If there's one thing that any good patent lawyer should know about, it's the upcoming Supreme Court review of In re Bilski. Last week, the Supreme Court heard oral arguments on the case (Bilski v. Kappos, Fed. Cir., No. 2008-964, 11/9/09.) and they had some interesting things to say.

Bilski Before
But let's step back for a bit and figure out what In re Bilski is all about. The Bilski patent application involves a business method for hedging risks in commodity trading. Business method patents (and likewise software patents) have always been on thin ice as far as eligibility goes. Legal theorists often struggle to explain why business methods should receive patent protection, essentially since they are discovered or mathematical in nature. However, the door was blown open with the resolution of State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998). In re Bilski has, so far, has had a chilling effect such patents and reiterated the "machine-or-transformation test", but fell short of categorically denying software and business method patents.

The machine-or-transformation test is a test of patent eligibility under which a claim to a process qualifies to be considered for patenting only if it (1) is implemented with a particular machine, that is, one specifically devised and adapted to carry out the process in a way that is not conventional and is not trivial; or else (2) transforms an article from one thing or state to another. On the other hand, the court refused to adopt a test that barred business methods, under that rubric, from patent-eligibility. The court noted that while the machine-or-transformation test was the applicable test,  but stated that there could be cases where a claim that fails the machine-or-transformation test is nonetheless patent-eligible subject matter. The court also stated (foreshadowed?) that future developments may alter the standing or the application of the test.

Bilski Now
Although oral arguments are hardly indicative of the stance the court might take, they shed some interesting light on the proceedings. From reading the transcripts, it seems that the justices questioned the basic justifications of providing a business method patent like Bilski's. In fact, Justice Ginsburg asked about an estate plan, about a way of teaching antitrust law, a method of resisting corporate takeover,  tax avoidance methods and if they should be granted patents. (The oral arguments are a fascinating read, see here for more detail: http://www.aipla.org/Content/ContentGroups/About_AIPLA1/AIPLA_Reports/20098/SCtOralArg.pdf). Justice Sotomayor was notably vocal about the social justification of these patents and asked how they would be expected to draw the line between Bilski's application and one for a method on speed dating.

Still, the justices left a lot of wiggle room open in their questions, and almost seemed to get some of the core issues confused (after all, these men and women don't see patent cases often). Justice Roberts asked if the State Street patent would pass the Federal Circuit’s machine or transformation test.  Stewart tried to explain that the State Street patent was directed to a machine rather than a process, and thus the en banc Bilski test would not apply. But the Justices appeared to confuse the State Street “means plus function” machine claim with a claim to a process implemented by a machine.  Justice Roberts persisted in his questions about the significance of the machine in the process, asking if the use of a simple calculator could convert a process from eligible to ineligible.

At this point it seems that the justices agree with the idea that Bilski's application is not patentable, but are struggling with where to draw the line and how to interpret the Constitution's Article I, Section 8, Clause 8. It will be interesting to see what the Court decides on this case and believe me when I say the whole world is watching. Thousands of patents could be rendered invalid by this decision leaving owners with a nice (and now worthless) piece of paper. But hey, at least their methods will still work - and they just might be able to work for everyone.