Brief of Amici Curiae Entrepreneurial and Consumer Advocates in Bilski v. Kappos, No. 08-964

Abstract

The Bilski Petitioners ask this Court to reject Congress’ sound policy judgment, ignore § 101’s substantive limitation on patentable subject matter, and open the patent floodgates in a wide variety of fields where exclusive rights are unnecessary and harmful. This Court should decline this invitation for three reasons: (1) the history and structure of § 101 limit the construction of “process” to technological processes; (2) allowing patents on non-technological methods such as those in the business and service industries is unnecessary and harmful to innovation; and (3) removing the long-standing technological limit on § 101 processes would undermine the institutional competence of both the United States Patent and Trademark Office and the federal courts to protect innovation.

When the Federal Circuit decided State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), it knocked patent law loose from its historical moorings and improperly injecting patents into business areas where they were neither needed nor wanted. Since then, the PTO has been flooded with patent applications on a wide variety of non-technological processes that cover services like arbitration, tax-planning, legal counseling, charity fundraising, and even novel-writing. The results have been nothing short of disastrous: many business and service companies now face serious patent threats to both their freedom to operate and to innovate. And, because few if any service-based industries need patent incentives to provide consumers with professional competence and innovation, these costs far outweigh any appreciable benefit.

The method in this case is a textbook example. If Mr. Bilski were allowed to patent his hedging method, he would be able to extract rents and potentially put out of business any individual or company who invests money or even advises others on investing in the same way as he does. In patent law, limiting competition is tolerable only when incentives are needed to promote technological progress. Bilski’s method, however, does nothing to advance the useful arts; in fact, one need not even use technology to invest as Bilski does. Moreover, there can be little question that investment firms — exemplars of service-based businesses — already strive to develop innovative and effective investing methods in order to entice more clients. Thus, providing exclusive rights to a single individual or firm to control such methods goes against the core of patent policy. Congress implicitly recognized as much in 1952, when it limited patentable subject matter to technological processes. Non-technological processes such business methods and services were understood to be excluded from that definition, an exclusion courts respected for decades. The Federal Circuit’s State Street decision marked a dramatic departure from this sensible approach. Amici urge the Court to bring patent law back in line with the history, structure, and purpose of the Patent Act.

Keywords: patent, amicus, Bilski