This week, the Supreme Court considers a case that could have a major effect on patent law. Bilski and Warsaw v. Kappos poses the question of what kind of abstract ideas can be protected as intellectual property. In the case, Bernard Bilski and Rand Warsaw attempted to patent a business method that consisted of a hedging process to help companies have more predictable energy costs. The patent was denied. Though the decision is upcoming, one New York Times article portrays the Justices as being skeptical towards the idea that any intangible ideas or processes could be patented. I think this is an extremely difficult question.

First, here's the New York Times, explaining the Supreme Court's reaction during proceedings:

The justices peppered J. Michael Jakes, a lawyer for Mr. Bilski and Mr. Warsaw, with hypothetical patents that they clearly found ludicrous.

Justice Antonin Scalia suggested that under Mr. Jakes's argument, a patent for "somebody who writes a book on how to win friends and influence people" might be allowed, while Justice Sotomayor suggested a "method of speed dating."

Justice Stephen G. Breyer set off a ripple of laughter when he brought up his "great, wonderful, really original method of teaching antitrust law" -- one in which 80 percent of students actually stayed awake -- and asked if that could be patented.

You can understand the Justices' attitude: it seems ludicrous to patent certain things. But some business methods might be genuine innovations that deserve protection. After all, the law should encourage inventive thinking with patents, even if that thinking doesn't lead to something you can immediately hold in your hand.

One question is where to draw the line. You could think about obviousness. If a business process is truly new and innovative, then it might deserve a patent. If it's not particularly creative, but you're just the first one to think to patent it, then that's probably not going to fly.

There is, however a danger in patenting too much. You could inadvertently hamper the creative process by having abstract ideas or methods protected from being used in subsequent innovation. For example, imagine I had a good idea for a more efficient way to do something when writing code for some computer software. I patent it. That means if anyone else wants to use that more efficient coding for another computer program, I can sue him or her. The last thing you want is for patents to stifle further innovation.

One possible solution to this is to require anyone patenting abstract ideas or processes to license them at a reasonable price. Of course, determining a fair price that wouldn't discourage the prior idea's use might be tricky. But licensing would preserve the incentive for initial innovation without entirely preventing subsequent inventive thinking that might build on the original advance.

Another problem I see for patenting the intangible is enforcement. Sometimes the creation of a product involves a sort of black-box process, as far as the outside world is concerned. So if patent infringement of a business process or idea occurs in the creation of some product, it might be hard to discover.

I'm really torn on this question. So I'll be interested to see the Court's decision. It will likely have a major effect on some important industries like biotechnology and software.

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