May 3, 2007
On April 30, the Supreme Court issued a unanimous opinion in KSR Int’l Co. v. Teleflex Inc., which has the potential to reshape long-standing Federal Circuit law and United States Patent and Trademark Office practice on determining whether a patent is "obvious" under 35 U.S.C. § 103. Writing for the Court, Justice Kennedy stated that the Federal Circuit erred in transforming the "teaching, suggestion, or motivation" (TSM) test into a "rigid and mandatory formula" that improperly limited the obviousness inquiry in a manner "inconsistent" with the "expansive and flexible approach" of the Court’s earlier jurisprudence.
The KSR case involved a patent on an adjustable gas pedal system for an automobile. The district court granted summary judgment, finding that the patent claim at issue was obvious and invalid. The Federal Circuit reversed, holding that the defendant had not demonstrated a specific suggestion to combine the prior art to arrive at the claimed gas pedal. KSR represents the first time the Supreme Court considered the standard for obviousness since long before the 1982 establishment of the Federal Circuit (to which all patent cases and decisions by the patent office whether to issue a patent are appealed). Thus, the Supreme Court’s reversal of the Federal Circuit’s decision and its criticism of the TSM test as applied in the KSR case is widely expected to have a significant impact on both the ability to obtain patents and the defenses available to defendants in patent infringement litigation.
Section 103 and the Obviousness Determination
Section 103 of the Patent Act provides that a "patent may not be obtained . . . 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 [(PHOSITA)]." This section comes into play when all the elements of the claimed invention are not found in a single prior art reference, for example, when elements from two or more references need to be combined.
In KSR, the Supreme Court reiterated that the framework for determining obviousness under § 103 it had set out in Graham v. John Deere, 383 U.S. 1 (1966), continues to "define the inquiry that controls." As set forth in Graham, the objective analysis is as follows:
First, "the scope and content of the prior art are to be determined";
Second, "differences between the prior art and the [patent] claims . . . are to be ascertained"; and
Third, "the level of ordinary skill in the pertinent art resolved."
In addition, "secondary considerations [of non-obviousness, such] as commercial success, long felt but unresolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented."
The Supreme Court Rejects the Federal Circuit’s "Rigid Approach" of TSM as Applied in KSR
In an attempt to provide "more uniformity and consistency" to the obviousness inquiry, the Federal Circuit had adopted the TSM test, pursuant to which a patent can be obvious only if "’some motivation or suggestion to combine the prior art teachings’ can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art."
Reviewing the district court’s grant of summary judgment in favor of KSR on obviousness, the Federal Circuit held the motivation prong of the TSM test required that the prior art references "address the precise problem that the patentee was trying to solve"; otherwise, "the problem would not motivate an inventor to look at those references." Because, in its view, the references upon which KSR relied were designed to solve problems different from the problem solved by the claimed invention, the Federal Circuit found that a PHOSITA would not have been led to combine the prior art references. Additionally, relying on its earlier cases, the Federal Circuit held that KSR could not prevail by showing that it might have been "obvious to try" the proffered combination of prior art.
The Supreme Court acknowledged that the TSM test, as first established, "captured a helpful insight" and that there was "no necessary inconsistency between the idea underlying the TSM test and the Graham analysis." Specifically, the Court said "it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does," as the Federal Circuit had previously required. Nevertheless, the Court "reject[ed]" what it characterized as the Federal Circuit’s "rigid approach" to the TSM test as applied in KSR and reaffirmed the "expansive and flexible approach" set forth in its prior cases, including the "broad inquiry" of Graham.
The Supreme Court’s View of Obviousness
In explaining the general principles of the obviousness inquiry as gleaned from its own precedents, the Supreme Court stated that a combination is obvious if it "simply arranges old elements with each performing the same function it had been known to perform and yields no more than one would expect from such an arrangement." Accordingly, if "a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability." Correspondingly, "if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill."
By contrast, "when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be nonobvious." Thus, "[t]he fact that the elements worked together in an unexpected and fruitful manner support[s] the conclusion" that a claimed invention is not obvious.
In carrying out the obviousness analysis, a court "need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ." Because in "many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends," it may often "be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art." For example, one way "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 Court concluded that the flaws in the Federal Circuit’s analysis "relate[d] for the most part to [its] narrow conception of the obviousness inquiry reflected in its application of the TSM test." First, the Court held that the Federal Circuit erred in "holding that courts and patent examiners should look only to the problem the patentee was trying to solve," because a patent’s subject matter may address problems beyond the one "motivating the patentee." Thus, "any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed."
Second, the Court found that the Federal Circuit erred "in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem." Regardless of the primary purpose behind the prior art, "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." Importantly, in this regard, a PHOSITA is "not an automaton," but instead "a person of ordinary creativity."
Third, the Court rejected Federal Circuit law holding that one cannot prove a patent obvious "by showing that the combination of elements was obvious to try." Rather, such a showing can prove obviousness if "there is a design need or market pressure to solve a problem and there are a finite number of identified predictable solutions." In that situation, the Court found, such a combination would likely be "the product not of innovation but of ordinary skill and common sense."
Lastly, the Court held the Federal Circuit "drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias." While a factfinder should be aware "of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning," the Court concluded that adopting "[r]igid preventative rules that deny factfinders recourse to common sense . . . are neither necessary under [Supreme Court] case law nor consistent with it."
In the concluding section of its opinion, the Supreme Court summarized its view of the height of, and rationale for, the obviousness bar, explaining:
We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts.
The Impact of the Court’s KSR Ruling
It is unclear if this week’s KSR decision will result in a dramatic change in the Federal Circuit’s recent jurisprudence (i.e., since the Supreme Court’s grant of certiorari in KSR). First, the Supreme Court described KSR as "challeng[ing] th[e TSM] test, or at least its application in this case." Second, and more importantly, the Supreme Court acknowledged the Federal Circuit’s apparent relaxation of its TSM test since the grant of certiorari, stating that "[t]he extent to which [the Federal Circuit’s more recent opinions in DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356 (Fed. Cir. 2006) and Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286 (Fed. Cir. 2006)] may describe an analysis more consistent with our earlier precedents and our decision here is a matter for the Court of Appeals to consider in its future cases."
The court also raised — but did not answer — the question of whether a patent is presumed valid even when the prior art that forms the basis for an obviousness challenge was not disclosed during prosecution. In KSR, the Court found the patent-in-suit was invalid under § 103 whether or not the presumption applied. The Court nevertheless thought "it appropriate to note that the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished" in this case, in which the prior art being analyzed was not before the examiner. This statement seems to invite the Federal Circuit to reconsider whether the presumption of validity should apply to an invalidity challenge based on a newly-discovered prior art.
Finally, the Court’s analysis of the Federal Circuit’s application of the TSM test appears to invite more emphasis on the PHOSITA and "common sense." Indeed, in its discussion of the errors in the Federal Circuit’s analysis, the Court endorses the "common sense" of the PHOSITA three times, as well as the "common sense" of the factfinder. In this regard, it is anticipated that the Court’s opinion will affect patent prosecution as the opinion appears to give examiners greater ability to reject patents based on their technical knowledge and expertise, or common sense. Similarly, because one can seek reexamination of patents by raising a "substantial new question of patentability," it may be possible for a party to seek reexamination by establishing that the examiner improperly evaluated the prior art (and, thus, the patentability of the claimed invention) under an unduly narrow or rigid TSM test.
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In sum, although not rejecting the TSM test in its entirety, the Supreme Court’s decision seems to raise the bar to patentability — thereby potentially opening the door to new challenges on obviousness. In particular, KSR may have the greatest impact on business method patents, particularly those that simply translate a technique used in everyday business onto the Internet, and incremental patents. Of course, any impact of the Supreme Court’s decision will only be fully appreciated as the Patent Office, district courts and the Federal Circuit apply KSR‘s teachings in future prosecutions and cases.
Members of Gibson, Dunn & Crutcher’s Intellectual Property Practice Group are available to assist with any questions you may have regarding this recent development or any other patent issues. For further information, please contact the Gibson Dunn attorney with whom you work, David A. Segal (949-451-3973, firstname.lastname@example.org) in the firm’s Orange County office, or any of the following chairs of the firm’s Intellectual Property Group:
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Glenn K. Beaton – Denver (303-298-5773, firstname.lastname@example.org)
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