Wolf Greenfield Lawyer Who Won State Street Case Says if Bilski Decision Tosses Business-Methods Patents, Economy Would Suffer

BOSTON, MA–(EMWNews – July 23, 2008) – On July 23, 1998, a landmark federal appeals

court ruling upheld patents for software-implemented inventions and methods

of doing business. Ten years and thousands of business-method patent

applications later, the United States Court of Appeals for the Federal

Circuit is considering whether to undo that decision in part or completely.

In State Street Bank & Trust Co. vs. Signature Financial Group Inc., the

Federal Circuit — the nation’s top patent court — ruled in favor of

Signature, upholding its patent for a data processing system for mutual

funds. The ruling opened the gate for

business-method patents — most for serious inventions, but a few for

things that seem silly.

Now the Federal Circuit is considering the Bilski case, which involves a

rejected patent application for a method of managing weather-related risk

in commodities through hedging.

While some expect the decision will invalidate business-method patents,

Steven J. Henry of Wolf, Greenfield & Sacks, P.C., one of the lead

attorneys for Signature in 1998, believes that the Federal Circuit — and

ultimately the Supreme Court — won’t toss out the State Street precedent

entirely.

“Most likely they’ll refine the approach, but I don’t think there will be a

huge swing,” he says. “The Federal Circuit stated in no uncertain terms in

1998 that it was wrong thinking in the past to have excluded

business-method patents, and State Street corrected that. I don’t foresee

a complete reversal of direction at this point — just a mid-course

correction.”

Thirty briefs have been filed by various parties with the Federal Circuit

regarding Bilski. Henry expects the 12 judges will strive to craft an

opinion with the fewest dissents that makes a clear statement.

And whichever way the decision goes, it’s virtually certain to end up in

the Supreme Court, he says.

The Constitution gives Congress the power to promote the progress of the

“useful arts” by giving inventors and authors exclusive rights.

“The central legal issue is that the term ‘useful arts’ has never been

construed by the Supreme Court,” Henry says. “Ultimately, someone has to

resolve the constitutional limits of the patent system. The current

Supreme Court has taken a great interest in putting its stamp on the patent

system, so I strongly suspect the Federal Circuit decision will attract its

interest.”

By rewarding inventors and investors, business-method patents foster

innovation in an economy that increasingly depends on information and

financial services, Henry says.

“Denying protection in software, financial services and other service areas

might put the brakes on the growth we’ve experienced in the last decade at

precisely the wrong time,” he says.

“Ironically, China and India have built patent systems that are becoming

more viable and more heavily used every day. They seem to have learned the

importance of patents in encouraging investment in innovation. If we don’t

provide protection for US investors, why shouldn’t they invest in places

like India and China instead?”

Henry adds: “There have been some egregious examples, but it is usually not

good policy to base general rules on preventing infrequent ‘lapses.’ We may

need to protect against the Patent Office being a bit lax in applying the

rules and letting some bad patents issue, but that does not mean we need to

change the rules. A strong and broadly accessible patent system

contributed significantly to our economic growth over the past decade or

two. Fine tuning is appropriate, not a giant step backward.”

About Wolf Greenfield

Wolf Greenfield, the largest law firm in New England devoted exclusively to

intellectual property law, serves companies that make everything from

pharmaceuticals to software to electronics to snowboards, as well as

representing academic research centers. The firm counsels clients in the

areas of patents, trademarks, copyrights, designs, trade secrets, and

related licensing and litigation. Web: www.wolfgreenfield.com