WASHINGTON — The Supreme Court on Monday cut software developers and university researchers a little break by keeping open notions of what can be patented.
In the year's most anticipated science and commerce case, the court stressed that patent protection can be extended beyond machines or the "transformation" of a product. The decision amounts to at least a partial victory for the University of California, Microsoft and myriad researchers who have been watching closely.
Essentially, justices determined that patent law must remain flexible enough to handle a surge of 21st century inventions. The patent office granted 185,224 patents in 2008, twice as many as were granted in 1990.
"Times change," Justice Anthony Kennedy noted in the majority decision. "Technology and other innovations progress in unexpected ways."
Specifically, the Supreme Court rejected a lower court's decision that would have strictly limited patents to parts of a machine or apparatus, or that transformed one thing into another. This is sometimes called the "machine or transformation" test.
"The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age," Kennedy wrote. "But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age."
Citing arguments made by the Biotechnology Industry Organization and other research-oriented groups, Kennedy noted that the rigid machine-or-transformation test could undermine the ability to patent software, some advanced diagnostic medical techniques or the manipulation of digital signals.
At the same time, the court on Monday declined to offer more specifics about what kind of processes might be offered patent protection. This will be left to lower courts to work out.
"The ruling maintains the status quo," noted David Tennant, an intellectual property attorney with White & Case, a New York-based international law firm.
Mimi Addy, an intellectual property attorney with Brinks Hofer Gilson & Lione, a Chicago-based intellectual property law firm, added that the decision Monday was "signally important" because of the flexibility it will continue to allow inventors.
Still, the high stakes and technical facts in the case called Bilski v. Kappos appeared to give the court pause. The decision Monday arrived seven months after oral arguments, and it was the last case argued in 2009 to be decided.
Bernard Bilski and Rand Warsaw had developed what they called an "energy risk management method." It's a way for energy consumers to hedge their bets, locking in prices to protect against fluctuations due to changing weather or other circumstances.
Citing a strict machine-or-transformation test, the U.S. Court of Appeals for the Federal Circuit had rejected a patent claim for this business method.
In a bittersweet touch for Bilski and Warsaw, the Supreme Court on Monday declined to reverse the denial of their proposed patent. Justices said the appellate panel could have rejected the proposed patent on the basis that the business method was too abstract, without having to set a strict machine-or-transformation test.
Other business methods, though, might still win patent protection, justices noted.
The decision itself was fractured, with no dissenters but with two separate concurring opinions written to express competing arguments.
The case's potential significance was reflected in the extraordinary number of high-powered kibitzers, with more than 65 amicus briefs being filed by the likes of Microsoft, the University of California, Bank of America and Yahoo. Many urged the court to keep patent protections flexible.
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