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Yes, software can be patented, US Supremes say

'Machine-or-transformation' test not only game in town

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The US Supreme Court on Monday preserved the right of inventors to patent software and other intangible business methods in a highly anticipated ruling that disappointed critics who say such patents stifle competition and innovation.

The ruling came in a case in which plaintiffs Bernard Bilski and Rand Warsaw tried to patent a procedure traders could follow to hedge against seasonal price fluctuations of energy commodities. The US Patent and Trademark Office denied their application on the grounds the method wasn't a tangible invention and as such merely manipulated an abstract idea or solved a purely mathematical problem. That reasoning was upheld on appeal, and on Monday, the high court also affirmed the rejection of the application.

But a majority of the Supreme Court justices went on to say that the so-called “machine-or-transformation” test at the core of the case wasn't the sole test for determining whether an invention was eligible for patent protection. They added that a “business method is simply one kind of 'method' that is, at least in some circumstances, eligible for patenting.”

The court is unaware of any meaning of a process that requires it to be tied to a machine or the transformation of an article, they continued.

The majority opinion went on to temper their ruling somewhat by saying that while the governing patent statute clearly permits business method patents, “it does not suggest broad patentability of such claimed inventions.”

The decision, released on the final day of the Supreme Court's current term, comes as critics claim that patent eligibility is so generous to inventors that many common-sense methods end up winning protection. During oral arguments in November several justices appeared skeptical of methods patents, with Justice Sonia Sotomayor asking whether there could be a patent for for speed dating and Justice Antonin Scalia asking if animal trainers could patent processes for horse whispering.

Indeed many of those critics on Monday warned the decision would worsen an already murky process.

“The landscape of patent law has been a cluttered, dangerous mess for almost two decades,” Eben Moglen, chairman of the Software Freedom Law Center, said here. “The confusion and uncertainty behind today’s ruling guarantees that the issues involved in Bilski v. Kappos will have to return to the Supreme Court after much money has been wasted and much innovation obstructed.”

And in a concurring decision Justice John Paul Stevens warned the majority opinion would only invite abuse.

“The Court is quite wrong, in my view, to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a 'process' within the meaning of §101” of the statute at issue in the case, he wrote. “The language in the Court’s opinion to this effect can only cause mischief. The wiser course would have been to hold that petitioners’ method is not a 'process' because it describes only a general method of engaging in business transactions — and business methods are not patentable.”

The case is Bliski et al. v. Kappos, Under Secretary of Commerce for intellectual property and director, Patent and Trademark Office. A PDF of the decision in its entirety is here. ®

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