Wednesday, November 11, 2009

Software and business method patents: at least four justices see through the Christmas ornament loophole

Several years ago, before section 101 of the U.S. patent statute became fashionable again, I wrote a paper on it, "Elemental Subject Matter." I remember several professors and patent attorneys, who shall remain nameless, telling me that section 101, which defines what kinds of subject matter are patentable and what kinds are not, was a useless topic to explore -- these issues, they said, had all been resolved and the legal excitement was elsewhere. I thought otherwise. I researched and in my paper I described the basic loophole that made software patents possible. Algorithms are "laws of nature" or "abstract ideas" and as such are supposed to be unpatentable. Patent lawyers being clever got around this by tacking on an extra fig-leaf or Christmas-ornament element to patent claims: the patent was for process X,Y,Z "and a computer", where X and Y and Z is the novel and non-obvious algorithm and "computer" is just your general-purpose computer. Under a long line of high court precedents, starting with the old English case of Nielson v. Harford, and continuing through many Supreme Court cases, this was an invalid claim: {X,Y,Z}, the part of the patent that makes it novel and non-obvious, must itself be patentable subject matter, i.e. not just an algorithm or law of nature or abstract idea. But the Federal Circuit, which hears all U.S. patent appeals and thus dominates U.S. patent law, ignored Nielson. Software became patentable because lawyers could trivially tack on "computer" or "memory" onto software claims, turning abstract algorithms into patentable "machines." Still later, the Federal Circuit allowed even these fig-leafs to be dropped from software patents, they were implicitly understood. The issue has never come before the U.S. Supreme Court. Until now.

At least four Supreme Court justices brought up the issue in Monday's oral arguments in Bilski v. Kappos, a business methods patent. The main patent claim reads as follows:
A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions
(Forget about the fact that this is not even novel much less non-obvious. When the Federal Circuit allows claims to be made in areas where they previously weren't, the U.S. Patent Office agents are incompetent to analyze techniques in the new area or to search for prior art, and indeed a search of prior patents, which is almost all they know how to do, naturally turns up no prior art. Thus the many preposterously obvious software and business method patents we've seen. The case is being heard on the assumption that the patent office agent was correct, absurd as it is, to declare this claim novel and non-obvious, and the issue is thus focused on whether such business methods are patentable subject matter under section 101 of the patent code).

These four justices seem to agree with the view of my paper that the Christmas ornament loophole lies at the heart of software and business method patents:

JUSTICE STEVENS: I don't understand how that can be a patent on a machine if the only thing novel is the process that the machine is using. Isn't -- isn't the question -- really, the question there was whether the new process was patentable.
(p. 42)

(in reply to Justice Stevens repeating the above point)
JUSTICE KENNEDY: That's -- that's a problem I have.
(p. 44)

JUSTICE BREYER: But then all we do is every example that I just gave, that I thought were examples that certainly would not be patented, you simply patent them. All you do is just have a set of instructions for saying how to set a computer to do it. Anyone can do that. Now, it's a machine. So all the business patents are all right back in...all you do is you get somebody who knows computers, and you turn every business patent into a setting of switches on the machine because there are no businesses that don't use those machines.
(p. 46)

This is also what Chief Justice Roberts is clumsily getting at on pg. 35:

CHIEF JUSTICE ROBERTS: ...that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.

I'd like to think that somebody over there in the Supreme Court building has been reading my paper, but more likely, yet remarkably, Justice John Paul Stevens, the author of Parker vs. Flook, the last case to apply Nielson v. Harford properly, and the only justice left from that 1977 court, still remembers Nielson and has taught a whole new generation of justices its meaning.

The implications of this view may seem harshly radical (if you rely on software patents) or pleasantly reactionary (if you fondly remember the days when we didn't have them). The patent bar and software patent holders have been in a tizzy since Monday, fearing that the Court's hostility to business method patents will lead to a ruling that will spill over to invalidate the recent non-ornamented software patents they have been drafting and the USPTO has negligently been approving. And software engineers have been dreaming that they will finally be freed from some of the increasingly dense patent thicket. But if the Court, as the above comments suggest, returns to Nielson, the result could be even more dramatic than is hoped or feared. Taking the Nielson logic to its conclusion would invalidate practically all software-only and business method patents, including ornamented ones. Those who want software patents would have to go do what they should have done in the first place -- get Congress to pass a statute expanding patentable subject matter to software, and very importantly command the USPTO to recruit and train computer scientists and people who know how to search the non-patent software literature for prior art so that software claims that don't make sense won't pass muster. Then, if this experiment works, a few decades later try the same method for business patents. And if the experiment doesn't work, scrap software patents. At this point, the Federal Circuit's illegitimate experiment with software and business method patents is failing miserably. Let's hope the Supreme Court takes this opportunity to restore its old patent jurisprudence that the Federal Circuit so shamelessly flouted.

Thursday, November 05, 2009

The auction and the sword

Anno Domini 193 is often called the Year of the Five Emperors after the five that ruled as princeps ("first citizen") in all or major parts of the Roman Empire: Pertinax, Didianus Julianus, Pescennius Niger, Clodius Albinus, and Septimus Severus. Indeed, counting the Emperor Commodus, who died at the end of 192, the Empire saw six emperors in the space of five months.

The Roman imperial succession was supposed to proceed by adoption of the most competent possible successor [3]. This followed the example of Julius Caesar's adoption of Octavian as his heir, and Octavian's subsequent taking on the title of princeps as Augustus Caesar. In practice, however, at least three other factors often intervened: first, emperors tended to favor their natural sons over their adopted ones; second, the Praetorian Guard, the emperor's bodyguard, often exercised a life-or-death control over the succession; and third, Roman legions were often motivated to intervene. Combining this rickety system of succession with the awful power of the autocratic emperor, whose "will was law", made successions an all-or-nothing, win-or-die struggle of often devastating violence. The Year of the Five Emperors witnessed more than its share of such violence. It gave rise to the Severan dynasty and more importantly to its legal authorities, who are cited in courts of law today, millenia after the emperors themselves have been forgotten. The Severan's jurists also voiced political ideas that would echo down to our time, as we shall see in future articles.

Commodus, the incompetent and unpopular natural son and successor of Marcus Aurelius, was poisoned by his mistress Marcia (not, I'm afraid to tell fans of Gladiator, slain by Russell Crowe in the Colosseum). Apparently this assassination was a plot that included the Praetorian prefect Laetus and the urban prefect Pertinax. The urban prefect was something like the mayor of the city of Rome: he supervised all the collegia (corporations and guilds) in the city, supervised maintenance of its aqueducts and sewers, supervised the import and doling of grain, supervised a force of police and night watchmen, and other such administrative tasks. The Praetorian prefect was the head of the emperor's bodyguard, the Praetorian Guard, which also (as here) often had the power to make or break emperors.

The Guard declared Pertinax emperor. After only three months in power, as the great historian Cassius Dio reports, the Praetorians, unsatisfied with the funds Pertinax had provided them and fearing persecution, turned against Pertinax:
But Laetus...proceeded to put out of the way many of the soldiers, pretending that it was by the emperor's orders. The others, when they became aware of it, feared that they, too, should perish, and made a disturbance; but two hundred, bolder than their fellows, actually invaded the palace with drawn swords. Pertinax had no warning of their approach until they were already up on the hill; then his wife rushed in and informed him of what had happened. On learning this he behaved in a manner that one will call noble, or senseless, or whatever one pleases. For, even though he could in all probability have killed his assailants,— as he had in the night-guard and the cavalry at hand to protect him, and as there were also many people in the palace at the time,— or might at least have concealed himself and made his escape to some place or other, by closing the gates of the palace and the other intervening doors, he nevertheless adopted neither of these courses. Instead, hoping to overawe them by his appearance and to win them over by his words, he went to meet the approaching band, which was already inside the palace; for no one of their fellow-soldiers had barred the way, and the porters and other freedmen, so far from making any door fast, had actually opened absolutely all the entrances.[1]
The soldiers dispatched Pertinax and the Praetorians then decided to make their pecuniary preferences far more clear before they chose the next emperor:
Meanwhile Didius Julianus, at once an insatiate money-getter and a wanton spendthrift, who was always eager for revolution and hence had been exiled by Commodus to his native city of Mediolanum, now, when he heard of the death of Pertinax, hastily made his way to the camp, and, standing at the gates of the enclosure, made bids to the soldiers for the rule over the Romans. Then ensued a most disgraceful business and one unworthy of Rome. For, just as if it had been in some market or auction-room, both the City and its entire empire were auctioned off. The sellers were the ones who had slain their emperor, and the would-be buyers were Sulpicianus and Julianus, who vied to outbid each other, one from the inside, the other from the outside. They gradually raised their bids up to twenty thousand sesterces per soldier. Some of the soldiers would carry word to Julianus, "Sulpicianus offers so much; how much more do you make it?" And to Sulpicianus in turn, "Julianus promises so much; how much do you raise him?" Sulpicianus would have won the day, being inside and being prefect of the city and also the first to name the figure twenty thousand, had not Julianus raised his bid no longer by a small amount but by five thousand at one time, both shouting it in a loud voice and also indicating the amount with his fingers. So the soldiers, captivated by this excessive bid and at the same time fearing that Sulpicianus might avenge Pertinax (an idea that Julianus put into their heads), received Julianus inside and declared him emperor.[1]
But this was politics, not voluntary commerce, and the military hierarchy of the Roman legions proved to be mightier than the highest bidder. Three governors (commanding several legions each), Albinus of Britain, Severus of Pannonia (south-central Europe), and Niger of Syria, declared themselves emperor, suspended forwarding of tax revenues to Rome, and started marching on Rome to dethrone what they considered to be a corruptly selected emperor. Severus got there first:
Severus, after winning over everything in Europe except Byzantium, was hastening against Rome. He did not venture outside the protection of arms, but having selected his six hundred most valiant men, he passed his time day and night in their midst; these did not once put off their breastplates until they were in Rome.[1]
The security precautions of the Praetorians proved to be no match for Severus' legions, and this was so obvious that the city and Praetorian rank-and-file basically rebelled against Didianus Julianus and the Praetorian leaders and turned the city and the emperorship over to Severus:
Julianus, on learning of [Severus' approach to Rome], caused the senate to declare Severus a public enemy, and proceeded to prepare against him. In the suburbs he constructed a rampart, provided with gates, so that he might take up a position out there and fight from that base. The city during these days became nothing more nor less than a camp, in the enemy's country, as it were. Great was the turmoil on the part of the various forces that were encamped and drilling,— men, horses, and elephants,— and great, also, was the fear inspired in the rest of the population by the armed troops, because the latter hated them. Yet at times we would be overcome by laughter;he Pretorians did nothing worthy of their name and of their promise, for they had learned to live delicately; the sailors summoned from the fleet stationed at Misenum did not even know how to drill; and the elephants found their towers burdensome and would not even carry their drivers any longer, but threw them off, too. But what caused us the greatest amusement was his fortifying of the palace with latticed gates and strong doors. For, inasmuch as it seemed probable that the soldiers would never have slain Pertinax so easily if the doors had been securely locked, Julianus believed that in case of defeat he would be able to shut himself up there and survive.

But Severus presently reached Italy, and took possession of Ravenna without striking a blow. Moreover, the men whom Julianus kept sending against him, either to persuade him to turn back or to block his advance, were going over the Severus' side; and the Pretorians, in whom Julianus reposed most confidence, were becoming worn out by their constant toil and were becoming greatly alarmed at the report of Severus' near approach. At this juncture Julianus called us together and bade us appoint Severus to share his throne. But the soldiers, convinced by letters of Severus that if they surrendered the slayers of Pertinax and themselves kept the peace they would suffer no harm, arrested the men who had killed Pertinax, and announced this fact to Silius Messalla, who was then consul. The latter assembled us in the Athenaeum, so named from the educational activities that were carried on in it, and informed us of the soldiers' action. We thereupon sentenced Julianus to death, named Severus emperor, and bestowed divine honours on Pertinax. And so it came about that Julianus was slain as he was reclining in the palace itself; his only words were, "But what evil have I done? Whom have I killed?" He had lived sixty years, four months, and the same number of days, out of which he had reigned sixty-six days.[1]
Severus "inflicted the death penalty" on the plotters against Pertinax and "murdered" a number of Senators, after swearing a sacred oath not to harm any Senators. (The quoted language is Cassius Dio's [2] in translation). So what were Severus' homicides -- legal executions or illegal murders? This was question of legal procedure. Under the old Republican legal tradition, still nominally enforce but in practice long defunct where the emperor was concerned, most of these killings would have been considered extrajudicial, i.e. murders. As we shall see, under the laws codified under the Severan dynasty, "the emperor's will was law" -- he by definition could never murder, only execute, and his oaths were by definition not binding on his future self.

Major civil war ensued as the Severan legions went up against those of Albinus and Niger. The terrific battles included a spectacular siege of Byzantium -- later to become Constantnople, but already a mighty fortress strategically placed within on the Bosporus, controlling the maritime traffic between the Mediterranean and Black Seas. After four years of civil war between Roman legions [3], Severus came out the winner. I will examine the reign of the Severan dynasty, and in particular the effects of military structure of the victorious legions on the political structure and legal procedures of Rome, in subsequent posts.


[1] and [2] Cassius Dio, Roman History, books [1] 74 and [2] 75.

[3] Tony Honore, Ulpian, Oxford University Press (second edition 2002).

Commencing a history of Roman political and legal institutions

Most modern governments have political structures and legal procedures derived in a long evolution from those of the ancient Roman emperors, with a shallow overlay of modern democracy. The main exceptions, the Anglo-American countries, have legal procedures derived primarily from a partially independent evolution in England, but still with substantial influences from the old Roman autocrats. Political ideas and legal procedures are closely related, and versions of these derived from the Roman Empire have dominated most of European history.

I have started writing a history of this legal and political tradition. It starts with the Year of the Five Emperors, the rise of the Severan dynasty, and under that dynasty the first two major jurists (legal authorities) in the later Roman legal tradition, Papinian and Ulpian. It continues through the famous Codes of the emperor Justinian (as compiled by his jurist Tribonian), to the birth of universities in Western Europe upon the rediscovery of Justinian's codes, through the political philosophies of Bodin and Hobbes, to the Reception of Roman law into Western Europe, to the Code Napoleon, the German and Russian legal codes, and modern dictatorships based on the political and legal ideas of Rome. This will be a sprawling history and indeed I will probably never finish it. But meanwhile I will post a good bit of it to this blog, starting with the next post. I expect to proceed largely in temporal order, but no guarantees. Quite a few of my blog posts over the next two years may be part of this series. It should be quite enjoyable as well as provide unique insights into the history of political forms and constitutions.