Top court ruling on Bilski case could rock world of patents

By Rick Stouffer, The Pittsburgh Tribune-Review

Nov. 7--On Monday, all the time and money spent on appeals, and the estimated million of dollars of business lost to competitors come to a head: Both sides in what's known as the Bilski case will have 30 minutes to make their arguments before the U.S. Supreme Court.

"If I knew then what I know now, I don't think I would have filed for a patent, it's been a 13-year uphill fight," said Rand Warsaw, who with Bilski had formed a company named WeatherWise USA on the South Side.

A Supreme Court ruling concerning Bilski, an opinion not expected before late spring, could have major repercussions in both the patent world and the business world, legal experts said.

Financial services companies such as banks, mutual funds companies, commodities traders and investment banks could feel the impact of the ruling, according to experts.

"The impact of the court ruling could have a pretty substantial impact on the patent world," said Michael Madison, a professor of law and associate dean for research at the University of Pittsburgh School of Law. "This is as major a patent case the Supreme Court has heard in about 30 years."

"A ruling by the court does pose a risk of unwinding numerous previously granted method-process patents," said Dave Oberdick of counsel for the law firm Meyer, Unkovic & Scott in Pittsburgh.

"The outcome of the Bilski case at the Supreme Court is very unpredictable," said David Hanson, an attorney with The Webb Law Firm, Downtown, who represents Warsaw and Bilski.

"It would appear the court recognized the wide effect this case would have on certain types of patents and possibly the court was uncomfortable with the way the case was decided by the Court of Appeals for the Federal Circuit."

One year ago, Warsaw and Bilski lost 9-3 at the U.S. Court of Appeals, which sided with the Patent Office's 1997 rejection of their WeatherWise patent.

The Appeals Court took what some experts considered a conservative approach to determine what is patentable. It said to receive a patent, the Bilski method of doing business had to include a machine or transform one substance into another.

The Bilski method uses hedging principles, techniques designed to eliminate or reduce financial risk, such as taking two positions that will offset each other if prices change.

Warsaw has said the process involved in the Supreme Court case is used in WeatherWise's WeatherProof Bill products for electric or natural gas utilities and energy marketers who want to offer their customers capped or fixed prices. The company has diversified its product line in the last two years, he said, but until then the concept was key to the majority of its business.

"The Court of Appeals applied a rigid test for what can be patented, it was overly limiting," said Alan Towner, chairman of the Intellectual Property Practice Group at the Pittsburgh office of law firm Pietragallo Gordon Alfano Bosick & Raspanti LLC. "The patent statute states that methods are patentable, new processes are patentable, and that's what Bilski is."

One year after Warsaw and Bernard Bilski tried getting their business method patented, the Court of Appeals approved the so-called State Street case, which opened the floodgates for business-method patent filings. But not Bilski's and Warsaw's.

Warsaw said because the WeatherWise method for managing bad weather risk never was patented, a number of competitors copied the method. Couple that with large companies able to use the process in house and "we lose between $5 million and $10 million in revenue a year," he said.

Towner said that should the Supreme Court ruling continue the appeals court's hard-line in granting patents, the medical community could be the big loser.

"There are all sorts of pending patents right now for diagnosing or treating medical conditions," Towner said. "Those people have to be nervous."

"If the court doesn't come out and clarify what can and can't be patented, it really hinders investment," said Greg Bradley, chief of Intellectual Property Counsel for medical equipment manufacturer Medrad Inc. "The ruling could impact us, could impact what we can patent."

J. Michael Jakes, a partner in the Washington, D.C., office of law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP will argue for Warsaw-Bilski, facing Malcolm Stewart, assistant to the U.S. Solicitor General.

"We're not asking the Supreme Court to rule on the Bilski patent per se," Jakes said. "We want the court to send the case back to the U.S. Patent Office for further examination."

Rick Stouffer can be reached via e-mail or at 412-320-7853.

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