Illustration from the IP Law & Business print edition, courtesy Matt Faulkner.

Bilski v. Kappos was one of the most anticipated decisions on patent law by SCOTUS (Supreme Court of the United States). Law geeks (like me ?) used to run weekly checks on the status of the case. The stakes involved in Bilski were huge and it promised to be the Sony v. Universal Studios (where the substantial non-infringing uses defense in copyright law was expounded) of patent law. This may sound like hyperbole, but superlatives (sometimes even expletives) were hard to avoid when the subject was Bilski. Since the case concerned the (in) validity of a business method patent it was legitimately politicized by the open source movement as a case where a categorical holding could be made on the legality of software patents.

some background

Most people seemed to have reached a point of dissatisfaction with software patents when the Bilski appeals process began. This was due to software patents being increasingly claimed by “patent trolls” who would lurk and then spring litigation on technology companies. These lurkers were companies whose sole purpose was not to innovate but to maintain a portfolio of patents to claim money out of legitimate businesses later. This was having an impact on venture capital funding for startups, open source products and even successful companies who were sued for products such as blackberry mobile phones. The threat of such patent litigation was a real concern and most people agreed that grants of such broad, “business method” and “software patents” was contrary to the scope and intent of the federal patents act, allowed after the State Street Bank holding. Hence, the decision by the Federal Circuit in Bilski that, a patent application for, “a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes.” was invalid, was widely applauded and appreciated. The holding went further and closed the door on the State Street Bank carve out which held that an invention should be patent eligible if it involves some practical application and “it produces a useful, concrete and tangible result.” This in the interim, meant the end of business process and software patents. Hence, the appeal to SCOTUS was seen as the litmus test for software patents.

a fractured holding

Though the SCOTUS affirmed the holding of the Federal Circuit that the Bilski application was invalid it did so while substantially altering the reasoning. The court while invalidating the patent application of Bilski held that, (a) it did not prohibit business process patents in principle when it stated that, “The Federal Patent Act does not categorically exclude business methods from eligibility to be patented.”; (b) sought to avoid a broad comment on software patents; (c) called the MoT test not the singularly determinative test for determining patentability (“‘machine or transformation’ test may be a useful and important investigative tool, but it is not the sole test for determining whether a ‘process invention’ is patentable”); (d) did not elaborate or formulate an singular or plural, determinative test or criteria for the eligibility of business method and software patents.

The first thing which is striking of the SCOTUS Bilski decision, is how fractured it is. Several law-blogs have commented and I agree that this fractured decision is the reason for the delay in rendering of the decision and was the product of bargaining as to the final text of court opinion. The decision has been rendered by Justice Kennedy with the 4 of the court’s conservatives backing it (Justices Stevens, Alito, Thomas, and Scalia, the latter parting company on one aspect of the decision) and there is significant separate opinion by Justice Stevents having the liberal flavor and disagreeing with the reasoning permitting business method patents. Another thing which is striking is the reluctance by the court to formulate a bright line rule. It talks a lot about uncertainty and patents but it does not say much to end the uncertainty.

In the end the Bilski case was decided on facts, and it does not seem to prescribe an obvious broad formulation of patent law. The deeply fractured verdict is less prescriptive and more relative. In fact the only thing it says clearly is, “eeerm.. maybe?”.

Read the decision here

From the early 1980’s to the late 1990’s bollywood as a content production industry believed religiously in the application of “formulas” and “equations” for achieving success at the Box-Office. Rajshree Productions was one of the movie production houses which routinely used to practice this arithmetic. In the 1994 movie “Hum Aapke Hain Kaun” (Who am I to you?), it effectively employed the theme of, the complexity and the conservatism of the Indian joint family, adding to it, the aspirational depiction of the opulent north Indian wedding. However, this equation would have remained incomplete without a musical score to reel in the public. The musical score, sung by Lata Mageshkar had the intended effect with one of the songs from it, “Didi tera dewaar Deewana” (Sister your brother-in-law is crazy) becoming the vox populi (or song populi?) of North India.

With the mass success of the musical score came a mass wave of piracy. Most of the counterfeit product was alleged to originate from Super Cassettes Industries, (which was a major vendor of blank audio-tapes) under its brand T-Series. These practices were often alleged by business rivals against T-Series, when they sought to discredit the meteoric rise of its owner the Late Gulshan Kumar from a mere fruit juice seller to a to a major manufacturer of blank media and retailer of music. Whatever be the case and the allegations, it was certain that T-Series as a company and as a brand was built by stretching the legalities of Copyright law in India. The alleged piracy caused in the “Hum Aapke Hain Kaun” gives rise to a dispute and the decision in Gramaphone Company v. Super Cassettes Industries, reported at 58 (1995) DLT 99, evidencing this claim.

The case illustrates the business model of T-Series as it existed in the inception of the company. T-Series, would take a successful commercial song, get it sung by the several lesser known signers on its retainer creating a “version recording” of the song and then sell it at a fraction of the price. It would achieve this by exploiting what rights owners called a glaring lacuna in the copyright act, which allowed such “version recordings” on the service of a notice on the rights holders and payment of a statutory compulsory licensing fee. Taking advantage of this provision, T-Series flooded the market with “version recordings”, with the sales of the version recording often exceeding the total sales of the rights holders themselves.

However, in the case of Gramaphone Company v. Super Cassetes Industries, T-Series exceeded this legal allowance. In its effort to increase sales of its version recording of the songs of “Hum Aapke Hain Kaun”, it not only created a “version recording” but also had the lead stars of the movie printed on its inlay card alongwith the title of the movie. Here trademark law stepped in for the rights holders where copyright law deserted them and they got an injunction enjoining t-series. The relevant holding of the case is as follows :

I propose to vary the injunction that was made exparte by saying that the defendants are not to use in the carton or inlay card or any other packaging material a design, colour scheme, layout and get up similar to that of the plaintiffs; not in the title to use the words “Hum Aapke Hain Kaun” simplicities or any combination of words including “Hum Aapke Hain Kaun” which would be calculated to lead to the belief that the defendants’ record was the plaintiff’s record.

The case marked a major turning point for T-Series which took the decision as a signal of the times to come. It realized had become a big fish in the market and would no longer be able to deftly navigate the hazards in the copyright tank. T-Series began making its business models cleaner and more conventional by purchasing the copyrights in the sound recordings. By all accounts T-Series even after the untimely and tragic death of its founder Late Gulshan Kumar continued to remain successful and is a major and legitimate music label in India.

The first question is answered quite simply, yes. Lessigs works, Free Culture and The Future of Ideas provides a ready reckoner of case studies and illustration of how a certain amount of “piracy” is always caused due to transformative business models and technologies. Even the second question is affirmatively answered by Lessig, as he demonstrates that early infringers often after obtaining commercial success, begin legitimate models of media production with concomitant costs. To protect these costs these early pirates argue for the same legal protections which they initially avoided and against the legal exemptions which they initially availed. He further states that granting an indulgence to the broad theories and interpretations for the protection of intellectual property rights may harm innovation in the marketplace of ideas.

The pattern of copyright litigation initiated by T-Series shows the tendency of startups on becoming accepted by mainstream institutional frameworks and gathering critical mass and finances to “innovate” legally and then succumbing to the same exertions of legal power which they circumvented initially. Another recent example is Apple’s IPhone patent litigation against HTC. It is a documented fact that Apple as a startup was “heavily inspired” from the revolutionary graphic user interface invented at Xerox Parc Labs. Now it seeks to block competing products to the IPhone through a broad interpretation of its patents.

A search for applicant name, “google” revealed that it has 82 patent applications and 4 granted patents. Patent No. 221913 is for a “System and Method for Enabling Publishers to Select Preferred Types of Electronic Documents”. I am at a loss of logic to find arguments to make it fall outside the scope of being a “computer programe per se”.  This goes quite plainly over the semantics of the “per se” debate (which I find quite unnecessary and promoted by advocates of pure software patents). The plain language of the provision requires that the specification should disclose as to how the software is inextricably linked to hardware. Here the link between the hardware and the software should be coextensive and the hardware should not be merely incidental. Any other reading would defeat the legislative intent of section 3(K). However, there seems to be some other provision which has been applied by the Patents Office. Brings back me to the title of the post…. Inventing Statute: Einstein’s in the patent office!