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Bilski patent ruling will increase costs of doing business, says expert


The US Supreme Court's refusal to define what business methods and software can and cannot be patented will provoke an increase in patent litigation and a rise in costs for business, an intellectual property lawyer has said.

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The US Supreme Court this week issued its long-awaited ruling in the Bilski case, where inventors wanted to patent a system for spreading energy costs in relation to the weather.

The system was a 'business method', which meant that was an organisational system rather than a physical or technical invention, and the Supreme Court had to decide whether or not such a system could be protected by a patent.

The Court was widely expected to use the opportunity of this judgment to declare exactly what the law means in the US when it comes to business method patents and the implications that might have for the controversial area of software patents.

The Court failed to issue any broad guidance. Though it ruled that the Bilski invention could not be patented it went no further in clearing up what business methods or software can be patented.

"I think this was both helpful and an unhelpful ruling," said Deborah Bould, an intellectual property law specialist at Pinsent Masons, the law firm behind OUT-LAW.COM. "It was helpful because it did set out some clear rules, so business methods are potentially patentable and software patents are also generally OK – they haven't closed the door."

"But what the Court hasn't done is actually give us any concrete parameters within which we can work, so this means that there will be a lot more US patent litigation where people are pushing their chances, trying to get patents through which of course is going to generate extra business cost," said Bould.

Bould said that US courts and patent-granting body the US Patent and Trademark Office (USPTO) had reined in business method patents before this ruling.

"Generally speaking the courts were fairly sceptical about business methods and in particular the US Patent Office went through a period of granting business methods quite happily but they've become much more restrictive in recent years because of the more sceptical approach of the courts," said Bould.

That, she said, will now change, and could have a major impact on software patents.

"[The ruling] means that software patents are much easier now to get through," said Bould. "The USPTO will not doubt become more permissive I expect. It's also going to mean that there's going to be more litigation because the Court didn't set out a bright line test confining the parameters of patentability. What they did was say 'we're in the information age now – we're not going to prescribe what's going to be patentable."

Inventions used to be granted a patent if they passed the 'machine or transformation test', meaning that they had an effect in a machine or transformed something. Bould said that the Supreme Court ruling would turn this from a rule into just a "clue" to patentability after the Supreme Court said that it was not the only test applicable to decisions on business method patentability.

Bould said that strong software patents could affect any business, not just a software developing company.

"If you're dong business in the US and you're not patenting you may be on the receiving end of viable software patent claims," she said. "So for example Microsoft are out there asserting patents that read on to the Linux kernel at the moment - that could prove to be very expensive for you as a business just doing regular business using open source software."

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