Nov 8, 2009

Software cos. eye key patent case in Supreme Court

(AP) -- With the technology industry looking on, the Supreme Court on Monday will explore what types of inventions should be eligible for a patent in a pivotal case that could undermine such legal protections for software.

A ruling that sides with the Patent Office could bar patents on processes and methods of doing business, such as online shopping techniques, medical diagnostic tests and procedures for executing trades on Wall Street. And it might even undercut patents on software.

In a worst-case scenario for the high-tech industry, the ruling could invalidate many existing software patents or at least make them more difficult to defend in lawsuits. And it could make such patents harder to obtain in the future because software is generally patented as a process for doing something rather than as a physical invention.

"Technology companies care about this case because it will define what you can and cannot get a patent on," said Emery Simon, counselor to the Business Software Alliance, which represents large technology companies including Microsoft Corp. and Intel Cor. "The scope of patentability could have ramifications for the path technology takes."

It's impossible to know what products might never have come to market without patent protection for software. But tech companies say these patents have played a critical role in keeping the U.S at the cutting edge by giving people control over their inventions for nearly 20 years.

"The software industry would lose an important incentive to innovative if the government ceased issuing software patents," warned patent attorney James Carmichael, a former judge on the Patent Office board of appeals.

Although technology companies insist they'll keep innovating no matter how the high court rules, an unfavorable outcome might applications in a different way or rely more on copyright and trade secret protections. And it might even draw Congress into the debate.

The facts of the case are not about software.

The roots of the dispute go back to 1997, when investors Bernard Bilski and Rand Warsaw tried to patent a method of hedging weather-releated risk in energy prices. That process, which powers energy billing services offered by a Pittsburgh company called WeatherWise USA, can be used to lock in energy prices, even during an unusually cold winter.

The Patent Office concluded the process was too abstract and denied the application. So Bilski and Warsaw took their claim the U.S Court of Appeals for the Federal Circuit, which upheld the Patent Office decision last year and said a process is eligible for a patent only if it is "tied to a particular machine or apparatus" or if it "transforms a particular article into a different state or thing."

The Bilski filling, the court found, did not meet the test.

Now, the question facing the Supreme Court is whether that "machine-or-transformation" test is the right standard.


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