United States: Oops I Did It Again! – Supreme Court Reverses Federal Circuit, This Time On Obviousness

On April 30, 2007, a unanimous U.S. Supreme Court issued its holding in KSR International v. Teleflex, reversing the U.S. Court of Appeals for the Federal Circuit’s decision that the patent at issue was not invalid for obviousness. In doing so, the Supreme Court reviewed the Federal Circuit’s "teaching suggestion or motivation" (TSM) test for obviousness. While describing the TSM test, originally articulated by the Court of Customs and Patent Appeals (the Federal Circuit’s predecessor) as a "[h]elpful insight[]," the Supreme Court sharply criticized the Federal Circuit for its "narrow conception of the obviousness inquiry reflected in its application of the TSM test."

The patent at issue relates to an adjustable gas (throttle) pedal assembly in combination with an electronic control. Instead of mounting certain electronic sensors for engine control on the gas pedal, the patent placed the sensors mounted on the vehicle body adjacent to the pedal. The issue was whether the claimed invention was obvious under 35 U.S.C. § 103.

The district court granted summary judgment in favor of KSR on the basis that the claim at issue was invalid for obviousness. On appeal, the Federal Circuit reversed, holding that the district court had applied the TSM test too broadly by failing to make "finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention . . . to attach an electronic control to the support bracket of the [prior art] assembly." To support motivation, the Federal Circuit said the prior art references must address "the precise problem that the patentee was trying to solve."

In the alternative, the Federal Circuit reversed the grant of summary judgment on the basis that there existed a genuine dispute over an issue of material fact, the only evidence of which was expert testimony in the form of an affidavit.

The Supreme Court’s Decision

Interestingly, the Supreme Court’s overarching theme was a criticism of the Federal Court’s application of the TSM test in light of previous jurisprudence, not a criticism of the test itself: "The flaws in the analysis of the Court of Appeals relate for the most part to the court’s narrow conception of the obviousness inquiry reflected in its application of the TSM test." Specifically, the Supreme Court concluded that the Federal Circuit’s analysis in this case had improperly focused on the motivation and avowed purpose of the patentee. Instead, it held, "[w]hat matters is the objective reach of the claim."

In reviewing its own precedent, the Supreme Court reminded us that in its view "[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results." Thus, evidence of unexpected results is likely to become a more important bell-weather of non-obviousness when a case of prima facie obviousness is present. Moreover, in a passage likely to be oft quoted by those challenging patentability, the Court observed that "[w]hen a work is available in one field of invention, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, section 103 likely bars patentability." This may open the door to new and broader "analogous art" arguments in an area that had been thought to be well settled.

The Supreme Court also called into question the strength of the presumption of validity in cases where prior art was not before the U.S. Patent and Trademark Office (USPTO) , noting that "[w]e need not reach the question whether the failure to disclose [a prior art reference] during the prosecution ... voids the presumption of validity given to issued patents, for [the] claim [in issue here] is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished here."

The Supreme Court then went on to analyze the Federal Circuit’s application of the TSM test under the fact pattern at issue in the case, i.e., where the alleged infringer alleges obviousness by arguing that "there existed at the time of invention a known problem for which there was an obvious solution" and that that obvious solution is "encompassed by the patent’s claims." The Supreme Court identified four principle flaws in the Federal Circuit’s analysis:

• First, it held that the "obvious solution" analysis should focus not on the problem the patentee was trying to solve but on the more general needs or problems facing the field of art. ("Under the correct analysis, 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, in determining what prior art a person of ordinary skill in the art who is attempting to solve a problem will seek out, the analysis should not be limited to prior art directed only to that very same problem. In other words, as the Supreme Court noted, "[a] person of ordinary skill is also a person of ordinary creativity, not an automaton."

• Third, contrary to a long line of Federal Circuit cases, obviousness may, in a context where the possible combinations and permutations are limited, be established by "showing that the combination of elements was ‘obvious to try.’"

• Finally, the Supreme Court criticized the Federal Circuit for exhibiting an almost obsessive concern to avoid falling prey to hindsight, a concern that led it to improperly "deny factfinders recourse to common sense."

In the final section of the decision, the Supreme Court also addressed the Federal Circuit’s alternate ground for reversing the district court’s ruling on summary judgment: "…the existence of a dispute over an issue of material fact." The Federal Circuit had based its finding on expert testimony proffered in an affidavit. While noting the propriety of taking expert testimony into account when considering summary judgment, the Supreme Court highlighted the fact that obviousness is a legal determination based on specific factors: "…the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art." Where those factors are not in dispute, summary judgment is appropriate. "Conclusory" statements by experts to the contrary should not dictate otherwise.

While the impact of the Supreme Court’s decision is bound to be widespread, its anticipated severity is uncertain. In its decision, the Court itself noted that two subsequent (2006) Federal Circuit cases, DyStarTestilfarben GmbH & Co. Deutschland KG v. C. H. Patrick Co. (IP Update, Vol. 9, No. 10) and Alza Corp. v. Mylan Labs., Inc. (IP Update, Vol. 9, No. 9), have applied the TSM test much more broadly and flexibly than in the KSR case, and perhaps in a manner more consistent with Supreme Court precedent. However, the Supreme Court noted that these cases were "not before [it] and do not correct errors of law … in this [KSR] case."

We expect that in the future, patents will be subject to more rigorous challenges under the obviousness statute. As broader and more flexible application of the obviousness statute will make it more difficult to predict the outcome of patentability challenges with great certainty, some patentees may now hesitate to seek redress for infringement if they perceive their patent may be vulnerable to an obviousness attack, may assert only their narrowest claims (recognizing that counterclaims or declaratory judgment actions may nevertheless challenge the others) or may seek to shore up their patent against perceived vulnerabilities through procedural avenues available at the USPTO (i.e., re-examination and reissue).

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