Ernest Grumbles III

Ernest Grumbles III is an IP (intellectual property) and business development attorney at the Minneapolis firm Adams Monahan, where he works with entrepreneurs and early stage, tech-oriented enterprise. He is also Co-Founder of MOJO Minnesota, a collective supporting entrepreneurs and promoting innovation policy and community in Minnesota. He enjoys fresh air and lots of caffeine and is constantly trying new things (instead of sleeping). He may be reached at: egrumbles@adamsmonahan.com.

Bilski, Business Method Patents and the Uncertainty Principle

Posted by: Ernest Grumbles III under Government, Politics Updated: July 15, 2010 - 7:00 AM

On June 28, 2010, the U.S. Supreme Court issued its ruling in the biggest patent case in recent years, In re Bilski.  The case related to the patentability of business methods (steps in accomplishing a business task) and has been a lightning rod in the intellectual property world (and elsewhere) during its long path to conclusion.  These business method patents, typically directed to financial, Internet commerce, data analysis and business processes, are often written such that the particular machine or system used to perform the method is irrelevant.  Bilski himself had tried to get a patent on various methods of managing hedge fund risk.

In one view, the patent system is simply evolving to protect modern methods of technology, which may be platform neutral.  Think of the iPod, which can replace several other physical hardware tools.  In another view, such methods may not seem to require the perspiration of genius of physical hardware and seem to some to be too easy to create and protect.  Thus the questions posed to the Supreme Court: (a) do patentable methods require use of a particular machine or the transformation of physical matter; and (b) are business methods outside the bounds of patentability; and (c) what of Bilski’s methods of managing hedge funds.

If you’re Bilski, you now have certainty.  The Supreme Court unanimously rejected his claims as being “abstract” and unpatentable math formulas.  As to the other questions, we only know what’s not true.  Per the Court, methods or processes, to be patentable, don’t necessarily require the use of a particular machine or the transformation of matter.  That is simply one of the ways of evaluating whether a claimed method is too abstract to be protected.  Finally, the Court ruled that business methods are not per se unpatentable.  However, the converse is not true either – business methods are not always patentable.  Rather, each inventor’s claims will have to be evaluated individually as to whether they are too abstract. 

On this last point, if the Court had offered a definitive rule of unpatentability, thousands of patents across the country would have died a silent death.  Depending on your perspective, this was a good or bad thing.  For example, in the software community, there are many companies with valuable patent portfolios such as IBM who breathed a sigh of relief at the Court’s ruling.  And there are others in that community who believe there should be no patents on software inventions who were equally dismayed.

For the inventor community as a whole, the upshot of Bilski is that there is no strict test for determining patentability of methods and processes.  Flexibility and creativity in patent protection still reign.  But the lack of a bright-line test means that more cases will fall within the zone of uncertainty, which may increase the cost of patent protection and litigation.  While the Supreme Court may have been properly cautious in not issuing a ruling that stifled patent protection for future technologies, it did little to change the current realities faced by inventors and industry.  They will keep working and keep inventing, and the Patent Office will continue to sift the wheat from the chaff.

 

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