By Sarah Lai Stirland for Intellectual Property Watch
The United States Patent and Trademark Office (USPTO) has issued a preliminary memorandum that instructed its examiners to interpret a landmark Supreme Court ruling conservatively – even as the wider community in the field of US patent law expect the opinion to shake up longstanding rules that determine when an idea is too obvious to be granted a patent. The office also formed an experts’ group on the issue.

Under US law, inventors can only be granted a patent if their idea is novel, useful and non-obvious.

The brief 3 May USPTO memo [pdf] offering preliminary analysis of the high court’s late April opinion noted that the court had affirmed the continuing relevance of a 1966 court precedent laying out the factors that should be used when judging whether an idea is obvious. Yet the memo’s author then focused on the portion of the court’s opinion that said that a more detailed test developed by a lower court is not completely flawed.

Memo author Margaret Focarino, USPTO’s deputy commissioner for patent operations, told examiners going forward that if they decide to reject a patent application, they still must provide an explicit analysis as to why someone in the relevant field of endeavour would have found the idea obvious.

“In formulating a rejection under [the US law on obviousness] 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,” wrote Focarino.

USPTO has formed an internal think tank to interpret the Supreme Court’s opinion on obviousness, and to formulate resulting policy changes, said a USPTO spokesperson. The group of legal experts is led by John Love, the USPTO’s deputy commissioner for patent examination policy. The new group is composed of other internal management from the USPTO’s offices of patent legal administration, general counsel, board of patent appeals and interferences, and international relations.

The think tank is likely to issue a more detailed interpretation of the US Supreme Court’s opinion in about a month, the spokesperson said.

The Supreme Court’s unanimous ruling overturned a lower court’s opinion that had established a strict legal standard needed to prove obviousness. Patent lawyers said that it was nearly impossible to meet this standard when arguing in front of a court because it was hard to find a paper trail with the level of specific detail required by the standard. It required proof that a concept is obvious through the provision of a paper trail or testimony to show that someone had already considered combining two existing ideas into one “invention” in the specific context of the problem at hand.

The justices ruled that the patent appeals court’s test was too rigid, that it had misinterpreted Supreme Court precedents, as well as statutory law.

“Throughout this court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its [teaching, suggestion or motivation] test here,” wrote Supreme Court Justice Anthony Kennedy on behalf of his colleagues.

“For over a half century, the court has held that ‘a patent for a combination which only unites old elements with no change in their respective functions obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skilful men’,” he continued. “This is the principal reason for declining to allow patents for what is obvious.”

Thus courts need to take a broader view of the market for an invention, consider market forces and trends, and ask whether an idea covered by a disputed patent amounts to more of a revolutionary change than a simple rehashing of combined ideas, Kennedy said.

Most Important Case of the Decade?

The high court’s opinion, available here [.pdf], overturned the lower court’s ruling concerning a dispute between rival automobile parts manufacturers, KSR International and Teleflex, Inc.

The court’s opinion concerning this case was closely watched from across all segments of US industry, by legal academia and by independent inventors because of the current cultural and legal battle in the United States over the growth in patenting in recent decades. Judge Randall Rader of the US Court of Appeals for the Federal Circuit told Intellectual Property Watch before the decision that it was “probably going to be one of the most important cases of the decade.”

Teleflex had obtained a patent on the combination of two individually-patented ideas concerning adjustable automobile pedals and electronic throttle-control sensors. Its rival KSR then designed a product for General Motors Corp. that employed the patented combination of the two ideas. Teleflex sued for infringement after KSR refused to pay any licensing fees for using what it considered an obvious idea. At court, KSR’s lawyers argued that the judge should dismiss the infringement case because the idea is obvious, and thus under US law should not have been issued a patent in the first place. The district court agreed with KSR, but the appeals court reversed the opinion, reasoning that the lower court had not applied its rules concerning obvious ideas with enough specificity.

Despite its apparently conservative stance, the USPTO’s chief last week praised the high court’s decision. “The decision gives our examiners more flexibility to use their considerable technical skills to reject obvious changes to existing technology,” USPTO Director Jon Dudas said in a statement.

Other US patent law experts also cheered the ruling. The opinion makes it harder to obtain a patent, as well as harder to defend already-issued ones that experts in the field of the invention consider as “obvious.”

“The court reached the right result, and the case is on the right track in paving the road for a more informed and somewhat higher standard of non-obviousness,” said Solveig Singleton, an adjunct fellow and patent law expert at the conservative, Washington, DC-based think tank Progress & Freedom Foundation. “But what exactly that will be, will again be left to the lower courts in a long drawn-out process that many observers think is broken.” Singleton commented on SCOTUSblog, a widely-read weblog dedicated to news and analysis of US Supreme Court opinions.

“This is almost a sea change for us,” said Paul Devinsky, a litigator and patent attorney in the Washington, DC office of law firm McDermott, Will & Emery. He expects the opinion to re-invigorate the legal argument often used to defend clients against claims of patent infringement – namely that the patent at issue is invalid, and should not have been issued in the first place because it covers an idea that is obvious.

Fueling the Push for US Patent Reform

The computer, software and telecommunications industries have argued that the issuance of a plethora of patents on obvious ideas has led to a rise in expensive, protracted and innovation-inhibiting litigation in recent years. As a result, they argue, the US Congress needs to act to eliminate the incentives to initiate such litigation. The industries are currently pushing lawmakers to change several legal and administrative processes to lower the cost of patent disputes, and the incentives to sue, and to make it logistically harder to launch infringement lawsuits.

But the lobbyists for the telecommunications and computer industries have run into opposition from wealthy independent inventors, who fear that any alterations to the law will short-change them in their licensing negotiations with large companies. Opposition has also come from the biotechnology and pharmaceutical industries because of the vastly-different dynamics that drive innovation and its growth in those industries.

“I still think there’s a need for comprehensive patent reform partly because the Supreme Court wasn’t very specific on what the test for obviousness is, and the lower courts are still going to be struggling with a legal test for obviousness,” PFF’s Singleton said in an interview.

The high court did not adopt much of the advice provided by professors, corporations and non-profits through their court filings on how it could have formulated an objective test to prove that an idea is obvious, Singleton noted. Instead, the court assumed that judges and patent examiners should include their own discretion when deciding whether an idea is obvious – after they are presented with the relevant evidence, and in the context of existing Supreme Court precedents

“In complex fields such as biotechnology, where you’re talking about the shapes of molecules and cellular processes, common sense isn’t going to have a lot of application,” Singleton said.

Sarah Lai Stirland may be reached at Stirland@gmail.com.