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High court considers whether business methods can be patented
Case involves strategy for hedging risk in buying energy

By Peter Whoriskey
Washington Post Staff Writer
Tuesday, November 10, 2009

The post-industrial evolution of the U.S. economy has aroused multibillion-dollar questions over what kinds of inventions deserve patent protection, and on Monday the Supreme Court joined the muddle over whether new ideas and strategies do.

The courts and U.S. law have long held that the inventors of machines, chemical treatments and other physical processes deserve to win patents; on the other hand, they cannot win patents for abstract ideas or natural laws.

But with computers blurring distinctions between ideas and machines, and with the economy moving increasingly into the ether, the courts have struggled in recent years to define the limits of patent law, and specifically, whether many "business methods" qualify for protection.

On Monday, the inventors of a strategy for hedging risk in buying energy argued that they deserve to be considered for a patent, even though, as a lower court noted, their method does not involve a machine or the transformation of a physical thing.

Patent laws ought to be interpreted broadly "to accommodate unseen advances," said J. Michael Jakes, the attorney for Bernard L. Bilski and Rand A. Warsaw, who were gas company executives who started their own firm to commercialize their product.

But some of the justices seemed to be skeptical of the claim, asking incredulously whether giving patents for some business methods might mean giving patents for new ways of teaching a class, or even horse whispering.

"Let's take training horses," Justice Antonin Scalia said. "Don't you think that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory."

"They might have, yes," Jakes said.

Likewise, Justice Stephen G. Breyer noted that he has a "wonderful" way of teaching antitrust law.

"It kept 80 percent of the students awake," he said. "I could probably have reduced it to a set of steps and other teachers could have followed it. That, you are going to say, is patentable, too?"

"Potentially," Jakes said.

But while the justices seemed reluctant to agree with the inventors of the business strategy, they also seemed wary of setting a standard that might deprive inventors of unforeseeable inventions of patent protection.

"Some of the justices seemed to be struggling for what the right test should be," said Washington lawyer Deanne E. Maynard, who as a former assistant to the solicitor general helped draft portions of the government's brief against granting review. "They seemed concerned about the effect their decision would have on patents not yet before the court."

The case has drawn intense interest in fields such as software, medical diagnostics and finance, where advances often come in the form of strategies that might not be eligible for patents because they do not involve machinery or the "transformation" of anything physical.

The inventors' attorney, Jakes, argued that the perspective of the Industrial Era, in which inventions often involved a machine or other physical process, should not limit the patent protections in the future.

But the attorney for the U.S. Patent and Trademark Office argued that the distinction between inventions that involve the physical matter and those that involve business techniques have worked long before the Information Age.

He drew a distinction between the innovations of Dale Carnegie, author of "How to Win Friends and Influence People," and Alexander Graham Bell, the inventor of the telephone.

"I think at a certain level of generality you could describe both Dale Carnegie and Alexander Graham Bell as people who devised methods of communicating more effectively," Deputy Solicitor General Malcolm L. Stewart argued. "The reason that Bell's method was patentable was that it operated in the realm of the physical. . . . Innovations as to new techniques of public speaking, new techniques of negotiations, techniques that go to the substance of what is said may be innovative. They may be valuable. They are not patent eligible because they don't deal in the realm of the physical."

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