The US Supreme Court's April 30, 2007 decision in KSR International Co v Teleflex, Inc, is an important development in determining the patentability of inventions. The Court's decision focuses sharply on the Federal Circuit Court of Appeals' teaching-suggestion-motivation (TSM) test used in determining whether a patent is invalid on grounds of obviousness. Although the decision's true impact may not be felt for some time, it will almost certainly be significant. First, it is anticipated that the decision will change the US Patent and Trademark Office's (PTO) patent examination procedures by making obviousness rejections easier to assert and more difficult to overcome. Second, it is anticipated that district courts will more willingly grant summary judgment of invalidity on grounds of obviousness. And, as a by-product of these changes, the decision may provide accused infringers somewhat better leverage in negotiating patent licenses by strengthening their contentions that an asserted patent may be invalid.
The KSR Decision
The requirement that a patent not be obvious is statutory. A patent claim is invalid under 35 U.S.C. §103 if "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which subject matter pertains." The analysis typically involves combining two or more prior art references to show that each limitation of a patent claim was previously disclosed and that the claimed invention was obvious. Many things, however, seem obvious after they have been done. To protect against the bias of hindsight, the decisions of the Federal Circuit – which is the appeals court for all patent cases – had firmly held that an invention could not be held obvious absent evidence of a teaching, suggestion or motivation to combine the potentially invalidating prior art references. KSR put the Federal Circuit's longstanding TSM requirement under the Supreme Court's microscope.
Teleflex sued KSR for infringing a patent allegedly covering a mechanism that combined an adjustable vehicle accelerator pedal with an electronic sensor, intended for use in computer-controlled engine throttle systems. The district court granted KSR's motion for summary judgment of invalidity on the ground that certain prior art rendered the claim-in-suit obvious. The Federal Circuit reversed, ruling that the district court did not apply the TSM test strictly enough. In particular, the Federal Circuit held that key prior art references did not help satisfy the TSM test because the references did not necessarily seek to solve the same problem addressed by the patent-in-suit. The Federal Circuit rejected arguments that it might have been obvious to try the combination because "obvious to try" tests cannot be used to show obviousness. In any event, the court held that genuine issues of material fact precluded summary judgment.
A unanimous Supreme Court, in an opinion delivered by Justice Kennedy, reversed. The Court began by "rejecting the rigid approach of the Court of Appeals. 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 applies its TSM test here." Slip Opin. at 11. Such an "expansive and flexible approach" is needed to protect against issuance or enforcement of bad patents: "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining known elements, deprive prior inventions of their value or utility." Id. at 15.
The contrast between the rigidity of the Federal Circuit's TSM requirement and the Supreme Court's "expansive and flexible approach" is the decision's major theme. In its analysis, the Court first dismissed the Federal Circuit's focus on the particular motivation or avowed purpose of the patentee: "[w]hat matters is the objective reach of the claim." Id. at 16. Courts and patent examiners thus should not limit their analysis to the particular problem that the patentee was trying to solve. Rather, any need or problem known in the field of endeavor at the time of the invention and addressed by the patent can provide a reason to combine references.
Second, the Court rejected the Federal Circuit's conclusion that a patent claim cannot be proved obvious merely by showing that the combination of elements was "obvious to try." Id.
Finally, the Court held that the Federal Circuit went too far in trying to prevent hindsight bias. While guarding against such bias is important, "[r]igid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it." Id. Common sense, the Court stated, 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." Id. at 16-17. Because "[a] person of ordinary skill is also a person of ordinary creativity, not an automaton, "obviousness does not necessarily require an express teaching, suggestion or motivation to combine references. Id. at 17.
In its analysis of the summary judgment ruling, the Court held that KSR's obviousness showing was not overcome by any secondary factors of nonobviousness. The Court therefore noted it did not need to reach the question of whether the patentee's failure to disclose a significant prior art reference "voids the presumption of validity given to issued patents," for the claim-in-suit was obvious despite the presumption. Id. at 23. In a statement almost certain to trigger debate, the Court then stated, "[w]e nevertheless think it is important to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here." Id.
The Decision's Impact
The Supreme Court's rejection of the Federal Circuit's TSM requirement as unduly rigid and narrow, and as inconsistent with the expansive, flexible approach outlined in the Supreme Court's precedent, almost certainly will affect PTO practice and patent litigation. The Supreme Court appears to be sending a clear message that the PTO and courts must better guard against the grant or enforcement of patents that inhibit innovation and cheapen pre-existing, valid patents issued in the same fields of endeavor.
How will this impact patent owners or other businesses in the real world?
- First, there is an anticipated rise in the number of PTO obviousness rejections that cannot be overcome during prosecution or reexamination proceedings. Section 2143 of the PTO's Manual of Patent Examination Procedures currently incorporates the TSM requirement into PTO examination practice. The PTO's procedures will now require revision to better account for the more expansive and flexible approach outlined by the Supreme Court.
- Second, elimination of the "rigid" and "narrow" TSM test that made validity challenges more difficult may result in a corresponding increase in the number of successful challenges. With the PTO and courts analyzing obviousness with greater expansiveness and flexibility, the playing field between patent owners and potential infringers (or licensees) has tilted somewhat in favor of the latter. The KSR decision suggests, however, that the tilt is really just a return to the longstanding case law of the Supreme Court.
- Finally, the Court's commentary on the presumption of validity, while seemingly dicta, may prove particularly noteworthy in patent infringement litigation. Validity challenges in litigation require the challenger to overcome the presumption of validity with clear and convincing evidence. Here, the Court has essentially stated that the presumption is "much diminished" as to prior art that was not before the PTO during original prosecution. Depending on their interpretation by the district courts and, ultimately, the Federal Circuit, these words may provide additional fodder for patent challenges.
By restoring to the obviousness analysis the expansive, flexible approach that the Federal Circuit had narrowed in its quest for uniformity and definiteness, the Supreme Court has readjusted the patentability equation's balance, but at the expense of greater uncertainty for patent applicants and litigants. Over time, that new balance may help ensure the issuance and enforcement of patents that "promote the Progress of . . . useful arts" (U.S. Const. art. I, §8, cl. 8) and prevent the issuance and enforcement of patents that retard innovation and progress.