Developments in Patent Law

Efforts are under way to address some of the complexities of patent enforcement, although it's too early to predict success.

On November 9, for example, the U.S. Supreme Court heard a high-profile case involving an appeal from the Federal Circuit's en banc rejection of a patent application for a business method of hedging risk in commodities trading (In Re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), cert. granted, 129 S. Ct. 2735 (2009)). The circuit court's en banc majority cited Supreme Court precedent when it noted that to be patentable, a process must be "tied to a particular machine or apparatus" or must transform "a particular article into a different state or thing." (545 F.3d at 954 (citing Gottschalk v. Benson, 409 U.S. 63, 70 (1972).)

During oral argument, the justices appeared to be skeptical of business-method patent claims. This cheered Bilski opponents such as Google and Red Hat, and Internet retailers such as Newegg and Crutchfield. Fearing that the court ruling might have the effect of expanding business-methods patentability to include software, several of the companies filed a joint amicus brief claiming they've "paid dearly" to NPEs for using processes that shouldn't have been patented. Software patents stifle innovation, some software developers argue, because developers trying to make their applications compatible with others constantly risk infringing on existing patents.

Some companies, such as Accenture and Pitney Bowes, support the Bilski patent. But others, such as IBM, think the Bilski patent was properly denied, even though they support strong patent rights for software. Microsoft, Symantec, and Philips, likewise contend that the Bilski patent was properly denied, but they oppose the Federal Circuit's strict "machine or transformation" test for patentability, contending it is hard to implement.

Congress also is trying to do its part for reform with a number of proposed changes to patent law, including measures that would reduce damage awards for patent-infringement claims. But the proposals have sparked clashes between tech firms and a biotech-pharmaceutical-NPE alliance. With much longer product-development cycles, biotech and pharmaceutical companies are anxious to retain maximum protection for their products.

As a result, Lee Cheng, general counsel of Newegg, is skeptical about the chances for real reform. "Big interests are in the way," says Cheng. "The pharmaceutical and biotech industries defend the patentability of incremental change." -RC

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