The U.S. Supreme Court today issued its long-anticipated ruling in In re Bilski, a case raising a fundamental question: what is patentable? The Court agreed with the lower court's refusal to grant a patent, but refused to state a new test for patentability.
Patent practitioners and inventors have awaited the decision with bated breath since oral arguments last November. Particularly at stake were business method patent applications under the Federal Circuits' narrowed interpretation of patentable subject matter. The Federal Circuit had held that patentable subject matter involving processes must involve a machine or transformation of matter, concluding that the Bilski price-fluctuation-risk-hedging process and its more specific application to commodities and energy markets accomplished neither.
The Federal Circuit's Bilski holding has caused concern for its potential negative impact on the patentability not only of business methods, but also of software programs themselves or even processes involving software-implemented or software-assisted components. And, as Judge Rader argued in his Federal Circuit concurring opinion, innovation in the Information Age is no less deserving of patent protection than innovation in the Industrial Age.
In the words of today's Supreme Court's majority opinion, "It is true that patents for inventions that did not satisfy the machine-or-transformation test were rarely granted in earlier eras, especially in the Industrial Age . . .. But times change."
While affirming the Federal Circuit's holding regarding the patentability of an energy price-hedging process--thus depriving petitioners Messers. Bilski and Warsaw of a patent--the Supreme Court roundly criticized the Federal Circuit's incorrect interpretation of 35 USC Sec. 101 and its too-narrow two-prong test.
Thus the Supreme Court unanimously agreed on the result while splitting on the reasons for affirming the Federal Circuit's holding of unpatentable subject matter.
All Supreme Court Justices agreed that the subject matter of the Bilski, et al. patent application was too abstract to merit patent protection. But a divided Supreme Court refused to dictate a particular patentability standard, relying instead on the patent statute and the Supreme Court's own precedents, and leaving to the Federal Circuit the development of future tests for patentability consistent therewith.
When the US Supreme Court decided Williams v. Philip Morris in 2007, it created a challenge for judges instructing juries on punitive damages. The Due Process Clause prevents a jury from imposing punitive damages to punish a defendant directly for harm it causes to non-parties. But a jury can consider evidence of harm to others when assessing the reprehensibility of defendant's conduct as part of setting the amount of punitive damages. How to instruct juries to avoid improper use of evidence of harm to others is where the problem lies.
On Thursday, the Oregon Supreme Court in Schwarz v. Philip Morris vacated a $100 million punitive damages award in a tobacco products liability case because the jury instructions didn't appropriately distinguish between proper and improper uses of evidence of harm to third parties. The court determined that the Uniform Civil Jury Instruction in effect at the time of the 2002 trial could have led the jury to believe that it could "use evidence of harm to others in arriving at its punitive damages verdict" and lacked an explanation of the limits of permissible use.
The court remanded for a new trial limited to the question of punitive damages.
The U.S. Supreme Court yesterday limited the role of courts in interpreting and enforcing arbitration agreements under the Federal Arbitration Act. At issue in Rent-A-Center West, Inc. v. Jackson was an arbitration agreement that Jackson signed as a condition of his employment with Rent-A-Center. When Jackson filed an employment discrimination lawsuit, the employer sought to dismiss based on the agreement. Jackson argued that the agreement was unconscionable and unenforceable. The agreement specifically provided that the arbitrator would determine the enforceability of the agreement.
In a 5-4 decision, the Supreme Court held that, because Jackson challenged the enforceability of the agreement as a whole, the challenge had to be resolved by an arbitrator. But if Jackson had challenged just the portion of the agreement stating that the arbitrator would determine the enforceability of the agreement, the issue would properly be resolved by a court.