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Abstractions and transformations

The significance of "In re Bilski" is that it offers an opportunity to restore some critical balance to the patent industry. The Bilski case revolves around the definition of what constitutes a patentable idea. More specifically, it revisits the idea that abstract ideas are not patentable.

Bernard L. Bilski and Rand A. Warsaw made an application in 1997 for a business method patent which was rejected by the USPTO on the grounds that "the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts." The claim was for a method of hedging risks in commodities trading , "managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps" as follows (summarised for clarity):

1. Initiating a series of transactions between the commodity broker (or reseller) and the users of the commodity whereby the users purchase the commodity at a fixed rate based upon the historical average price of the commodity,
2. Identifying producers of the commodity
3. Initiating a series of transactions between the producers and the commodity broker at a fixed rate such that the risk is balanced against the risk price of the consumer transactions

Bilski and Warsaw appealed the USPTO's decision to the Board of Patent Appeals and Interferences (BPAI) and the United States Court of Appeals for the Federal Circuit (CAFC) where the decision was upheld.

The judgement of CAFC focused on the meaning of a "machine-or-transformation test", and states:

"The proper inquiry under section 101 (of the patent statute) is not whether the process claim recites sufficient 'physical steps,' but rather whether the claim meets the machine-or-transformation test. As a result, even a claim that recites 'physical steps' but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter. Conversely, a claim that purportedly lacks any 'physical steps' but is still tied to a machine or achieves an eligible transformation passes muster under section 101."

The conclusion to be drawn from this judgement is that "a general purpose computer is not a particular machine, and thus innovative software processes are unpatentable if they are tied only to a general purpose computer." The Bilski decision re-establishes the precedent that abstract ideas are not patentable, and an abstract idea does not become patentable merely by implementing it as software.

The ruling is now before the Supreme Court, and is due for "oral argument" by the Supreme Court judges on 9 November of this year. The decision, if upheld, will have the effect of invalidating many thousands of business method and software patents, and will set a precedent for the evaluation of all future patents. In such a case, interested parties (known as Amicus Curiae) can make representations (known as Amicus Briefs) to the Court. A full list of the Amicus Briefs relating to Bilski can be found on the website of the American Bar Association .

Unsurprisingly the majority of the Amicus Briefs in favour of Bilski, the petitioner, and some that claim to support neither the petitioner nor the respondent, come from patent lawyers and large companies with a vested interest in preserving the status quo. Equally, the arguments in favour of the respondent, nominally the Director of the USPTO, are dominated by organisations in favour of limiting patents because of their negative effect on a variety of industries, not just software.

Explosive growth

IBM patents for the past 15 years compared to nearest competitors IBM, in its role as the world's leading advocate of "Intellectual Property", may cause some embarrassment to its many employees who thrive and survive on the development and use of free and open source software by its contention that patents have "fueled the explosive growth of open source software development."

IBM's brief will also be troublesome to many of those to those that have worked closely with them in the fight for open standards, with its contentious assertion that the advent of software patents has allowed firms "to selectively license innovations on favourable terms to the community of standards users, thus encouraging other firms to participate in and adopt standards,", and that "disclosure of software inventions," as the result of patent acquisitions, "promotes collaboration among software developers (such as open source development) and interoperability among software platforms (such as software interoperability standards)."

Users of free and open source software would argue that it has blossomed despite, not because of, the existence of patents on software. Open standards have tended to be inhibited, not encouraged, by the proliferation of patents on APIs and data formats. A standard that is patent-inhibited is neither open nor serving the interests of anybody but the patent holder.

Next: World domination

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