Yesterday a federal appeals court ruled against a patent on a business idea (here is the Yahoo story), and the decision has significant implications. Bernard Biliski was seeking a patent for a method to hedge against the risk of weather-related impacts on business. The focus of the decision was that the application did not meet the definition of “process” as defined in patent law and precedent. The patent application had already been denied by the USPTO and the decision on Thursday merely affirmed the patent office’s denial as correct.
The 11 judge panel was split 9-2 and the most fascinating thing to me were the dissenting opinions which argued that the decision might lead to the disruption businesses or industries that rely on other such patents. I find this argument astonishingly irresponsible. Considering the significant intellectual and economic forces that are currently challenging the very foundations of the existing IP regime, I do not know how one could advance this as a justification for maintaining any kind of patent. In response, I would offer the following four points:
1. Patent decisions always disrupt businesses or plans. To argue that courts should not invalidate patents if it will disrupt businesses or industries would have much farther reaching implications. If this were a vaild standard then I would guess that there would be few invalidations. I don’t think that the degree of disruption should ever be a consideration in deciding the validity of a patent (though it may be an important consideration for the appropriate remedy).
2. The argument that entire industries are based on business method patents is questionable. However, even if it is true it would then only serve to provide further justification for even more careful consideration of the validity of these patents.
3. One of the biggest dangers with business method patents - and it is true in this specific case as well - is that the patent will embody methods or processes that are already widely in use in business. The real potential for trouble is when a business method patent disrupts existing businesses. Invalidating that kind of patent is essential. (Here is another current example.)
4. Finally, business method patents are perhaps the most controversial element of an increasingly controversial patent system. To argue that we need to maintain them primarily because invalidating them would disrupt some businesses essentially justifies the position of the opponents of IP and undermines the logic of a system for protecting intellectual property.
