Betting on Bilski: The Supreme Court and Biotechnology Patents

There is a two-part question that we are frequently asked these days: “When is Bilski going to be decided and what’s the decision going to be?”

The first part of that question is easy to answer. Bilski will be decided soon. Need something more specific? Bilski will be decided sometime between today and the end of June or beginning of July, when the Supreme Court’s current term ends.

The second part of the question involves predicting the future. We’re happy to take a shot at that, but only after a few caveats. First, these predictions are for entertainment purposes only. Betting on Supreme Court decisions is illegal in most states and several foreign countries, so don’t. Second, pay no attention to alleged inside information about what the Court is going to do or when it’s going to do it. There are no credible Supreme Court leaks—the Court is tighter than Putin’s old KGB (or his new FSB). Third, remember that it takes the votes of four justices for the Court to take a case. So we can presume that at least four justices wanted to say something about Bilski. But we don’t yet know what that might be. With those disclaimers, let’s proceed to the prognostication.

Reviewing Bilski and the Biotech Patent Landscape. Recall that Bilski involves a form of method patent (the so-called “business method” patent) that claims a method of hedging commodities prices by setting up a relationship between a regular seller (a coal mine, for example) and regular buyer (a power company). The question is whether such a method constitutes patentable subject matter—that is, is the Bilski method the sort of “new and useful process, machine, manufacture, or composition of matter” that meets the standards of Section 101 of the Patent Act. In its 2008 en banc decision, the Federal Circuit established—or re-established, since it had been lurking in the case law for years—the so-called “machine or transformation” test for method patents. Under this test, the method must be tied to a particular machine (whatever that means) or transform some article into a different state or thing in order to qualify as patentable subject matter. According to the Federal Circuit, Bilski’s patent failed both branches of the test.

By contrast, in its 2009 decision in Prometheus v. Mayo, the Federal Circuit upheld a patent on “a method of optimizing therapeutic efficiency for treatment of an immune-mediated gastrointestinal disorder.” The method comprises “administering” a specified drug to a patient and then “determining” the level of the drug in the patient. The remainder of the claim specifies threshold levels of the drug’s metabolites (the chemical products of metabolism in the body) in the patient’s blood below which the dose should be increased (because of lack of efficacy) and above which it should be decreased (because of potential toxicity). The court found that both administering the drug and determining the metabolite levels (by withdrawing and testing blood) worked a sufficient physical transformation of the body.

Finally, remember also that the ongoing Myriad Genetics litigation involves not only claims on the isolated breast cancer BRCA1 and BRCA2 genes, but also claims to methods of interpreting mutations. In the Myriad case, Judge Sweet relied on Bilski’s machine or transformation test to invalidate Myriad’s method claims, finding them to be “abstract mental processes” that “constitute unpatentable subject matter.”

As we discussed recently (WARF Reexamination Takes Another Bite out of Biotech Patents), biotechnology patents are coming under attack from a number of angles. But of all of the current biotechnology patent cases, Bilski holds the most potential to significantly reshape the biotechnology patent landscape, in no small part because it is the only one currently before the nation’s highest court. But is that likely to happen? Let’s take a look.

First Question: Who Wins and Loses? The Supreme Court must first decide whether to affirm(the result stands: no patent for Bilski) or reverse (Bilski wins: he gets his patent, or at least gets to keep trying under some new standard) the Federal Circuit’s decision. It takes five votes to reverse; anything less (including a 4-4 tie, if someone doesn’t participate for some reason) generates an affirmance. The opinion accompanying an affirmance or reversal can be as broad or as narrow as the prevailing justices choose. Procedurally, the Court can direct the specific judgment that is to be entered or remand the case (send it back to the Federal Circuit and/or the USPTO) for further proceedings “not inconsistent” (as appellate courts say) with its opinion. This could happen if, say, the Supreme Court decided to replace the machine or transformation test with something else and instructed the Federal Circuit to apply that new (or revived) test to Bilski’s invention.

We think that the Supreme Court will affirm and that Bilski will lose out on his patent. To paraphrase Seinfeld’s Soup Nazi, “No patent for him.” This is not an especially brave prediction, since virtually every prognosticator has said the same thing. It is based primarily on the Court’s multiple recent expressions of concern about so-called low-quality patents. In its 2007 decision in KSR v. Teleflex, for instance, the Court modified the obviousness test to make it easier to knock out patents on that basis. And in a non-binding 2006 opinion in Labcorp v. Metabolite, three justices (Breyer, Stevens, and Souter), two of whom should be participating in Bilski, made a strong statement about the dangers of patents that claim simple biomedical associations (pdf) (Prometheus, anyone?).

Many justices also expressed skepticism about the Bilski patent during the oral argument, but it is dangerous to read much into their questions. Appellate judges often play the devil’s advocate to expose weaknesses in lawyers’ arguments, so their questions may or may not reflect their actual views.

Still, we do not see the Supreme Court reviving Bilski’s patent. If you need one more reason, consider this point (to which Patently-O alerted us last week): Santa Clara University School of Law professor Colleen Chien points out that over the past two decades “every single amicus brief authored by the US Government in a Supreme Court patent case except one predicted the case outcome.” Guess which way the government thinks Bilski should be decided?

Next Question: What Test Will The Supreme Court Choose? Assuming that we (and almost everyone else) are right and the Supreme Court affirms the Federal Circuit, will it simply approve the machine-or-transformation test, or will it substitute a new test? We think it will stick to the Federal Circuit’s test, at least in principle.

Why? As John’s original article on Prometheus and medical method patents explains, the Federal Circuit’s machine-or-transformation test is drawn from some older Supreme Court cases that remain good law. The Federal Circuit’s business method test before Bilski—the “concrete, tangible, and useful result” test from the 1998 State Street case—had little if any Supreme Court pedigree. The Supreme Court doesn’t like to overrule or disavow prior cases unless it has to. Here, it doesn’t, so we predict that the machine-or-transformation test will survive, at least on a rhetorical level.

The reader may now be thinking about those (at least) four votes needed for the Court to hear a case and asking, “Why did they want to take Bilski, if not to change the test?” That’s not a bad hypothesis, and it might well be right. But we think what they had in mind was not changing the test, but instead making a statement about how to apply it. And it’s also possible, of course, that there were only four who wanted to take the case, and that the other five remain totally satisfied with all aspects of the Federal Circuit decision—though we don’t think that’s likely.

Final Question: How Sweeping Will the Opinion Be? For the purpose of biotechnology patents this is perhaps the most important and uncertain element of the Bilski opinion. Inquiring minds want to know how broadly worded the opinion will be and whether the Court will limit itself to deciding the specific case before it, restrict itself to business method patents or, thinking even more broadly, use the opinion to set guidelines for biotechnology patents. The last option could include a range of scenarios including, for instance, undoing a wide range of Prometheus-like patents on methods of medical testing and diagnosis.

So what is actually going to happen? We see several options:

1. The Court sticks very closely to the Bilski facts. In this scenario, the Court affirms the Federal Circuit’s result, endorses its test, and has some harsh words for broad and highly abstract business method patents, something along the lines of, “We don’t want to see anything like this ever again.” But it doesn’t say anything about Prometheus-type claims or biotechnology in general.

Odds: Unlikely. Business method patent hysteria has abated over the past few years as obviousness has taken its toll, and we suspect that the Court had broader concerns in deciding to grant certiorari and take Bilski.

2. The Court goes further, expressing concerns about biotech patents. In this version, the Court again affirms the Federal Circuit’s result, endorses the machine-or-transformation test, and trashes business methods, but it also comments on the application of the test to claims like those in Prometheus and Myriad. Specifically, the Court would indicate a belief that such claims are not allowable. Although such comments would be technically dicta (not essential to deciding the case before it, and thus not having the direct force of law), they might signal how the court would handle a future biotech case and might therefore influence the decision-making of the USPTO and the lower courts, particularly the Federal Circuit. As a result, the practicalities of biotech patenting would change, with the decision carrying significant impact for both existing and future biotechnology patents.

Odds: The most likely outcome. The potential implication of Bilski for biotechnology was reflected in the Supreme Court’s oral argument and discussed at length in a number of amicus briefs. This scenario might also partially explain why the opinion has not yet been issued, with the Court possibly taking time to incorporate Myriad (which was decided at the District Court level at the very end of March) into its opinion.

3. The Court adopts a new and less patent-friendly test, with sweeping effects. In this option, the Court comes from out of left field to author a new test (or to revive or rework an old one, such as the State Street test) for method patents—business, biotech and otherwise—that changes the patent landscape in an unpredictable fashion. At this point, all (hypothetical) bets would be off as to the nature of the test and its implications for the biotechnology industry.

Odds: Very unlikely. There is a great respect for precedent and continuity, both at the Court and in our legal system generally, and while this outcome isn’t out of the realm of possibility, there are no obvious indications that the Court is—or needs to be—considering a radical shakeup of the patent landscape.