A surprising decision from the second-highest
court for US patent cases will put meaningful
restrictions on the patentability of software here, Red
Hat patent lawyer Rob Tiller said in a well-attended
talk at the Southern
California Linux Expo. In a surprise
October ruling in the case of In re Bilski
last year, the Court of Appeals for the Federal
Circuit "threw out wholesale" the existing test
for software patentability, and substituted a new,
stricter one. "The test has teeth," said Tiller,
who, as Vice President and Assistant General Counsel,
IP for Red Hat, handles incoming patent threats and
authored an amicus brief in the case.
The patent at issue was a business method for hedging
commodities transactions; the Federal Circuit
found the method unpatentable under a new test:
in order to be patentable, a process must be either
tied to a particular machine or apparatus, or must
transform a particular article into a different state
or thing. However, the court, "left to future cases
the elaboration of the contours of the test," Tiller
said. The Federal Circuit threw out its previous
standard, which it set in the State Street Bank
& Trust Co. v. Signature Financial Group, Inc.
case in 1998. That decision, which opened the door
to pure business method patents, allowed a patent
on a mutual fund business method under a "useful,
concrete and tangible result" test. In the Bilski decision [PDF],
the Federal Circuit's chief judge, Paul R. Michel,
wrote, "those portions of our opinions in State
Street and AT&T relying solely on a 'useful, concrete
and tangible result' analysis should no longer be
Questions remain about what kind of machine is
"particular" enough. Will a patent applicant need
to affect a real event outside the computer, such as
the timing of a rubber-curing machine, or is moving
electrons within a general-purpose computer enough?
"This is something that courts and patent attorneys
are scratching their heads about," Tiller said later.
It's possible that a software-patent-friendly
interpretation of Bilski could simply include a
"general-purpose computer" in a patent claim, and
trivially get around the requirement for a particular
machine or apparatus. But, Tiller said, "It's hard
to argue that a general purpose computer alone will
suffice." Judge Pauline Newman wrote in dissent,
"For the thousands of inventors who obtained patents
under the court's now-discarded criteria, their
property rights are now vulnerable."
"Bilski suggests that the Federal Circuit believes
the Supreme Court is concerned with its work,"
Tiller said. In an unusual move, the Federal Circuit
heard the case en banc, with all twelve judges
involved, instead of in a smaller panel. Nine agreed
on the ruling, with two against the new test and one
dissenter writing that the court didn't go far enough.
"They really are concerned that if you grant too much
patent protection you could inhibit innovation,"
Tiller said. In the Red Hat amicus brief, Tiller
summarized the often-heard economic arguments against
software patents, and argued that the State
Street test was inconsistent with the Supreme
Court's previous patent decisions.
In a 1972 case, Gottschalk v. Benson,
the Supreme Court ruled that an algorithm for
converting binary-coded decimal data to binary
was not patentable. Later, in a 1981 decision in
the case of Diamond v. Diehr, the Supreme
Court decided that a process for curing rubber
that includes a computer-implemented algorithm
is patentable. The Red Hat amicus brief
says, "Diehr reaffirms that abstract ideas by
themselves are unpatentable, and that only inventions
that are sufficiently tangible are patentable."
The patent holder has requested that the Supreme
Court hear the Bilski case, but the Supreme
Court accepts few such requests, Tiller said.
Groklaw covered the Bilski case thoroughly (Part
3) and called it "The End for the stupidest of
the stupid patents."
Tiller got an easy round of applause when an
audience member thanked him for Red Hat's refusal
to sign a dubious patent agreement with Microsoft,
as Novell did. Although Red Hat did not give
ground to Microsoft's patent threats, Microsoft
first and agreed to establish virtualization
interoperability agreements with Red Hat without a Red
Hat signature on a patent shakedown.
asked for some policy changes to ease the patent
stress on the software business. "Since 1994, US
litigation costs have substantially exceeded profits
from patents," he said, except in the chemical
and pharmaceutical industries. "If we can't have
a subject matter exclusion for software, is there
anything else that can be done?" he asked. Improving
patent search tools would help, and requiring
source code with a patent application would make it
easier for working software developers to identify
problem patents, since it's easier for them to read
code than the tortured language of patent claims.
An independent invention defense would also help,
he said. "We ought to carve out the situation where
a second inventor, just as creative but a little later,
comes up with the same invention," he said.
Senator Patrick Leahy of
Vermont plans to re-introduce a bill
to reform patent damages and reexamination
requirements, Tiller said. "We in fact supported
Linux users can help with the patent problem.
"Talk about this problem. Educate ourselves
and educate others. Instead of fostering
innovation it's hindering innovation,"
he said. "We have a large amount of work to
do to educate people about this." Red Hat is also seeking
prior art to help defend a lawsuit from a patent
troll firm that is suing both it and Novell.
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