Transcripts

SCOTUS Examines Patent Policies

JEFF YASTINE: The Supreme Court today seemed skeptical of the idea that new ways of doing business should be granted the same patent protections as new machines and technical breakthroughs. That was the issue before the court today in the case of Bilski v. Kappos. As Darren Gersh reports, it could set the standard for patent protections in an increasingly knowledge- driven economy.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: These two inventors Bernard Bilski and Rand Warsaw are trying to patent a way to hedge against the risk of rising energy bills. Michael Jakes represented the inventors before the high court, arguing their work is a product of a knowledge economy.

MICHAEL JAKES, ATTORNEY FOR BILSKI: The real reason people are getting patents is because there has just been a huge surge in innovation in financial engineering and operations research, things in that area that now should be eligible for patenting.

GERSH: Under the law, no one can patent an abstract idea and Chief Justice John Roberts asked whether risk management wouldn't fall under that category. The only physical step in the process Roberts said was picking up the phone to buy and sell commodities. Justice Ruth Bader Ginsburg pointed to other patents granted for ways to pick a jury or avoid taxes. The court wanted to know where to draw the line on these kinds of business methods which don't involve machines or technology. Jakes argued as long as the business method is new and not obvious, two traditional standards for patents, it should be approved. Law professor Pamela Samuelson filed a brief with the court on behalf of an online civil liberties group arguing such patents provide little benefit to society.

PAMELA SAMUELSON, LAW PROFESSOR, U.C. BERKELEY: It's just difficult to do searches and impose huge amount of cost on society if everybody who decides that they are going to engage in a hedging strategy has to go check the patent office records to see whether or not they have to clear rights.

GERSH: Law professor Kevin Collins says the court today showed it clearly wants to rein in the patent system, but isn't sure how hard to pull.

KEVIN COLLINS, LAW PROFESSOR, INDIANA UNIVERSITY: Either the case could go from a relatively narrow exclusion that affects only business method patents to quite a broad exclusion from patentability that could affect the patentability of a number of software and biotech inventions.

GERSH: Which is why companies like Yahoo! and Microsoft filed briefs in this case and are watching it closely. A decision is expected next spring. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.