Obviousness following the United States supreme court

Issue24 By Wayne C. Jaeschke & Zhun Lu,[Patent]


      The United States Supreme Court’s ruling in KSR Int’l Co. vs. Teleflex Inc., 127 S.CT.1727, 82 (2007) has affected U.S. patent law far beyond the scope of the case. Typically, Supreme Court decisions have had wide reaching impact on the related field of law. The implications of KSR should be taken into account when deciding strategy associated to the import and sale of new products and services in the United States.

Depending on which side you are on, KSR may be helpful or harmful to your case

      The KSR decision contains useful pearls of wisdom for most stakeholders in the patent arena, including, applicants, the patent office, patentees, and potential defendants. The Supreme Court performed a balancing act in relation to the various issues in the case that would make the proverbial King Solomon1 proud of the result. Depending on whether you are a patent applicant or examiner or a patent plaintiff or defendant there is either elation or anguish since the decision. While components of the opinion seem to make the job easier for a patent examiners to sustain an obviousness rejection on a combination of prior art references, other areas may require a higher level of reasoning and findings than in the past.

The TSM test lives on but is now less helpful in the sustaining patent validity and in the granting of new patents

      The KSR opinion makes clear that a plaintiff may not be able to keep his patent simply because none of the cited prior art references contain a teaching, suggestion or motivation to combine the references (TSM test). Conversely, the Supreme Court adhered to the requirement that obviousness requires a finding of teaching, suggestion, or motivation; however, the Court pointed out that the motivation to combine may be drawn from sources other than the cited references including design trends or knowledge in related fields.

Judges and examiners may use “common sense” but not hindsight

      The Supreme Court additionally observed that “common sense” is useful in determining obviousness, but that “hindsight” cannot be used to reconstruct the invention from the prior art using the application or patent as the roadmap.

The Supreme Court has resurrected “obvious-to-try”

      In the case at bar, the Supreme Court clearly rejected years of rulings by the Court of Appeals for the Federal Circuit (Federal Circuit) that obviousness should not be measured by whether the claimed change would have been “obvious to try” but rather whether the change was motivated by teachings of the prior art. In KSR, the Supreme Court stated, “When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp”. Based on KSR, “obvious to try” will be employed more frequently to reject applications based on the grounds of obviousness.

Historically, non-obviousness has been found to lie somewhere between “flash of genius” and “naked novelty”

      Based on a historical perspective, the KSR ruling suggests that the proper test for patentability or non-obviousness lies somewhere between the early Supreme Court’s rulings that required a “flash of genius” and naked novelty where there is an insignificant difference between the claimed subject matter and the prior art. On one extreme, the

Supreme Court held that a “flash of genius” was required to support patentability. Under that high standard, a larger number of inventions would be deemed obvious and not patentable. At the other end of the spectrum, there is the TSM test as developed and applied over the years by the Federal Circuit according to which a novel combination of old elements should be patentable unless the references contain a teaching, suggestion, or motivation to make the combination to meet the claimed combination. The Federal Circuit’s application of the TSM test together with the concept that “obvious to try” is not obviousness are reasons advanced by many patent law observers to explain the granting of many low quality patents over the past twenty years.

In the 1953 Patent Act, the United States Congress outlawed the “flash of genius” requirement of patentability by enacting the last sentence of 35 U.S.C. 103 which states that “patentability shall not be negative by the manner in which the invention was made.” That change in the law recognized that modern day research involves a number of technical innovators working together who each add a small contribution to the whole invention rather than a single inventor working alone. If patentability is judged based on each small contribution of the co-workers, most innovations from large research laboratories might be held to be unpatentable as each step might be obvious from the other. However, when as required by the amended Statute, the whole invention is viewed with reference to the state of the prior art, the product of many collaborative research projects are more likely to be found patentable. Thus, advanced technology may be protected and the investment in such research justified.

Following the 1953 Patent Act, the Supreme Court decided Graham vs. John Deere. 86 S. Ct. 684 (1966), the landmark case on the issue of non-obviousness. The key principals of that decision are set forth and followed in the KSR opinion as discussed below.

Following the 1953 Patent amendments and Graham vs. John Deere, the Federal Circuit developed the “TSM test” for the patentability of new combinations of old elements. Since the 1953 amendments to present, the number of granted U.S. patents has grown to over 200,000 annually. For many patent lawyers who have become increasingly dependent on “TSM” and other patent friendly tests of the Federal Circuit for their successful prosecution and enforcement of patents, the TSM test is likened to the “iron rice bowl” of their practice.

The Supreme Court in KSR cracked the “iron rice bowl” sending patent prosecution and enforcement into more challenging and uncharted territory

      KSR presented a simple set of facts that provided the Supreme Court an opportunity to rule on the central issues of obviousness and once again to reverse the highly patent friendly direction of the Federal Circuit. The Supreme Court accepted the invitation and ruled in a balanced way but one which has raised the obviousness standard creating greater barriers to upholding validity of existing patents and to granting new ones.

For those patent stakeholders, organizations and lawyers who have depended on the Federal Circuit’s patent friendly rulings including its application of the TSM test, there is no doubt KSR cracked the “iron rice bowl”, but at the same time, created opportunities for seasoned patent attorneys. We are in somewhat uncharted waters in a more challenging environment in obtaining and enforcing U.S. patent rights. From a different viewpoint, however, there are many who think that too many poor quality patents were being granted and enforced in the courts; and, that over time, the changes mandated by KSR will make U.S. patents stronger and more valuable.

Some global companies operating in the United States are permitting abandonment of significant numbers of patent applications in part due to changes of KSR. If this trend is borne out in the future, some believe it might help to decrease the application backlog in the patent office (USPTO) and unclutter the U.S. patent landscape. However, some cases decided since KSR suggest that patents based on significant differences between the prior art and the claimed subject matter are likely to be sustained. It may be too early to tell what the overall impact of KSR will be on the rate of granting of new patents and the funding of research in new technologies that are dependent on patent coverage.

Change creates opportunity

      Change and uncertainty often fosters opportunities. For example, offshore companies including those based in China that are considering initiating sales of new products and services into U.S. markets, might find the current environment more hospitable in which to negotiate patent licenses or test the waters of potential infringement. Existing patents that might be barriers to entry can be challenged in court and by re-examination at the USPTO based on the rulings in KSR. Decisions of the U.S. Courts such as KSR are applied retroactively to all patents regardless of when they were granted. By contrast new legislation, acts of the U.S. Congress, or new rules by the USPTO can only be applied in future cases.

Evaluate the patent landscape prior to importation

      New products in the fields including electronics, biotechnology, drugs, and electromechanical devices are likely to be covered by patents and pending applications in the United States. The extent and strength of coverage will vary with many factors. It is essential to conduct right-to-use searches and infringement evaluations in advance of importation. Opinions of experienced U.S. patent counsel should be sought as needed.

These searches and opinions can be executed with greater cost efficiency where the work can be divided between cooperating Chinese and U.S. counsel.

Develop a litigation contingency plan

      Companies that are planning to import new products or services into United States markets should plan their intellectual property strategy including potential litigation defense by devoting resources in proportion to projected sales values in order to increase the probability of success of the new business venture. While the potential benefits may be substantial, there are numerous patent risks that need to be considered and minimized. For instance, U.S. patent owners can sue for infringement either at the I.T.C. (International Trade Commission) or in the Federal District Courts subject to jurisdictional requirements. Infringement actions take place on a very fast schedule at the I.T.C. and in many federal district courts. The requirements of U.S. discovery and depositions can be overwhelming for offshore defendants who are not well prepared in advance. Failure to comply with court ordered discovery can lead to fines and default judgments. The courts can order injunctions, seize goods, and render sizeable damage awards. Armed with advance preparations, however, there may be solid defenses that can bring an infringement suit to a quick and satisfactory resolution or avoid such suits altogether.

Consider a Declaratory Judgment action for advance resolution of key patents

      Where potential importers are denied licenses and presented with a “case or controversy”, United States law provides an opportunity to sue the patent owner in a court of the potential defendant’s choice if jurisdiction and venue rules are satisfied. Another recent

Supreme Court ruling in MedImmune vs. Genentech, 127 S. Ct. 764 (U.S.2007), changed the dynamics of maintaining a declaratory judgment action so that an “imminent threat of suit” is no longer needed for a court of the potential defendant’s choice to decide issues of potential infringement or validity before incurring significant damages. MedImmune coupled with the substantive changes of KSR provides a powerful combination of tools that foster commerce and competition through fast and fair resolution of patent disputes. However, MedImmune and follow up cases present challenges to patentees attempting to notify potential infringers of their patents.

KSR arose on Summary Judgment before full-blown discovery and trial

      In KSR, the Federal Judge in the Southern District of New York granted summary judgment based on his conclusion of law that the combination of known elements would have been obvious to the person of ordinary skill in the art. The granting of summary judgment without completed discovery itself is quite significant and somewhat unusual in patent suits since most cases are highly fact specific and proceed through the expensive and time consuming steps of discovery before a judge feels comfortable enough to render a legal judgment related to obviousness. From a defendant’s standpoint, the ability to persuade the judge to rule on obviousness early in the proceedings is critically important to avoid the massive burden and expense of discovery. In KSR, the Judge was convinced by the defendant’s showing that the patentee had simply combined an automated sensor means with an adjustable pedal both means being shown in the prior art.

The Federal Circuit reversed the holding of the District Judge based the Court’s TSM test which required that one of the references themselves contain a teaching, suggestion or motivation that would lead a person of ordinary skill in the art to combine the references according to the patentee’s claims. In KSR, while the combination appears quite simple especially in the light of the patent, the references themselves did not teach, suggest, or motivate the combination.

The Supreme Court reversed the Federal Circuit and concluded that the TSM test was being applied too rigidly. The Supreme Court said while TSM is required it can be found elsewhere, for example, in the demands of the design community, market pressure, and in the interrelated teachings of multiple patents.

KSR ruled that the Federal Circuit’s TSM test is helpful but not the exclusive test

      In KSR the Supreme Court emphasized the “need for caution in granting a patent on the combination of elements found in the prior art”. They found that the TSM test for combination of references was being applied too rigidly by the Federal Circuit as an absolute rule of law when it should be viewed as a helpful but not exclusive guideline on the question of obviousness.

Hindsight is still forbidden but the Judge can consider “common sense” and “ordinary creativity”

      The Supreme Court pointed out that in determining the legal issue of obviousness, a judge may consider:
      The use of common sense, and
      That the skilled person is also one of ordinary creativity.

The Supreme Court further cautioned that in determining obviousness “hindsight” reasoning based on the applicant’s or patentee’s description and claims cannot be employed.

On the specific facts the Supreme Court ruled as a matter of law that it would have been obvious to the skilled person to combine the known electronic sensor with an adjustable pedal even though there was no specific teaching in any of the references to do so;

The Supreme Court remanded the case for further disposition consistent with its decision.

KSR highlights the potential for summary judgment of obviousness early in the suit

The proceedings in KSR are a poignant reminder that a defendant sued for patent infringement may move for summary judgment at an early stage of the suit before expending large sums of money on discovery and trial. Following the decision in KSR, the defendant pointed out that it might have been difficult to bear the cost of the defense if a full-blown discovery and trial had been required. On the other hand, the revived feasibility of summary judgment on obviousness based solely on interpretation of the cited references requires a greater focus on advancing material issues of fact that may be in dispute or on which the trial court should defer judgment until after both fact and expert discovery is concluded. In KSR, the Court said that summary judgment of obviousness is appropriate where there is no meaningful dispute over the content of the prior art, the scope of the claims, or the level of skill in the art. In an appropriate case, a patentee-plaintiff could also raise another important issue based on the Graham factors in defense of summary judgment, namely, that the patentee requires the opportunity to show unexpected results or unpredictability in support of non-obviousness.

Does KSR balance the scales of obviousness or simply trade the certainty of TSM for vague notions of common sense and ordinary creativity?

      The KSR Court’s rejection of rigid application of TSM and expanding the sources from which TSM can be drawn appear to be a reasonable balance of the interests since the KSR ruling would allow for rejection of borderline combinations of known elements which function in a predictable way. By rejecting hindsight and adhering to the Graham vs. John Deere factors, the Supreme Court preserved the underlying structure of the obviousness analysis that is important in patenting more innovations that are complex and in patenting small differences that exhibit unexpected results.

Viewed from a different perspective, KSR replaces the certainty of the Federal Circuit’s traditional reliance on the concept that TSM must come from the cited references themselves with vague notions of “common sense” and the idea that the skilled person is one of “ordinary creativity.” Some have questioned whether by use of the term ordinary creativity, the Supreme Court requires extraordinary creativity as the standard of non- obviousness. However, if later courts interpret “common sense” as meaning drawing verifiable suggestion from other real sources such as the market place, the decision may be good for all concerned. It is likely that the Supreme Court does not require “extraordinary creativity” as that would be in direct conflict with the last sentence of 35 U.S.C. 103 of the 1953 Patent Act and the court would certainly have pointed that out if it intended such a radical change. Overall, every stakeholder is given reason for both hope and despair and, in that respect, the Supreme Court seems to have made a King Solomon-like compromise but only time will tell.

The USPTO Board and Guidelines closely follow KSR

      Shortly after KSR in April 2007, The USPTO’s Board of Appeals and Interferences (the Board) issued three opinions following the ruling. These published decisions help to clarify the USPTO’s position on obviousness of combinations of elements following KSR. These cases exemplify the USPTO’s thinking as applied in biotechnology, electronics, and mechanical applications. Additionally, the USPTO has issued examination guidelines that can be found on the USPTO website that are mostly a codification of the KSR and these Board decisions. The Guidelines are written fairly but mostly to aid examiners in making and sustaining rejections against applicants’ claims.

Ex Parte Smith

      Ex Parte Smith, 83 U.S.P.Q. 2d 1509 (Bd. Pat. App. & Interf., 2007) is a case where the described and claimed invention is a rather simple mechanical combination comprising an improved pocket to hold a CD inside the cover of a book. The Smith Board held obvious the modified CD pocket bound in a book:
Each claimed element is found with the scope of the prior art,
One of ordinary skill could have combined the claimed elements by known methods, and
The skilled person would have recognized the capabilities and functions of the combination were predictable.

The Board in Smith further concluded:
      There were no arguments by Smith that the cutting and gluing presented any challenge,
      It was a simple substitution of one known element for another by known methods,
      There can be no teaching away where the art is silent as to function,
      A person of ordinary skill is also a person of ordinary creativity,
      It took no more than ordinary creativity for the skilled person to adapt one reference (Wyant) in view of another reference (Dick),
      The Board pointed to KSR as authorizing the fitting together of multiple patents like pieces of a puzzle using common sense, and
      KSR forecloses appellant’s arguments that a specific teaching is required to find obviousness.

In their analyses, the Board cited KSR and echoed the Supreme Court’s reliance on Graham vs. John Deere which laid out the cornerstones of obviousness determinations known as the Graham factors as follows:
      Assess the scope and content of the prior art,
      Determine the differences between the claimed subject matter and the prior art,
      Determine the level of skill in the art, and
      Take account of any secondary considerations such as commercial success, copying, unpredictability, and unexpected results.

The Board emphasized the use of a functional approach as set forth by the Supreme Court where if the claimed combination of old elements yields only predictable results it is likely to be obvious.

On the positive side for applicants at the USPTO, the Board said that KSR requires specific findings related to the obviousness issues and that rejections on obviousness cannot be sustained by mere conclusive statements. However, “The analyses 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 apply.” More important, from a practical standpoint, is the fact that these opinions each contain a number of detailed findings in support of the conclusions of obviousness. The Board appears to be showing the patent examiners, by example, that detailed findings are needed to sustain rejections on obviousness.

Ex Parte Kubin

      In Ex Parte Kubin, 83 U.S.P.Q. 2d 1410 (Bd. Pat. App. & Interf., 2007), the applicant claimed isolation of the NAILcDNA sequence. In Kubin the Board appeared to base its decision on the doctrine of “obviousness to try” as resurrected by KSR. Kubin and KSR raise serious concerns for the patentability and validity of biotech patents in general. KSR seems to breathe new life into rejections and defenses based on the idea that it is obvious to make selections made from a small number of options where the results are predictable.

Ex Parte Catan

      In Ex Parte Catan, 83 U.S.P.Q. 2d 1569 (Bd. Pat. App. & Interf., July 3, 2007), claimed invention is a consumer electronic device incorporating bio-authentication means where each of the elements was known. The Board cited Leapfrog vs. Fisher-Price in which the Federal Circuit held it was obvious to combine references to a mechanical device for actuating sounds with a known means to do the same job electronically. Common sense can be used and obviousness is not a rigid formula. Contributing to a holding of obviousness in Leapfrog was the lack of any showing that the combination presented any unique challenges and the fact that nothing was unobvious about making the combination.

Takeda vs. Alphapharm is a ray of hope for applicants and patentees

      Takeda vs. Alphapharm, 492 F.3d 1350 (Fed. Cir. 2007), Certiorari denied (2008), was decided at the District Court level prior to the KSR decision but was reviewed on appeal by the Federal Circuit after the KSR ruling. The patented subject matter pertains to chemical position isomers, however, the patent friendly views of the Federal Circuit panel of judges that wrote the opinion in the aftermath of KSR might signal their continued adherence to the salient concept that obviousness of claimed subject matter in any field must be derived from specific teachings or suggestions of the prior art. In Takeda, the Federal Circuit held that the claimed structural rearrangement of chemical elements on an organic ring compound was not made prima facie obvious from the prior art which showed the same substituents at a different position on the ring but failed to suggest the patentee’s claimed structural modifications. Both the prior art and the claimed compounds were useful in the treatment of diabetes.

The Federal Circuit said that their holding and that of the District Court are consistent with KSR which requires the defendant (or an examiner) to identify specific reasons to motivate changing the prior art to arrive at the newly claimed structure. The Court held more specifically, “Thus in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new compound.” The Supreme Court declined to review the Takeda ruling on Certiorari despite the defendant’s impassioned plea that it contradicts the KSR ruling.

In contrast to the Federal Circuit ruling in Takeda, a lower Court in Northern California granted summary judgment on obviousness in Frisket vs. Realnetworks, 499 F. Supp. 2d 1145 (N.D. Cal. 2007), citing two points from KSR namely: (1) Arranging old elements performing the same function with predictable results, and (2) when design or market pressures create a need, the combination/modification provides good reason for the person of ordinary skill to pursue the known options within his grasp and if this leads to anticipated success it is likely the product is of ordinary skill and common sense.


KSR has clearly changed the law of obviousness by relegating the Federal Circuit’s long standing TSM test for combination of references to secondary and optional importance and by reviving the concept that “obvious to try” is an appropriate consideration in obviousness. The Court may have replaced the greater certainty of the TSM test with less objective standards of “common sense” and “ordinary creativity” which will make it even more difficult to render predictive opinions as to the validity of patents or the patentability of new inventions.

While the full impact of the KSR changes will take some years to determine, the changes might present opportunities to challenge many existing combination patents. Nevertheless the Takeda case suggests that the significant new structural rearrangements, whether chemical or otherwise, that cannot be shown to be motivated by the prior art are not obvious. For example, inventions that are well-differentiated from the prior art and that produce unpredictable results, are likely to be held patentable and valid by the courts.

1 King Solomon is a Biblical figure described as a ruler of an empire centered on the United Kingdom of Israel. One of the qualities most ascribed to King Solomon is his wisdom.

About the authors:
       Wayne C. Jaeschke & Zhun Lu are lawyers of the Connolly Bove Lodge & Hutz LLP.


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