Not since 1981 has the Supreme Court undertaken to spell out the kinds of inventions that are eligible for patent rights — the exclusive rights to produce or use an invented device or process, or to license it to others for a royalty fee.  Much has changed since then in the world of commerce, not least the digital revolution.  On Wednesday, the Court was asked to bring the law up to date — an effort that, it is clear, could be highly controversial, depending upon what path patent law modernization might take.

The new case is Bilski, et al., v. Doll (not yet assigned a docket number) — a case that has generated hot and even worldwide controversy since two inventors in 1997 filed an application for a patent on a new method of conducting business.  In much-simplified form, the method devised by Bernard L. Bilski and Rand A. Warsaw provides ways to hedge against the business risks that come with the inevitable rise and fall of prices for commodities.  (The petition filed Wednesday is available in a link contained within this press release.  The link includes the lower court decision at issue; it is a large file.)

On the one side of this controversy in its largest sense are those — like Bilski and Warsaw themselves — who argue that patents must be available to encourage innovation in devising new ways to conduct business in the global information-based economy, including encouragement for new ways of digitizing business methods.

On the other side are consumer advocacy groups and free-market devotees who worry that patent monopolies could tie up methods of creative thought processes, including teaching, judging, creative writing, making medical judgments, or picking juries (some current, real examples of claims).

There is also the possibility, or so it is argued, that the validity of thousands of existing patents may now be in question under a new test of patent eligibility that is at the center of the new case.  That is a test devised by the Federal Circuit Court of Appeals, in a 9-3 en banc decision last October rejecting patents on all of the Bilski-Warsaw claims.

Of course, this doesn’t mean that the Supreme Court will take the case. But if they do, it could have some profound implications for patent law, and in particular for process and software patents, depending upon how the justices rule and how broad or narrow their ruling is.  ..bruce..

Well, I just received an e-mail from Joel Miller of the ABA Intellectual Property Law Committee (of which I’m a member) that include two decisions:  a US District Court decision (Classen v. Biogen et al.) invalidating several patented methods for “evaluating and improving the safety of immunization schedules”, and a US Federal Court of Appeals ruling upholding that decision based on In re Bilski. Here’s the entire text of the latter’s decision:

In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court’s grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen’s claims are neither “tied to a particular machine or apparatus” nor do they “transform[] a particular article into a different state or thing.” Bilski, 545 F.3d at 954. Therefore we affirm.

Here are the patents that were held to be invalid (with links):

• US Patent 6,420,139
• US Patent 6,638,739
• US Patent 5,728,385
• US Patent 5,723,283

Interesting times ahead.  ..bruce..

In Edwards v. Arthur Andersen, the Court examined an employment agreement between Arthur Andersen and one of its former tax manager employees, Raymond Edwards.  The agreement contained a typical non-competition clause, prohibiting Edwards from working for or soliciting Arthur Andersen clients for limited periods after his employment ended.  Edwards later alleged that the non-competition agreement violated Business and Professions Code section 16600, which states: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  The trial court ruled in favor of Arthur Andersen, but the court of appeal reversed, finding for Edwards.

The Supreme Court largely affirmed the ruling of the court of appeal, holding that the non-competition agreement was void.  The Court emphasized California’s strong public policy favoring open competition and employee mobility, and determined that non-competition agreements are permissible only if they fit within one of the statutory exceptions to section 16600.  Those exceptions authorize non-competition agreements in connection with the sale or dissolution of corporations, partnerships, and limited liability companies.  None of those exceptions were present in the Edwards case.

California law has long moved in this direction — non-compete agreements have always been hard to enforce in California, particularly in the technology industry — but the California Supremes have made it official and rather sweeping.

As the article goes on to point out, most companies are now left primarily with trade secret enforcement as a means of guarding against what they feel is unfair competition from former employees. However, that requires the company to take active steps to define and protect its trade secrets, including appropriate confidentiality and intellectual property agreements, as well as security measures (both physical and electronic). It also raises the perennial issue of what is a trade secret vs. what is domain expertise.

Hat tip to Mary Enmark at MMB.  ..bruce..

Since PDA-like devices date back to the 1980s, and John Sculley announced the Apple Newton — complete with a touch screen — in early 1992, a year before the earlier patent was filed, one wonders whether these patents can hold up under prior art, and it’s unclear why the patents were granted in the first place.

On the other hand, there are some curious information gaps on the web. Just last week (see entry for 05:29, 18 June 2008), someone stripped out the “History” section of the Wikipedia article on PDAs, which — before being deleted — documented PDAs going back to 1983. Likewise, a commonly-linked article — “The Evolution of the PDA: 1975-1995″ by Evan Koblanz — appears to have been pulled off the web. (Google doesn’t have a cached version, nor does the Internet Wayback Machine.)

Sounds as though someone may be trying to do historical revision in advance of trial. ..bruce..

So now the Minnesota Department of Public Safety has reluctantly sued CMI to force CMI to make its source code available, which the MDPS apparently has a right to under the terms of its contract with CMI. Even as it pursues this suit, the MDPS claims in its pleadings that “[s]ource code review is not a generally accepted means of determining whether a scientific measuring instrument is fit for a particular purpose, nor does the BCA [Minnesota Bureau of Criminal Apprehension] believe that source code review is an appropriate means to determine whether this particular instrument works as represented by the manufacturer.”

However, it’s unclear how MDPS — which apparently has never seen the source code itself — can make that statement. On the contrary: it’s not at all unusual in IT-related lawsuits for source code to be reviewed to see whether or not certain functionality exists, how it is implemented, and what defects might occur during operation. In cases such as this, the manufacturer typically releases its source code under an “attorneys eyes only” designation, and the other side retains a technical expert who must sign a protective order (the legal equivalent of a non-disclosure agreement) before s/he can review and analyze the source code.

I suspect that CMI software engineers (and their managers) would really like to do some cleaning up (and rewriting) of the source code first, since issues of code documentation, architecture, design, implementation, performance, reliability, and user interface are all fair game. At the same time, the expert might well ask to see defect tracking logs or databases to see how many open defects existed for the version(s) in question. And there might even be issues of how well the software integrates and interacts with the hardware of the device itself.

However, CMI would be obligated to release the exact version(s) of the source code used in the device(s) in question, warts and all. This raises another issue for the DWI defense: has CMI practiced source code control with sufficient rigor to be able to produce the exact source code version for the serial number of each breath-test machine in question? If not, then some judges might well continue to dismiss the corresponding DWI cases, and the state of Minnesota could be compelled to upgrade all of its breath-test machines to a software version that can be reliably produced.

As with the electronic voting machine issue, this case should be interesting going forward and could ripple into other states as well. ..bruce..