Supreme Court ruling dashes hopes that software patents will go away

Supreme Court ruling on Bilski case does nothing to challenge business process patents.

Free software advocates who despise software patents were hoping that a case pending before the Supreme Court would more-or-less abolish them. But, alas, the much anticipated opinion [PDF] on Bilski v. Kappos that was issued Monday, did no such thing.

The Defensive Patent License makes patents less evil for open source.

Although legal experts are calling the opinion complicated, in an over-simplified nutshell, here's what happened: The Supreme Court was to issue judgment on a case that concerned "business process" patents. This case, Bilski v. Kappos, actually wasn't about software at all, but about math -- a method of hedging risks in commodities trading. The applicants (Bernard L. Bilski and Rand Warsaw) filed a patent application. They were turned down. They sued, appealed and were still turned down. Today, the Supreme Court sided with the lower court. Bilski and Warsaw won't get their patent.

But at the heart of the case was whether or not business process patents are valid at all. Almost all software patents are business process patents. The lower court when ruling on Bilski had said that the "machine-or-transformation test" should be the sole test used to determine patentability.

To paraphrase from Wikipedia, this test says that in order for process to be patentable it must use a particular machine specifically devised to carry out the particular process in a way that is not conventional, and that the process transforms an article from one thing or state to another. This criteria for patents has been around since the 1900s.

So, if you develop a process to turn mud to gold that uses a machine, the process is patentable. Using this as the sole test, most software doesn't make the patent grade. However, while the Supreme Court sided with the lower court in denying this one particular patent to Bilski and Warsaw, the decision specifically said that the "machine-or-transformation test" is not the sole test.

That means that business processes are still eligible for patents. Indeed, even though the decision sided with the lower court, it actually struck down the restrictions that would have made software patents more difficult, if not impossible, to get (or maybe enforce).

Groklaw notes:

"So, no blanket decision on categories. Sadly. What they did is pull back some from the lower court's decision. They don't get the tech, I'm afraid. And they believed the BSA, which in my view is a mistake. So, this will require more work, later cases."

Others who would like to see software patents abolished are equally disappointed, "The position that software patents should be abolished isn't nearly as popular among judges and politicians as it is in the free and open source software community," said Florian Mueller in an e-mail sent to me this morning -- and he wrote the same in a reaction to the ruling in his FOSS Patents blog.

Mueller is founder and former director of the NoSoftwarePatents campaign. "Simply put, the Supreme Court's decision does not do away with even one software patent that already exists, nor does it raise the bar for the future," he said.

On the other hand, patent litigators are thrilled that software patents haven't been gutted. I received an e-mail from one litigator this morning that pointed out the "machine-or-transformation test" not only comes from the 1900s, it ignores the inventions that stem from the Information Age. A PR rep for Stephen Schreiner, a partner with the law firm Goodwin Procter LLP sent me this statement from Schreiner:

"Wow, the Supreme Court ended its 2010 session with a bang. The Court launched the United States Patent System into the Information Age with the Bilski v. Kappos decision today. Rejecting the chorus from some demanding the Patent System be limited to Industrial Age technology, the Court answered with a flat 'no,' finding patents are available for software, business methods, and other products of the Information Age. In sum, everything is 'back up in the air' again."

While attorneys might be happy, users are the ones that often get stuck in the middle of all this patent litigation. Software patents cause far more harm than they are worth. But they are ingrained so deeply into the profit/loss centers of software companies these days that a blanket ruling that suddenly wipes out all that intellectual property might have had horrible consequences, too.

We'll have to wait and see if there's any juice buried somewhere in this complicated ruling that could help to clean up the mess known as "software patents." But it looks like the only hope for abolishment is massive patent reform -- a political nightmare -- and no one is holding their collective breath on that.

Mueller says that software companies will need defensive measure like the Defensive Patent License now more than ever.

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