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The good news is control of the market.
How are we gonna do that, Mr. Ross?
Some information is in front of you. We don't want to get too specific for security reasons. My task is to tell you what those things I can in layman's language.  I think I can break it down sufficiently to give you a pretty firm idea.
This process
Yes--    
How long could we hold on to it before the competition steals it?
We defend it, of course, tooth and nail. This is a proprietary process.

David Mamet, The Spanish Prisoner

The Federal Patent Act says:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

But what is a process?  It's been almost thirty years since the Supreme Court looked at the question of what sorts of processes are patentable.  Back then, it was had to be "tied to a particular machine or apparatus," or needed to "transform a particular article into a different state or thing."

But what about mental processes -- and, in particular, business processes?  Think about Amazon.com's method of recommending items, Netflix's rental movie delivery system, and Priceline's Dutch auction-style ticket-buying system -- all business methods which have applied for and received patents.

Bernard Bilski and Rand Warsaw told the Patent Office in 1997 that they had developed a highly useful method of using complex mathematical formulas to tell a business how to hedge against risk due to the rising and falling of prices of raw materials which they wanted to patent.  The patent examiner rejected the invention, finding it was basically the solving of a math problem.  The patent board of appeals agreed, concluding that the formulas involved non-physical matters beyond the scope of the patent law. And the Federal Circuit, which handles all patent appeals, agreed as well.

This is a huge deal.  More amicus briefs were filed for Bilski than any other case you'll see.  As one set of professors put it:

Limiting patent protection to physical transformations and specific machines would have problematic consequences for a variety of industries, including not only software but also pharmaceuticals and biotechnology. In these research-intensive industries, invention often consists not merely of making a new thing, but of harnessing a scientific principle or fact about the world to a new and useful end. New and nonobvious insights into which molecular structure might cure cancer, what ratio of measured chemicals in the human body indicates disease, and which form of an algorithm will properly measure the risk inherent in a debt instrument, should be patentable so long as they involve the practical application of the idea or discovery. By contrast, the scientific principle or fact itself should not be patentable, because it is merely an abstract idea, law of nature, or natural phenomenon.

The flipside was presented by, among others, the Electronic Frontier Foundation and other pro-innovation groups/persons:

If Mr. Bilski were allowed to patent his hedging method, he would be able to extract rents and potentially put out of business any individual or company who invests money or even advises others on investing in the same way as he does. In patent law, limiting competition is tolerable only when incentives are needed to promote technological progress. Bilski’s method, however, does nothing to advance the useful arts; in fact, one need not even use technology to invest as Bilski does.  

Moreover,  there can be little question that investment firms— exemplars of service-based businesses—already strive to develop innovative and effective investing methods in order to entice more clients. Thus, providing exclusive rights to a single individual or firm to control such methods goes against the core of patent policy.

Today's Supreme Court was unanimous that Bilski doesn't get the patent -- agreeing that while "machine or transformation" is an important test, it's not the only one -- but that Bilski's ideas are not patentable subject matter.

Justice Kennedy, for the five you'd expect, agrees that his "business methods" can't be patented but maybe some future mental processes can:

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.

In the course of applying the machine-or-transformation test to emerging technologies, courts may pose questions of such intricacy and refinement that they risk obscuring the larger object of securing patents for valuable inventions without transgressing the public domain....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.

In light of these precedents, it is clear that petitioners’ application is not a patentable "process." Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk: "Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class." ... The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea... Allowing petitioners to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.

Justice Stevens, for the other four, concurring:

[T]he Court is quite wrong, in my view, to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a "process" within the meaning of §101. The language in the Court’s opinion to this effect can only cause mischief. The wiser course would have been to hold that petitioners’ method is not a "process" because it describes only a general method of engaging in business transactions—and business methods are not patentable. More precisely, although a process is not patent-ineligible simply because it is useful for conducting business, a claim that merely describes a method of doing business does not qualify as a "process" under §101.

[Many, many pages of history follow.]

Since at least the days of Assyrian merchants, people have devised better and better ways to conduct business. Yet it appears that neither the Patent Clause, nor early patent law, nor the current §101 contemplated or was publicly understood to mean that such innovations are patentable. Although it may be difficult to define with precision what is a patentable "process" under §101, the historical clues converge on one conclusion: A business method is not a "process." And to the extent that there is ambiguity, we should be mindful of our judicial role. "[W]e must proceed cautiously when we are asked to extend patent rights" into an area that the Patent Act likely was not "enacted to protect," lest we create a legal regime that Congress never would have endorsed, and that can be repaired only by disturbing settled property rights.

Justices Breyer and Scalia concur (yes, them) to stress the areas on which all nine Justices agree:

[A]lthough the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a "useful, concrete, and tangible result," is patentable. "[T]his Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary."  Indeed, the introduction of the "useful, concrete, and tangible result" approach to patentability, associated with the Federal Circuit’s  State Street  decision, preceded the granting of patents that "ranged from the somewhat ridiculous to the truly absurd."  In re Bilski  , 545 F. 3d 943, 1004 (CA Fed. 2008) (Mayer, J., dissenting) (citing patents on,  inter alia , a "method of training janitors to dust and vacuum using video displays," a "system for toilet reservations," and a "method of using color-coded bracelets to designate dating status in order to limit ‘the embarrassment of rejection’ "); see also Brief for Respondent 40–41, and n. 20 (listing dubious patents). To the extent that the Federal Circuit’s decision in this case rejected that approach, nothing in today’s decision should be taken as disapproving of that determination.

In sum, it is my view that, in reemphasizing that the "machine-or-transformation" test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.

So, what does it mean?  I don't practice in this area of law, so I defer to friends who do.  #1 says: "It's a huge victory for the status quo.  The edges are blurry, they've always been blurry, and they're pretty much the same blurry.  The border that the PTO was patrolling is a gray area that the court approves of.  Bilski was just out of it.  Business method patents go forward, as long as they're not absurdly algorithmic, and of course, I can't explain exactly what I mean by it."

And #2, our own profmatt, adds:

So what does this all mean?  Well, honestly, it's hard to say.  Because of how the court fractured, today's opinion doesn't give a whole lot of guidance to anyone other than Mr. Bilski, who doesn't get his patent.  Can software programs be patented?  Maybe, but they're going to face a more uphill process than they did before.  What about efforts to patent complex financial structures and the like?  Maybe, maybe not.  It's really the equivalent of getting "Reply hazy, ask again" when you shake the Magic 8 Ball.

Because of how patents work, national uniformity is less of an issue than it might be in other cases.  All patent cases go up to the Federal Circuit in Washington regardless of where they're brought.  (The Federal Circuit also hears appeals from patent and trademark office decisions refusing patentability, which is where Bilski got its start.)  At least in its original Bilski opinion, the Federal Circuit was pretty hostile to continuing to broaden the scope of patents.  While SCOTUS' decision does dial back their outright hostility toward allowing any method patent, that's still going to be present at the lower court.

My guess?  We're back at SCOTUS in 2-3 years on a similar issue, looking for more guidance.  Indeed, we could be back at the court as soon as next term, as there's at least one cert petition (Prometheus v. Mayo), where the lower court invalidated a patent, applying Bilski.  We'll probably have an order on that petition tomorrow, which will let us know how quickly we can expect some more answers.

Still to be recapped from today, the final day of the term: Free Enterprise Fund v. Public Company Accounting Oversight Board, in which a 5-4 Court decide that it's totally unconstitutional to have an executive branch board with members appointed by the SEC and removable only "for good cause shown" (with the SEC members under the President also removable only for good cause) ... but that the PCAOB can keep running anyway.  I'll try to explain.

Originally posted to Adam B on Mon Jun 28, 2010 at 01:56 PM PDT.

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Comment Preferences

  •  I'd love to hear from some (1+ / 0-)
    Recommended by:
    Adam B

    business/math experts to give their take on the judgment, as well.  Do you think the justices - some or all - gave the process a fair reading?  Was this, or should this have been, a patentable process or not?

    I'm neither a lawyer nor a mathematician, so I'm just soaking this all up.

    Saint, n. A dead sinner revised and edited. - Ambrose Bierce

    by pico on Mon Jun 28, 2010 at 02:06:25 PM PDT

    •  Patent lawyers were expecting something more. (3+ / 0-)
      Recommended by:
      theran, pico, Terra Mystica

      They were pretty sure that Bilski wasn't going to win, but clearer rules going forward would be nice.

      •  That's odd (0+ / 0-)

        I'd have thought that from an hours perspective, less is more. :)

      •  Isn't this another example of the judiciary (0+ / 0-)

        legislating? If it were ambiguous exactly what Congress meant, shouldn't the default be the unambiguous finding, and then kicking the rest back to Congress to disambiguate?

        Doesn't this also give Congress a get-out-of-jail-free card, a way of kicking the can up the road, by writing terribly ambiguous and poorly phrased laws (My God -- how much worse could S 101 be!) and "let the judges make it up".

        Maybe we need an amendment specifying that -- instructing judges to make unambiguous findings, and push back to the judiciary any ambiguous and innovative findings. If it isn't clear that Congress clearly intended to create software patents, business patents, etc, they should be rejected by non-legislating jurists.

        •  Well, Congress *can* step in ... (2+ / 0-)
          Recommended by:
          Terra Mystica, RandomSequence

          ... but it's clearly more likely to let the courts proceed casuistically and develop the business methods common law.

          •  Right -- but the judiciary is willing to take on (0+ / 0-)

            that power, so where a democratic decision needs to be made, instead an unelected council of elders makes the decisions. Congress gets ass-cover to avoid doing their jobs and instead a tenured body makes the choice.

            It's part of a pattern of political malpractice in our system -- why we waste so much money on litigation, why political bodies fail to respond to the voters.

            That's why I suggest a Constitutional amendment to direct judges to not take other people's jobs, and force political bodies to actually do their jobs. There's a fundamental problem here that distorts our entire society.

            •  But this isn't about the judiciary (1+ / 0-)
              Recommended by:
              GiveNoQuarter

              creating new law, or Congress bucking their duties: it's about how to interpret existing law for a new set of circumstances.

              Plus, this:

              That's why I suggest a Constitutional amendment to direct judges to not take other people's jobs, and force political bodies to actually do their jobs. There's a fundamental problem here that distorts our entire society.

              is just silly.  The Constitution already outlines what each branch's jobs are.  An amendment that simply reiterates that is useless.

              Saint, n. A dead sinner revised and edited. - Ambrose Bierce

              by pico on Mon Jun 28, 2010 at 02:56:18 PM PDT

              [ Parent ]

              •  What does "interpreting for new circumstances" (0+ / 0-)

                mean to you?

                Look, if there's a "new set of circumstances" which the old laws don't cover -- then extending a law to cover the new circumstances (as if business processes or algorithms didn't exist before the 70s!) is making a new law, a Congressional responsibility, by any sane definition of "new" and "law". By your argument, Congress could fulfill its responsibility by passing one law -- "property rights will be respected" -- and consider it's job faithfully executed.

                I read S101 and the history of patent law, and I don't see a useful law at all, but an ambiguous muddle created precisely to avoid writing a clear law, to put the legislative responsibility on the shoulders of the judiciary. How do you operationally define "new composition of matter"??? That's obviously legal nonsense intended to kick the can down the road -- make the judiciary responsible for -- new cases coming up rather than doing the political job of changing the law as new developments happen.

                This kind of knee-jerk "common sense" approach that is just the default high school civics in fancy words is incredibly silly. It's devoid of historical consciousness, or the real usage of analytical tools. Folks get away with this crap all the time in political conversations that they wouldn't get away with in any scientific setting. Just asserting tradition is plain stupid -- history shows no such thing as "clear and unambiguous" separation of powers, but an invention of the boundaries starting from the first Congress, to Marbury, to Jackson and on and on and on.

                It's not like we don't know quite a bit about constructing clear defined algorithms, testing cases, setting boundaries, etc. Nope -- politicians want to avoid doing their job instead.

                •  Eh, I think you're living (0+ / 0-)

                  under the wrong governmental system.  One of the primary duties of our judiciary branch is to gauge the applicability of the law in places where is application is unclear, and that often has to do the issue of 'scope'.  What SCOTUS was ruling on here was whether this new technology - or rather, whether our changing habits and attitudes - are within the scope of the existing law.  

                  Circumstances change all the time; new developments are a daily occurrence, not a rare one.  That's why we don't run to Congress to clarify every single potential aspect of every single law, and leave that within the scope of the courts.  And in cases where the ambiguity outpaces the law, if Congress doesn't like the way SCOTUS has ruled, they have the power to make those clarifications as they see fit.  There's nothing broken here, and this is how the system was designed to work.

                  In a case like this people would like to see a clearer set of guidelines not because the tech is new or different, but because it's becoming such a large part of our daily lives that it can't be ignored.  And SCOTUS here has said, that's too big an issue for this case, so we'll just rule on how the Constitution applies to this case.  Should Congress be stepping in here?  I'm not so sure: the courts can decide applicability with or without them.  It's their job, after all.

                  By the way, applying hard science standards to soft sciences is never a good idea: you can't circumscribe legal (not to mention civic or social) situations with in the way you can mathematical or scientific ones.  Life is not reducible to a formula.  That's why we have judges, yo.

                  Saint, n. A dead sinner revised and edited. - Ambrose Bierce

                  by pico on Mon Jun 28, 2010 at 04:46:40 PM PDT

                  [ Parent ]

                  •  The standards of completeness aren't (0+ / 0-)

                    a soft or hard science question -- or even an aesthetic versus scientific question. It's just a question of actually using words in a meaningful way. S101 isn't meaningful in any meaningful way -- you can interpret it to mean almost anything you want.

                    "Eh, I think you're living under the wrong governmental system."

                    Yeah, that's my point, yo. You're wrong and the governmental system is wrong. We should fix it, 'cause it'll only get more broken over time, yo. Yeah think I don't know that? Silly rabbit.

                    Your second paragraph is much better than your earlier knee-jerkism --- the speed of change is a good argument for using a tenured expert to adapt the law.

                    But judges, in my view, are particularly bad judges of technological change, it's implications and what are responses should be. Judges are lawyers -- they're trained in the law, with very, very few having graduate degrees in sociology, physics, biology, engineering, etc.

                    If we're going to put updating laws in the hands of technocrats, it should at least be balanced to include actual experts in the domain. This is like hiring 100 programmers to calculate the disintegration of a black hole, but including no physicists.

                    But I'd argue that maybe we need more political bodies with the wherewithal to actually keep up with these cases. Maybe we need a different territorial subdivision? Or more "houses" to handle some of these cases?

                    But we definitely need to think about some deep changes, or the shit is going to bury us.

      •  Not a patent lawyer (0+ / 0-)

        and haven't read the opinion, but this seems like one of those classic SCOTUS "punts" where they keep all their options open and leave it to the lower courts to make all the hard decisions.

        •  well, there's only one lower court here (0+ / 0-)

          Wonder how they're feeling at the Federal Circuit today.

          •  If it's truly case-by-case (0+ / 0-)

            have to consider 93 district courts.  Though for patent law, some districts are more equal than others (N.D. Cal.; E.D. Tex., for some reason; D. Del.)

            "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

            by Loge on Mon Jun 28, 2010 at 03:12:51 PM PDT

            [ Parent ]

            •  E.D. Tex.... (2+ / 0-)
              Recommended by:
              Adam B, kurt

              has become a hotbed for two big reasons:

              1.  They have a "rocket docket" that moves cases fast, with very tight calendars for discovery and trial prep.  This is generally viewed as an advantage to a plaintiff, particularly a plaintiff that has a paper patent and doesn't "practice the art."
              1.  There have been a number of big plaintiff verdicts.

              Also, plaintiffs like it because it's inconvenient for most companies to send executives/lawyers to places like Tyler, Texas for hearings and the like.

          •  I'm sure they're not happy (1+ / 0-)
            Recommended by:
            Adam B

            They spent countless hours, hundreds of pages, and attempted to adhere fairly closely to Supreme Court precedent in crafting Bilski en banc after being slapped down by the Court in recent decisions.  It was designed to be the former Chief Judge's legacy trying to bring clarity and sanity to an area that had become increasingly confused.

            And the Supreme Court's response?  We don't like what you did here, we don't endorse what you've done in the last two decades, and let's basically put things back to where they were in our three decisions in the 70's/80's.  Oh, and if you could come up with a new rule that complies with our precedent (whatever that means) and knocks out the "abstract" patents, that'd be great.

            It's very much a status quo decision written by Kennedy at the last minute after Stevens lost his bid to have his swan song be a complete upheaval of patentable subject matter doctrine.  From the look of things, Stevens lost Scalia somewhere along the line - probably when Scalia realized how big a change it would be to have a business method categorical bar, along with the implications the bar would have.

            I'd say the only thing this whole saga really changed is it raised the profile of this issue to the point where patent practitioners will either use patentable subject matter arguments in litigation or have to deal with subject matter rejections from the USPTO.

  •  Isn't a manufacture a process? (0+ / 0-)

    Denial is complicity.

    by Publius2008 on Mon Jun 28, 2010 at 02:06:49 PM PDT

  •  This seems like an adisory opinion. (3+ / 0-)
    Recommended by:
    Adam B, pico, Loge

    9-0 on the result, but with a majority saying they're keeping an open mind on future cases.

    Makes me appreciate Sandra Day O'Connor's minimalism, and I never thought I'd say that.

    "[R]ather high-minded, if not a bit self-referential"--The Washington Post.

    by Geekesque on Mon Jun 28, 2010 at 02:08:45 PM PDT

  •  Patent reform and copyright reform (6+ / 0-)

    Narrowing what can be protected and shortening for how long would benefit the country enormously.

    I don't expect it to happen in my lifetime.  All the money is on the other side and on this side, only the public good.

    Progressive -> Progress; Conservative -> Con

    by nightsweat on Mon Jun 28, 2010 at 02:08:48 PM PDT

    •  There's actually... (5+ / 0-)
      Recommended by:
      Adam B, theran, nightsweat, MJB, DocGonzo

      a lot of money on the patent reform side.  Generic pharma companies (such as Teva, Sandoz, etc.) make tons of money, but can't start making that money until and unless a drug comes off-patent.  They've become more aggressive about targeting "use patents" or "Combination patents" rather than traditional "formulation patents."  

      •  Have they had any successes? (2+ / 0-)
        Recommended by:
        Odysseus, kurt

        From your description, it sounds like they're pushing back against further abuses rather than making any headway on the ones already in place.

        Progressive -> Progress; Conservative -> Con

        by nightsweat on Mon Jun 28, 2010 at 02:12:39 PM PDT

        [ Parent ]

        •  Patents... (2+ / 0-)
          Recommended by:
          theran, billmosby

          are pretty regularly invalidated in litigation, including pharmaceutical ones.

          •  Part of the Problem (4+ / 0-)
            Recommended by:
            Odysseus, nightsweat, GiveNoQuarter, kurt

            A big part of the problem is that patents are granted on superficial evidence they're warranted. Then the courts are used as a patent examination system, relying on competitors to challenge patents. But the patent has the advantage of incumbency. Any court challenge is expensive. And that expense strikes right at the heart of why patents exist at all: to protect the revenue of inventors from any purpose except repaying the invention investment.

            So even those patents that are overturned are a win for the cartel, those already making enough money in the industry, if not an individual inventor patent monopoly. The individual inventor is threatened at every turn by the patent system's many threats of litigation.

            "When the going gets weird, the weird turn pro." - HST

            by DocGonzo on Mon Jun 28, 2010 at 02:39:07 PM PDT

            [ Parent ]

          •  Yes, at around a megabuck per claim, (1+ / 0-)
            Recommended by:
            nightsweat

            or thereabouts, I believe. Plus, you have to camp out in East Texas for a while, right?

            Moderation in most things. Except Reactors. IFR forever!

            by billmosby on Mon Jun 28, 2010 at 02:59:56 PM PDT

            [ Parent ]

  •  I like the idea of a gray area (5+ / 0-)

    but am generally skeptical of business method patents.  It doesn't seem to me that the benefits of such inventions are offset by the exclusivity periods.  For improvements in business methods to have any benefit, they should be disseminated and copied as widely as possible.  These inventions are inherently and almost always short-term beneficial, whereas you can conceivably justify a patent exclusivity period for ordinary inventions because those aren't always immediately monetizable.  

    Still, Kennedy seems to get it right that you don't want to make too much of a broad statement.  

    And I'm going to suggest if you can use a common term like "Dutch Auction" to describe Priceline, that is not original, even if it is patentable subject-matter.

    "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

    by Loge on Mon Jun 28, 2010 at 02:08:55 PM PDT

  •  I'm taking bets on what would've happened (0+ / 0-)

    had a large corporation, say ExxonMobil, had applied for this very same patent.

  •  Reply hazy, ask again (3+ / 0-)
    Recommended by:
    Adam B, theran, pico

    That pretty much sums of patent law in general.  Nice summary of the case.  Thanks.

    "Put your big-girl panties on and deal with it." -- Stolen from homogenius, who in turn stole it from a coffee mug.

    by Mother of Zeus on Mon Jun 28, 2010 at 02:12:32 PM PDT

  •  So, with processes, it all (2+ / 0-)
    Recommended by:
    Floja Roja, kurt

    comes down to: I know it when I see it!

    But I'm not givin' in an inch to fear, 'cause I promised myself this year. I feel like I owe it to someone.

    by Its the Supreme Court Stupid on Mon Jun 28, 2010 at 02:13:35 PM PDT

  •  I wish they would hurry up and decide on software (4+ / 0-)
    Recommended by:
    Odysseus, Adam B, pico, kurt

    patents.

    It's such a huge issue.  It's presently preventing all the different browser manufacturers from agreeing on a single video codec to use for the HTML5 spec.

    It's pretty much impossible to write any moderately complex piece of software without violating dozens, if not hundreds, of patents that should never have been granted in the first place.  The whole software industry is in kind of a patents arms race where everyone tries to scoop up as many patents as they can and everyone agrees not to sue anyone else because everyone is in violation of everyone else's patents.

    Toss in the fact that The US is one of the few nations that recognizes software patents and it becomes more complex.  In most of the rest of the world a programmer can write something and not give a damn if it violates patents or not.  That exposes the commercial linux vendors to all kinds of liability so they just keep scooping up defensive patent portfolios so they can sue anyone that sues them.

    It's totally antithetical to how the patent system is supposed to work.

    ---
    Toyota: Proof US Union Labor Still Does it Better

    by VelvetElvis on Mon Jun 28, 2010 at 02:16:09 PM PDT

    •  What it appears may have happened... (2+ / 0-)
      Recommended by:
      MJB, Loge

      is that Stevens' opinion is a "lost majority," likely having peeled off Kennedy's vote because of Kennedy's reluctance to make broader rules in the area.  Stevens is on record as anti-software-patent, and just may not have been able to get the votes.

      •  That's what it looks like. (1+ / 0-)
        Recommended by:
        Adam B

        Stevens might have originally had 5 or 6 votes for the outright prohibition of business-method patents -- several patent-law observers predicted a majority opinion written by Stevens with that result -- but someone got cold feet and retreated from such a huge change to patent law.

        Between Kennedy's opinion and Breyer's -- and the possibility that someone backed out of giving Stevens a majority -- it kind of looks like the SCOTUS is admitting that it's reluctant to make significant changes in patent law because patent law is outside the comfort zone of the justices.

  •  consider this diary the SCOTUS vegetables course (4+ / 0-)
    Recommended by:
    theran, DocGonzo, Rogneid, xanthippe2

    Here's dessert:

  •  For Limited Times (2+ / 0-)
    Recommended by:
    debedb, GiveNoQuarter

    Patents are a government enforced monopoly. They're granted under the Constitution's directions that Congress "promote progress in science and the useful arts". They're a compromise based on the late 1700s idea of commerce that required protection from a competitor cheaply copying an invention that cost a lot do invent, so the competitor had the advantage in making and marketing the invention.

    Patent restrictions also prevent those competitors from making their own progress in science and the useful arts, based on the invention they would start with.

    Even if a government monopoly is still necessary to protect progress in science and the useful arts, even if it's more often promotion than prevention, the time limit that patent laws grant is far too long. It doesn't protect just the inventor's ability to compete. It protects any chance of their gaining large profits beyond recouping their investment, even if they take a long time - which slows progress.

    Patent applications should document the costs invested in the invention. When that cost is recouped, and revenues taken in somewhere from 2x to 10x expenses, that patent should expire. A 200%-1000% return on investment should be ample to incent anyone to invent, if simple creation isn't enough. And if they can't earn enough revenue in a fairly short time, like 1-3 years, after they complete their invention, they should not prevent others from pursuing progress and blocking up the field.

    There's lots of reasons to say that a business practice is like the overbroad description of a machine, rather than the patentable machine itself. But at the very least any patent should be restricted to only how long it takes for the patent protection to do its job. Not the long times that today stand in the way of progress, and protect only monopoly profits at public expense.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Mon Jun 28, 2010 at 02:35:56 PM PDT

    •  Why? (1+ / 0-)
      Recommended by:
      VClib

      Patent applications should document the costs invested in the invention.

      This is building a system to favor the slow, stupid, and clumsy.

      •  Because (1+ / 0-)
        Recommended by:
        GiveNoQuarter

        No it's not. It's building a system to protect only the initial return on investment, which is the only basis for patents at all.

        If you're arguing for doing away with patents entirely, in favor of "the fast, the smart, and the agile", that's another conversation in which we largely agree. But so long as we have patents, the basis least subject to abuse is one in which the revenue is protected according to costs they compensate.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Mon Jun 28, 2010 at 02:41:04 PM PDT

        [ Parent ]

    •  DocGonzo - Incentive to invent (1+ / 0-)
      Recommended by:
      theran

      While a revenues of 2-10X the cost of an invention may be enough to encourage an inventor to spend his/her own money it is not nearly enough to attract serious investors. If you have an invention that requires outside investors they would have no interest in investing in the economic model you propose. You need to understand that most of these investments will fail. An investor will require that some of his investments at least have the potential to have a 50 - 100 to one return, cash on cash. Having a home run is the only way any early stage portfolio can compete with more predictable, safer investments. Even with the patent laws as favorable as they are, many very promising technologies are not able to find funding.

      "let's talk about that"

      by VClib on Mon Jun 28, 2010 at 10:05:19 PM PDT

      [ Parent ]

  •  A question that came to mind for me: (1+ / 0-)
    Recommended by:
    Odysseus

    If the following is true:

    ..."Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class."...

    Why did every freaking Wall Street bank ignore it three years ago?

    Barack Obama in the Oval Office: There's a black man who knows his place.

    by Greasy Grant on Mon Jun 28, 2010 at 03:00:05 PM PDT

  •  Well, lots of software prior art... (3+ / 0-)
    Recommended by:
    Odysseus, kurt, Terra Mystica

    ... has been snapped up and patented by random "discoverers" already. The one that took the cake for me was "Linked List", granted in 2007. I remember studying linked lists in my beginning programming class in 1968. In a real sense, the internet is nothing but a bunch of linked lists...

    Moderation in most things. Except Reactors. IFR forever!

    by billmosby on Mon Jun 28, 2010 at 03:02:16 PM PDT

  •  Wow. (1+ / 0-)
    Recommended by:
    theran

    I can't believe no one has said I screwed this up yet. Because this really isn't my turf.

    •  You've screwed this up. Totally. (2+ / 0-)
      Recommended by:
      Adam B, xanthippe2

      (Just so it's on the record.)

      Saint, n. A dead sinner revised and edited. - Ambrose Bierce

      by pico on Mon Jun 28, 2010 at 03:05:59 PM PDT

      [ Parent ]

    •  Not sure how it could get much more screwed up (1+ / 0-)
      Recommended by:
      kurt

      How do you screw up something so clear as to be indistinguishable from the darkest depths surrounding the BP oil spill?

      Unfortunately, we're stuck with such obviousness as the one-click patent and strict math patents like compression algorithms until such time as the justices decide to actually tackle the issue rather than punting back to the Federal District.

      Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

      by Phoenix Rising on Mon Jun 28, 2010 at 03:30:20 PM PDT

      [ Parent ]

      •  Well, explain this to me. (0+ / 0-)

        Why is this bad for innovation's sake?

        •  I believe Donald Knut had some thoughts on this.. (2+ / 0-)
          Recommended by:
          Odysseus, kurt

          here, for example. He also said on another occasion, in 1994, that patents were being granted for algorithms that his students had been turning in on homework assignments for years before.

          The problem boils down to bad patent office decisions on prior art. Invention, and more to the point reinvention, is an everyday occurrence in programming. Programmers "invent" algorithms in the course of their everyday work because it is so much easier in most cases than looking one up to fulfill an immediate need for some piece of code that is being written. I know that there are complex algorithms that take more work to originate than that, and perhaps those might reasonably be patentable. Again, though, finding out who was the first to invent might still be a difficult problem. So most programmers are said to adopt a head in the sand approach- don't research patents at all because at least then you have a hope of avoiding treble damages for intentional infringement.

          If programmers stopped to read the relevant patents before writing a piece of code, work would grind to a halt. That's one impact software patents would have on innovation.

          Moderation in most things. Except Reactors. IFR forever!

          by billmosby on Mon Jun 28, 2010 at 03:53:54 PM PDT

          [ Parent ]

        •  Case in point - video encoding (2+ / 0-)
          Recommended by:
          Odysseus, kurt

          Right now there's a battle going on for definition of a Web video standard.  H.264 is the leading candidate, but it's encumbered by software patents, many of which have been largely duplicated by independent development in at least two other codecs that I know of.  H.264 has a temporary "free use" grant, but the consortium that controls it has not stated their willingness to extend that free use past, well, essentially past the time when it would come into wide adoption were it recommended as the standard.

          So here we have what could be a competition for the best video standard, and instead we have an uncertain mess where the open source Mozilla Foundation and others refuse to adopt H.264 because of its patent encumbrance, and those who have a stake in H.264 (Microsoft, Apple) are pushing for its adoption as a standard to force other browsers into using it (and threatening the competing codecs via their patent portfolio).

          Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

          by Phoenix Rising on Mon Jun 28, 2010 at 04:03:14 PM PDT

          [ Parent ]

          •  To expand a bit (4+ / 0-)
            Recommended by:
            Odysseus, Adam B, kurt, billmosby

            The situation we have in the software world is that we all code at breakneck speeds, adopting what seem to be common-sense methods for solving the problems of the day.  Unfortunately, that means that if we're in especially competitive arenas, we often wind up coding something that someone else gets to the patent office first.

            Between the uncertainty created by this aggressive patent application/licensing process, and the huge portfolios of patents (often unexpected and obscure) already held by companies either for defense of their own product or for outright patent trolling, there is a definite deterrent to entering into many serious application fields as a business.

            Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

            by Phoenix Rising on Mon Jun 28, 2010 at 04:08:04 PM PDT

            [ Parent ]

            •  You said it! One example of this.. (3+ / 0-)
              Recommended by:
              Odysseus, Phoenix Rising, kurt

              was articulated pretty well during the trial on one-click. One witness said he had written basically the same code some years earlier for some website or other. When asked why he hadn't applied for a patent for it, he said "If I stopped and wrote up a patent application every time I did 15 minutes' work, I'd never get anything done".

              I've been trying to find the link to that story but can't find it. I read it about 2 years ago, though, I remember that much.

              Moderation in most things. Except Reactors. IFR forever!

              by billmosby on Mon Jun 28, 2010 at 04:24:23 PM PDT

              [ Parent ]

              •  Didn't know how to phrase that... (4+ / 0-)
                Recommended by:
                Odysseus, ebohlman, kurt, billmosby

                How do you say something is so obvious that any rational observer would say it falls under the patent rules against obvious inventions and make it sound so not obvious that it deserves discussion in a patent case?

                The video patents are a good example - you need to break your video into bits so you can fast-forward and search through the stream, and you have to mark those bits with tiemstamps of some sort, and you have to sync the audio and video, and you get to choose a few basic ways to compress your video (and then implement optimizations of those basic ways).  There aren't many ways to do these things, they all look very similar, and chances are you and the dozen other code monkeys working on the problem will come up with very similar solutions.  How many of these ideas are actually worth a patent?  How many of them are simple math algorithms or, essentially, methods or organizing a digital file cabinet?

                Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

                by Phoenix Rising on Mon Jun 28, 2010 at 04:36:02 PM PDT

                [ Parent ]

                •  They're all composed of basic, simple bits. (1+ / 0-)
                  Recommended by:
                  Odysseus

                  One key to the worth of software patents it that they all (or all of them I have ever seen, anyway) are a combination of two unpatentable things: an algorithm, and a "preferred embodiment" of the algorithm, which is to say a computer. You often even see the computer part defined with a nice diagram calling out its various parts.

                  I wonder if you could use another preferred embodiment that also can't be patented, the human brain? Just kidding. Although a business method patent for swinging in an elliptical pattern comes pretty darn close. I found the link again for that not too long ago, but can't find it right now.

                  Here's another, which I posted as a comment on Brad Feld's blog a while ago:

                  Filed by BMW: application number 20090271701, entitled "Method for Systematically Identifying Technology-Based Solutions", the first line of which reads:

                  "A process for identifying technology-based solutions in the context of technical component development includes identifying technical components for particular technical systems, as well as the corresponding technological functions associated with the identified technical components."

                  I guess they didn't have the actual gall to call it "Engineering".

                  Moderation in most things. Except Reactors. IFR forever!

                  by billmosby on Mon Jun 28, 2010 at 05:31:12 PM PDT

                  [ Parent ]

            •  Son of a gun, I found it: (3+ / 0-)
              Recommended by:
              Odysseus, Phoenix Rising, kurt

              one-click patent witness

              Ok, he said it took him an hour.

              Moderation in most things. Except Reactors. IFR forever!

              by billmosby on Mon Jun 28, 2010 at 04:30:20 PM PDT

              [ Parent ]

            •  The big problem (3+ / 0-)
              Recommended by:
              Odysseus, kurt, billmosby

              is that courts have adopted a ludicrous definition of "non-obvious." Fundamentally, in order to be patentable an invention not only has to be "novel" (never invented before) but it also cannot be "obvious to someone skilled in the relevant arts." The reason for this latter restriction is that one of the main reasons for patents in the first place is to encourage inventors to publicly disclose how their inventions work, rather than keeping it a secret. Thus, something that couldn't be kept a secret in the first place isn't eligible for patent protection.

              A reasonable interpretation of "obvious" in the context of software is "something that a CS graduate could come up with just by putting together techniques he/she learned in school." Unfortunately, the courts have interpreted "obvious" as "described in the public literature." That's really a redundant interpretation of novelty, not obviousness. The fact is that there are millions of programs that a) were never developed before (duh) b) have not been published in citable literature and c) do not involve any techniques that would not be obvious to any CS major. Merely combining well-known objects according to well-known rules shouldn't rise to the level of patentability.

              Disclaimer: IANAL. I am a CS graduate.

              If Nixon was cocaine for the resentful psyche, Palin is meth—Andrew Sullivan

              by ebohlman on Mon Jun 28, 2010 at 04:39:41 PM PDT

              [ Parent ]

          •  This makes no sense (0+ / 0-)

            So you want somebody else's ideas for free, since you can code them but not replace them with something more compelling.

            This is not a strong argument.

            •  No - you misunderstand (0+ / 0-)

              There are only so many ways to do video encoding, and there are requirements that you need to include if you're going to use the encoder for certain purposes (like streaming).  These requirements are pretty obvious as soon as you dive into designing such an encoder - you can't avoid them.

              Imagine being handed a geometry problem.  You have a background in geometry proofs, so you know the general concepts available to you.  You look at the problem and decide that a certain set of tools will be necessary to solve the problem.  You put them together, perhaps - since it's a difficult problem - not in the exact sequence or in the exact combination as someone else working independently of you, but in the same general arrangement.  And then the other guy goes and files for a patent on the basic theorems that underlie every possible solution to the problem - theorems that any person with skill in geometry already knows or could easily deduce.

              That's the problem here.  The only potentially patentable bits of the main video codecs competing for the HTML5 standard (H.264, Theora, and VP8) all have their own compression and encoding algorithms, but the H.264 consortium has gone and patented the simple packetization and header information needed to put together any streaming video, along with some patents on encoding that essentially relate back to JPEG encoding and are filed in such a broad manner as to cover all obvious and semi-obvious evolutions from still to video compression.

              Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

              by Phoenix Rising on Tue Jun 29, 2010 at 07:55:55 AM PDT

              [ Parent ]

        •  Something I really can speak to (2+ / 0-)
          Recommended by:
          Adam B, jlowery

          Here is the problem:

          There are certain mathematical ideas which become "obvious" only after somebody explains them to you, at which point the clarity is such that you can easily just write a program, put on a sequence of trades, etc. to exploit the new idea.

          Somebody who makes such a thing up and does not have very deep pockets won't stand a chance of every getting paid for it.  The two basic solutions are:

          (1) Tenure

          (2) Patents

          (3) Secrecy

          In practice, all of them are used.  Startups and technology firms like (2), hedge funds like (3).  Each has their own benefits:

          (1) is good for scientific exchange; (2) allows for disclosure; (3) is the only viable option in the financial world.

          Here we're talking only about (2).  The advantage of software/algorithm patents is that the idea makes its way into the public where it can be improved and widely licensed.

          The disadvantage comes, in my opinion, because of the patent process itself: since it happens in secret, some things that really are obvious and were widely used already end up getting patented.  There's no peer review, so it's incredibly tedious to undo a mistake.  This causes a lot of headache for everybody, so companies tend to bulk up on patent portfolios just to avoid "trolling".

          Ultimately, I don't have as strong an opinion as I once did.  Personally, I am not convinced such patents hold things back much.  The two or three egregious examples of bad patents tend to suggest that many of the interesting ones really were novel.  It's also not that expensive to hire a lawyer, if the idea is more than marginal.

          So, basically, I think software patents introduce some friction, but not too much.

          Then again, Viterbi, famously, did not patent his algorithm (it wasn't done in those days), and he did alright.

          SInce I am blathering, I will stop.

          •  Wow, the above is awful writing (0+ / 0-)

            I really should edit these things better.  (I have too much smoke coming from my ears on other things at the moment, but still...)

          •  It really is that expensive (0+ / 0-)

            With the size of "defensive" patent portfolios these days, software patent cases can get very protracted and you can rack up significant expenses.  This holds double for open source projects like Ogg Theora which is competing to be an open Web standard not on its merits (good and bad as they may be) but rather on the uncertainty of whether the behemoth H.264 consortium will come after them with patents they're pretty sure they either don't violate or that won't hold up in a patent court.  The uncertainty itself is hindering the competition, and that's bad.

            Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves. - William Pitt

            by Phoenix Rising on Tue Jun 29, 2010 at 08:00:16 AM PDT

            [ Parent ]

      •  Couple issues (2+ / 0-)
        Recommended by:
        Adam B, theran

        First, "obviousness" is another area of the law, which is one of the biggest problems most patent lawyers had with the handling of this issue by the courts and the public.  Basically, first you tell me if my application cites patentable subject matter, traditionally an insignificant requirement, then I have to prove that my invention is non-obvious, a much higher requirement.  But people tend to wrap up bad business method or software patents that should have been rejected at the PTO on obviousness grounds as an indictment of an entire field of patents.

        Second, this case just wasn't going to get into software patents.  Stevens might have some lingering issues with those patents from his dissents in previous Section 101 cases, but this wasn't a case to deal with that.  I'm not sure why the free software community became obsessed with this being the case that would solve everything.

        I really don't think software patent eligibility will be challenged by the courts.  The patent statute is just too broad to be read to exclude them.  Congress is the only real recourse, though the political concerns probably mean that will never happen.

    •  You did a pretty good job for non-patent-er (2+ / 0-)
      Recommended by:
      Adam B, theran

      I would have a few nits to pick, but nothing big.  The biggest thing in the decision for patent law is that "machine or transformation" is no longer the only test and therefore the Federal Circuit was de facto reversed, even if this is an affirmation.   This means that the wave of litigation and rejections based on that test are going to be somewhat blunted as patent-holders who don't meet the test (a test they didn't know about when they applied for their patent) can now rebut a claim that their patent doesn't have a machine.

      But really the most noteworthy thing is what the Court didn't do.  Stevens was one vote away from really changing everything in patent law and greatly restricting patentable scope here and possibly elsewhere down the road.  Business methods are safe-ish, software patents moreso, and medical/biotech can breathe easier.  It will be interesting if the Court tries to deal with this issue again after their obvious discomfort and failure by the minority to get what they wanted.

  •  the culturally definitive event of the american (1+ / 0-)
    Recommended by:
    kurt

    revolution was a protest against patenting of a business model.

    which tells all one needs to know about the essential obnoxiousness of such a concept.

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Mon Jun 28, 2010 at 03:24:02 PM PDT

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