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Comments on Bilski v. Kappos
Today in the world of patent law, all eyes were on the Supreme Court’s ruling in Bilski v. Kappos.
The issue in Bilski was whether certain hedging devices against price fluctuation, and their mathematical representations could be treated as “eligible” for patent protection as a “process” under the law. The Supreme Court held in this case that it could not be so, and on the outcome it affirmed the decision of the Federal Circuit. But read in context, Bilski’s loss was on exceedingly narrow grounds that do not undercut the general view, long established that business method patents can be regarded as patent eligible processes in most situations. Instead the key move in Justice Kennedy’s argument was that this particular patenting formula should be treated as an abstract idea or mathematical formula—both classes that have long been held outside the scope of IP protection.
Justice Kennedy in Bilski went out of its way to reject the broader, and misguided, grounds on which the federal circuit had rejected the patent, most notably on the view that a patentable process had to be tied to some “machine-or-transformation test,” which would make physicality in some narrower sense the hallmark of patent protection. The willingness of the Court to affirm the broad definitions of patentability embodied in such key cases as the 1980 decision in Diamond v. Chakrabarty was most welcome. I coauthored a brief on this case with Scott Kieff in which we were concerned solely with the larger question and not the fate of what should on any view be regarded as a very dicey patent.
Bilski is a patent protective decision.
Published in General
Professor Epstein: Forgive my opportunism and laziness. Patent law is far afield of my day-to-day practice, but I do a good deal of trade secret and restrictive covenant litigation. Is there anything in Bilski that you believe may be useful in that context?
A world of interesting philosophical assumptions are implicit in the idea that mathematical formulas are not eligible for patents, no? The legal tradition seems to subscribe to the idea that mathematical formulas are some form of universal truth that may be discovered, but not invented. I’m sorely tempted to look up Diamond v. Chakrabarty to see what the reasoning was, but I know if I start that the whole morning will disappear, so I’ll just ask: What was the court’s basic argument?
We have a post on Ricochet about Bilski, McDonald, and Christian Legal Society all in one day. Fantastic! If we can only coax a post about Freedom Enterprise Fund from Professor Epstein, Professor Yoo, or Mr. Escalante, Ricochet would hit a grand slam today for SCOTUS junkies.
Matthew — Fortunately, for most serious work Bilski will have little or no impact. If it does move things, it is on the boundary line between abstract ideas and patent eligible processes. Trade secrets can embrace stuff outside the patentable space. Indeed the business method that was invalidated here could still be protected as a trade secret. My guess is that your practice will not be changed much by this decision.
Claire — It comes from two points. First, as a matter of text and statutory history, that is how the game was played. Second, as a matter of theory the great tradeoff is between incentives to innovate, which calls for exclusivity, and the need for effective use, which cuts the other way. Just ask yourself what would happen if someone could patent the definition of pi or the pythagorean theorem. We tend to see these over the top, and are pretty much right. Some cases have pushed this line too far into the domain of the practical, but Bilski will I think turn out not to have major consequences.
My view: the system has been abused for a few years in the area of business methods. For example, the Amazon attempt to patent “One-click ordering”- basically almost taking a marketing slogan and turning it into a patent rather than a copyright- think if Joe’s Dairy could patent home delivery of milk; it gets ridiculous, but some of the on-line operations have gotten to nearly that level of attempted restriction.
In the same way, the pharmas have been broadly abusing the patent system for years (look at “pay for delay”, where threat of litigation is virtual extortion) and they have been in turn abused by the FDA.
Lots of changes to the patent system would be beneficial, if possible to do so without the rent-seekers buying off Congress in the way that the entertainment media and publisher-types already have in the area of copyright.
I believe in patents (Art. 1, Sect. 8, “the useful arts”)- but I am coming to believe that as currently applied the current statute may be a bit more anti-capitalist than pro-market. Some adjustment is in order:
http://www.econtalk.org/archives/2009/05/boldrin_on_inte.html