Bilski v. Kappos: The Blockbuster That Was a Bust

Every year there's a much hyped movie that everyone expects will be a big hit. But, sometimes, those highly anticipated movies are more bust than blockbuster. For patent lawyers, Bilski v. Kappos was the most eagerly anticipated Supreme Court decision in years — a decision on the patentability of business methods, the primary type of patent asserted against direct marketers that operate e–commerce websites. Unfortunately, when the Supreme Court finally issued its decision at the end of June, Bilski turned out to be this year’s Waterworld.

The Federal Circuit Court of Appeals issued a decision holding that a business method was patentable only if it was tied to a particular machine or apparatus, or if it transformed a particular article into a different state or thing. The Supreme Court concluded that this test was too rigid, but didn't substitute another test. Although all nine Justices concluded that Bilski’s claimed invention — a method of hedging risk in commodities trading — wasn't patentable, there wasn't a consensus on why this was the case.

No doubt patent lawyers and law professors for years to come will enjoy parsing the multiple opinions spanning 70 pages. Internet retailers and direct marketers will find the decision much less enjoyable. The reason is simple: Absent a clear standard on what business methods are and aren't patentable, expensive patent lawsuits filed against such companies will continue unabated.

It's estimated that over 11,000 patents apply to various aspects of the internet, and most are so–called business method patents. Over 2,500 patent cases are filed each year, and increasingly, such cases are filed against companies based not on the products they make, but rather based on the fact that they sell products online. And it's not just Amazon that's being sued. Smaller companies like TracRac, a 50-employee company in Fall River, Mass., have found themselves sued for patent infringement concerning their websites, alongside major retailers like L.L.Bean, Office Depot and Williams–Sonoma.