Patents and the Supreme Court

June / July 2007 By: Bruce Winchell Volume 5 Number 3

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The Supreme Court has made it much easier to challenge patents for being obvious to those of ordinary skill in that art in its opinion on the KSR International Co. v. Teleflex Inc. case, handed down in April. This will very likely make the patenting process much more difficult and expensive.

The court sided with companies that are frequent targets of patent-infringement claims that urged the court to overturn the decades-old test used by the federal circuit court of appeals, which is charged with handling all patent appeals.

Those companies included Intel, Cisco, Microsoft, Time Warner, Viacom, Micron Technology, General Motors, Ford and Daimler. But other major firms, more concerned about protecting their own patents, took the opposite side, arguing in favor of the appellate court's teaching/suggestion/motive test that made such contests more predictable for several decades.

The justices said, unanimously, that the lower court went too far to shield patents from legal attack. The ruling threw out a Teleflex lawsuit that accused KSR International of using a patented invention for adjustable gas pedals. The decision extends a Supreme Court trend that has put new limits on patent rights. The justices heeded arguments from large computer companies and automakers that the lower court test, which centered on the requirement that an invention be "non-obvious,'' had given too much power to developers of trivial technological improvements. "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress,'' Justice Anthony Kennedy wrote for the court.

This decision will make it substantially easier to get patent infringement actions thrown out of the trial court on a summary judgment motion if a trial court judge, usually with no technical training, thinks that the invention was obvious. Large corporate infringers with deep pockets will now have a new weapon to challenge any and all patents that issued before this decision as not using an appropriate measure of what is obvious and that a different standard should be used to determine that it is obvious to those skilled in that art. Under the old approach a search of the prior art in the patent office could probably tell you if you could expect to be able to obtain a claim of your own on the invention. Under the new approach a trial court judge will be able to simply say that he or she believes that it is obvious. This will likely be the end of many more patents than in the past.

Also, taking this decision along with the Supreme Court ruling in Medimmune v. Genentech of 2007, which allows a defendant in a patent infringement case to file a declaratory judgment action to question the validity or enforceability of the patent, gives defendants a new ability to litigate to death many more patents than before.

This decision will make it much more difficult for inventors to obtain patents, since the Patent Office is obliged to follow the ruling. It is now much easier for a patent examiner to simply use the application as a blueprint to do a word search of the electronic prior art to find references to cite against the application in a hindsight kind of approach. Applicants will need to spend significantly more time and money in attorney opinions to understand if it is worth filing an application. And large companies with billions of dollars and large intellectual property groups will have a significant advantage over the individual inventor in terms of obtaining patents and in being able to defend them in the courts in the future.

This decision will hurt all small technology-based companies in their efforts to survive against those who would steal their inventions and their advantage in the marketplace once the value of any given invention is discovered, usually after the patenting effort would have been completed.

Bruce Winchell is a registered patent attorney.

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—€¦But Let's Get a Second Opinion

By Chris Cotropia

Well, we have gotten early indications from the major patent players as to how the substantive part of KSR will play out. TSM (Teaching-Suggestion-Motivation) still has a place in the post-KSR world, at least according to Chief Judge Paul Michel of the Federal Circuit and Deputy Commissioner Peggy Focarino of the U.S. Patent and Trademark Office. These are preliminary statements. We will not know what the Federal Circuit or Patent Office really think until the first precedential opinion or interim guidelines are issued. But these early comments make one wonder if KSR changes anything, particularly those like myself who witnessed the Federal Circuit's acceptance of, and reliance on, implicit TSM well before In re Kahn, DyStar, and Alza.

While the substantive impact may turn out to be minimal, KSR could have a significant procedural effect. The Supreme Court appears to have shifted the line between factual and legal parts of the non-obviousness analysis, moving what was (is?) the TSM test from being a question of fact to a question of law.

The Supreme Court in Graham established that non-obviousness was ultimately a question of law, but there were recognized underlying factual issues—€”content of the prior art, scope of the claims, and the level of the PHOSITA (Person Having Ordinary Skill in the Art). When the CCPA, and then the Federal Circuit, started employing the TSM test, the test became another underlying factual component of the inquiry. As a result, there was not much left at the question of law level, and the Federal Circuit affirmed most appeals from rejections by the USPTO and or trials before district courts on the non-obviousness issue.

The court in KSR introduces a procedural change, folding the TSM-like inquiry into the question of law level of the analysis. This move is most clearly witnessed in Part IV of the opinion, where the court rejects the existence of a dispute over an issue of material fact. The Court goes out of its way to note that "[t]he ultimate judgment of obviousness is a legal determination," rejects the ability of a "conclusory affidavit[s] addressing the question of non-obviousness" to create a fact issue, and shows concern only to whether the first three Graham factors are "in material dispute." In contrast, the final step, determining whether a PHOSITA would modify the prior art, is identified as a "legal question." The earlier, general discussion of the substantive standard also supports this interpretation. The opinion focuses on what "a court" should analyze when determining whether there is "an apparent reason to combine."

The implications of this procedural change are many. Making the TSM-like analysis a question of law facilitates more summary judgments on the issue of non-obviousness (although not as much as one would think, as I determined here). It also gives the Federal Circuit more freedom to reverse both USPTO and district court judgments on non-obviousness. This may lead us down a similar road as Markman has, giving the Federal Circuit so much flexibility that it injects even greater uncertainty into an area that is inherently uncertain, particularly after KSR. We might even end up with KSR hearings.

Admittedly, the court does not explicitly say it is making this change. And, as the Federal Circuit has done in the past, TSM-like discussions can be framed as part of one of the first three Graham factors that have always been factual issues. However, the main focus of the opinion is on the Federal Circuit's "application" of §103, and the language and application in KSR strongly suggest a change in the law/fact line in non-obviousness analysis (or maybe this is all just a "common sense" reading).

Chris Cotropia is an associate professor of law at the University of Richmond School of Law. He was counsel of record and a co-author of an Amici Curiae brief in Support of the Respondents in KSR. His analysis is posted on www.patentlyo.com a patent law blog maintained by Dennis Crouch, a law professor and patent attorney.