SUPREME COURT TAKES "OBVIOUS" AIM AT "BAD" PATENTS
by Paul S. Weidlich

Have you ever thought, "How did they get a patent for that?"  Or have you ever looked at another's patent and said, "But we've been doing that for years!" 

Apparently, the Supreme Court of the United States has been asking itself these same questions.  And earlier this week, the Court handed down a decision aimed at putting an end to these questions, or at least curbing their frequency. 

In KSR v. Teleflex, the Supreme Court unanimously decided that the test for determining whether an invention is obvious in view of what was previously known ("prior art") and therefore unpatentable, should be modified to insure that patents are granted only for significant innovations, not marginal or ordinary innovations.  In modifying the obviousness test, it appears that the Supreme Court intends to both (a) reduce the number of "bad" patents issued by the United States Patent and Trademark Office ("USPTO") in the future and (b) make it easier to challenge the validity of "bad" patents that have already been issued by the USPTO.

The KSR v. Teleflex decision, like the recently-decided eBay, MedImmune, and Microsoft cases, reflects the Supreme Court's growing interest in patent law.  Moreover, taken together, these decisions represent a significant shift in power away from patent owners and toward their competitors.  Indeed, it appears that the Supreme Court's recent decisions are an attempt correct what the Court perceives as a patent system that unfairly favors patent owners.

In KSR, the patent owner, Teleflex, sued KSR, an automobile gas pedal system manufacturer, for infringing U.S. Patent No. 6,237,565 ("the '565 Patent").  This patent includes claims directed to an adjustable gas pedal system with an electronic throttle control.  KSR responded to the infringement claim by alleging that the '565 Patent is invalid as being obvious in view of the prior art.  The district court agreed with KSR and held that the '565 Patent is invalid as being obvious.  The patent owner, Teleflex, appealed the district court's decision to the United States Court of Appeals for the Federal Circuit ("Federal Circuit").  After applying the judicially-created "teaching, suggestion, motivation" ("TSM") testš, the Federal Circuit reversed the district court's ruling, concluding the gas pedal claimed by the '565 Patent is not obvious in view of the prior art, and therefore, the '565 Patent is valid.  KSR then appealed to the Supreme Court.

The Supreme Court specifically addressed the proper role of the TSM test in determining whether a claimed invention is obvious in view of the prior art.  Over the past 46 years, the Federal Circuit and its predecessor, the Court of Customs and Patent Appeals, have increasingly emphasized the significance of the TSM test in determining whether a claimed invention is obvious in view of the prior art.  Many thought that a "teaching, suggestion or motivation" to combine prior art references had to be shown in order to maintain a finding of obviousness.  The KSR Court, however, has now made it clear that this is not the case.

More particularly, the KSR Court concluded that the TSM test is too narrow and the Federal Circuit has applied the test too rigidly.  While the KSR Court characterized the TSM test as providing "helpful insights" into the obviousness inquiry, it warned that the TSM test must not become a "rigid and mandatory formula" that limits the expansive obviousness inquiry set forth in the 1966 Supreme Court decision in Graham v. John Deere.  As the KSR Court noted, there is nothing inconsistent between the TSM test and the Graham analysis, but the general principle of the TSM test cannot be transformed into a rigid rule that limits the obviousness inquiry. 

The KSR Court further warned that "[g]ranting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility."  "The results of ordinary innovation are not the subject of exclusive rights under the patent laws.  Were it otherwise, patents might stifle, rather than promote, the progress of useful arts."˛  The KSR Court also emphasized the role of common sense in the obviousness analysis, stating that "[r]igid preventative rules that deny fact finders recourse to common sense, however, are neither necessary under our case law nor consistent with it."

Proponents of the TSM test, including large pharmaceutical and biological companies, have favored the relatively narrow, predictable and pro-patent test because it has allowed them to obtain numerous patents for incremental improvements over the prior art and justify the hundreds of millions of dollars invested in research and development.  Proponents argued that any change to the standard for determining obviousness would result in inherent uncertainty as to the validity of patents granted after an obviousness rejection which was overcome by applying the TSM test.  Opponents of the TSM test, including software companies and the Bush Administration, have argued that the pro-patent standard has stifled innovation by allowing too many "bad" patents to be granted for marginal innovations which consequently require large companies to pay significant royalties for the multiple licenses needed to commercialize their innovations.  According to the opponents of the TSM test, a more flexible approach to determining obviousness is needed in order to prevent expensive infringement lawsuits that drive up prices or force products off the market.  With its decision in KSR v. Teleflex, the Supreme Court has clearly sided with flexibility over predictability.

Several consequences will follow from the KSR decision.  First, it will be easier for the USPTO to reject claims in patent applications as being obvious in view of the prior art.  No longer must the Examiner find evidence of a "teaching, suggestion or motivation" in the prior art to combine the disclosures of prior art references in order to find an invention obvious.  Instead, the Examiner may apparently rely on "common sense" in the absence of evidence of such "teaching, suggestion or motivation".  The Examiner may also now rely on a broader scope of prior art references than was allowed under the TSM test.  It is also likely that litigation relating to the validity of granted patents will increase.  On the other hand, the KSR decision may discourage patent holders from enforcing their marginal patents against potential infringers for fear that their patents may be determined to be invalid as being obvious in view of the prior art.  Perhaps the frequency of infringement claims brought by patent "trolls," who do not practice their patented inventions but instead commercialize them only through licensing, will decline.  It is further likely that the value of marginal patents will decrease, while the value of patents directed to more substantial innovations will increase.

To read the KSR decision in its entirety, please click on the following link: KSR Decision.  If you would like to discuss how the new obviousness standard impacts your future plans to patent innovations and/or challenge the validity of patents owned by others, please contact one of our IP Group.

šThe TSM test provided that the disclosures of multiple references (e.g., prior patents and printed publications) could be combined to render a claimed invention obvious if a teaching, suggestion or motivation to combine the references could be found in the prior art.

˛The Constitutional basis for the U.S. patent system is "to promote the progress of science and useful arts".