Last year, Microsoft was hit with a $1,500,000,000 verdict in a patent infringement suit related to Mp3 technology (see here, later thrown out). In 2006, RIM agreed to pay over $600,000,000 to settle litigation related to the ubiquitous blackberry (see here). Last year Vonage agreed to a $100,000,000+ settlement with Verizon over patents for VOIP technology (see here). The bottom line is that patents for software are big money, which was why In re Bilski, a decision the Federal Circuit issued today, was so anticipated. You see, many people had thought that Bilski might put an end to software patents, or at least curtail patent protection for business methods.
My take on the subject was somewhat different. As I explained in this guest post at Patent Baristas I felt that it was unlikely Bilski would have much effect, and that even if the Federal Circuit wanted to, it couldn't eliminate software patents. The reason was the Supreme Court's decision in the case of Diamond v. Diehr said that a patent couldn't be invalidated on the basis that it included software, as long as the claimed invention as a whole performs a function the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing). As I wrote in that guest post,
"I can easily tie almost any process I write claims for to a computer, and it would be a trivial task to require that the computers make a physical change in an article (e.g., printing an invoice)," which meant that, based on Diamond v. Diehr, software patents were safe.
So, what did the Federal Circuit do in Bilski? Well, everyone who had anticipated the death of software patents was undoubtedly disappointed. The Federal Circuit specifically addressed and smashed that hope: "we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court." Bilski, FN 23. It also adopted a "machine-or-transformation" test for patent eligibility (from page 10 of the opinion): "A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing" - exactly the approach I had recommended in my guest post for obtaining patent protection for software inventions. The Federal Circuit's reasoning was also strikingly similar to my guest post, including an extended discussion of Diamond v. Diehr (see pages 7-9 of the opinion) and used that case to answer potential objections based on arguably contrary Supreme Court precedent (see FN 8: "To the extent it may be argued that Flook did not explicitly follow the machine-or-transformation test first articulated in Benson, we note that the more recent decision in Diehr reaffirmed the machine-or-transformation test. See Diehr, 450 U.S. at 191-92. Moreover, the Diehr Court explained that Flook 'presented a similar situation' to Benson and considered it consistent with the holdings of Diehr and Benson. Diehr at 186-87, 189, 191-92. We thus follow the Diehr Court's understanding of Flook.").
The bottom line is that Bilski reaffirmed the patentability of computer software, and did so in a manner which was strikingly similar to what I had predicted some 7 months previously (the guest post went up on March 6, while the actual decision came down October 30). For the future, this can be a lesson: if there's a billion dollar patent law question, you can either wait for the court to decide it, or you can ask me, and I'll tell you the answer.
NOTE: While I'm aware that this blog primarily focuses on the law related to information security and data privacy, when I read Bilski I had an almost irresistible urge to crow about my previous analysis being validated. Thus, given that blogs are basically tailor made platforms for self promotion, I felt that this would be as good a platform as any to engage in a bit of self-congratulation.