I Scream, You Scream, We All Scream for Bilski!

[WSJ_law_blog]

It’s been another of those busy busy weeks for our email in-boxes. This time the deluge has been a flood of messages letting us here at the Law Blog know that [Insert Name Here], a leading patent lawyer at [Name, Name & Name LLP] is willing to offer his/her expert take on In re Bilski, a case being argued at the Federal Circuit tomorrow. (Click here for a previous LB post on Bilski.)

Well, we took one of those emails and put it to use. Herewith are the results: a quick Q&A/Primer on the Bilski case from Daniel Crowe (pictured), a partner specializing in patent work at Bryan Cave in St. Louis who is not involved in the case.

Hi Dan, thanks for taking the time. Pretend we’re someone with no knowledge of the patent world. Why is this case important?

The Patent Act says you can get a patent on four types of inventions. Three of these are fairly straightforward: articles of manufacture, machines and composition of matter. But the fourth one is a “useful process.” People have been struggling with the meaning of this — what is a useful process — for years.

At the same time, in a case called Diamond v. Chakrabarty, the Supreme Court basically said that anything under the sun is patentable, with the exception of laws of nature, natural phenomena and abstract ideas. And since then [1981], lower courts have wrestled with how you define an abstract idea. But they developed this notion that if [the idea is used to] physically transform an article, like a process that changes or melts rubber, say, then it’s no longer abstract.

That led to the 1998 State Street decision, in which the Federal Circuit ruled that a financial group could patent a process for managing a portfolio of mutual funds. The ruling paved the way for the development of so-called “business-method patents.” Since then, lots of patents have been issued for a wide variety of processes, like tax strategies, Internet business ideas and investment methods.

So what’s the debate all about?

Well, many people look at an issue that’s received a business-method patent and they see something that’s been done for years, a traditional retail method of selling, something that’s been done with a pen and paper and a calculator and just transposed to a different medium, like the Internet. They see that and ask ‘why does this deserve a patent?’
At the same time, others think that these sorts of patents were new and non-obvious. It’s a debate that’s been raging in this world for 10 years.

Okay. So what’s the Bilski case all about?

The patent at issue in Bilski covers a method of managing risk in selling commodities. The claims do not cite a transformation of articles; they’re not tied to a machine. So the question becomes is this patentable? [The Patently-O blog has a lot of the documents in the case.]

When the court decided to hear the case en banc, it put out five questions they wanted the parties to address. The second one is really the meat of it — what standard should govern business-method patents?

What should we look for tomorrow at argument to gauge what the ruling might be?

I’d be looking to see whether the judges indicate that there’s a problem with the standard that’s used now, the one issued in State Street — that an invention is patentable if it contains some practical application and “it produces a useful, concrete and tangible result.” I’d look to see if the judges indicate the State Street test needs refinement or whether what we have now, State Street and the caselaw that followed, is enough.

Is there a chance that State Street will be overturned? That business-method patents will be shot down?

No, I really don’t think so. I think the question is really how much the court is going to tweak at the margins, how much they’ll refine the test that exists now.

But whatever happens, this is important?

Oh absolutely. This is important, regardless of how the court rules.

Thanks for taking the time.

My pleasure.