Anthony J. Fuga is a Partner in our Chicago office.
Justice John Paul Stevens passed away last week at the age of 99. During his nearly 35 years on the Supreme Court, Justice Stevens did not hesitate to make his views on intellectual property rights known – in short, they ought to be construed narrowly. This view was evident in both his Diamond v. Diehr dissent and his Parker v. Flook opinion.
But Justice Stevens' view of intellectual property rights – at least as it relates to this blog – is most evident in his final written opinion, his Bilski v. Kappos concurrence.
Justice Stevens agreed with the Bilski Court that the machine-or-transformation test is not the exclusive test to determine what constitutes a patentable "process" under Section 101. But Justice Stevens went much further and took the opportunity to criticize business method patents more generally. (The patent at issue in Bilski was directed to hedging losses.)
Justice Stevens noted that the Court "never provides a satisfying account of what constitutes an unpatentable abstract idea." He then looked at the meaning of "process" under Section 101 and disagreed with the Court. He stated that "process" under §101 was not a process in the ordinary sense of the word:
Although this is a fine approach to statutory interpretation in general, it is a deeply flawed approach to a statute that relies on complex terms of art developed against a particular historical background.
Indeed, the approach would render §101 almost comical. A process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds — all would be patent-eligible. I am confident that the term "process" in §101 is not nearly so capacious.
He used the discussion of "process" to begin a journey through patent history. He started with the "English backdrop," moved through early-American patent law, discussed Thomas Jefferson's difficulty in determining what should be patentable, and eventually settled on modern American patent law. Through all this, Justice Stevens concluded that a business method was not a "process:"
Since at least the days of Assyrian merchants, people have devised better and better ways to conduct business. Yet it appears that neither the Patent Clause, nor early patent law, nor the current §101 contemplated or was publicly understood to mean that such innovations are patentable. Although it may be difficult to define with precision what is a patentable "process" under §101, the historical clues converge on one conclusion: A business method is not a "process."
Justice Stevens closed his concurring opinion by discussing his concern that patents on business methods will prohibit legitimate competition and innovation, instead of encouraging innovation:
If business methods could be patented, then many business decisions, no matter how small, could be potential patent violations. Businesses would either live in constant fear of litigation or would need to undertake the costs of searching through patents that describe methods of doing business, attempting to decide whether their innovation is one that remains in the public domain.
That can take a particular toll on small and upstart businesses. Of course, patents always serve as a barrier to competition for the type of subject matter that is patented. But patents on business methods are patents on business itself. Therefore, unlike virtually every other category of patents, they are by their very nature likely to depress the dynamism of the marketplace.
Ten years later, this debate is as fierce as ever.
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