eligibility determination, which is exactly what the majority of the Supreme Court did in Bilski v. Kappos, although I doubt they realize they did that.

By explaining that the ordinary meaning or process is what governs we now have a very expansive view of the types of high-tech, new processes that can be patent eligible. It was a good day for software, biotechnology and medical diagnostic innovations for that reason. We also know that business methods are patentable subject matter, and that even those 4 concurring Justices would not negative patent eligibility because an otherwise patentable innovation is capable of characterization as a business method. And we know that Bilski is an abstract idea.

Somewhere between Machine or Transformation and Bilski lies a bright line waiting to be discovered. That bright line can be discovered by realizing that what the Supreme Court was looking for was an invention. Perhaps they will know it when they see it, a la obscenity, but perhaps what they were looking for was just an articulation in the claims that was concrete enough and tangible enough in description to demonstrate that the process is not boundless, but defined so as to allow for proper and intellectually honest measuring of the other patentability requirements.

What ultimately becomes of Bilski v. Kappos will be written by the Federal Circuit for years to come, and perhaps another trip to the Supreme Court, or two.  For now what we know is that the Patent Office recognizes that all those Machine or Transformation rejections are not appropriate in and of themselves.  See USPTO Sends Memo to Examiners Regarding Bilski v. Kappos. If you satisfy Machine or Transformation you have patent eligible subject matter, if not then you get a 101 rejection with a request to explain why your claims do not represent merely an abstract idea.  So for now, until the Bilski Guidelines come down, we will live with burden shifting, which will certainly be easier to deal with than an inflexible Machine or Transformation test.