Yesterday, the Supreme Court handed down its long-awaited decision in Bilski v. Kappos, and many folks were on pins and needles. In some cases (such as mine!) it was because they were personally cited in one of the briefs (see pages 16-17). In most cases, however, the excitement grew out of the possibility that the Supremes might take an axe to so-called "business method" patents.
You see, given that a significant number of the innovations on the Internet and in the social media space are protected by business method patents, tossing business method patents out the window would represent a dramatic change, to say the least. On the one hand, patent holders would be unable to assert their patents, and competitive advantages could be lost. It is no coincidence that venture capitalists often require their portfolio companies to invest in patent protection. On the other hand, competitors could freely use proven and successful business methods without worries over infringement exposure, perhaps expanding competition where none existed before, and removing a business risk that all start-ups faced.
But, alas, none of this happened. Instead, the high court decided to indicate that yes, there was a limit to how crazily abstract a business method patent could get before it was no longer patentable, but no, the court was not going to say exactly where that limit is.
Specifically, the Court held that the invention at hand - a commodities hedging strategy devised by Mr. Bilski - was unpatentable, but indicated that some (undefined) business methods would be patentable. This leaves the industry in a bit of a pickle. We know that there's a line to be drawn somewhere, but no one knows where that line might be.
Thus, the patentability of software and pure business methods set apart from machines and transformations is left in the lurch, and will now be the subject of continuing litigation for the next several years. If you are a social media start-up, or a big company moving into the space, you still have to worry about others coming after you for patent infringement in connection with your social media and Internet initiatives. Conversely, if you are innovating in that same market segment, you may have a renewed shot at getting patent protection and a valuable asset.