Talk:In Re Bilski, Mayer dissenting opinion

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Maura

The patent system is intended to protect and promote advances in science and technology, not ideas about how to structure commercial transactions. Claim 1 of the application of Bernard L. Bilski and Rand A. Warsaw (“Bilski”) is not eligible for patent protection because it is directed to a method of conducting business. Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain. State Street and AT & T should be overruled.

When drafting the Constitution, the framers were well aware of the abuses that led to the English Statute of Monopolies and therefore “consciously acted to bar Congress from granting letters patent in particular types of business.”

By 1952, when Congress enacted the current Patent Act, it was widely acknowledged that methods of doing business were ineligible for patent protection. See, e.g., Loew's Drive-In Theatres, Inc. v. Park-In Theatres, Inc., 174 F.2d 547, 552 (1st Cir.1949) (“[A] system for the transaction of business ... however novel, useful, or commercially successful is not patentable apart from the means for making the system practically useful, or carrying it out.”); In re Patton, 29 C.C.P.A. 982, 127 F.2d 324 (1942) (noting that “a system of transacting business, apart from the means for carrying out such system” is not patentable); Hotel Sec. Checking Co. v. Lorraine Co., 160 F. 467, 469 (2d Cir.1908) (“A system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art.”); In re Moeser, 27 App. D.C. 307, 310 (1906) (holding that a system for burial insurance contracts was not patentable because “contracts or proposals for contracts, devised or adopted as a method of transacting a particular class of ... business, [are] not patentable as an art”); see also 145 Cong. Rec. H6,947 (Aug. 3, 1999) (statement of Rep. Manzullo) (“Before the State Street Bank and Trust case ... it was universally thought that methods of doing or conducting business were not patentable items.”).

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable.

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection.

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. Bilski, for example, likely spent only nominal sums to develop his hedging method. The reward he could reap if his application were allowed- exclusive rights over methods of managing risks in a wide array of commodity transactions-vastly exceeds any costs he might have incurred in devising his “invention.”

Instead of providing incentives to competitors to develop improved business techniques, business method patents remove building blocks of commercial innovation from the public domain. Dreyfuss, supra at 275-77. Because they restrict competitors from using and improving upon patented business methods, such patents stifle innovation.

One reason for the poor quality of business method patents is the lack of readily accessible prior art references. Because business methods were not patentable prior to State Street, “there is very little patent-related prior art readily at hand to the examiner corps.” Dreyfuss, supra at 269.

Like many business method applications, Bilski's application is very broadly drafted. It covers a wide range of means for “hedging” in commodity transactions. If his application were allowed, anyone who discussed ways to balance market risks in any sort of commodity could face potential infringement liability. By adopting overly expansive standards for patentability, the government enables private parties to impose broad and unwarranted burdens on speech and the free flow of ideas.

Indeed, although this court has struggled for years to set out what constitutes sufficient physical transformation to render a process patentable, we have yet to provide a consistent or satisfactory resolution of this issue.

The majority, however, fails to enlighten three of the thorniest issues in the patentability thicket: (1) the continued viability of business method patents, (2) what constitutes sufficient physical transformation or machine-implementation to render a process patentable, and (3) the extent to which computer software and computer-implemented processes constitute statutory subject matter.

Courtney

State Street's decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent. Because (1) “the framers consciously acted to bar Congress from granting letters patent in particular types of business,” Comiskey, 499 F.3d at 1375, and (2) Congress evidenced no intent to modify the long-established rule against business method patents when it enacted the 1952 Patent Act, it is hard to fathom how the issuance of patents on business methods can be supported.

II. Business method patents have been justified, in significant measure, by a misapprehension of the legislative history of the 1952 Patent Act. In particular, proponents of such patents have asserted that the Act's legislative history states that Congress intended statutory subject matter to “include anything under the sun that is made by man.” AT & T, 172 F.3d at 1355 (Fed.Cir.1999) (citations and internal quotation marks omitted); see also Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Read in context, however, the legislative history says no such thing. The full statement from the committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” S.Rep. No.1979, 82d Cong., 2d Sess. 5 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2399 (emphasis added); H.R.Rep. No.1923, 82d Cong., 2d Sess. 6 (1952) (emphasis added).

This statement does not support the contention that Congress intended “anything under the sun” to be patentable. To the contrary, the language supports the opposite view: a person may have “invented” anything under the sun, but it is “not necessarily patentable” unless the statutory requirements for patentability have been satisfied. Thus, the legislative history oft-cited to support business method patents undercuts, rather than supports, the notion that Congress intended to extend the scope of section 101 to encompass such methods.

Business method patents do not promote the “useful arts” because they are not directed to any technological or scientific innovation. Although business method applications may use technology-such as computers-to accomplish desired results, the innovative aspect of the claimed method is an entrepreneurial rather than a technological one. Thus, although Bilski's claimed hedging method could theoretically be implemented on a computer, that alone does not render it patentable. See Diehr, 450 U.S. at 192 n. 14, 101 S.Ct. 1048 (Patentability cannot be established by the “token” use of technology.); Gottschalk v. Benson, 409 U.S. 63, 64-66, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) (finding unpatentable a method of programming a general purpose digital computer to convert signals from binary-coded decimal to pure binary form). Where a claimed business method simply uses a known machine to do what it was designed to do, such as using a computer to gather data or perform calculations, use of that machine will not bring otherwise unpatentable subject matter within the ambit of section 101. See Benson, 409 U.S. at 67, 93 S.Ct. 253 (finding a process unpatentable where “[t]he mathematical procedures [could] be carried out in existing computers long in use, no new machinery being necessary”).

Methods of doing business do not apply “the law of nature to a new and useful end.” Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection. See, e.g., John R. Thomas, The Patenting of the Liberal Professions, 40 B.C. L.Rev. 1139 (1999) (arguing that affording patentability to business methods opens the door to obtaining patent protection for all aspects of human thought and behavior, and that patents should remain grounded in science and technology) (hereinafter “Thomas (1999)”). “[T]he primary purpose of our patent laws is not the creation of private fortunes for the owners of patents but is ‘to promote the progress of science and useful arts.’ ” *1004 Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511, 37 S.Ct. 416, 61 L.Ed. 871 (1917). Although business method patents may do much to enrich their owners, they do little to promote scientific research and technological innovation.

Patents granted in the wake of State Street have ranged from the somewhat ridiculous to the truly absurd. See, e.g., U.S. Patent No. 5,851,117 (method of training janitors to dust and vacuum using video displays); U.S. Patent No. 5,862,223 (method for selling expert advice); U.S. Patent No. 6,014,643 (method for trading securities); U.S. Patent No. 6,119,099 (method of enticing customers to order additional food at a fast food restaurant); U.S. Patent No. 6,329,919 (system for toilet reservations); U.S. Patent No. 7,255,277 (method of using color-coded bracelets to designate dating status in order to limit “the embarrassment of rejection”). There has even been a patent issued on a method for obtaining a patent. See U.S. Patent No. 6,049,811. Not surprisingly, State Street and its progeny have generated a thundering chorus of criticism. See Leo J. Raskind, The State Street Bank Decision: The Bad Business of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L.J. 61, 61 (1999) (“The Federal Circuit's recent endorsement of patent protection for methods of doing business marks so sweeping a departure from precedent as to invite a search for its justification.”); Pollack, supra at 119-20 (arguing that State Street was based upon a misinterpretation of both the legislative history and the language of section 101 and that “business method patents are problematical both socially and constitutionally”); Price, supra at 155 (“The fall out from State Street has created a gold-rush mentality toward patents and litigation in which companies .... gobble up patents on anything and everything.... It is a mad rush to get as many dumb patents as possible.” (citations and internal quotation marks omitted)); Thomas (1999), supra at 1160 (“After State Street, it is hardly an exaggeration to say that if you can name it, you can claim it.”); Sfekas, supra at 226 (“[T]he U.S. courts *1005 have set too broad a standard for patenting business methods.... These business method patents tend to be of lower quality and are unnecessary to achieve the goal of encouraging innovation in business.”); William Krause, Sweeping the E-Commerce Patent Minefield: The Need for a Workable Business Method Exception, 24 Seattle U.L.Rev. 79, 101 (2000) ( State Street “opened up a world of unlimited possession to anyone quick enough to take a business method and put it to use via computer software before anyone else.”); Moy, supra at 1051 (“To call [the situation following State Street ] distressing is an understatement. The consensus ... appears to be that patents should not be issuing for new business methods.”).

There are a host of difficulties associated with allowing patents to issue on methods of conducting business. Not only do such patents tend to impede rather than promote innovation, they are frequently of poor quality. Most fundamentally, they raise significant First Amendment concerns by imposing broad restrictions on speech and the free flow of ideas.

Business innovations, by their very nature, provide a competitive advantage and thus generate their own incentives. See Xiang, supra at 813 (“A business entity improves the way it does business in order to be more effective and efficient, to stay ahead of [the] competition, and to make more profit.”). The rapid “growth of fast food restaurants, self-service gasoline stations, quick oil change facilities ... automatic teller devices ... and alternatives for long-distance telephone services” casts real doubt about the need for the additional incentive of patent protection in the commercial realm. Raskind, supra at 93.

Although patents are not a prerequisite to business innovation, they are of undeniable importance in promoting technological advances. For example, the pharmaceutical*1006 industry relies on patent protection in order to recoup the large sums it invests to develop life-saving and life-enhancing drugs:

Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. Bilski, for example, likely spent only nominal sums to develop his hedging method. The reward he could reap if his application were allowed-exclusive rights over methods of managing risks in a wide array of commodity transactions-vastly exceeds any costs he might have incurred in devising his “invention.”

Allowing patents to issue on business methods shifts critical resources away from promoting and protecting truly useful technological advances. As discussed previously, the patent office has been deluged with business method applications in recent years. Time spent on such applications is time not spent on applications which claim true innovations. When already overburdened examiners are forced to devote significant time to reviewing large numbers of business method applications, the public's access to new and beneficial technologies is unjustifiably delayed.

Regardless of whether a claimed process involves a “physical transformation,” it should not be patent eligible unless it is directed to an advance in science or technology. See Benson, 409 U.S. at 64-71, 93 S.Ct. 253 (finding a process unpatentable even though it “transformed” binary-coded decimals into pure binary numbers using a general purpose computer). Although the Supreme Court has stated that a patentable process will usually involve a transformation of physical matter, see id. at 70, 93 S.Ct. 253, it has never found a process patent eligible which did not involve a scientific or technological innovation. See Diehr, 450 U.S. at 192-93, 101 S.Ct. 1048 (finding a process patentable where it involved new technology for curing rubber).