• Patents Will Be Harder to Obtain and Defend Following the Supreme Court's Recent Ruling on "Obviousness"
  • June 1, 2007 | Author: Michael J. Urbaitis
  • Law Firm: Miller Nash LLP - Seattle Office
  • On April 30, 2007, the U.S. Supreme Court issued its much-anticipated ruling on the “obviousness” standard in KSR International v. Teleflex. While the scope and full impact of the ruling remain uncertain, patent applicants and holders of U.S. patents have reason to be concerned. The bar for patentability appears to have been raised—making it potentially more difficult, and therefore more expensive, to obtain a patent, and easier for others to challenge existing ones.

    For an invention to be patentable, the invention must be both “novel” and “non-obvious.” While the novelty and non-obviousness standards are initially applied during the patent application process, they can also be raised during a reexamination of a patent by the U.S. Patent and Trademark Office (the “USPTO”), or during litigation involving the patent. A common strategy for a defendant faced with allegations of patent infringement is to counter that claims of the infringed patent are invalid because they are obvious.

    A claim is considered obvious if a single prior-art reference, or a combination of prior-art references, teaches or suggests all elements of the claim. Until the KSR decision, if a combination of prior-art references was used to challenge a patent as obvious, the references themselves must have included a teaching, suggestion, or motivation to combine the teachings of the prior art as described in the claim being examined. This is the so-called “TSM” test.

    The U.S. Court of Appeals for the Federal Circuit, which specializes in patent cases, and its predecessor, the Court of Customs and Patent Appeals, had been rigidly applying the TSM test for more than 45 years. The TSM test was intended to avoid hindsight bias when considering the obviousness of a patent claim by offering a predictable means of determining what would have been obvious to “one of ordinary skill in the art,” an ordinary practitioner in the relevant field of technology, at the time of the invention. Efforts to overcome a determination of obviousness often proved successful when it could be shown that prior-art references lacked a requisite teaching, suggestion, or motivation to combine those references. As the Federal Circuit’s case law had evolved over the years, the “TSM” test came to mean that the teaching, suggestion, or motivation had to be explicitly contained in some prior-art reference, rather than (for instance) inferable as a matter of common sense.

    KSR involved an alleged infringement of a patent held by Teleflex for an adjustable gas pedal that combined two established elements: an adjustable pedal and an electronic position sensor. KSR challenged the validity of the patent in response to the suit, asserting that the patent was invalid under 35 U.S.C. § 103(a) for being obvious over the prior art, and the district court agreed. The Federal Circuit reversed on grounds that the lower court had failed to specifically find that one of ordinary skill in the art would have been motivated to combine the two elements at issue. In a unanimous decision, the Supreme Court reversed, holding that the Federal Circuit had gone too far in its rigid application of the TSM test, and rejected the application of any rigid rule in a determination of obviousness.

    With the elimination of a rigid application of the TSM test, and arguably a degree of predictability for patentability, it may now become more difficult to overcome an “obviousness” rejection in obtaining or defending the validity of a patent. Also, it seems likely that any of the thousands of patents that were obtained using the now-rejected strict application of the TSM test in their prosecution may now be more vulnerable to challenge.

    On May 3 a memo was issued by the USPTO’s Deputy Commissioner for Operations to its patent examiners in response to the Supreme Court’s KSR decision. The memo states that further guidance will be issued pending a study of the Court’s opinion, but does not suggest any real changes in patent examination procedure that are inconsistent with existing practice. The memo concludes with the instructions: “[I]n formulating a rejection under 35 U.S.C. §103(a) based upon a combination of prior art elements, it remains necessary to identify the reason why a person of ordinary skill in the art would have combined the prior art elements in the manner claimed.”

    In the first real application of the Supreme Court’s new position on obviousness, the Court of Appeals for the Federal Circuit addressed issues of patentability and obviousness in Leapfrog v. Fisher-Price (May 9, 2007). In this case Leapfrog sued Fisher-Price, claiming infringement of its patent for a children’s learning toy. The trial court found the patent not-infringed and invalid as obvious over combined prior art. The combination was an adaptation of an old idea, an electro mechanical toy for phonetic learning, using newer electronic technology that is commonly available and understood in the art. The Federal Circuit affirmed on appeal, explaining that “obviousness analysis requires a common sense approach rather than any rigid formula.”

    The KSR case is part of a trio of recent patent law decisions from the Supreme Court that have addressed the scope and enforceability of patents. Earlier this year, the Supreme Court held that licensees could challenge the validity of a patent that they had licensed. MedImmune, Inc. v. Genentech, Inc. (Jan. 9, 2007). On the same day it issued the KSR decision, the Supreme Court held that damages for patent infringement would not include products manufactured offshore from an infringing U.S. component in Microsoft Corp. v. AT&T Corp. (Apr. 30, 2007). Taken together, this trio of cases has fundamentally altered the patent playing field, probably opening up a wider range of patents to the likelihood of challenge.

    We can expect more case law on the issue of patent obviousness, which will inevitably provide a better understanding of the longer-term implications of the KSR case. While the outcome remains uncertain, companies and their legal counsel would be well advised to reevaluate their on going intellectual property strategies, including a critical review of their patent portfolios. More than ever, consultation with experienced patent counsel will be the key to a successful patent strategy.