Supreme Court Raises Bar for Patents

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In an important, and unanimous decision, the Supreme Court ruled in KSR International vs Teleflex that patent protection was valid for bona fide inventions, not the mere landgrabbing of the “obvious.”

While this may not have been the basis for the Supreme Court’s ruling, the decision has the effect of at least partially correcting a tendency in recent years of the US Patent and Trademark Office of issuing patents that either were not terribly innovative or (contrary to the requirements for patent issuance) were superseded by prior art. The problem started when method patents became popular. The number of patent applications exploded, staffing in the patent office did not keep pace, and many of the patents also involved arcane areas that were difficult or time consuming to evaluate. So the Patent Office’s response was to become a bit too generous.

The problem, from a legal standpoint, is it takes a very long time to get a patent reexamined (which is what you need to do to get it overturned by the Patent Office). Thus, if a dubious patent was issued, the holder extract fees, or worse, bankrupt innocent companies, since it would take too long to nullify the patent (consider Vonage as an example: the patents asserted by Verizon make it impossible for anyone to offer voice over the Internet, also known as VoIP, and Verizon most certainly did not invent VoIP).

From the Wall Street Journal:

….The opinion could have especially big implications for technology companies, whose software programs typically are built through small improvements in prior designs. Also affected will be the growing and much-disputed field of “business method” patents, which are granted for abstract processes rather than specific devices….

Yesterday’s rulings are sure to influence pending patent cases while opening an unknown number of existing patents to challenges. Weaker patents that survived under lower-court precedents are more likely to be invalidated, putting their inventions in the public domain.

With challengers emboldened to resist infringement claims, more disputes could head to court. But patent holders, assessing their weakened position, could be inclined to settle disputes on more generous terms rather than risk a court judgment that could invalidate their patents outright. Investors that buy up patents with the aim of obtaining royalties from alleged infringers — known as patent trolls — are sure to find slimmer pickings.

In its ruling, the court said the U.S. Court of Appeals for the Federal Circuit, a specialized court overseeing patent law, had been too generous toward patent holders, allowing them to claim a patent monopoly for incremental advances. The decision swept aside the test used by the court to determine whether an invention was “obvious” — and therefore ineligible for a patent.

Note that the Supreme Court has adopted a standard similar to the one used by the EU (the issue of patents is a bone of contention in its anti-trust case against Microsoft).

The Nattering Naybob provides a nice excerpt of some of the key elements in the decision:

Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress….

In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls.

What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under §103.

One of the ways in which a patent’s subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent’s claims…

The Circuit first erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve.

Under the correct analysis, any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed….

Second, the appeals court erred in assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem.

Common sense teaches, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle….

The court also erred in concluding that a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try.

When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp.

If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense….

Finally, the (appellate) court drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias….

Rigid preventative rules that deny recourse to common sense are neither necessary under, nor consistent with, this Court’s case law.”

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