Nov. 9 (Bloomberg) -- U.S. Supreme Court justices signaled resistance to affording patent protection to abstract business innovations as they debated a case that has drawn an unprecedented level of corporate interest.

In an hour-long argument that featured questions about speed-dating and techniques to keep law students awake, a majority of the court’s justices challenged a lawyer for two men seeking a patent for a method of hedging weather-related risks when buying and selling energy.

Justice John Paul Stevens told the lawyer that “none of our cases has ever approved a rule such as you advocate.” Chief Justice John Roberts said the method was “classic commodity hedging that’s been going on for centuries.”

The court’s ruling, likely to affect billions of dollars in patent rights, will be its first since 1981 on what types of innovations qualify for legal protection.

The justices have received 68 briefs from outsiders, a record for a business case. Microsoft Corp., Google Inc., Novartis Corp., Bank of America Corp., American Express Co., Morgan Stanley and Accenture LLP are all pressing arguments in the case. The fight is splitting industries, dividing companies that rely on their own intellectual property from those aiming to head off expensive infringement lawsuits.

Limits on Patents

In addition to Roberts and Stevens, Justices Stephen Breyer, Antonin Scalia, Anthony Kennedy and Sonia Sotomayor all voiced a desire to limit the scope of U.S. patent laws to inventions that have some physical component.

The federal appeals court decision under review said that business methods must have either a connection to a machine or the power to transform an item into a different state. The appeals court said Bernard L. Bilski and Rand A. Warsaw weren’t entitled to a patent on their hedging method.

Bilski and Warsaw’s lawyer, Michael Jakes, argued that business methods were patentable so long as they had some “practical application.”

The seeming consensus on the court that the hedging method isn’t patentable may let the justices avoiding an extended discussion of what types of innovations qualify for patent protection. Justice Ruth Bader Ginsburg said the case “could be decided without making any bold step.”

Sleeping Students

Still, the justices spent much of the afternoon session trying to determine how far the U.S. patent statute reached. Breyer, a former antitrust law professor, asked whether he could patent his teaching technique, which he joked “kept 80 percent of the students awake.”

When Jakes answered, “potentially,” Breyer intimated that he disagreed. “Suppose I were to take the view that this is way too far, that that is not the purpose of the statute,” he said. He also suggested he might be “a little nervous” about the appeals court decision.

Sotomayor asked whether a new form of speed-dating would be patentable, while Scalia asked about Dale Carnegie’s 1936 book, “How to Win Friends and Influence People.”

Kennedy said that, under Jakes’s approach, the first insurers could have received a patent for compiling actuarial tables and applying them to risk.

“It’s difficult for me to think Congress would have wanted to give only one person the capacity to issue insurance,” Kennedy said.

Hard Questions

Justice Department lawyer Malcolm Stewart urged the court to uphold the lower court ruling, saying it was a limited ruling under which “most of the hard question remain unresolved.”

Applications for so-called business method patents have soared over the past decade, from 974 in fiscal 1997 to a peak of 14,364 in 2008, according to the U.S. Patent and Trademark Office.

Those companies urging restrictions on method patents include Microsoft, Bank of America, Google, Hartford Financial Services Group Inc., J.C. Penney Co. and Morgan Stanley. The Obama administration is also advocating a tougher standard for granting method patents, as is Bloomberg LP, the New York-based parent company of Bloomberg News.

On the other side, arguing that the lower court standard is too restrictive, are American Express, Medtronic Inc. Novartis, Palm Inc., Accenture. Small software, financial services and electronic commerce companies are also backing broad patent rights.

The justices will rule by July in the case, Bilski v. Kappos, 08-964.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net;

Last Updated: November 9, 2009 16:10 EST