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May 4, 2007

Patent prosecution is likely to be more challenging and accused infringers are likely to be emboldened in view of the April 30, 2007 decision by the Supreme Court of the United States in KSR International Co. v. Teleflex Inc., et al., relating to the manner in which the obviousness bar to patentability is assessed.

The Court overturned the decades old test under which a patent claim is rendered obvious. Under prior law, before obviousness could be found, the prior art had to reveal some motivation or suggestion to a person of ordinary skill to combine prior art teachings (i.e., the so-called teaching, suggestion or motivation (TSM) test). The Supreme Court ruled that this test was too narrow and made clear that it is relevant to consider the totality of the state of the art in a general sense and that articulated signposts are not required.

The Court recognized that in many fields there may be little discussion of obvious techniques or combinations, but nonetheless, if a market demand were to exist, those skilled in the art will readily know how to combine known elements to meet the market need. In essence, the Court adopted a common sense assessment of the state of the art and in particular what would be obvious to try given the totality of the knowledge base and an emerging market demand.

This is the third in a series of recent decisions in which the Supreme Court has rejected longstanding Federal Circuit precedent. The Supreme Court has established a factor analysis which needs to be assessed before injunctions issue in patent cases, thus taking out of the hands of so-called patent trolls the ability to shut down a business where the patented feature is a small part of a larger system. As well, the Court has rejected the requirement that a licensee must renounce the license before it can challenge the licensed patent and therefore patent challenges can proceed without fear by the licensee of a draconian result in the event the challenge is not supported. The Court has now provided a totally new prospective for the obviousness standard. Collectively, one can see a pattern in which the Court is signaling its displeasure at what it perceives to be abuse by patent owners in the obtaining of patents, the licensing of patents and the enforcement of patents.

There is little doubt that the decision will be welcomed by certain business groups, notably the generic drug industry which is constantly seeking a basis to challenge drug patents and by those companies who rarely enforce their patents, but are frequent targets of patent infringement claims, such as the automotive industry.

However, there is a substantial segment of the business community who vigorously protects their patented products against the constant efforts by copyists to free-ride on technical developments created only after the patent owner has made a significant investment in research and development, production and marketing. Assuredly, they will now be faced with an obviousness invalidity defense in almost every litigation. Many are expressing a serious concern that America's technological base which provides support to much of its economy will be seriously eroded.

There is little doubt that the decision's downgrading of the TSM test from a dispositive rule to merely a factor to be considered will have a significant impact on both patent solicitation and enforcement in the United States. It is likely that the Patent Office will be rejecting more applications and a greater number of patent challenges will become a contest of experts seeking to convince the trier of facts about the mindset of the mythical person of ordinary skill at the time the patent was filed.

We are strongly recommending to our clients that in addressing prior art in the drafting of patents a broader perspective be considered and that emphasis be placed on explaining why the known prior art collectively teaches away from the claimed improvement. This same focus will be applied to our litigation efforts.

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