Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

The Supreme Court heard oral argument in the Bilski case Monday afternoon.  Click here for a transcript of the arguments.  Here are a few of the highlights from Bilski's argument:

JUSTICE GINSBURG: But you say you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable?

MR. JAKES: They are eligible for patenting as processes, assuming they meet the other statutory requirements.

JUSTICE BREYER: So that would mean that every -- every businessman -- perhaps not every, but every successful businessman typically has something. His firm wouldn't be successful if he didn't have anything that others didn't have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That's how he made his money.

And your view would be -- and it's new, too, and it's useful, made him a fortune -- anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.

* * *

JUSTICE BREYER: So you are going to answer this question yes. You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things - (Laughter.)

JUSTICE BREYER: It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

MR. JAKES:  Potentially.

And here are some of the highlights from the government's argument:

JUSTICE SOTOMAYOR: No ruling in this case is going to change State Street. It wasn't looking at process or the meaning of "process." It was looking at something else.

* * *
 

CHIEF JUSTICE ROBERTS: Mr. Stewart, I thought I understood your argument up until the very last footnote in your brief. And you say this is not --simply the method isn't patentable because it doesn't involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the -- the process then it is patentable. I -- I -- it -- that takes away everything that you spent 53 pages establishing.

* * *

CHIEF JUSTICE ROBERTS: But if you look at your footnote, that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.

MR. STEWART: And all we've said is that it might be enough; that is, hard questions will arise down the road as to where do you draw the line, to what extent must the machine or the transformation be central --

CHIEF JUSTICE ROBERTS: So you think it's a hard question. If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it -- then it is?

MR. STEWART: I think if it's simply using a calculator for its preexisting functionality to crunch numbers, very likely that would not be enough. But what we see in some analogous areas is that the computer will be programmed with new software, it will be given functionality it didn't have before in order to allow it to perform a series of calculations, and that gets closer to the line. And again --
 

CHIEF JUSTICE ROBERTS: Well, your footnote -- I don't mean to dwell on it -- it says to identify counterparties to the transactions. So that if what you're trying to get is the -- the baker who sells bread, because you are going to hook him up with the grocer who sells, you know, in the grocery store, if you punched in in your search station, you know, give me all the bakers in Washington, that would make it patentable?

MR. STEWART: Again, we are -- we are not saying it would be patent eligible. We would have to review those facts, and the PTO would have to review those facts in the context of an actual application.

I guess the point I'm trying to make is simply that we don't want the Court, for instance, in the area of software innovations or medical diagnostic techniques to be trying to use this case as the vehicle for identifying the circumstances in which innovations of that sort would and would not be patent eligible, because the case really doesn't present any -- any question regarding those technologies. And therefore, we --

If those highlights, left you wanting more, check out the following posts that give some additional context to the cold transcript or read the tea leaves, as we all wait for a decision, likely this spring:

• 271 Patent Blog
   
• IPWatchdog (and here)
   
• Patent Docs
   
• Patently-O (and here)
   
• The Prior Art
   
• WSJ Law Blog

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I have noticed that my news updates tend to be patent-focused, so today  they focus on trademarks and copyrights:

• IP Law & Business (subscription required to access the article) has an interesting article in the February/March 2009 issue identifying Justice Ginsburg as the Supreme Court's "champion of copyright holders" because of recent opinions supporting broader copyrights.  The article also identifies Justice Breyer, based on dissents in the same cases, as leading the cause for narrower copyrights.  And the article predicts that the Supreme Court is trending toward a narrower view of copyrights.
   
• Seattle Trademark Lawyer Michael Atkins has a timely post (click here to read it) that traces the March Madness trademark back to the Illinois high school basketball playoffs, as early as the 1940s.  The NCAA and the Illinois High School Association have since pooled their rights and both have a license to use the marks. 
   
• Victoria Pynchon has a great series of posts looking at laches in trademark law based upon a recent Ninth Circuit decision -- click here and here.

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The Winter 2008 edition of the John Marshall Review of Intellectual Property Law has been published and is available online by clicking here.  It includes several interesting articles, including:

• An argument for making stage directions copyrightable, Jennifer J. Maxwell, Making a Federal Case for Copyrighting Stage Directions: Einhorn v. Mergatroyd Productions, 7 J. Marshall Rev. Intell. Prop. L. 393 (2008); and
  
• John W. Osborne, Justice Breyer's Bicycle and the Ignored Elephant of Patent Exhaustion: An Avoidable Collision in Quanta v. LGE, 7 J. Marshall Rev. Intell. Prop. L. 245 (2008), arguing that the Supreme Court should chart its own course regarding patent exhaustion, instead of adopting the parties' positions in Quanta v. LG (click here for more on the case in the Blog's archives):

The Federal Circuit held in LGE v. Bizcom that patent exhaustion could be disclaimed by contract.

The confusion regarding patent exhaustion evident in the Federal Circuit’s LGE v. Bizcom decision can be entirely eliminated by strict adherence to the Supreme Court’s Univis Lens decision. Univis Lens makes clear that the sale of an article embodying the essential features of a patent claim results in the exhaustion of that claim.

But patent exhaustion is reflective of the scope of patent rights granted by statute. A statutory grant of rights should not be expandable by private contract. The Supreme Court should thus reverse in Quanta v. LGE. 261 This conclusion applies equally to any type of patent claim, i.e., component, apparatus, composition, system, combination, method, or process claims. Identifying the essential features of a patent claim, i.e., the patentably distinct features, clarifies the exhaustion analysis, results in predictability, and eliminates the confusion between the doctrines of exhaustion and implied license.

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The big news in patent law this week is the Supreme Court oral argument in Microsoft v. AT&T.  Microsoft exports software from the United States to various countries.  The software code alone cannot infringe AT&T's patents until it is combined with the hardware, which only occurs after the software has left the United States.  So, exporting the software is not an act of infringement.  The issue, therefore, is whether, pursuant to 35 U.S.C. Section 271(f), exporting the software constitutes:

suppl[y] . . . from the United States . . . [of] all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States,” as well as the “suppl[y] . . . from the United States [of] any component of a patented invention that is especially made or especially adapted for use in the invention.

For more on the issues, you can find the briefs at Patently-O. 

The case has received substantial media attention both because it was granted cert and because the case could have effects far beyond the international exportation of software.  The oral arguments were interesting (transcript here) and both the main stream media and blogs are frantically reading the tea leaves.

My favorite oral argument quotes both came from Justice Scalia:

JUSTICE SCALIA:  Mr. Olson, before you get into the merits I have a question, a preliminary question. I understand from AT&T's brief that there has been a stipulation entered into between the parties after the judgment below which preserved Microsoft's right to appeal and prescribed different dollar amounts that Microsoft must pay AT&T depending on the outcome of the appeal. Does that raise any, any muteness problem? Can you sort of wager on the outcome of an appeal that way?

                                                               * * *

JUSTICE SCALIA:  I hope we can continue calling it the golden disk. It has a certain Scheherazade quality that really adds a lot of interest to this case.

(Laughter.)

For more on the oral arguments and analysis of the case generally, check out:

Patently-O -- Discussion of the oral argument and quotes from the transcript.

The BLT (Blog of the Legal Times)* -- Coverage of Solicitor General Ted Olson accidentally referring to Justice Stevens (a former Chicagoan) as Justice Scalia and Chief Justice Roberts recusing himself based upon his stock holdings. 

The WSJ Law Blog -- Focusing on Justice Breyer's statement to AT&T:  "I don’t see how to decide for you.”

The WSJ print story (subscription required) -- A broader overview of the story, including a discussion of the fact that the Supreme Court has never held that software is patentable.

271 Patent Blog -- Focusing on the "metaphysical" aspects of the case with extensive quotes from the oral argument.

IP Kat -- A pre-argument case detailing the parties' arguments.

*  This is a new blog that is well worth checking out and adding to your RSS feeds.

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