Business Method Patents: Technological Change, Not Judicial Activism

By Professor John Duffy

The last two decades have seen an extraordinary growth in the number of patent applications for business technologies and methods. Critics of business method patents tend to assign responsibility for this development to judicial activism by the judges of the Federal Circuit especially those responsible for the decision in State Street Bank & Trust Co. v. Signature Financial Group, Inc. For example, Professor Peter Menell points to the State Street decision as one of the “more notable” examples of the Federal Circuit’s “strong pro‑patent bias in the interpretation of patent law.” Professor Leo Raskind describes the State Street decision as “so sweeping a departure from precedent as to invite a search for its justification.” So too, Judge Mayer of the Federal Circuit, in his opinion dissenting from the en banc ruling in In re Bilski, argues not only that the State Street “decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent,” but also that it “launched a legal tsunami, inundating the patent office with applications seeking protection for common business practices;” led to the patenting of “the somewhat ridiculous to the truly absurd;” and “generated a thundering chorus of criticism.” The activism thesis has even entered the political arena, as shown by a 2006 report issued by the Computer and Communications Industry Association (CCIA), which accuses the Federal Circuit of being an “activist court” that “summarily eliminated the judicial rule against business method patents” as a means of expanding the domain of the patent system by “judicial fiat.”

The judicial activism thesis may have a superficial appeal. State Street was a highly visible and prominent pronouncement by the federal court having nationwide jurisdiction over patent cases. It may seem reasonable to attribute tremendous implications to such a famous judicial opinion. Yet the judicial activism thesis suffers from multiple glaring problems and plainly cannot account for the timing of the rise in business method patenting, which plainly began well before State Street.  

[Read the full article: Business Method Patents_Blog.pdf]

Notes:

  • Bilski v. Kappos oral arguments are set for this afternoon at the Supreme Court in Washington DC.
  • In college, I earned a certificate in “engineering management systems.” That program was part of the civil engineering department at Princeton and essentially focused on applying engineering techniques to solve business related problems. There was nothing “abstract” about these courses. The problems were real, and the solutions sure seemed like engineering – especially since they worked to solve the problems.

108 thoughts on “Business Method Patents: Technological Change, Not Judicial Activism

  1. what is it that you think or the SCOTUS thinks is just so special about mechanical and chemical inventions compared with information processing inventions?

    Anyone can process information with his/her brain but nobody can make a peanut butter sandwich with his/her brain.

    That’s really all there is to it, NWPA. What’s shameful is that you can’t figure this out yourself.

  2. … all you have left to do is define, “primary,” “substantially,” “material,” and “‘transformation” … and we’ll all be able to agree on just what a business method is.

    Good luck with that.’”

    “Courts define those terms all the time, in all manner of contexts. Such terms allow fact-finders and courts to make reasonable decisions while preventing form to triumph over substance.”
    MM

    Yes they do. But here the need/context has been established: To define these (your) terms for the purpose of defining a biz method.

  3. “My arguments center on that 101 is the wrong tool to police software patents. 102 and 103 are the right tools.”

    I would agree with you if 102 and 103 could be used effectively. They are not being used effectively and the garbage that is being patented is being used to extort money from successful companies. If 102 and 103 cannot be used effectively and the cost of recognizing software patents outweighs the benefit (as I believe it does) then the right response is to simply say that 101 bars software patents and be done with it.

    That is how I would approach it. I suspect however that the correct legal analysis is more like this:
    1) software is an abstraction which has been expressed in a computer language, meta language or boolean design;
    2) abstractions are not patentable under 101;
    3) where the gravamen of a device is the physical design and the software is incidental in producing the functionality of the device then the logical design expressed in the software can be patented as being part and parcel of the device whether that logical design is expressed in software, firmware or hardware;
    4) where the intended purpose of the device can be achieved on general purpose computers then the design is not patentable;
    5) if in doubt deny the patent.

    This would lead to the following corollary: “To the extent that the functionality of a hardware design can exactly emulated on a general purpose computer, the design is not patentable.” The corollary gets around the concern expressed by Chief Justice Roberts about making an intellectual process patentable simply by throwing a calculator into the mix. It also avoids the metaphysical debate about the difference between hardware and software.

  4. Big Hairy Rat,

    I agree that the method should be obvious if it is nothing more than a routine automation of a known method.

    But how often are the methods used by a computer and a person the same? Furthermore, there is how to automate the method. How to automate a method may be non-obvious. One of the problems with the claims we keep seeing discussed in court is that they are too broad to be meaningful.

    My arguments center on that 101 is the wrong tool to police software patents. 102 and 103 are the right tools.

    Long ago I was a software engineer for many years. I don’t know if any of my software is stilled used day to day, but it used to be. And my designs used to be used by millions of people everyday.

  5. The decision in the 1998 State Street case apeared obvious to me at the time. The idea that a whole category of subject matter could be summarily dismissed without review was ridiculous. It’s not activist at all. It actually was a return to the statutes and basic principles.

  6. Night Writer Patent Attorney said:

    “Big hairy rat: Oh boy, you just don’t get information processing.”

    Mr. Patent Attorney – I don’t know about you, but I’ve written software which is in daily use.

    I happen to agree that there may be software inventions that in the abstract would deserve a patent when they were first discovered /invented because they are so different from what came before (the electronic spreadsheet for example, the simplex method, Karmarkar’s algorithm and the conjugate gradient method come to mind).

    I do not say that implementing a method is easy. It can take man years of effort to implement a method (I’ve been there, done that) but it is the equivalent of designing and constructing a building using known techniques and methods. The resulting code can be copyrighted but not patented.

    If I conceive of a computational or logical method for solving a problem which cannot in practical terms be done manually (this seems to have happened a lot in computational methods pre computer) and then you say: let’s implement it on a computer – you have invented nothing patentable and the code monkey who grinds out the implementation has not invented anything patentable unless in the course of the implementation he makes some new discovery.

    The problem with software is identifying the boundaries of what should be patentable so that we have a workable system that promotes progress. Given that we had enormous progress in software before people thought it was patentable and we know that there are transaction costs associated with allowing patents, it seems doubtful that allowing software patents will promote progress => software patents are unconstitutional.

    Last year I had a look at the Netflix prize and some of the patents in the recommender system area. There seemed to be hundreds of patents and the ambiguity of the patents presented a significant risk for anyone new trying to work in the field and yet it was not one of those existing patent holders who won the prize.

  7. Just because “financial engineering” uses the tools and analytics of science and engineering does not make it the equivalent of a hard technology. Indeed, inappropriate use of those tools and analytics was a fundamental cause of the Great Recession. To imply that financial engineering is just another step on the road of progress is to miss the radical transformation that the computer and the Information Age are bringing about. This transformation is changing the economic structure in ways that we are only beginning to comprehend. A patent system that is a relic of the Industrial Age will be only one of many casulaties in the years and decades ahead.

  8. >>If people currently perform the task how does >>moving the known task to a computer justify >>patentability. Are you saying that the >>mere “idea” of automating an existing process >>is itself patentable?

    Big hairy rat: Oh boy, you just don’t get information processing. Digging holes is old. So, should all patents directed to machines that dig holes be rejected under 101?

    Think about a method a person currently carries out: (1) why do you think it is easy to automate this method? If it was then we would all be out of a job. (2) the methods information processing machines carry out are not likely to be the same as what people do. We see that already in most of the financial models that could not be done without rapid calculations and rapid exchange of information.

    Here’s a question for you: what is it that you think or the SCOTUS thinks is just so special about mechanical and chemical inventions compared with information processing inventions?

    The answer is that you don’t understand information processing.

    I fear the SCOTUS is going to give us a pretty bad result in this. Comparing a computer loaded with software to a DVD player loaded with a DVD is just shameful. Shameful display of ignorance.

  9. Posted by: Ciaran O’Riordan | Nov 09, 2009 at 07:29 PM: “The point is, in areas where projects might have very little financial backing (such as making a website), and where there can be thousands of practitioners, if justice requires any fees or any amount of bureaucracy, then many will not get justice.

    These sort of regulations are fine in areas where the practitioners are medium/large businesses, but not for things that many ordinary people do in their daily life, or for fun, or for a hobby, or to help their friends/community.”

    I take it here you are thinking about the LZW patent and Unisys asking for royalties somewhat after it had become an industry standard. I mentioned one legal problem Unisys had with the LZW patent. There is another. It is the doctrine of abandonment. It is a equitable doctrine. But the nut is that where the owner of rights has slept on them so long as to justify the inference by the public that there are no adverse rights or that they will not be asserted, those rights are effectively abandoned. They are unenforceable.

    I had just such a case once upon a time. It involved a class action where I demonstrated late assertion of rights on behalf a class. Not only did we win, but the judge sanctioned the general counsel of the owner of the rights.

    Clearly there are tools to building websites so notoriously publicly available as to benefit from this legal theory against a late assertion of patent rights. Had Unisys ever sued anyone, the legal theory may have been viable.

  10. … all you have left to do is define, “primary,” “substantially,” “material,” and “transformation” … and we’ll all be able to agree on just what a business method is.

    Good luck with that.

    Courts define those terms all the time, in all manner of contexts. Such terms allow fact-finders and courts to make reasonable decisions while preventing form to triumph over substance.

  11. MM’s above suggestion for the definition of a business method:

    I would suggest something along the lines of “A method whose primary purpose is to achieve a profit or an increase in profitability, wherein the increase is achieved substantially without the creation of a new composition or the material transformation of a commodity for sale.” Something like that.

    Now; though you in a later comment added:

    “*my definition is offered off the cuff, btw, took me 30 seconds to draft it with just a bit of revision after reading it through a couple times and I’m not wedded to it but it is more than Professor Duffy managed.”

    … all you have left to do is define, “primary,” “substantially,” “material,” and “transformation” … and we’ll all be able to agree on just what a business method is.

    Good luck with that.

  12. But nobody has ever published/practiced the patented invention publicly before the the patent was granted, right? So how are people (in business) harmed if they were not using the method? All business innovations must be made public?

    From what I can see above, she was rebutting the Finnegan lawyer’s quid pro quo argument, unless there was more to that, which you can fill in.

  13. While the Justices enjoyed a few moments of levity at the expense of truly silly ideas, they managed to avoid the key question- why are “mechanical” patents prima facie embraced, while “idea” patents are disgraced? I believe the main reason is one of surrogacy- that is, to address the question of “obviousness” they are substituting the hard work bringing an invention into physical realization, as a surrogate for obviousness. Idea patents require little apparent work, and to the layman (which means most attorneys and judges), they are easy and obvious. And therefor not patentable. But that’s simply sloppy thinking, and one can do much better. A sound obviousness hurdles would make any distinction between hard and soft ideas moot. See link to genuineideas.com for a more detailed argument.

  14. I believe generally this statement is logically incorrect.

    I think the context is key here. When the patent itself claims a method of using and/or transforming information, then the patent certainly does limit the free flow of information.

  15. I admit I haven’t read her full comments, so maybe they were made in some particular context. However, I believe generally this statement is logically incorrect.

  16. Ned H.: “All one had to do was consult a patent attorney for an opinion.”

    Which brings us to the old joke:

    Patent holder: you infringe our patent, pay us two thousand.

    (Developer thinks the patent is bogus, seeks lawyer)

    Patent lawyer: Sure I give you an opinion. That’ll cost five thousand.

    NOTE: this is *not* an anti-lawyer joke. Five thousand might be a perfectly reasonable fee (I didn’t even mention a currency!). The point is, in areas where projects might have very little financial backing (such as making a website), and where there can be thousands of practitioners, if justice requires any fees or any amount of bureaucracy, then many will not get justice.

    These sort of regulations are fine in areas where the practitioners are medium/large businesses, but not for things that many ordinary people do in their daily life, or for fun, or for a hobby, or to help their friends/community.

  17. MM: The question is: if it is profitable and gives a them an edge, then why shouldn’t they keep it a secret, period?

    Then you agree with me that Sotomayor is wrong.

  18. appealho: And if it is profitable for that inventor of the innovative concept, and gives that person an edge in the market, why shouldn’t that person also keep it a secret if patent protection is not available?

    The question is: if it is profitable and gives a them an edge, then why shouldn’t they keep it a secret, period?

    And the answer is that: it doesn’t really matter if you’re a troll or you operate a patent holding company.

    Note that the “wheels of progress” are irrelevant here unless you believe that profits = progress, in which case you are a patent troll or stoopiter than Sarah Palin.

  19. –…but there will never be patents on what lawyers do.–

    Actually, patent attorneys have to be careful not to accidentally become co-inventors. And plenty of patent attorneys have patents in their own names.

  20. But if it is innovative and patentable, by definition no one else is practicing it unless they are doing it secretly. And if it is profitable for that inventor of the innovative concept, and gives that person an edge in the market, why shouldn’t that person also keep it a secret if patent protection is not available? Seems somewhat limiting rather than “free flow.” Just wondering …

  21. link to legaltimes.typepad.com

    Justice Stephen Breyer said that if everything that “helps a businessman succeed” is patent-eligible, it would “stop the wheels of progress” by granting exclusive rights to innovations that should be available to all. When J. Michael Jakes of Finnegan, Henderson, Farrabow, Garrett & Dunner, arguing in favor of the patent at issue, said one benefit of patenting innovations is public disclosure, Justice Sonia Sotomayor countered that patents in fact “limit the free flow of information.” Sotomayor, a onetime intellectual property lawyer in New York, was viewed as a potential pro-patent vote, but her comments suggested skepticism.

    Sotomayor 1, RedMonkey 0

  22. Unfortunately, it appears that O’Riordan has been making his case in front of a few too many government types (“gobbledygook” anyone?) or open source hippie types. His case pretty much falls apart when he tries to put it in front of people, many of whom including myself, have developed code and know the ins and outs.

  23. “Today, if you write software to play the videos that are available on the Internet, you’ve violated patents. If the format was MPEG H.264, then the MPEG-LA group will tell you you’ve violated the patents of over 20 companies.”

    So? People who produce those videos are free to use other formats, but they chose H.264. In theory, most H.264 videos are produced with software licensed for the H.264 patents. H.264 is a commercial standard. People opt into it by choice. You sound like someone who complains about having to pay for a ticket to see a movie.

    Write your software in a way that abstracts the video format and provide for user-addition of new codecs. Someone who buys an H.264 codec can use your software with H.264, others can use your software for patent-free formats.

  24. Posted by: Ciaran O’Riordan | Nov 09, 2009 at 04:24 PM: “Do you remember when Unisys used their LZW / gif patent to shake down people who simply made websites? Any search engine will tell you about that.”

    I remember it well. They had a patent on it. Shake down is a bit much. All one had to do was consult a patent attorney for an opinion. Unisys had a problem, a prior patent owned by IBM on the same invention. There should have been an interference to resolve the issue of prior invention, but there was none. The last thing Unisys wanted to do was to file a lawsuit, as that would have effectively resulted in the issue of who invented LZW first being actually litigated. Unisys clearly did not know who would prevail.

    “On the contrary, writing software today without violating software patents is maybe impossible. You won’t get sued immediately, but if you ever start making money, the trolls might come, or if your software becomes widely used (taking users away from some software company with a big patent portfolio), the large software companies will come knocking.”

    I agree to this. But, if you file your own patent applications you have a lot of leverage in any negotiation. What the big boys want is a cross license and a balancing fee. But, if you are clean enough, what you may end up getting is being acquired by the big boys for billions. Those patents are valuable.

  25. Machine for drafting a patent application and process for doing same
    US Pat. 6049811 – Filed Nov 26, 1996
    Another object of the invention is to provide a method of preparing a patent
    application that is sequentially based one section upon another. …

    System, method, and recording medium for drafting and preparing patent …
    US Pat. 6434580 – Filed Oct 23, 1998 – NEC Corporation
    SYSTEM, METHOD, AND RECORDING MEDIUM FOR DRAFTING AND PREPARING PATENT …
    industrial properties is disclosed in Japanese Patent Application Laid-Open No.

    Machine for drafting a patent application and process for doing same
    US Pat. 6574645 – Filed Feb 18, 2002
    Returning now to the operation of the machine and flow of the method for
    drafting a patent application, when pre- 20 sented with the drafting screen 200
    for …

    Apparatus and method for the manipulation of image containing documents
    US Pat. 5982931 – Filed Nov 28, 1997
    … patent attorney or patent agent involved in drafting the patent application.
    In a clearance search, the drawings of a new device or manufacturing method …

    Method and apparatus for controlling the drafting of sliver in a drawing frame
    US Pat. 4819301 – Filed Jul 2, 1987 – Zinser Textilmaschinen GmbH
    Additional prior art is disclosed in US Patent Application Ser. … This
    application teaches a method and means for controlling the drafting of sliver in
    a …

    Method and apparatus for controlling a drafting unit
    US Pat. 5134755 – Filed Jan 9, 1992 – Maschinenfabrik Rieter AG
    … to a further aspect of the invention, the European Patent Application No.
    … discloses a method and apparatus for optimizing the drafting process in …

    System, method, and computer program product for developing and maintaining …
    US Pat. 5754840 – Filed Jan 23, 1996 – SmartPatents, Inc.
    Related Art according to the present invention: and When drafting certain types
    … documents h^g stringent require- prosecution of the patent application, …

    …and some how the world hasn’t come to an end.

  26. “…if you write software to play the videos that are available on the Internet”

    If you are writing software to play videos, chances are you are making calls to a Microsoft DLL that you loaded from a Microsoft SDK.

    If you are writing video playback stuff from scratch, you should either be working for Microsoft, Avid or the like and 1) your company should be concerned about patents, or, if you are on your own, 2) you should be concerned about patents in the sense that you should probably be filing something (but really not, because you will either be offered a job, or you will be bought out if you have something valuable).

  27. Ciaron-

    ” You won’t get sued immediately, but if you ever start making money, the trolls might come, or if your software becomes widely used (taking users away from some software company with a big patent portfolio), the large software companies will come knocking.”

    So, whats wrong with that? You are making money from something they invented. Why aren’t they entitled to come knocking?

  28. The case, an appeal of a lower-court ruling that denied a patent to developers of a commodities hedging system, has attracted attention in the business community because it gives the high court an opportunity to set new guidelines for what types of business ideas—as opposed to physical technology—can be covered by patents. A wide array …

    TO CONTINUE READING SUBSCRIBE NOW

    As if I’d pay money to read anything published by that rag.

  29. Cioran: Lawyers don’t want patents in their field

    For the sake of accuracy, the correct statement is “the vast majority of lawyers don’t want patents in their field.”

    I’m certain that you could find examples of lawyers who do want patents in their field, including patent lawyers. Aren’t there patents on methods of managing a patent prosecution docket out there?

    Yes, it makes nearly all of us vomit. But you know that is beside the real point which is that the lawyer who wrote and filed the app back in 2002 can buy another BMW for his mistress after he shakes down various law firms (including his own, after he’s asked to leave it).

  30. Just a note, at the time State Street was announced, I believed the case was inconsistent with Benson, and Flook at least. While disparaging the MOT, the Supremes did say in Benson that physicality was the “clue.”

    Even though Bilski does not present the exact facts of State Street, I think the Supremes should address that case now so as to remove all lingering doubt.

    Is it sufficient to name a computer in the claim in order to patent the Bilski method? If it is not, why not?

  31. “If you are writing software that might be patentable, you will know it and you won’t have a problem with it”

    I suspect that a lot of people used gif and jpeg files as integral parts of software they were working on without knowing they were violating issued patents. I also suspect that the people Eolas has recently sued to enforce their plug in patent are surprised since the idea of using a general purpose software front end combined with an add-on component to access files is old:
    1. Magellan Navigator used this type of arrangement for file viewing.
    2. In the early 1990s I bought a developer kit for Lotus 1-2-3 to write add-ons. The licence specifically prohibited the use of the kit to write add-ons (“plug-ins”) that would allow 1-2-3 to be used to access and view database data. Lotus had obviously thought of that application and wanted to keep it for itself.

  32. TwoCents: the typical application programmer has nothing to worry about vis a vis “software patents”

    Unfortunately, this hasn’t been the case for about 20 years.

    Today, if you write software to play the videos that are available on the Internet, you’ve violated patents. If the format was MPEG H.264, then the MPEG-LA group will tell you you’ve violated the patents of over 20 companies.

    Do you remember when Unisys used their LZW / gif patent to shake down people who simply made websites? Any search engine will tell you about that.

    On the contrary, writing software today without violating software patents is maybe impossible. You won’t get sued immediately, but if you ever start making money, the trolls might come, or if your software becomes widely used (taking users away from some software company with a big patent portfolio), the large software companies will come knocking.

  33. Ciaran,

    I hear everything you say. I love and use opensource. You can’t call for a special exception just because OS is in many ways a good thing. A generic drug is a good thing for poor sick people even if it blatantly infringes a patent. In the US, even saving lives does not justify infringement.

    OpenSource community needs to find ways to address the patent problem other than hoping for software patents to go away.

    If you’re going to operate in an organized and coordinated way, why don’t you address the patent problem in the same way other organizations do. OTTOMH, and in no particular order: Try building your own pool of patents. Find some people willing to do patent searches for free. Make it possible to quickly remove allegedly infringing code if requested. Organize as a bunch of non-profit organizations (or some form of corporation) where liability is with the institutions not the individuals who contribute.

    You have to different fundamental issues. First, not knowing whether you infringe. Second, what to do when you do infringe.

    Regarding the first, remember that people don’t want to sue you if you don’t have any significant assets. If your OS project is undercutting the demand for a patented commercial product, probably you only have to worry about an injunction, which you can dispel by simply removing the offending portion of code.

    See, you’re already getting free legal contribution to your cause! Every year my bar association asks how many pro bono hours I’v put in. in 10 years, it’s been 4 hours. I’m sure you could find patent attorneys willing to put in pro bono time to help out. My view is that there is too much inertia (among other reasons) to hope that software patents will go away, and even if they’re curtailed by the Supreme Court, the problem will still be there. So better to spend time and effort on dealing with the problem in other ways that you have control over.

  34. “Legal experts who advocate patenting software ideas should look at the similarities between writing software, writing essays, writing music, and writing legal briefs – instead of looking for similarities with semiconductors, cars, or pharmaceuticals.”

    As I have said before, the typical application programmer has nothing to worry about vis a vis “software patents”

    If you are writing software that might be patentable, you will know it and you won’t have a problem with it. Software that you might dabble with from the comfort of your living rooms should not ruffle your ascot…

  35. “…the dreams of great innovators and businessmen like Bilski…”

    Well, one thing is for sure, I don’t see Mooney’s name in there anywhere among the “great innovators and businessmen”

  36. “Justice Stephen G. Breyer brought up … a method for teaching antitrust law that ‘would keep 80 percent of the students awake,’”

    This illustrates the ludicrosity that is being contemplated.

    “Deputy Solicitor General Malcolm L. Stewart, speaking for the Patent Office and for the Federal Circuit Court’s patentability test”

    Uhh, coincidence?

  37. TwoCents,

    I was saying that ways of battering metal and treating raw materials to make cars are patentable. Ways of drafting legal documents are not patentable. Lawyers know that applying the patent system to activities such as drafting legal documents would lead to frustration, restrictions, and exclusion and it wouldn’t progress the art.

    Legal experts who advocate patenting software ideas should look at the similarities between writing software, writing essays, writing music, and writing legal briefs – instead of looking for similarities with semiconductors, cars, or pharmaceuticals.

    Lawyers don’t want patents in their field, and software developers don’t want patents in their field.

    @HierarchyOfPB,

    Policies that affect car manufacturing have to look after the interest of causing a sufficient number of sufficiently good quality cars to be available at an acceptable price. We don’t have to look at what impact the policies will have on individuals who make cars, because there aren’t any (or maybe there are, but their output is minimal). So the considerations can be “narrowed” to just looking at the economic issues.

    For software, there are also social issues, personal freedom issues, and issues of those who develop software without having a direct financial interest. Patent negatively impact all these issues, and that has to be taken into account.

    In software, the programming that people do for fun and exploration, or for social reasons, has produced GNU/Linux, Apache, Drupal (which the White House uses for http://www.recovery.gov), software used by the US military, by NASA, etc. A large software project takes many people, so the freedom to tinker in your basement isn’t sufficient.

  38. It would take a most inventive analyst to find a way in the argument for the risk-management idea under review to fit into the Patent Act’s coverage. The idea had no defenders whatsoever on the bench

    For the record, this bench includes Chief Justice Roberts and Justice Alito. If those two couldn’t get excited about defending the dreams of great innovators and businessmen like Bilski from the Federal government’s malicious and arbitrary actions, then you’ve got a serious problem.

    What’s more interesting is that, in certain respects, the claim in Mayo v. Prometheus is even worse than Bilski’s. Pass the popcorn!

  39. “TON of crap” “whining” “exceptionally greedy” “crap”

    “A man’s character may be learned from the adjectives which he habitually uses in conversation. ”

  40. Lawyers and judges have invested major resources in the Bilski case, and it does raise a fundamental question that may well need answering. But, when there may well be no formulation of patent law that would salvage the Bilski-Warsaw creation, why bother?

    Oh, that’s easy: because there is nothing at all that is atypical about the Bilski patent. There is a TON of crap like it in the queue, and worse, and a lot that has already issued. And you’ve got a tiny minority of whining, awesomely un-creative and exceptionally greedy people for whom it is very very important that every little crap idea out there gets past 101 and onto the USPTO’s 103 roulette wheel.

  41. It would take a most inventive analyst to find a way in the argument for the risk-management idea under review to fit into the Patent Act’s coverage. The idea had no defenders whatsoever on the bench

    BWAHAHAHAHAHAHHAHAHAHAHAHAHAHAHA!!!!!!!!!

  42. What’s wrong with getting rid of Bilski type claims with 102/103 and 112? Why use the nuclear option to swat a fly?

    You’re new here, aren’t you? There’s nothing “nuclear” about using 101 to get rid of a claim.

    But your point is well-taken that many claims that fail 101 would also fail 102/103 and/or 112 under various theories, especially when doctrines are applied with those latter statutes to “read out” certain types of limitations (which some folks believe is strictly verboten when it comes to 101). Why is that claims that fail 101 are typically so crappy when examined under the statutes as well?

  43. Well, I supposed the invocation of “Lorenzo Jones” is just Scalia’s way of saying “I don’t know a darned thing about patent law” without using the word “gobbledygook.”

  44. “…soon software will be performing many more tasks that people currently perform.

    How could this be not eligible for patentability?”

    If people currently perform the task how does moving the known task to a computer justify patentability. Are you saying that the mere “idea” of automating an existing process is itself patentable?

    The real problem with business method and software patents is quality. It may be that the only way to deal with the quality problem is to simply say that the benefits of allowing business method and software patents is outweighed by the problems of the garbage the resulting tide brings in and refuse to allow them.

    Biliski should have been disallowed on the alternate grounds that (1) it was not a “process” since it did not lay out a deterministic series of steps from start to finish and (2) it was obvious.

  45. Well…me and the people that wrote 35 USC 101 and 35 USC 100, who used words like “any” and didn’t use words like “except or but”.

    Yes, and the earth was created in 7 days. We know, Les. We know.

  46. MM-
    “You believe that all processes are patentable which is, quite frankly, ludicrous and is an opinion shared by virtually no one on the planet except for the trolls here”

    Well…me and the people that wrote 35 USC 101 and 35 USC 100, who used words like “any” and didn’t use words like “except or but”.

  47. Les why did you respond to my post at all?

    I already answered that question, Les. I responded so that others don’t waste their time trying to “reason” with you as there is very little “reasoning” going on. You believe that all processes are patentable which is, quite frankly, ludicrous and is an opinion shared by virtually no one on the planet except for the trolls here.

  48. If mortgage backed securities had been patented and the patentee had kept it to himself, we’d have less of a mess on our hands.

    Meanwhile, back on earth, I’m guessing that the Bilski oral arguments are over. Can I make a prediction: the Supremes sounded a lot more like me than than Les or Actual Inventor, i.e., they didn’t bash the government over the head with a simpleton’s version of Diehr, and they didn’t mention the importance of promoting such “innovations” as Bilski’s alleged invention or even the disclosure of such alleged inventions. Rather, they wanted to know how to get rid of claims like Bilski’s if they don’t use the Federal Circuit’s test (which isn’t flexible enough to capture all of the crap).

  49. MM-

    “Les, I’m not playing twenty questions with you. I already know the answer to the question I asked. It’s just a warning to others. You should feel free to express your radical views (you are probably not alone). But I’m not going to waste my time engaging with a fundamentalist of any stripe.”

    Thank goodness! Then I wont have to respond to your nonesense.

    But if you are not going to waste your time engaging with the sane, why did you respond to my post at all?

  50. >>But I’m not going to waste my time engaging >>with a fundamentalist of any stripe.

    OK. The arguments don’t matter. The person making the arguments is what counts.

    Quite an impressive mind you have their MM.

  51. >>I asked you first. Are there any processes >>that are not algorithms?

    Strikes to the heart of the issue because represented information is like little grains of wheat. It takes time, energy, and space to transform information.

  52. Les, I’m not playing twenty questions with you. I already know the answer to the question I asked. It’s just a warning to others. You should feel free to express your radical views (you are probably not alone). But I’m not going to waste my time engaging with a fundamentalist of any stripe. I will gladly ridicule and scorn you, though, when you ask for it.

  53. MM

    “How about we just stick to patent law, Les, and not muck about in your philosophical cesspool? For the record, are there any useful processes that you believe are unpatentable under 101?”

    I asked you first. Are there any processes that are not algorithms?

  54. “…lock them out of the room and get some real work done…” would that “real work” be performed with the right hand or left hand Mooney?

    Actually, that whole “lock them out” sounds like the tile of a chapter borrowed from Pelosi’s “bipartisanship” playbook.

  55. Wouldn’t hurt. If mortgage backed securities had been patented and the patentee had kept it to himself, we’d have less of a mess on our hands.

    Maybe we should stop calling it a monopoly and call it a “test drive.” It’s all in how you spin it anyway.

  56. Mooney is a bitter SPE working the chemical arts who believes that the information processing arts has destroyed the world, or at least his little part of the world. Plus he has to eat lunch with people that allow business method patents.

  57. RedMonkey Full disclosure of exotic financial instruments and business methods faciliates public scrutiny. This makes it more likely that potentially harmful practices will be detected early and suitably regulated.

    So business methods patents are mandatory now? LOL.

  58. Les show me a process that is not an algorithm

    How about we just stick to patent law, Les, and not muck about in your philosophical cesspool? For the record, are there any useful processes that you believe are unpatentable under 101? If so, give us an example of such a process in claim form.

    You see, if you answer this question, that helps us learn how to converse with you. It’s sort of like discussing a problem in evolutionary biology with a group of strangers. Once you identify who the young-earth creationists are you can lock them out of the room and and get some real work done.

  59. Here is the Democratic Theory of Patenting.

    Full disclosure of exotic financial instruments and business methods faciliates public scrutiny. This makes it more likely that potentially harmful practices will be detected early and suitably regulated.

    This is just like open source sw arguments saying that bugs can be found and fixed more easily when software is open.

  60. Malcolm writes :”Simply because logic (including math) is used to solve a problem does not turn the solution into a patentable solution.”

    Please let us know what you think the 101 test is, Malcolm.

  61. Two important quotes for my angry friend Mooney

    “A man’s character may be learned from the adjectives which he habitually uses in conversation. ”

    “Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured. ”

    Twain

  62. Business methods are often some of the most tightly-controlled trade secrets. Permitting them to be patented will result in their clear and enabled disclosure. Others will be able to adopt the new, better methods for their profitability as well, instead of them being secret. The progress of useful arts is advanced. Society win.

    So profitably = progress? Yes, that would explain a lot of the bullcrap spewed here. Let’s call it the Republican Theory of Patenting.

  63. The Judicial Activism is in the other direction.

    35 USC 101 says any new and useful process is patentable if it meets the other requirements.

    35 USC 100 says process means process, method or art…

    Any restriction or exception read into that to exclude “natuarl laws”, or algorithms (show me a process that is not an algorithm) is Judicial Activism and nonesense.

  64. “Second of all, can someone explain why patents are necessary or desirable to incentivize the development of methods for increasing a company’s profitability?”

    Business methods are often some of the most tightly-controlled trade secrets. Permitting them to be patented will result in their clear and enabled disclosure. Others will be able to adopt the new, better methods for their profitability as well, instead of them being secret. The progress of useful arts is advanced. Society win.

  65. Mooney writes:

    “What are patents for again?”

    Answer: to give windbags like you and O’Riordan something to bloviate about, ad nauseum. Don’t you have any real work to do?

  66. Paul: ”This is not to suggest that §101 has no limits or that it embraces every discovery. The laws of nature, physical phenomena, and abstract ideas have been held not patentable.”

    Always worth keeping in mind. Of course, the Diehrbots will tell you that all this means is can’t draft a claim that begins in one of the following ways:

    “A law of nature, wherein said law of nature is …”
    “An abstract idea, comprising…”
    “A physical phenomenon, wherein said phenomenon comprises …”

    The Diehrbot will advise that if you simply use the term “A process” or “An article of manufacture” or “A composition” then you have nothing to worry about from 101 (as long as the claim can be deemed “useful” to somebody, somewhere, in some circumstance).

  67. “can someone explain why patents are necessary or desirable to incentivize the development of methods for increasing a company’s profitability”

    Patents give your competitors incentive to do something better than what you did, instead of taking the easy route and just copying. The easier the subject matter is to copy, the more important patents become.

    The incessant chant that patents somehow stifle competition arises from those who believe they are not smart enough to design around someone else’s patent.

  68. Mooney, you are a sad freak and a sleazy joke of human garbage (just borrowing some of the language from your usual attacks)

  69. O’Riordan,

    I don’t follow your argument. Like much of what you use to support the contentions of your little personal anti-patent campaign, it is touchy-feely hogwash. The characteristics of the people in a field do not determine whether the product of what they do should or shouldn’t be patentable.

    To the ever annoying and shrill anti-patent (and anti-financial success) mouthpiece Mooney,

    “Simply because logic (including math) is used to solve a problem does not turn the solution into a patentable solution.”

    Except when it does…which is quite often

  70. Ciaran:

    “…but there will never be patents on what lawyers do. Lawyers solve problems. Their work can be innovative, technical, useful and very profitable, and yet there’s never a question of sticking lawyers with the patent system.”

    Lawyers do lots of things. They use software, some of which might be patented. You suggest that somehow all lawyers do is outside the patent realm? It’s not true. If you want to separate “do” into mental activities (analyzing a case, outlining an appeal, forming a mental opinion, reading, writing per se), and physical activities (using email, using cryptography to protect client confidentiality, etc.), then our activities, like anyone else, can be curtailed by patents.

    “When patents are applied to fields such as pharmaceuticals or car manufacturing, they are an industrial regulation and can be evaluated in the narrow terms of economics.”

    Huh? Regulation has nothing to do with patent eligibility. Not sure what “narrow terms of economics” means, but I’m pretty sure software can be measured in terms of economics. Ask the firm that invests millions to develope some new ideas, as some do.

    “Fields like law, software development, music, and essay writing have practitioners who are individuals and non-commercial entities, people doing these things out of fun or interest. The freedom for everyone to participate in these fields is essential for society.”

    Patents do NOTHING to prevent you from intellectual exploration of the patented subject matter. And, practically speaking, if you’re only intereseted in programming for fun, code up any patent in the world and use it in your basement for fun and exploration. I assure no one will be coming after you for infringement. Just don’t package it and make it freely available to the world. You don’t have to do that to have fun or explore. That’s a distinction the o-source folks miss. They don’t want to build things only for their own edificaiton and amusement. They want to participate in an ecosystem where things are widely distributed for free and those things are used to build other widely distributed things for free, and so on. There’s potentially a problem when you start to do things that in effect devalue or even steal what the capital of others has brought into existence. It’s like the difference between stealing a single newspaper out of a newspaper machine to read and scanning the newspaper in and making it freely available.

    Ciaran, I think you have an incomplete view of what freedom is. When you pull on a strand of a spider web, sometimes that pull can be felt far across the web.

  71. Ah, RedMonkey, you speak like a true software prosecutor. Bilski has turned you into a reactionary stooge wherein the addition of a claim element (to an unstated claim, no less!) suddenly “changes everything.”

    What makes you think that adding the phrase “wherein you sell the product” or “give the product away” would turn any claim into an unpatentable business method, according to my definition*, or vice versa?

    And I love the idea of patents on methods of donating to charity. Almost as hilarious as patentable methods of tax avoidance.

    What are patents for again? Are they encourage progress in the useful arts, or are they merely something that agents, lawyers and their clients use to facilitate sharing of the grease from their palms?

    *my definition is offered off the cuff, btw, took me 30 seconds to draft it with just a bit of revision after reading it through a couple times and I’m not wedded to it but it is more than Professor Duffy managed.

  72. Thanks, that PTO White Paper confirmed that this was “a device or process in the printing art” and that and other examples in this White Paper of what IT calls business method patents are not what anyone concerned about business method patents would even call business method patents.
    BTW, there are several examples of specificly unpatentable subject matter or unenforceable patents, as in atomic energy and surgical proceedures [by statute], and the conveniently ignored parts of the Sup. Ct. Diamond v. Chakrabarty decision which said [right after "..anything under the sun that is MADE by MAN" (2 limitations bolded): ”This is not to suggest that §101 has no limits or that it embraces every discovery. The laws of nature, physical phenomena, and abstract ideas have been held not patentable.” [citing several prior Sup. Ct. cases]

  73. DC: There was nothing “abstract” about these courses.

    Really? I highly doubt that is true.

    The problems were real,

    Every problem is “real” to the person tasked with dealing with it, including a “problem” that is philosophical in nature, i.e., “answering a question about morals or ethics.” Are the answers patentable because the problem is “real”? Of course not, unless you’re a Diehrbot like Actual Inventor and his cheerleader.

    and the solutions sure seemed like engineering – especially since they worked to solve the problems.

    See above. Simply because logic (including math) is used to solve a problem does not turn the solution into a patentable solution.

  74. Well, certainly any product by process claim can be turned into a business method claim by simply adding the step of “selling the product.”

    But what if you instead added the limitation of “giving the product away”? Aside from making it easy to compute damages and really hard to find prior art, would such a claim now also be an invalid “business method”?

  75. “the newly emergent field of financial engineering”

    First of all, “financial engineering” isn’t “newly emergent”. Second of all, can someone explain why patents are necessary or desirable to incentivize the development of methods for increasing a company’s profitability? Maybe Professor Duffy can take a stab at it?

    “Someone here recently commented that all patents are business method patents.”

    What a pleasantly vapid statement! Yes, it’s true that you need to define a business method before you can critique it. I would suggest something along the lines of “A method whose primary purpose is to achieve a profit or an increase in profitability, wherein the increase is achieved substantially without the creation of a new composition or the material transformation of a commodity for sale.” Something like that.

    “The State Street decision reversed this trend largely as a response to the rise of financial business methods”

    And how did that work out? How did State Street Bank and the repeal of Glass-Seagall work out for the good of the country? Professor Duffy, you’re a very serious and intelligent man. How did it work out?

  76. Tazistanjen : “Someone here recently commented that all patents are business method patents. I wouldn’t go quite that far, but he(?) has a point. It is a difficult line to draw, and it seems to me that Congress, not the Supremes should be the ones to draw it if necessary.”

    I have expressed this belief many times on this blog. My point simply being that the primary purpose for most inventors filing for a patent is to make money.

    Presumably, once the patent is granted some type of business method or system will be built around the patent, regardless of what statutory category it’s in.

    So from that perspective all patents are indeed business method patents.

    The question now becomes, which type of businesses will inventors be allowed to go into with a patent, and which type of businesses will they be denied entry?

    It’s is my belief that the constitutional right of inventors to enter any legitimate business with a patent be upheld.

  77. Apparently, the record of the patent to Mr. Perkins was lost in a Patent Office fire in 1836. The PTO provides a little more information and acknowledges that this was the first business method patent at:

    link to uspto.gov

    Unfortunately, I was unable to quickly locate an alternate source. As for Thomas Jefferson, I am curious which of his expressed views would support the position that he either was or was not in favor of business method patents. I am afraid that any such assertion would likely be stained by over 200 years of subsequent consideration and jurisprudence.

  78. Is Dennis going to post an article expressing the opposing view? If not, I fear the credibility of this blog will take a major hit.

  79. Paul,

    X241 – only information contained is “Jacob Perkins Mar. 19 1799 Detecting conterfeit notes rec London Journal of Arts & Sciences Vol 1 Page 161″

  80. Dennis,

    Will the audio recording of the oral arguments will be publicly accessible, and if so, would you be able to post them or provide a link?

  81. Someone here recently commented that all patents are business method patents. I wouldn’t go quite that far, but he(?) has a point. It is a difficult line to draw, and it seems to me that Congress, not the Supremes should be the ones to draw it if necessary.

  82. TwoCents says: ‘there cannot be an arbitrary bar against certain “types” of patents’

    …but there will never be patents on what lawyers do. Lawyers solve problems. Their work can be innovative, technical, useful and very profitable, and yet there’s never a question of sticking lawyers with the patent system.

    When patents are applied to fields such as pharmaceuticals or car manufacturing, they are an industrial regulation and can be evaluated in the narrow terms of economics.

    Fields like law, software development, music, and essay writing have practitioners who are individuals and non-commercial entities, people doing these things out of fun or interest. The freedom for everyone to participate in these fields is essential for society.

  83. Re: “The first business method patent was granted on March 19, 1799, to Jacob Perkins of Massachusetts for an invention for “Detecting Counterfeit Notes”.
    Please provide a hotlink, or at least some other identification for this patent, and tell who issued it, because what is considered a “business method” patent or not seems to vary considerably “in the eyes of the beholder” and their view on the subject.
    As I recall the first U.S. [not colonial] patents were issued personally by Thomas Jefferson. I find it hard to believe [in view of his other known views] that he would have favored business method patenting.
    It will be interesting to see if, or where, Justice Scalia goes for “original intent” on this issue.

  84. It’s worth recalling Baker v. Selden (ca. 1870s), in which S. Ct. denied copyright protection to a book that described and provided forms for implementing a new accounting method. The Court suggested to the author that perhaps patent, not copyright, was the proper way to protect his work. It’s a bit ironic that this came not long before the Hotel Security decision.

  85. This is a great article. For a historical perspective, it is worth adding that the first business method patent predates the 80′s by nearly two centuries. The first business method patent was granted on March 19, 1799, to Jacob Perkins of Massachusetts for an invention for “Detecting Counterfeit Notes”. Though the first business method patent dates back nearly to the inception of the United States patent system, certain cases in the early 1900’s questioned the patentability of business method patents. These cases include the Hotel Security Checking Co. v. Lorraine Co. decision of 1908, where a bookkeeping system for preventing embezzlement was held to be unpatentable. For much of the 1900’s, the USPTO refused to grant business method patents. The State Street decision reversed this trend largely as a response to the rise of financial business methods, as the author noted.

  86. Dennis writes:

    “There was nothing “abstract” about these courses. The problems were real, and the solutions sure seemed like engineering – especially since they worked to solve the problems.”

    This is exactly why there cannot be an arbitrary bar against certain “types” of patents, and why the Federal Circuit has tried to keep the door wide open with regard to subject matter questions.

  87. Anyone that is in or has been in the field of information processing can see that soon software will be performing many more tasks that people currently perform. Software will likely displace 10′s of millions of workers in the next several decades.

    How could this be not eligible for patentability?

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