After a long, long wait, the Supreme Court of the United States has finally delivered its opinion (pdf) in the so-called ‘Bilski’ appeal. The judgement was eagerly awaited by those who opposed software patents, as it held the potential to change the rules on patentability of software in the US.
Thirteen years ago Bernard L. Bilski and Rand Warsaw applied (pdf) for a patent on a process that sought to allow commodities traders to reduce their risk exposure. The key components of their invention were a list of steps traders could take, and an expression of those steps as a mathematical formula. The patent application was rejected on the basis that it did not describe a specific apparatus, that it manipulated only abstract ideas and that the problem it solves is an exclusively mathematical one. Bilski et al kept appealing the decision at progressively higher courts, and kept getting knocked back. Finally the en banc court (a kind of grand moot of all the Court of Appeal judges reserved for issues where uniformity of opinion is particularly important) knocked it back while also tearing down one of its previous ‘tests’ for patentability which might otherwise have been interpreted as supporting Bilski et al‘s arguments. This test, established in the case of State Street Bank & Trust Co v. Signature Financial Group, Inc. in 1998, held that a process could be patented if it produced a “useful, concrete, and tangible result”. The State Street decision was taken at the time as a green light for patent applications on abstract concepts like business and software processes.
In the light of the Bilski patent claim, the en banc court decided that this was too low a hurdle, and that they needed a new test for patentable processes. Instead they insisted that a process must meet the following two criteria: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” This has become known as the ‘machine or transformation test’. Bilski responded by taking the final throw of the dice and asking the US Supreme Court to review the en banc court’s decision. The Supreme Court agreed.
So what does this have to do with software? Well business processes are frequently embodied in software, and the discussions of where the borderline between invention and abstraction lies is an extremely relevant one in the world of software development. The ‘machine or transformation test’, if affirmed by the Supreme Court, would very likely have made many pure software inventions unpatentable (as general purpose computers are not ‘particular machine[s]‘, and their own internal processes and data unlikely to qualify as ‘particular article[s]‘). After the en banc decision hopes were high in the anti-software-patent community that the Supreme Court would affirm the ‘machine or transformation test’ and make widespread software patenting a thing of the past. On the other side of the argument, groups like the Business Software Alliance and Dolby Labs submitted amicus briefs to the Supreme Court arguing that the machine or transformation test would kill off a large proportion of their livelihoods.
Perhaps inevitably the Supreme Court has chosen a middle path that brings little certainty to anyone except Bilski et al – who now definitely know they’re not getting their patent. The decision finds that the specific Bilski patent is indeed an attempt to own an entirely abstract concept, and so should be disallowed. It does not, however, go as far as to agree with the en banc court that the ‘machine or transformation test’ is the new gold standard for patentability in these worryingly abstract domains:
The Court’s precedents establish that although that 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”
A little further on, the decision gives the effect on software patentability as a good reason for not adopting the ‘machine or transformation test’, and in doing so cites a group of software problem domains that – it seems to imply – are very firmly the proper subject matter for patents:
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.
Yet a little further on, we get the qualification:
It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection.
Clearly there is confusion here. There seems to be an anxiety on the part of the Supreme Court that they will ‘break’ innovation whichever way they lean. This is perhaps best expressed in this elegantly-phrased linguistic shrug:
This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.