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The Bilski Patent Case


Robert Tosti is an attorney specializing in IP law, including patents and trademarks, with Brown Rudnick. He has been closely following what's known as the "Bilski Patent Case" -- a case that could have serious repercussions for software developers. Robert recently took a few minutes to talk with Dr. Dobb's about the case.

Q: Robert, can you give us a snapshot of the background to the Bilski Patent Case?

A: Sure, two inventors -- Bernard Bilski and Rand Warsaw -- filed for a U.S. patent. The first claim of Bilski's patent application was described by the patent appeals court (the court just below the Supreme Court) as "[i]n essence...a method of hedging risk in the field of commodities trading." More particularly, Bilski's claim 1 recites, in part, "[a] method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price". To be even more specific, the entirety of Bilski's first claim is as follows...

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

Both the U.S. Patent and Trademark Office (USPTO) and the patent appeals court (which officially is called the "Court of Appeals for the Federal Circuit") found that this claim of Bilski's patent application is, and all of the other 10 claims in Bilski's patent application as well are, "not directed to patent-eligible subject matter under 35 U.S.C. Section 101." This means that the claims were deemed not to recite subject matter that qualifies for patent protection. This doesn't mean necessarily that Bilski's claims do not recite a new and unobvious innovation -- the USPTO, the Federal Circuit, and the Supreme Court were not presented with the questions of whether Bilski's claims recite a new and unobvious method. They never got to the questions of novelty and nonobviousness. Instead, they were asked to rule on the threshold issue of whether Bilski's claims recite the type of subject matter for which a patent can even be granted. Both the USPTO and the Federal Circuit have ruled that Bilski's claims do not recite patent-eligible subject matter, and now the issue is in front of the Supreme Court.

Q: So what is the "big" issue here?

A: The issue is whether patents should be allowed on methods that don't involve a machine (such as a computer or some other type of physical device or thing) or that don't involve a transformation of something into something else. Perhaps the bigger issues it indirectly raises are whether innovations implemented in software should be afforded any patent protection at all, and also whether medical diagnostic techniques should be afforded patent protection. These issues clearly are important to the software/computer industry and the life science industry.

Q: This involves software. How will it impact software developers?

A: Software developers and companies that want to protect important innovations may be unable to do so if software innovations as a class are excluded as patentable subject matter.

Q: What happens next, and when will it happen?

A: The Supreme Court's final decision in the Bilski case will be handed down by no later than June 2010. We probably won't have the SC's written decision in 2009. Look for it in the first half of 2010.


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