On March 13, IP Osgoode held a panel discussion entitled Business Method Patents: Bilski and Beyond. While the tagline of the event indicated it was to ‘Explore the effect in Canada of recent US business method patent jurisprudence,’ attendees got treated to a lot more. Speaking from a wide array of perspectives, the panelists provided insightful, yet accessible substance, all the while facilitating an encouraging environment for intellectual cross-pollination.
For the unacquainted, the US Court of Appeals for the Federal Circuit released their decision in In re Bilski, 545 F.3d 943 (Fed Cir. 2008) (warning: PDF link) in October 2008. As pointed out by panelist Bob Nakano, the case was heard en banc by the court, and no less than 39 amicus briefs were filed. Clearly, it was a highly anticipated case with far reaching implications on many stakeholders. In the end, the decision changes the decade-old test in State Street Bank v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998) for the patent-eligibility of business methods. The test of a ‘useful, concrete, and tangible result’ is out, and the older ‘machine or transformation’ test is back in. Greater details about the case can be found here and here.
I summarize the main points of the panelists below:
Appropriately starting the discussion was a representative from the stakeholder group which serves as the driver for patent law – inventors. Krishna Pathiyal, Director of IP at Research in Motion provided two key highlights: (1) a useful analytical tool for evaluating caselaw with regards to business method patents, and (2) a view into how innovative businesses view IP risk assessment.
First, the analytical tool used by Krishna employs a spectrum consisting of purely technological innovations on the one end and purely business innovations on the other. In the space filling the two extremes are hybrid innovations. Krishna observed that where the former State Street test allowed hybrid innovations that came very close to being purely business innovations, the current Bilski formulation reins back that line towards the center of the spectrum.
Second, Krishna provided a perspective of the IP risk management issues emanating from Bilski. He noted that the recalibrated test will create investment risks in the form of monies already spent on prepared or outstanding applications because the ultimate procurement of the patent may be at risk. Also, infringement risk may be created because existing patents will now be subject to a more stringent subject matter test.
Two partners from McCarthy Tetrault shared their views. Bob Nakano provided the perspective of a patent agent, while Andrew Reddon gave the view of a litigator.
After taking the audience through a more detailed look at the scope of the new test in Bilski, Bob pointed to the US Patent Office’s internal memo (date Jan. 7, 09) to patent examiners on how to apply Bilski. This memo (found here) contained 3 points: (1) a reiteration of the basic machine or transformation test, (2) a statement that the machine or transformation must impose meaningful limits on the claim’s scope, and (3) an indication that insignificant extra-solution activity which recites a specific machine or a particular transformation of a specific article will be insufficient to make unpatentable subject matter patentable.
While the first 2 points took wording specifically from Bilski, there was a question raised as to what extent the USPTO had authority to implement the third point. This is especially so for the machine prong of the test where the court decided to “leave to future cases the elaboration of the precise contours of machine implementation.” (p.24)
Andrew Reddon provided some strategies on how to litigate business method patents. First, he reminded the audience that when litigating business method patents, subject matter arguments are not the only game in town. Anticipation, obviousness, and breadth are tools in the patent law toolbox that are also available, and can result in fruitful results considering that many business methods patent applications are just attempts to claim methods which have long been used in traditional commerce.
Second, he provided an analysis of Bilski, and discussed how it might be utilized in Canadian courts. Noting that the Canadian conception of ‘art’ outlined in chapter 12.02.01 of the Manual of Patent Office Practice (MoPOP) requires both “an act or series of acts performed by some physical agent” (arguably akin to a ‘machine’) and a requirement to “produc[e] in that object some change of either character or condition” (arguably akin to a ‘transformation’), he observed that the Canadian requirement is in fact narrower than the Bilski test which just required a machine or a transformation.
Additionally, he noted that the dividing line for what can and cannot be transformed as espoused in Bilski is not a meaningful distinction. That is, the court’s distinction (at p. 25-26) between acceptable transformation of data based on physical objects versus unacceptable transformation of data based on intangibles such as legal relationships, business risks, or abstractions creates vague results. If Bilski supports your case, Andrew suggests characterizing Bilski as providing a bright line test; conversely, if Bilski harms your case, Andrew suggests arguing that the distinction in what can be ‘transformed’ is not meaningful.
Last, Andrew pointed out how the recent Supreme Court of Canada case in Apotex v. Sanofi, 2008 SCC 61 alluded to US and UK jurisprudence in reformulating the Canadian test for obviousness. In seeking to apply Bilski, Andrew suggested citing this case as one where Canadian courts looked to foreign jurisprudence with favor. If seeking to distinguish Bilski, Andrew suggests characterizing Apotex as only looking to foreign jurisprudence when there was a convergence in foreign viewpoints, which is not the case for the patent-eligibility of business methods.
Professor Mgbeoji provided a more theoretical and historical viewpoint of the impact of US patent jurisprudence on Canadian patent law. Using the metaphor of an uneasy dialog, Mgbeoji illustrated his point by parsing several key US and Canadian patent cases. Of note, he pointed out the similarity in language and temperament between the majority decision in Diamond v. Chakrabarty, 447 U.S. 303 (1980), and the minority opinion in Harvard College v. Canada (Commissioner of Patents), 2002 SCC 76.
Coming from the Patent Appeal Board, Paul Fitzner put a face to a government institution that could at times seem distant. After providing an overview of the thicket of procedural steps involved in how patent claims come to be litigated in court, he briefly reviewed the leading case law in Canada surrounding this topic. Observing that there has been a lack of consistency in how Canadian courts have supported their conclusions that such litigated claims were unpatentable, Paul left the audience in anticipation of revised versions of Chapters 12 and 13 of MoPOP which are to be published on April 27, 2009. In addition, he indicated that a Commission decision relating to the patentability of business methods will be handed down around the same time.
(Update: March 16, 2009, 2:50pm – The text above has been updated to correct the erroneous indication that the pending Commissioner’s decision concerned claims similar to those in Bilski. Paul made no reference to the similarities or differences between the claims in the pending decision and the claims in Bilski.)
From a student’s perspective, the wide array of theoretical and practical points was enlightening. Specifically, the perspectives offered by Krishna and Paul concerning the business and decision-maker viewpoints respectively were a rare treat that law students seldom see. I’m sure all audience members, no matter their background, learned a lot from this event.
Powerpoint slides for some of the panelist presentations will be made available here on IP Osgoode soon.
Powerpoint slides for presentations are being made available on our Event Archive page:
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