Justice Scalia’s Indecision a Victory for the Patent Bar

Bilski v. Kappos was the most-anticipated Supreme Court patent case in a generation. And when it was finally handed down on Monday, it turned out to be the most anticlimactic.

There’s been a raging debate about software and “business method” patents since an appeals court gave the green light to them in 1998. Many people, myself included, hoped that the Supreme Court would place new limits on such patents this term.

But Bilski turned out to be a bad test case. The applicant, one Bernard L. Bilski, tried to patent a “method for managing the consumption risk costs of a commodity.” If that doesn’t sound like the sort of thing patents are supposed to cover, that’s because it’s not. Almost no one other than Bilski and his attorney believed that he should get his patent.

So there was little doubt that Bilski would lose, what mattered was how. A narrow ruling would simply invalidate Bilski’s particular patent but leave the bulk of business method (and software) patents intact. A broad ruling, in contrast, could dramatically limit such patents.

As it turned out, the Supreme Court was split down the middle. The court’s liberals sided with an opinion by Justice Stevens, while four of the court’s conservatives backing an opinion by Justice Kennedy. That might not seem surprising on today’s polarized Supreme Court, but it’s a new development for patent law. On the rare occasions when the justices have disagreed about a patent case, (as they did with dueling concurrences in eBay v. MercExchange) there hasn’t been a clear partisan split.

But in this case, the conservatives favored the status quo, while the liberals wanted to place new limits on business method patents. Bilski was argued in November, so a decision was expected in March or April; court watchers were puzzled when June arrived with no decision. My guess is that the swing voter, Justice Scalia, spent those months negotiating to decide which opinion to join. Ultimately, Scalia sided with his fellow conservatives, giving Justice Kennedy a 5-vote majority.

Yet Scalia didn’t join the full Kennedy opinion. He opted out of passages like this one:

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.

Seeing this in a majority opinion would be pretty depressing for a software patent critic like me, but because Justice Scalia didn’t sign this section, it’s not controlling precedent. Back in 2007 I noticed that Justice Scalia (along with Stevens and Breyer) was asking questions that suggested skepticism about the patentability of software. Scalia’s position in Bilski confirms that impression: Whenever Justice Kennedy waxes poetic about the Information Age, Justice Scalia gets off the bus. The result is an exceptionally narrow holding that doesn’t give much comfort to partisans on either side.

The primary winners from all this are the patent lawyers. Not only are there few restrictions on what can be patented, but the high court’s failure to articulate a clear rule means even more litigation. All is not lost, though. Justice Stevens is retiring, but Justices Breyer, Ginsburg, and Sotomayor all signed onto his opinion. If Justice Kagan sides with her fellow liberals, then they’ll need just one more vote to restore some sanity to patent law. As the patent system continues to inflict damage on the IT industry, the need for reform will only get more obvious. Hopefully, the next time the Supreme Court has an opportunity to fix the problem, Justice Scalia will get off the fence.

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4 Responses to Justice Scalia’s Indecision a Victory for the Patent Bar

  1. Rhayader says:

    Cool summary, thanks Tim. I admit that I find wonky copyright stuff intolerably dry, even though it has major ramifications for my lifestyle. It’s good to have people wade through the muck and give someone like me the takeaways.

    As far as the lawyers “winning” — well, who could expect anything else?

  2. Brian Moore says:

    “the machine-or-transformation test would create uncertainty as to the patentability of [...] inventions based on linear programming”

    Seriously? It would put at risk patents based on linear programming? Linear programming!

    This is actually a sentence that came out of the mouth of a Supreme Court Justice?

  3. Larry Downes says:

    Aha–I wondered whether Scalia’s absence from those sections of the majority meant he was more for or more against software patents. Your explanation makes good sense. I hadn’t read your piece before on the MSFT v AT&T case–that’s also encouraging.

    You’re doing great work!

  4. Aha–I considered whether Scalia’s lack from those segments of most intended he was more for or more against application patents. Your description creates feeling. I had not study your part before on the MSFT v AT&T case–that’s also motivating.

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