cfo.com

Print this article | Return to Article | Return to CFO.com

How 'Obvious' Is Your Company's Patent?

The Supreme Court will soon rule in a case in which a key test of originality may be overturned.
John P. Mello Jr., CFO.com | US
November 6, 2006

As soon as the end of this month, the ruling in a case slated to be heard by the U.S. Supreme Court, KSR International v. Teleflex, could unhinge our patent system as we know it, some lawyers think.

To be sure, the facts of the dispute involve something quite industry-specific: gas-pedal technology in autos. But the broader issue in the litigation reaches far beyond any one industry, because the case touches on the test for "obviousness" in granting patents. If the court rules to invalidate that test as a way to overturn existing patents, according to legal experts, the consequences could be far-ranging.

A negative outcome of the test, in fact, is one of the main requirements for getting a patent. Under U.S. patent law, an inventor can't get a patent for a technology or a product if the differences between the invention and previously developed items "would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."

But opposing a patent on those grounds can be harder than it sounds. According to the U.S. Circuit Court of Appeals, the U.S. Patent Office or the challenger of a patent must produce written documentation that someone suggested the substance of the patent before it was filed. That test "forces litigants to search through reams of technical papers for a document in which someone, somewhere, bother to state the obvious," argues Corynne McSherry, a staff attorney with the Electronic Frontier Foundation, of San Francisco, which filed a friend of-the-court brief in the case.

What's more, the test is ubiquitous. "Non-obviousness comes up in every examination of every patent application," Kevin Rhodes, assistant chief intellectual property counsel for the 3M Company in St. Paul, Minn., said at a recent panel discussion on the case. "It's often the ultimate hurdle to getting a patent."

But the barrier can be overly rigid, some say. In a brief that helped sway the Supremes to review the Teleflex case, the U.S. government, represented by the Department of Justice and the Patent Office, argued that the test for obviousness developed by the Federal Circuit courts is so inflexible it has become an obstacle to innovation.

In the brief, the government contended that Federal Circuit courts like the one that ruled in KSR have turned one means of establishing obviousness--proof that previous inventions supplied "a teaching, suggestion, or motivation for combining separate prior art references" into "an inflexible requirement."

The government feels that the existing requirement makes it too tough for innovators to upend existing patents. "The issue is important," it added, "because many patent applications rest on the combination of prior art references, and because extension of patent rights to obvious combinations of familiar elements retards, rather than advances, new discoveries."

Although opponents of the status quo claim existing judicial tests make it hard to overturn patents, that's not the case in the pharmaceutical industry, declared panelist Greg Chopskie, patent litigation counsel with Wyeth, a drug company based in Madison, N.J. "As an industry, we tend to lose cases 75 percent of the time, often because of invalidity due to obviousness," he said. "So I have trouble thinking it's too difficult to invalidate patents."

Roger Parkhurst, a partner with Steptoe & Johnson, the Washington, D.C. law firm that sponsored the panel discussion on the case, maintained that patent case outcomes have been significantly altered by the Federal Circuit courts. "Before the Federal Circuit, when appeal of patent cases were going to the regional circuits, approximately 70 percent of all patents that got to the appellate level were being held invalid, often for obviousness," he said. "With the Federal Circuit today, it's much closer to 50-50."

"One has to wonder if there is a danger that eliminating the Federal Circuit's rule may result in a big swing back toward invalidation of an extraordinary number of patents," he added.

While forecasting what the High Court will do can sometimes be like reading tea leaves, panelist Marian Underweiser, intellectual property counsel for IBM in Armonk, N.Y., said, she nonetheless predicted that the Court wouldn't pass the buck on this case. "They're going to look to do something to reinterpret or maybe completely change the way that the federal circuit is looking at the obviousness test," she said.

For his point, the attorney representing KSI International in the case argues that the appointment John Roberts as Chief Justice may also move the Supremes to take some definitive action on the issue, since Roberts has first- hand experience as an attorney in patent litigation. "Chief Justice Roberts has more practice experience in this than any other member of the court," said James Dabney, an attorney with Fried, Frank, Harris, Shriver & Jacobson in New York City. "It wouldn't surprise me that his becoming Chief Justice is, at the margins, helping."

Added Underweiser: "There's no way to predict whether or not [the justices] will state a new rule or give new guidance, but it would good if they did. It will cause a great deal of uncertainty if they don't provide a clear rule when they hear this case."




CFO Publishing Corporation 2009. All rights reserved.