Inventors say patent ruling is old hat

When does a great idea become a patentable invention?

That was a question easier to answer when Thomas Edison came up with the light bulb and when Whitcomb Judson revolutionized the apparel industry with the zipper — Industrial Age innovations that clearly fit with old ideas of what it meant to invent something.

But a recent case at the U.S. Court of Appeals for the Federal Circuit points up the difficulty of making such judgments in the age of the Internet.

Bernard Bilski and Rand Warsaw, of WeatherWise USA in Pittsburgh, developed a computerized method for using weather to predict commodities prices and energy costs. But the U.S. Patent and Trademark Office rejected their efforts, a decision upheld by the federal appeals court.

The inventors and their intellectual-property lawyers argue that novel concepts that use existing processes in new ways deserve patent protection as much as physical machines that transform industries.

They have petitioned the U.S. Supreme Court to review the appeals-court ruling. They say that without the ability to profit from such inventions, the biotech and informational-services companies that have put places like Silicon Valley and Redmond on the world innovation map won't be willing to invest in research and development toward other breakthroughs.

The patent office and the court's rejection of Bilski and Warsaw's business-method patent claim follows years of rather liberal interpretations by patent examiners as to what qualified as an invention. And the new standard imposed — that the invention must involve a machine or a physical transformation — threatens to put the brakes on the busiest area of patent application and analysis. Of the 13,779 "process" patents sought in 2008, just 1,643 were granted.

Before the ruling, patent examiners used the test of whether an invention was "new, useful and not obvious." Now they are deciding whether a process is "tied to a particular machine or apparatus, or transforms a particular article into a different state or thing."

At least four subsequent patent denials based on the Bilski precedent led attorney Michael Jakes, acting on behalf of Bilski, Warsaw and other inventors, to petition the Supreme Court, which hasn't updated its definition of what can be patented for 28 years.

"There are companies out there that have been getting process patents and right now they don't know if that has value any more," said Jakes, a partner with Washington, D.C.-based Finnegan, Henderson, Farabow, Garrett & Dunner.

"This is one of those rare times in over 200 years of the U.S. patent system that the courts have taken a very constricted view of what is patentable," said Wayne Sobon, founder of the www.NewEconomyPatents.org Web site and director of intellectual property for Accenture, a global management consulting, technology services and outsourcing company. "A lot of observers, including our company, view that as an undermining of the incentive the patent system was created to provide."

The biggest problem with the Bilski decision, said Stanford University law professor Mark Lemley, is that it has thrown into question all innovations that involve more mental than physical activity, not just those sought on business methods. That could jeopardize existing patents on some medical diagnostics and scientific-data evaluations, as well as withhold patents from future innovations.

"What does it mean to be tied to a machine? If you attach 'in a computer' to your application for a process patent, is that enough to pass the machine-or-transformation test? The patent office has been saying 'no,' that you need to show a special machine has been built for this purpose," Lemley said.

The Supreme Court hasn't ruled on what is patentable since 1981, Lemley said, leaving the federal appeals court to apply standards set in the infancy of the Information Age to complex modern innovations.

Not all high-tech leaders want Bilski overturned. Although it's true that health-science industries often rely on patents to recover millions in R&D investments, information-technology advances move too fast to benefit much from patent protections.

"Patents like the one at issue in Bilski give a bad name to the patent system," said Horacio Gutierrez, a Microsoft vice president for intellectual property and licensing and deputy general counsel.