Retailers Urge Supreme Court Smackdown Of Process Patents

Written by Evan Schuman and Fred J. Aun
November 12th, 2009

Relief may be in sight for retailers that are afraid someone somewhere has secured a patent covering some mundane process they regularly use in the course of selling stuff—be it the way customers swipe payment cards, their methods for collecting loyalty program data or the functioning of their Web site’s shopping cart feature.

The U.S. Supreme Court on Monday (Nov. 9) heard arguments about process patents and there were indications that it might snuff out such patents altogether. Process patents, also called business method patents, have been derided as frivolous because, some critics charge, patent applications are created after the process has been routinely performed by many companies for years but the “inventor” is merely the first to try to get a patent on that process.

Seven E-tailers, including J.C. Penny, Talbots, L.L. Bean and, are urging the high court to clamp down on patent violation lawsuits by so-called “patent trolls,” which are often shell companies claiming rights to vague business method patents. The retailers note they routinely settle patent infringement claims related to their Web sites rather than spend millions on litigation.

Many of the Supreme Court justices expressed significant skepticism about whether the current system should be maintained. Questioning one attorney about a financial approach patent, Justice Anthony Kennedy raised a Congressional intent argument. “In your view, clearly those would be patentable: the explanation of how to compile an actuarial table and apply it to risk. It’s difficult for me to think that Congress would have wanted to give only one person the capacity to issue insurance.”

Justice Stephen Breyer questioned the very premise of the process patent when used in an overly broad manner. “Every successful businessman typically has something. His firm wouldn’t be successful if he didn’t have anything that others didn’t have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That’s how he made his money. It’s new, too, and it’s useful, made him a fortune. And your view would be anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?” Breyer asked.

“Well then, if that were so, we go back to the original purpose of the Constitution,” Breyer said. “Do you think that the framers would have wanted to require anyone successful in this great, vast, new continent because he thinks of something new to have had to run to Washington and to force any possible competitor to do a search and then stop the wheels of progress unless they get permission? Is that a plausible view of the patent clause?”

The newest member of the court, Justice Sonia Sotomayor, asked how far process patents could go. “How do we limit it to something that is reasonable? Why not patent the method of speed dating?”

Chief Justice John Roberts Jr. also weighed in, questioning legal arguments that a process patent needs to interact with a machine. “If you develop a process that says ‘Look to the historical averages of oil consumption over a certain period and divide it by two,’ that process would not be patentable. But if you say ‘Use a calculator,’ then it is?”

The amicus brief filed by the retailers is one of dozens submitted to the high court in the pending case of Bilski v. Kappos. In the case, two inventors–Bernard Bilski and Rand Warsaw–are appealing the rejection of an application for a patent that would cover their method of hedging risk in commodities trading. A federal circuit court found that the method didn’t qualify as patentable because it wasn’t tied to a particular machine or transformative of any physical object.

Because the case deals with whether patents should be granted for methods, it tests whether software programs–including those used by E-Commerce sites for features such as online shopping carts–can be patentable.


4 Comments | Read Retailers Urge Supreme Court Smackdown Of Process Patents

  1. staff Says:

    Patents may only be issued on novel inventions, meaning if it existed before you discovered/created it, it cannot be patented. If a patent should be issued in spite of a lack of novelty, it will be invalidated in court if an accused infringer can provide proof that the invention was not novel.

  2. Colin Busher Says:

    If inventors or businesses have strong opinions on a legislative solution they should express them to the Judiciary Committees that oversee the Patent Office which they can do at I would like to know where you can get a list of patent insurance companies in the U.S.
    Thanks in advance

  3. T1 Says:

    Here is an amazing quote by USPTO Director David Kappos on just how serious the backlog is in terms of its impact on downstream economic growth and prosperity:

    “Nearly nine months into his tenure as director of the U.S. Patent and Trademark Office, David Kappos said Monday [May 3, 2010] that he thinks the agency still is stifling millions of potential jobs [following the financial meltdown triggered in 2008] because of its inability to keep pace with the volume and complexity of the applications it receives.

    While he lacks empirical data on the number of jobs that ‘our country’s innovation agency’ impedes because of its inability to keep up, Kappos said his instincts tell him the number runs into the millions.

    ‘Hundreds of thousands of groundbreaking innovations that are sitting on the shelf literally waiting to be examined – jobs not being created, lifesaving drugs not going to the marketplace, companies not being funded, businesses not being formed – there’s really not any good news in any of this,’ Kappos said during a panel discussion at the annual trade show of the Biotechnology Industry Organization.

    What’s more, innovation has become the main driver of economic growth, Kappos said. The agency’s backlog impedes economic advancement at a time when China and the rest of Asia are spending unprecedented sums on research and development, challenging the United States in areas of technology innovation where it once reigned supreme, he said.”

    (John Schmid of the Journal Sentinel, “Backlog of patents still stifling potential jobs, director says,” Milwaukee Journal Sentinel, Milwaukee, Wisconsin, May 3, 2010)

    David Kammen

  4. cost of eye lasik Says:

    Love the Kappos quote. How about this one by President Obama? “Believe it or not, in our patent office — now, this is embarrassing — this is an institution responsible for protecting and promoting innovation — our patent office receives more than 80 percent of patent applications electronically, then manually prints them out, scans them, and enters them into an outdated case management system. This is one of the reasons why the average processing time for a patent is roughly three years. Imminently solvable; hasn’t been solved yet.”

    — President Barack Obama, Forum on Modernizing Government, White House, January 14, 2010


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