Background
Petitioners Bernard Bilski and Rand Warsaw filed their Brief For Petitioners last week in what 
could be this decade’s watershed patent ruling. The patent at issue relates to a method for managing risk when buying or selling energy commodities. The law at issue is whether a process must: 1) be tied to a particular machine and/or 2) transform a particular article into a different state to be patentable (the “machine-or-transformation”/“MOT” test). The Brief breaks the case down into five issues:
1) No New Limits On §101
Petitioners note §101 covers “any … process” and argue court’s limits on patentable subject matter, should not exceed limits outlined by Congress. Citing Benson and Flook, Petitioners note the Supreme Court has twice refused to limit §101 to the MOT test. Processes must, they argue, be subject to the same patentability requirements (and no more) than the other categories of subject matter. Petitioners enlist caselaw to attack the machine requirement of the test. They enlist Judge Rader’s dissent in Bilski to attack the transformation requirement which “links patent eligibility to the age of iron and steel as a time of subatomic particles and terabytes.”
Petitioners argue that Congress drafted the language of §101 broadly enough to encompass emerging technologies and the CAFC’s inability to apply its MOT test to “information-age processes” demonstrates the test is anathema to Congressional intent. Pitting the Supreme Court’s flexibility in interpreting patent cases against the CAFC’s rigidity, Petitioner’s analogize the MOT test with the CAFC’s KSR “teaching, suggestion or motivation test,” which the Supreme Court unanimously rejected.
2) Conflict with §273, State Street and J.E.M. Ag Supply
In 1999, Congress enacted 35 U.S.C. §273, which insulates entities from patent infringement liability based on using a method of conducting business, if the entity reduced the method to practice at least one year before the effective filing date of the patent and the patent contains claims the method would otherwise infringe. Since §273 of the Patent Act specifically recognizes patent protection for business methods Petitioners argue §101 cannot be read to exclude those same claims. Petitioners note the legislative history of §273 provides “[a] method is any systematic way of accomplishing a particular business goal” with “[t]he State Street decision [bringing the financial services] industry to the forefront of cutting edge patent law protection.”
In J.E.M. Ag Supply the Supreme Court upheld the validity of plant patents, basing its decision on the PTO’s history of issuing patents on plants and Congress’ failure to amend the Patent Act to prevent the practice. Petitioners analogize the facts underlying J.E.M. Ag Supply with the PTO’s grant of more than 15,000 patents in the “business methods” technology group. Weilding J.E.M. Ag Supply, Petitioner’s argue, settled PTO practice and Congressional non-interference mandate a reversal of the Bilski decision.
3) Disruption of Public Policy and Settled Expectations
Petitioners argue the MOT test constitutes legislation from the bench, straying from the CAFC’s prior technology neutral position to one of anti-technology Luddism. Acknowledging the problem of vague or trivial patents, Petitioners assert an unfettered §101, along with §112, §102 and §103 are far more better suited to vet patents than the MOT test. Petitioners cite Judge Newman’s dissent in which she notes the MOT test diminishes incentives available to new enterprises and disrupts settled expectations of those who rely on the law. Festo is also cited for the proposition that disrupting settled expectations destroys legitimate property expectations.
4) Practical Applications
In lieu of the MOT test, Petitioner’s suggest the more flexible “practical application” test of Funk Bros. Petitioner’s argue the Supreme Court finds a principle is “practically applied,” and therefore patent-eligible, when the principle is applied (1) to a new and useful result; 2) in a particular apparatus or structure; or 3) in a particular art or process. Under this test, a method or transformation is sufficient, but not necessary, to make a principle patent-eligible. Petitioners analogize practical and patentable applications of mathematical formulas, natural laws, industrial processes, chemicals and manufacturing processes.
Petitioners point to the historical rejection of the English “manner of manufacture” in favor of the broader Constitutional “and useful Arts” as support for protection of processes being a seminal Constitutional right. Diehr is cited for the proposition that processes have historically enjoyed patent protection as a form of “art” as that term is used in the 1793 Patent Act.
5) The Bilski Patent Claims Comport With §101
Petitioners reiterate the expansive nature of the language of §101, the admonition not to overrule Congressional intent by placing unnecessary restrictions on §101, and the availability of the Supreme Court’s “practical application” test as an alternative to the MOT test. Petitioners argue Claim 1 of the Bilski patent falls within the broad reach of §101 and embodies a practical application of using an intermediary to manage consumption risk costs associated with buying and selling a commodity. Even if Claim 1 fails the “practical application” test, Petitioners argue the much narrower and detailed Claim 4 is patentable for its inclusion of a mathematical formula, practically applied to a useful result.
Conclusions
Though well argued, Petitioners’ Brief buries its most persuasive argument. Arguments relating to the scope of §101, concordance of various statutes, general principles of patent law and application of particular claims to the law are all the true grist of every patent attorney’s mill. The issue with the most far-reaching and potentially catastrophic consequences is the disruption of public policy and settled expectations. Even the first U.S. patent ever granted covers a process.
It is no surprise the CAFC, left with applying flexible formulations to mercurial facts, constantly strives for hard and fast measures against which to adjudicate patent cases. Sweeping aphorisms (while simple to understand and apply) risk excluding entire technologies. Moreover, invalidating decades of case law and established practice undermines faith in our entire patent system. If there can be no reliance that patents granted today will endure, all patents immediately become less valuable and infringers are more apt to challenge them in court.
Disputed issues of patentability must be settled. Any decision of this magnitude must take into account rules regarding statutory interpretation, stare decisis and the application of the law to the facts. The decision should also take into account the tens of thousands of current inventors whose patents may be made worthless by this decision. Of course the value of the property interest at issue is not a pivotal factor in cases such as these. The public policy underlying reliance on the fairness and settled expectations under the law however, not only for past inventors, but for future inventors as well, is a factor of critical import. While simple rules and bright lines make resolving patent disputes easier, surrendering fairness for simplicity achieves neither end.
HT: CEB, Luke, Veritas, Matt Krigbaum and my lovely wife
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