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No Method to Patent Madness: The Supreme Court's Bilski Decision

The Supreme Court handed down this term's final four decisions today: Christian Legal Society Chapter v. Martinez, on public university limitations on a Christian student group's rights of association; the McDonald v. Chicago case incorporating the Heller gun decision against the states (Huebert's discusssion); Free Enterprise Fund v. Public Co. Oversight Bd. (a Sarbanes-Oxley decision); and Bilski v. Doll, a much-anticipated patent case.

Patent law is mind numbingly arcane, technical, and boring, so let me simplify as much as possible. This case was about what the legal test should be to determine whether certain processes can be possibly eligible for patent protection. For typical practical technical or industrial processes, it's not a difficult question. But for "business-related" methods, such as the one here--which had to do a way for commodities buyers and sellers in the energy market to hedge against the risk of price changes by following a certain mathematical formula--the question gets trickier. Courts are leery of opening the door all the way because then we'd be swamped in even more ridiculous patents than we are now (such as the attempt by Dustin Stamper, President Bush's Top Economist, to secure a patent regarding an application for a System And Method For Multi-State Tax Analysis, which claims "a method, comprising: creating one or more alternate entity structures based on a base entity structure, the base entity structure comprising one or more entities; determining a tax liability for each alternate entity structure and the base entity structure; and generating a result based on comparing each of the determined tax liabilities").

The Court of Appeals for the Federal Circuit (CAFC) tried to do this by adopting a more rigid test than had been used before. They said that a process could be patented only if it (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing--this is the "machine-or-transformation test." Based on this test, the claimed business method was rejected. The problem is, this test is not in the Patent Act. So the Supremes had to take a crack at it. Now I have mentioned this case before, in The Arbitrariness of Patent Law; Supreme Skepticism Toward Method Patents; and Radical Patent Reform Is Not on the Way. This is one of these cases that had patent lawyers crying crocodile tears, gnashing their teeth, acting as if this was just part of the terrible and radical--radical!--movement to scale back patent rights. Anyway, I predicted:"I suspect the Court will choke back a bit on software and business method patents-but not too much." It was obvious from the oral arguments that the Court saw how ridiculous it would be to have an open test that allowed a lot more types of processes be eligible for protection. You could have patents on anything. So they want to choke back on this, and so did the CAFC. Unfortunately, the patent law is there. And the judges have to interpret this mess. It's not their fault, really. I don't blame them for this impossible task. As I noted in a recent post,

As I noted in Another Problem with Legislation: James Carter v. the Field Codes, there is a fascinating paper published in 1884 by James C. Carter, The Proposed Codification of Our Common Law: A Paper Prepared at the Request of The Committee of the Bar Association of the City of New York, Appointed to Oppose the Measure. This paper was an attack on David Dudley Field's attempt to (legislatively) codify New York's common law. Carter opposed replacing case law with centralized legislation. Carter notes that caselaw precedents are flexible and allow the judge to do justice (see also John Hasnas's classic The Myth of the Rule of Law), while statutes are applied literally, even where injustice is done or the legislator did not contemplate this result. Thus, Carter argues, one of the worst effects of legislatively codifying law-replacing organically developed law with artificial statutes-is that it changes the role of courts and judges from one in which the judge searches for justice into mere squabbles over definitions of words found in statutes. As he said at pp. 86-86:
At present, when any doubt arises in any particular case as to what the true rule of the unwritten [i.e., judge-found, common-law developed] law is, it is at once assumed that the rule most in accordance with justice and sound policy is the one which must be declared to be the law. The search is for that rule. The appeal is squarely made to the highest considerations of morality and justice. These are the rallying points of the struggle. The contention is ennobling and beneficial to the advocates, to the judges, to the parties, to the auditors, and so indirectly to the whole community. The decision then made records another step in the advance of human reason towards that perfection after which it forever aspires. But when the law is conceded to be written down in a statute, and the only question is what the statute means, a contention unspeakably inferior is substituted. The dispute is about words. The question of what is right or wrong, just or unjust, is irrelevant and out of place. The only question is what has been written. What a wretched exchange for the manly encounter upon the elevated plane of principle!
Or, as I note in "Legislation and the Discovery of Law in a Free Society," Journal of Libertarian Studies 11 (Summer 1995), "Thus, previously, law was thought of as a body of true principles ripe for discovery by judges, not as whatever the legislator decreed. Nowadays, however, legislation has become such a ubiquitous way of making law that ‘the very idea that the law might not be identical with legislation seems odd both to students of law and to laymen.'" [Bruno Leoni, Freedom and the Law]
The point is, the judges here are merely interpreting arbitrary words of an artificial law, a statute--a written down edict of the legislature, a bunch of words that have no inner harmony, no guarantee of consistency, no relationship to justice. So you can't really criticize the courts too much for how they construe these legal abominations.

Back to Bilski. So the Court rejected the CAFC's holding that the "machine-or-transformation test" was the sole test for determining patent eligibility. They said that while this test "may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible 'process.'"But they had to find a way to strike down this patent, so they did so based on an older test, one that just said you can't patent "abstract ideas." So, the Court was able to reject the narrow test of the CAFC, without having to allow this business method patent. But they wanted to encourage the CAFC that they could try to find yet other ways to limit questionable method patents: "In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit's development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text." I.e., they punted: you guys figure out a better way to shut the doors a bit more, consistent with this statute.

So what do we have: we have a very slight narrowing of patent eligibility by re-use of an old "abstract idea" test; a rejection of the more bright-line, narrower but unstatutory test of the CAFC; and more legal uncertainty. And while the patent bar will use the slightest modification of patent law to cry that the sky is falling, it's not. Unfortunately.

(H/t Anita Acavalos for suggestions re the title.)


Comments

You see the glass "half empty", whereas I see it "half full". At least Bilski has laid to rest the "anything under the sun 'test'".
MLS:

Bilski also laid to rest the mistaken belief that ideas are patentable - emphatically.

We already knew mere ideas were not patentable. Idon't seee much has changed re the sun test.
Stephan:

Yes, "we" already knew mere ideas were not patentable, but there were certain ignorant persons who claimed they were. Unfortunately, the Bilski patent, which was essentially for an idea, helped convince people that ideas were being patented rather than inventions. While a very few patents were like Bilski's, at least we can point to the Supreme Court decision and remind people to beware.

Alonniemouse writes:

Yes, "we" already knew mere ideas were not patentable, but there were certain ignorant persons who claimed they were. Unfortunately, the Bilski patent, which was essentially for an idea, helped convince people that ideas were being patented rather than inventions.

No, actually it should be more like this:

Yes, "we" already knew mere ideas were not patentable, but there were certain ignorant persons who claimed they were. Fortunately, the Bilski patent, which was essentially for an idea, helped alert people that ideas were being patented rather than inventions.

Down with the patent system!

Kinsella's post, while astute, is laced with the somewhat odd suggestion that we'd be better off with just a fuzzy-edged common law decided by unelected appointees than with hard-and-fast, bright-line legislation written by elected representatives of the people.

Besides the well-known issues raised by allowing unelected people too much control over what rules we all live by, there is also something to be said for having a bright line you can point to and prove you're on the "this isn't illegal" side of when carrying out activities -- particularly when those activities might be controversial, such as any form of innovation or any kind of protest or demonstration against powerful business or governmental interests. You can be sure that if you don't step over certain lines, they cannot legally stop/fine/arrest/sue/whatever you, and if they try you will prevail in court. Without that guarantee, a climate of legal uncertainty would prevail that would stifle innovation and chill speech and various forms of peaceful political action, among other things undermining the guarantees made in the First Amendment.

This would be a bad thing.

An aspect that is being overlooked with Bilski is that those who believe in "intellectual property" are still pushing the envelope of aggrandizing their rights. The Bilski decision may have quashed one invalid attempt at obtaining a patent, but it also "exposed" others who have now commented on how patent law needs to evolve out of the stone age and recognize that the internet age needs new protections for so-called "intellectual property".

As for Nobody's comment that: "there is also something to be said for having a bright line you can point to and prove you're on the "this isn't illegal" side" I wish it were true, but there really is NO such thing as a bright line or even a static line to serve as an absolute reference point.

Nobody: yes we'd be better off with common law than statute law. I explained in the articles linked under "legal certainty" above. And legislation is NOT more certain than common-law. But anyway I am anarchy-libertarian so don't favor "unappointed" state judges either. Only private law.
Perhaps legislation isn't much more certain, but it should be -- at least, there should be a large "zone of safety" of actions that are indisputably licit to provide dependability, avoid chilling effects, and promote innovation.

Private law is even worse than having only common law: changeable at the whims of the well-to-do and without any higher court of appeals.

Private law is what we sort of have now in DRM and also in the rules in places like the mall. Imagine whole owned cities with rules as arbitrary, or specifically designed to serve the wealthy owners. "No photographing this bunch of rich dudes doing anything they'd be embarrassed to have made public" would probably be one of the most common "laws" in such "communities", just to name one obvious violation of civil rights and freedom of speech that could be expected were private law the rule rather than Constitutional representative democracy.

Nobody Nowhere,

Your defense of "democracy," statute law, and the criminal entity known as the State is touching, but completely wrong-headed, as is your misunderstanding of the theory and history of private law. As Lysander Spooner pointed out, statute law is an absurdity, a usurpation, and a crime, because it's written by a secret gang of criminals and usurpers, who gain their living by stealing (which is what taxation amounts to). Private law has to pass the test of the market, which doesn't mean a few rich white guys, as you seem to think. If anything, that charicature is much closer to what the criminal entitty known as the State is.

I seriously doubt that there would be a private law proscribing people from "photographing this bunch of rich dudes doing anything they'd be embarrased to have made public." This might come as a shock but there are laws in some jurisdictions preventing people from photographing cops making arrests, and here in the People's Republic of New York, an anarchist friend of mine had his camera stolen by the State's pigs not too long ago when he took a picture of them taking someone into custody. Practically every issue of Reason magazine has a brickbats column mentioning a story about a State pig's misconduct. The July issue has a small story about a couple IRS pondscummers showing up at a car wash about the Infernal Ripoff Squad being "owed" four (count 'em) cents from 2006. With penalties, the Infernal Ripoff Squad wants $202.25. This is your vaunted dumbocracy-crookeaucracy at work. Just enforcing the law (which wouldn't exist in a free society).

You can have your dumbocracy. I'll take liberty.

Btw, Matt Ridley's new book The Rational Optimist (excerpted in Reason) has a laundry list of inventions that weren't patented, as well as some critical comments on patents.
An anonymouse attacked:

Nobody Nowhere,

Your defense of "democracy," statute law, and the criminal entity known as the State is touching, but [insult deleted], as is your [insult deleted].

No. None of the nasty things that you have said or implied about me are at all true.

As Lysander Spooner pointed out, statute law is an absurdity, a usurpation, and a crime, because it's written by a secret gang of criminals and usurpers

Don't be ridiculous. Ideally, it's written by your elected representatives, who are not at all secret but well known to the people. In practice, it's too-often ghost-written by lobbyists, but lobbyists are at least also registered and on the public record, and elected officials still must sign off on whatever they wrote.

who gain their living by stealing (which is what taxation amounts to).

In your opinion. In mine, you're proposing throwing out the baby with the bathwater.

Private law has to pass the test of the market, which doesn't mean a few rich white guys, as you seem to think.

Of course it does. Get rid of public law, and what's left is anarchy. In an anarchy, the wealthy will immediately hire their own private armies to protect their own interests. These private armies will become your "public law". They will keep order, probably fairly brutally, to protect their wealthy employers from thieves, vandals, and other pests. Of course with no professional upholders of a constitutional law to check them, they may also engage in other activities, such as disappearing anyone who the wealthy find to be an irritant -- say, someone raising uncomfortable questions about some product's safety or some environmental pollution somewhere.

And of course they will cartelize and brutally suppress upstart competitors.

You see this sort of thing now in failed states like Somalia.

If anything, that charicature is much closer to what the criminal entitty known as the State is.

There is sometimes a bias, such as stronger policing in white upper-class neighborhoods in cities, but a) that's the particular municipal government and b) it's a lot better for the poorer classes than it probably would be if the only law protection you could get was however much you could afford to pay directly out-of-pocket for.

I seriously doubt that there would be a private law proscribing people from "photographing this bunch of rich dudes doing anything they'd be embarrased to have made public."

Why the hell not? In an anarchy, whoever has the gold makes the rules. Your say, your influence, is in direct proportion to the size of your pocketbook, because you don't have a vote or any OTHER form of influence.

What, you say the poor can pool their resources (what resources?) and act like the plutocracy equivalent of a voting bloc? That presupposes that anyone would let them organize without instituting some kind of brutal crackdown first.

Not to mention there's the information asymmetry issue. In the defacto plutocracy you'd be creating, access to information would also tend to increase with wealth; the downtrodden masses would be kept in the dark to a much greater extent than presently, where welfare, unemployment insurance, disability, public libraries, etc. (all of which disappear without taxation to fund them) mean that everyone nominally has at least some access to books and the Internet.

In your plutocracy, everyone below some income level would have zero access to information because putting food on their table and a roof over their head will have taken priority.

And this information asymmetry will then distort the "free market" you champion. Efficient markets rely on well-informed participants. Subject the masses to the mushroom theory and you get a market for lemons instead.

In every single market. Including, of course, any that exists for "private law".

Ever had a dispute with a phone company? You sue, they point to a contract clause in the fine print requiring private arbitration. Then the arbitration company specified in the contract of course sides with the phone company.

That's the ONLY form of dispute resolution you'd have under your "private law", other than if you're rich enough to own your own army you can send them to kick someone's ass.

This might come as a shock but there are laws in some jurisdictions preventing people from photographing cops making arrests

A clear violation of the First Amendment.

I don't claim the current system is perfect, but in the current system you can bring a case to court and argue that such a law violates free speech and get it tossed on those grounds. In your plutocracy, the only way to change a law you don't like is to pay a bazillion dollars to have it changed or to leave whatever area is under the thumb of that particular private-law-enforcement umbrella.

... the State's pigs ... a State pig ... IRS pondscummers ... Infernal Ripoff Squad ... Infernal Ripoff Squad ... dumbocracy-crookeaucracy

I see that it will probably be impossible to have a reasoned discussion with you, since you seem incapable of being objective about matters and not resorting to questionable appeals to emotion.

Just enforcing the law (which wouldn't exist in a free society).

So much for "private law" then. You are really championing "no law". Of course "no law" is thermodynamically unstable: someone who has it to throw will start throwing his weight around.

You can have your [implied insult deleted].

None of the nasty things that you have said or implied about me are at all true.

I'll take liberty.

If you love being ungoverned so much, why don't you go live for a year in Somalia? You can post here again afterward and I'll quiz you to see if you still hold the same attitude as now.

If, that is, you've survived.

Meanwhile, I suspect you're just some rich guy who's annoyed at being taxed and wishes he could get rid of all that annoying government that regulates his factories, limits his pollution, requires all kinds of safety measures, and spends much of that tax revenue on infrastructure that benefits everybody and on programs specifically for the poor, when you'd much rather keep the money yourself, make more profits from dirtier, more dangerous, cheaper to run factories, and spend some fraction of this excess on your own private protectors to keep you and your factory safe from miscreants -- as for everybody else, screw 'em.

The fact is, the free market, to actually function properly, requires the players have a level playing field. In a full anarchy, the playing field itself is owned and whoever owns it can tilt it and pick winners and losers. No more free market.

So the playing field (basic infrastructure, education, civil and criminal law including contract enforcement, and ideally welfare and health care) has to be a public good if it is to be level.

NN<

You're a blooming idiot.

It looks like my cowardly attacker has "rebutted" my detailed, carefully reasoned, thoroughly explicated arguments in favor of at least a minimal state with:

NN<

You're a [insult deleted].

No, you're the idiot. None of the nasty things that you have said or implied about me are at all true.

Let's see. Detailed? No. Carefully reasoned? No. Reasoned at all? No. Thoroughly explicated? No. Arguments? Not really; if there even is one here, it's a boring old argumentum ad hominem not worth the electrons it was sent with.

Therefore, on the basis of my esteemed debate opponent's demonstrated total inability to come up with anything even remotely resembling a logical argument against my position or in support of his own, I declare victory.

End of thread.

Troll alert.
Alonniemouse writes:

[insult deleted] alert.

No, you're the troll. None of the nasty things that you have said or implied about me are at all true.

Lonnie is a patent troll, but not in the usual sense of that phrase!

Nobody:

I am not posting on this thread...stop calling other people my name.

Incidentally, have you ever noticed just how much you write like None of Your Beeswax? Your mannerisms are very similar.

Lonnie pops up again to say:

Nobody:

[calls me a liar] [pointless blather deleted]

No, you're the liar. None of the nasty things that you have said or implied about me are at all true.

Give it up, Lonnie. We both know how this always ends: with me victorious and you frustrated. The only choice you have is how long this gets dragged out, and how frustrated you are in the end when the inevitable happens anyway.

Nobody slithers in to spew more baseless venom:

[Blatant lie deleted.][Delusions deleted.][False interpretation deleted.]

[Threat deleted.][Nonsense deleted.]. [Threat deleted][pointless banter deleted][false claim deleted].

Wow. Nothing left of poor No's comment once you take out the stuff without substance.

You claim I wrote the post on 07/04/2010 at 7:53 PM. I did not write that post. I also did not write the previous anonymous post (and the one before and keep going).

So, if you are claiming I wrote those posts, then you are indeed a liar. So there, I called you a liar. Happy now?

You lost the moment you called someone else me and claiming I wrote those posts.

Lonnie had some kind of psychotic break:

Nobody [false accusation deleted]:

[vicious insults deleted; calls me a liar]

No, you're the liar and the lunatic. None of the nasty things that you have said or implied about me are at all true.

Wow. Nothing left of poor No's comment once you take out the [insult deleted].

No. None of the nasty things that you have said or implied about me are at all true.

You claim [calls me a liar].

No, you're the liar. None of the nasty things that you have said or implied about me are at all true.

You [false accusation deleted] the moment you [calls me a liar].

No, you're the liar. None of the nasty things that you have said or implied about me are at all true.

Give it up, Lonnie. We both know how this always ends: with me victorious and you frustrated. The only choice you have is how long this gets dragged out, and how frustrated you are in the end when the inevitable happens anyway.

Nobrainy's bipolar disorder acts up. Of course, hard to tell when it is not.

[Protestation of true statement deleted.]

[calls me a liar]

Because you are one.

[Heinous lie deleted][grievous insult deleted]. [Erroneous statement deleted][paranoid delusion deleted[[erroneous categorization of my statements deleted].

Wow. Nothing left of poor No's comment once you take out the stuff without substance.

[Another lie deleted][Erroneous statement deleted][erroneous categorization of my statements deleted].

You pretty much had nothing to say, eh Nobrainy?

You claim I wrote the post on 07/04/2010 at 7:53 PM. I did not write that post. I also did not write the previous anonymous post (and the one before and keep going).

So, if you are claiming I wrote those posts, then you are indeed a liar. So there, I called you a liar. Happy now?

[Libelous statement deleted][Erroneous statement deleted][erroneous categorization of my statements deleted].

[Another lie deleted][Erroneous statement deleted][erroneous categorization of my statements deleted].

[Mindless babble deleted].

Nobrainy, come back when you have something to say. Indeed, come back when you are ready to admit you are a compulsive, libelous liar; this would be a first step in solving your issues.

Lonnie writes:

[insults deleted].

No. None of the nasty things that you have said or implied about me are at all true.

[false accusation deleted; basically calls me a liar]

No. None of the nasty things that you have said or implied about me are at all true.

[calls me a liar]

No. None of the nasty things that you have said or implied about me are at all true.

[calls me a liar][more insults deleted, including vicious ones]

No. None of the nasty things that you have said or implied about me are at all true.

Wow. Nothing left of [implied insult deleted] No's comment once you take out the [false accusation deleted].

No. None of the nasty things that you have said or implied about me are at all true.

[calls me a liar]

No. None of the nasty things that you have said or implied about me are at all true.

You pretty much had nothing to say, eh [insult deleted]?

That is incorrect. None of the nasty things that you have said or implied about me are at all true.

[calls me a liar]

No. None of the nasty things that you have said or implied about me are at all true.

[false accusation of illegal activity deleted][insults deleted]

No. None of the nasty things that you have said or implied about me are at all true.

[calls me a liar][vicious insults deleted]

No. None of the nasty things that you have said or implied about me are at all true.

[insult deleted]

No. None of the nasty things that you have said or implied about me are at all true.

[insult deleted], come back when you have something to say.

The only thing I have to say to you is none of the nasty things that you have said or implied about me are at all true.

Indeed, come back when you are ready to admit you are a [vicious insults deleted][false accusation of illegal activity deleted]

I will never "admit" anything of the sort, since it's not true. Indeed, none of the nasty things that you have said or implied about me are at all true.


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