Widely viewed as the most important patent case in 40 years, the U.S. Supreme Court on Monday decided to loosen a legal standard considered key to patent law. The ruling could make it easier to invalidate some patents on the basis of an obviousness test, a boon for software and technology companies.
The Supreme Court decision reversed the Federal Circuit Court's decision on the Teleflex, Inc. v. KSR International case. The landmark case raised a question as to the proper standard for patentability under Section 103 of the Patent Act. Generally speaking, the understanding has been that if the combination of prior art -- that which was known or used prior to the claimed invention -- would be considered obvious to a person of ordinary skill in the art, then the claimed invention would typically be invalidated.
The unanimous Supreme Court ruling concluded that the courts should be more flexible in the way they interpret the standard that governs whether patents are valid or represent an obvious collection of past inventions that should not be protected under Section 103. "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, for patents combining previously known elements, deprive prior inventions of their value or utility," the court said in its opinion.
Reviewing the Case
Teleflex held the disputed patent, which describes an adjustable pedal and an electronic throttle control that were previously patented. A federal district court ruled the patent obvious and invalid in the wake of KSR's lawsuit. The U.S. Court of Appeals for the Federal Circuit, which specializes in patent cases and originally established the obviousness test, overturned the decision.
KSR then appealed the Supreme Court with an argument that pointed out a contradiction in the way the obviousness test was applied in other cases. After several months, Supreme Court justices ruled that KSR had offered "convincing evidence that (combining the sensor and pedal) was a design step well within the grasp" of the engineers that designed throttle pedals.
Defense Attorneys Keep Arguing
According to Thomas C. Goldstein of Akin Gump Strauss Hauer & Feld LLP, the Teleflex counsel who argued the case, this decision will affect trillions of dollars in investments in intellectual property on which the modern American economy rests. "There will be a surge in patent fights during the struggle to decide exactly how tough the justices intend to be on securing a patent," he said in a statement.
Meanwhile, Robert Greene Sterne of Sterne, Kessler, Goldstein & Fox PLLC, an intellectual property specialty firm and Supreme Court cocounsel for Teleflex, said he believes the practical consequence of the decision is huge for inventors, existing patent relationships, and the value of patent assets of all enterprises.
"Obtaining a patent from the United States Patent and Trademark Office for an invention will undoubtedly be harder, cost more to pursue, and take more time to reach final decision," Sterne said in a statement. "So innovators will feel the impact of this decision almost immediately as the USPTO grapples with how to implement the decision with its patent examiners."
The Unbiased Impact
Teleflex attorneys have their views on how the Supreme Court ruling could impact patent holders. But Rachel Krevans, a senior intellectual property litigation partner in the San Francisco office of Morrison & Foerster LLP, offered a different take. Krevans agreed that the decision might call into question the value and validity of many issued U.S. patents and will make it harder in the future to persuade the U.S. Patent Office to approve a patent application. But Krevans said she does not believe the impact will be immediate.
It will likely take four to five years to resolve exactly how the lower courts and the patent office will apply the new standard, Krevans said, noting that in the meantime it will be easier for the patent office to reject proposed patent claims, and easier for defendants in patent litigation to prove that issued patents are invalid because they are obvious under the new test.
"The new test for obviousness, which will apply to challenges to patent validity regardless of whether the patent issued before or after the KSR decision, may also impair the value of previously issued U.S. patents, because it makes it easier to challenge them in litigation, and to ask the patent office to reconsider the decision to issue the patent," Krevans explained.
High-Tech the Big Winner
KSR won the battle, but high-technology companies might win the war. The Supreme Court decision will have a profound impact on patent litigation, according to Dan Bromberg, a partner in Quinn Emanuel Urquhart Oliver and Hedges LLP. Bromberg represented Time Warner, IAC/Interactive, and Viacom in the KSR v. Teleflex case.
Bromberg said the ruling will make it easier and less expensive for companies to defend themselves against suits that are based on dubious and unfounded patents. This, he continued, will deter the so-called patent trolls that have made a business out of filing such suits.
"The high-tech industry is a particularly big winner today," Bromberg said in a statement. "High-tech businesses have been favorite targets of patent trolls suing over low-value patents. The KSR decision means these businesses should face fewer unfounded patent suits, leading to lower defense costs and more innovation, all to the benefit of consumers."
Federal Circuit on Notice
KSR represents the latest of a string of recent Supreme Court decisions overturning Federal Circuit patent decisions. In this, the Supreme Court rejected the Federal Circuit's longstanding obviousness test in favor of a broader standard that is based on the statue itself as well as a 1966 Supreme Court decision in Graham v. John Deere.
Bobbie J. Wilson, intellectual property attorney and partner with Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco, said the Supreme Court is putting the Federal Circuit on notice. Like the Supreme Court's broad rejection of the Federal Circuit's declaratory relief test in Medimmune, she explained, the High Court now rejects the Federal Circuit's analysis for determining patent obviousness.
"The Court seems to have bought the Solicitor General's argument in its brief that the Federal Circuit's standard encourages weak patents, thus burdening the patent system because it forces the examiners to search for areas of obviousness rather than let them quickly dismiss clearly weak patents," Wilson noted. "Interestingly, the test for obviousness is one of the issues in the minds of those pushing the Patent Act of 2007."