Supreme Court may broach thorny issue for tech industry
November 9th, 2009 | 
Author: SAN FRANCISCO (MarketWatch) — Technology firms will turn their attention Monday to the U.S. Supreme Court, which is scheduled to consider a decision that could undercut legal protections afforded to a significant amount of the industry’s software innovation.
Oral arguments in the case, “Bernard L. Bilski and Rand A. Warsaw v. David J. Kappos,” have been highly anticipated. Often referred to as the “Bilski” case, it was originally brought by an inventor who’d tried to win a business-method patent for a means to hedge against changes in commodity prices.
An array of technology giants, including Microsoft Corp.В (MSFT 25.59,В +0.04,В +0.15%), IBM Corp.В (IBM 131.79,В +1.65,В +1.27%)В and others, have since taken a keen interest in the case, which could affect portions of their patent portfolios.
Microsoft, IBM and others operate impressive intellectual property operations, securing thousands of patents every year. However, the companies would also prefer to see some limits placed on the scope of what can be patented.
Noted examples of business methods that have won patents for their inventors — and ridicule from others for being overly broad — include a means to train janitors using video displays, and to entice customers to order more fast food. Technology companies generally see the granting of such patents as a threat to genuine innovation.
But a decision in the Bilski case may also cut into technology companies’ ability to patent software, legal experts say.
If the Supreme Court fully affirms a federal appeals court’s prior decision in Bilski, it could help invalidate many of the software patents now held by companies, and strike a blow at the intellectual property portfolios that underpin their business models.
“It could have a large impact on the software industry,” said David Tennant, a Washington, D.C.-based partner at White & Case LLP. Companies could apply to have affected patents reaffirmed, Tennant said, “but it’s a very expensive process.”
“I’m not sure how many companies would do that, and those that do certainly would not do it for all patents affected by the case.”
However, Tennant added that the Supreme Court may affirm some of the lower court’s rejection of the Bilski patent, without specifically delving into aspects that could raise the bar for valid software patents. In fact, he said, the high court may simply avoid discussing software at all.
Still, Microsoft, IBM and others are paying close attention.
‘Very carefully and very clearly’
In a brief filed in the Bilski case alongside security software maker Symantec Corp.(SYMC 13.00,В -0.04,В -0.31%), Redmond, Wash.-based Microsoft argued that while Bilski may not deserve a patent for his commodity-hedging method, the appeals court that ruled against him also proposed a confusing legal test for patents — which could unfairly limit valid software patents to only those deemed tied to a physical device or transformation.
Such a legal test shouldn’t become the “alpha-and-omega of patent eligibility,” Microsoft said in its brief, adding, ‘This Court should be mindful of this potential impact.”
A Microsoft spokesman was unable to comment.
IBM, in its own brief filed in the Bilski case, argued that fully endorsing the lower court’s legal test for software patents could “imperil” patent protection for deserving technologies.
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