Botching Bilski


So, the long-awaited US Supreme Court ruling on Bilski vs. Kappos has appeared – and it's a mess. Where many hoped fervently for some clarity to be brought to the ill-defined rules for patenting business methods and software in the US, the court instead was timid in the extreme.

It confirmed the lower court's decision that the original Bilski business method was not patentable, but did little to limit business patents in general. And that, by implication, meant that there was no major implication for software patents in the US.

Significantly, the main opinion was written not by Justice Stevens, as had been widely expected, but by Justice Kennedy. His explanation of the judgement includes the following passage, which pretty much sets the tone:

It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection. This 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. Nothing in this opinion should be read to take a position on where that balance ought to be struck.

That is, the court recognises that too many patents – explicitly called “monopolies” here - are actually a bad thing, threatening the innovation they purport to advance; but it also declines to “take a position” on where the threshold for patentability should be set. As a result, business methods and software remain patentable in the US, subject to various technical considerations (basically, loopholes that skilled patent lawyers can drive pretty much anything through.)

The feebleness of this approach is highlighted by the much more cogent opinion written by Justice Stevens, who states at the start, rather wonderfully:

Before explaining in more detail how I would decide this case, I will comment briefly on the Court’s opinion. The opinion is less than pellucid in more than one respect, and, if misunderstood, could result in confusion or upset settled areas of the law.

In many ways the heart of his argument – and the core reason why business process and software patents are unnecessary - is the following:

Many have expressed serious doubts about whether patents are necessary to encourage business innovation. Despite the fact that we have long assumed business methods could not be patented, it has been remarked that “the chief business of the American people, is business.” Federal Express developed an overnight delivery service and a variety of specific methods (including shipping through a central hub and online package tracking) without a patent. Although counterfactuals are a dubious form of analysis, I find it hard to believe that many of our entrepreneurs forwent business innovation because they could not claim a patent on their new methods.

Both that, and the following comment also clearly apply to software patents:

If business methods could be patented, then many business decisions, no matter how small, could be potential patent violations. Businesses would either live in constant fear of litigation or would need to undertake the costs of searching through patents that describe methods of doing business, attempting to decide whether their innovation is one that remains in the public domain.

He even gives a nod in the direction of patent trolls:

The breadth of business methods, their omnipresence in our society, and their potential vagueness also invite a particularly pernicious use of patents that we have long criticized. As early as the 19th century, we explained that the patent laws are not intended to “creat[e] a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax upon the industry of the country, without contributing anything to the real advancement of the arts.”

He adds:

These many costs of business method patents not only may stifle innovation, but they are also likely to “stifle competition,” Bonito Boats, 489 U.S., at 146. Even if a business method patent is ultimately held invalid, patent holders may be able to use it to threaten litigation and to bully competitors, especially those that cannot bear the costs of a drawn out, fact-intensive patent litigation. That can take a particular toll on small and upstart businesses.

It is truly tragic that this view narrowly failed to prevail – four judges were in agreement, but five wanted the weaker result that became the main opinion - since it encapsulates all that is wrong with the US patent system's approach to business method and software patents.

Unfortunately, in the wake of Bilski, it will probably be some years before the Supreme Court addresses this issue again, with the result that many more billions of dollars will be wasted on US litigation around software patents. Worse, the botched opportunity to bring some sense to this area is likely to have knock-on effects around the world, which means that we will all suffer its negative consequences.

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