Monday, November 09, 2009

Law & Tech Geek Alert: Future of Software and Technology Patents in Supreme Court's Hands

by Elizabeth Wharton **

The future of thousands of technology patents is playing out in front of the Supreme Court today. At stake are patent protections, possible infringement lawsuits, and millions of dollars of profits to inventors. The Bilski case asks the Supreme Court to determine whether business-methods (those that are more of a mental-process as opposed to those tied to manufacturing or a tangible product) may be patented. Starting with the State Street Bank decision in 1998, the Federal Circuit recognized that software programs that transform data, but do not physically transform an article or create a machine, are patentable. Thousands of patents were issued to technology companies, researchers and innovators based on this decision.

When Bernard Bilski’s and Rand Warsaw’s patent application for a unique set of mathematical formulas to crunch numbers and manage risks associated with weather patterns and utilities was rejected 13 years ago, a landmark patent case was born. The patent office determined that their process dealt with solving a purely mathematical problem and rejected their application. Mr. Bilski and Mr. Warsaw fought for their patent all the way through the court system. In October 2008, the Federal Circuit upheld the patent office decision, reigning in their earlier State Street Bank decision, and determined that an application must meet a machine or transformation test in order to be patentable.

The Federal Circuit's Bilski decision marked a dramatic shift from the past ten plus years and sparked a controversy in the current technology innovation era - not only for software companies but also biomedical and technology companies. Over 67 amicus briefs were filed in connection with the Bilski case. Among those filing briefs in support of one side or the other in Bilski are the likes of computer and technology giants IBM, Novartis, Microsoft, Google, Symantec Corp., and others such as Bank of America and clothier L.L. Bean. At risk are software, technology, and biomedical patents held by such companies as IBM, Nortel, Medtronics, and many others. As pointed out by Judge Newman in her dissent, many technology innovations and inventions today are novel ways to approach data and information.

Narrowing technology patents to exclude processes that produce a “useful, concrete, and tangible result”, per the State Street Bank decision, will stifle technology innovation and product development. More and more users will listen to a presentation, take out the original and unique content, and ultimately circumvent the inventor. The inventor of this content will not have the patent protections for their unique solutions and ideas. Part of the inventor’s incentive in working to develop the solution has been stripped away.

The amicus briefs and legal arguments today are just the start of the Supreme Court’s review of the case. Legal geeks and technology geeks, along with thousands of patent holders, will be anxiously watching and waiting for the Supreme Court’s final decision in the months to come.

(For more in-depth discussions about this case and intellectual property law, I recommend the following websites - and

** Reminder, these are just my thoughts and are not intended to provide advice, legal or otherwise. While I am a lawyer, I am not your lawyer.

1 comment:

Ben said...

I was with you until your conclusion at the end. I think the "end of innovation" comment is FUD, and I think that if you look at history there is no support for it. It's always a concern, and yet it never seems to come to fruition.

That being said, clearly IP needs protecting. However, there needs to be a way to differentiate between important and trivial software. Also, the timeframe for how long the protection is valid needs to be reasonably short. Tech evolves far too quickly to guarantee protection indefinitely, or 10 years even, or maybe even any more than 5 years. Restrictions similar to those placed on pharmaceuticals might be useful, though compensating for the derivatives loophole. Something important today could be deemed extremely trivial in a few short years.