The bottom line:

Business methods can still be patented in the U.S.

The summary:

Bilski attempted to patent a method of hedging energy commodities, primarily in the form of a mathematical formula. The US Patent Office rejected the application. The rejection was upheld by the Board of Patent Appeals and the Court of Appeal for the Federal Circuit.

Most notably, the Court of Appeal rejected the previous test which had enabled the claiming of business method patents (the State Street Bank & Trust case), instead holding that “a claimed process is patent eligible [only] if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing”.

Needless to say, this new test would have put a bit of a damper on business method patents.

The Supreme Court did not agree with the Court of Appeal. It held that the “machine or transformation” test is not the only test for patent eligibility for a process and that business method patents are in fact permissible under the Patent Act.

That being said, they nonetheless agreed with the Court of Appeal that Bilski’s patent should be rejected, not because it failed to meet the “machine or transformation” test, but rather because it was an attempt to patent an abstract idea rather than a business method. The Supreme Court affirmed that abstract ideas are not patentable.

Comments:

Many like the EFF seem to be disappointed, but from a jurisprudential perspective the judgement makes sense to me. The Supreme Court’s rationale was that courts “should not read into the patent laws limitations and conditions which the legislature has not expressed” and there was no reasonable basis on which the term “process” had to be specifically tied to a machine or the transformation of an article.

In other words, it’s not the job of the courts to make up new stuff when it comes to the law — their job is only to interpret the law correctly. And if there’s any issue with the Patent Act, then it should be dealt with through legislative change rather than a judicial decision.

Perhaps not quite the interventionist approach that some might have been hoping for.

So, as the EFF notes, all of you out there that have a glimmer of inspiration on how to make your fortune from, for example, a system for reserving toilets, (or suing others who come up with the same thing but didn’t apply for a patent) can still pursue that dream.

Bilski v. Kappos (PDF)

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Every Friday, the Pet Project Program (P3) goes into effect. “If you’ve been approved into the program, on Friday, we don’t expect to see you at your desk. You’ll be in our lab or you’ll be collaborating with other people,” said Singhal.

The P3 model is codified into employee agreements and the intellectual property developed during this time does not belong to Fusenet, he said.

If an employee spends three months working every Friday to develop a new technology for better video compression, for example, and then presents it to the company, the idea still belongs to the employee, said Singhal.

Fusenet will ask the employee how much they want to sell the idea for or whether they want to start a company that will sell or license the product, he said. “We’ll help you market that and say, ‘We’ll take 50 per cent of the equity, you take the other 50 per cent,’” he said.

“We will help you with money, we will give you all the resources you need – marketing, customer service, R&D – but you get to keep a significant chunk of the equity in the business as opposed to having just the pride of being able to say you started it,” he said.

The policy applies to all employees, but it’s the software developers who are most likely to come up with the ideas, said Singhal. “We thought this was an interesting model … 99 per cent of the companies out there will take the software,” he said.

Fusenet has experienced one major success, one emerging success and two failures as a result of the model, said Singhal. Another five projects are currently in the R&D stage, he said.

Of course there is a caveat noted in the story about how such an arrangement must be carefully documented. I could also see a few risks associated with this as far as delineation of IP and who owns what. Very often, when new ideas spring up, they may be closely related to some existing intellectual property or based upon it. The question then is where the dividing line is or should be drawn and how that is set out in the documents. Not an insurmountable issue but one that does warrant a bit of thought.

I certainly admire Fusenet for having the vision and courage to adopt such a model. Of course, it’s no guarantee for success but certainly puts all the right incentives in place to have an environment conducive to that. I really do hope to see some interesting things come out of their shop in the near future. They will, after all, be very likely to attract the right sort of folks with this program.

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The much anticipated Copyright Modernization Act (or Bill C-32) was tabled yesterday and is now on-line and available for your reading pleasure. Given the broad interest in this act, it’s not surprising that there has already been a ton of press on it, including summaries and analyses galore.  I don’t propose to reinvent the wheel, so will simply point to you a post in Michael Geist’s blog where he provides a summary and various links to media coverage of the bill (which also have their own summaries) plus of course his own take on it.

My initial impression is that the bill strikes a relatively good balance between content creators and content users. Of course, given the highly politicized nature of copyright reform, and the sometimes fairly extreme views taken in various camps, it won’t make everyone happy. From the perspective of Geist et al. on the user side, the biggest criticism so far has been how digital locks (or “TPMs”) are dealt with. The short version is that TPMs are permitted even if they prevent users from exercising specific rights that are deemed by the Copyright Act not to constitute copyright infringement.

I have my own views on TPMs but will reserve that for another post.

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Raises a whole number of issues, both in respect of the ownership of the materials themselves and what implied licenses, if any, are being granted by lawyers in filing them with the court, whether to the court, participants in the court and the general public, as well as copyright not necessarily in the materials but the database created by Thomson (which of course in and of itself has value).

Not the first time it’s happened. There was a claim by Milberg Weiss (or at least the threat of a claim) a few years ago. Not sure what happened with it.

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In any event, apparently we now have another first — the first person to have been convicted for a tweet. The prize goes to Mr. Paul Chambers, for this lovely tweet: “Robin Hood airport is closed. You’ve got a week and a bit to get your s**t together, otherwise I’m blowing the airport sky high!”

He was convicted of sending a menacing electronic communication. Fortunately for him no jail time was involved, though he was fined and apparently also lost his job as a result of the prosecution.

Social media, privacy, personal information and one’s communications through them are, collectively, a very complex topic. I’m sure that if you wanted to, you could spend a whole day (or longer) teaching people how to navigate Facebook’s privacy settings. Or LinkedIn’s. That being said, I usually try to keep my advice on using social media very simple: Before you post, tweet, blog or send, imagine what would happen if whatever it is you’re sending out will appear on the front page of the New York Times. Would you be comfortable with that? If not, then perhaps keep it to yourself. Or share it with close friends or colleagues over a coffee or a beer.

I imagine this might be of a bit of an oversimplification, and perhaps even rather obvious. Also, if someone already lacks any sense of judgement, it certainly won’t help (then again in that case nothing likely will). And it certainly won’t help you if you’re, say, someone with unusual predilections who can use only social media as an outlet. All that said, I find it to relatively good rule of thumb. Also a lot quicker than taking a couple of hours each time Facebook, once again, adds another 30 settings to its privacy controls.

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