United States: Across The Pond - The Positions In The US And Europe

Originally published in Patent World, May 2007

The issue of what exactly constitutes obviousness in relation to an inventive step is currently on the radar of patent lawyers the world over. In both the US and Europe, the courts seem to be constantly engaged in debate concerning the factors to be considered when deciding whether an invention is obvious and therefore unworthy of patent protection. This article contains an overview of recent developments concerning those factors and highlights the difficulties faced by anyone wishing to reach a conclusion on whether a patent will survive a validity challenge based on obviousness.

KSR International Co. v. Teleflex, Inc.: The demise of the exclusive motivation test for determining obviousness in the US? In the United States, the nation's highest court ("the Supreme Court") is poised to end a raging debate in KSR International Co. v. Teleflex, Inc.,¹ over one of the most fundamental requirements of patent law: only inventions that are "non-obvious" are worthy of patent protection. Over 150 years ago, the Supreme Court in Hotchkiss v. Greenwood² first articulated the requirement that a patent should only be awarded for those inventions that embody a "degree of skill and ingenuity" beyond that of "an ordinary mechanic acquainted with the business."³ This requirement has long been recognized as necessary to accomplish the Constitutional mandate that patents promote the progress of the useful arts. And it has been over 40 years since the Supreme Court in Graham v. John Deere Co.⁴ instructed the lower courts to resolve the legal question of obviousness by assessing four flexible factors: (1) the scope and content of the prior art; (2) the differences between the prior art and the patent claim as a whole; ( 3 ) the level of ordinary skill in the pertinent art; and (4) the presence of secondary considerations, such as commercial success, long-felt but unresolved needs, the failure of others, and expert testimony.⁵

Once an invention is disclosed in a patent specification, it is almost impossible to prevent judges, jurors, and patent examiners from using that information to influence their understanding of whether that invention was "obvious" at the time it was developed. Since Graham, the US Court of Appeals for the Federal Circuit ("the Federal Circuit"), the appellate court with exclusive jurisdiction in patent cases, has developed its own jurisprudence for combating hindsight bias: the motivation-teaching-suggestion ("MTS") test. Under this test, there must be a specific finding of a motivation, teaching, or suggestion in the prior art to combine references in the manner claimed to support an obviousness conclusion.

Over the years, the MTS test has become the exclusive requirement for obviousness. Most recently, in Teleflex, Inc. v. KRS International Co., the Federal Circuit reversed a district court's decision on summary judgment of obviousness based solely on the absence of a specific finding of motivation, even though the district court had correctly applied the flexible Graham factor approach. Since that decision eviscerated the Graham approach in favor of the MTS test, the US Solicitor General's Office took the unusual step of requesting Supreme Court review. On 28th November 2006, the Supreme Court heard oral arguments in KSR International Co., v. Teleflex, Inc., No. 04-1350, to address the question of: [w]hether a claimed invention can be 'obvious,' and therefore unpatentable under 35 U.S.C. § 103(a), without proof of some 'teaching, suggestion, or motivation' to modify or combine the prior art in the manner claimed."⁶

During oral argument, the Justices expressed disdain for the MTS test. For instance, Justice Breyer alluded to a growing concern among some organizations that the MTS test was too protective of patients, a tendency with "unfortunate implications for the economy."⁷ And Justice Scalia characterized the MTS test as "gobbledygook" and "irrational,"⁸ and suggested that the Federal Circuit's recent attempts to soften its MTS test were a sign of its demise.⁹ Justices Kennedy and Ginsburg, however, suggested that the MTS test could be retained merely as a nondispositive factor in the flexible Graham framework.¹⁰ In fact, the primary agreement among the Justices centered on how to reject the MTS test without immediately undermining the validity of tens of thousands of pending patents and causing a flood of patent suits.

B. Potential Impact of the Demise of the MTS Test

Many US patent practitioners expect that the Supreme Court ruling will effectively lower the threshold for determining the obviousness of an invention. Such a ruling will have a profound impact on patent owners, patent applicants, licensees, would-be infringers, and many others. But even before a decision has been issued, the US Patent and Trademark Office ("USPTO") has already made it more difficult to obtain a patent. In response to a wave of criticism over the grant of a number of specious patents in recent years, the USPTO has implemented various initiatives to improve patent quality, causing the patent allowance rate to drop from over 70% in 2000 to less than 55% in 2006.¹¹ An expected lowering of the bar for determining obviousness will likely cause the allowance rate to further decline.

Patent examiners would no longer be required to identify a specific and concrete rationale in the prior art for modifying that art to arrive at a claimed invention. It would be unfortunate if, emboldened by the Supreme Court's decision, examiners supported obviousness rejections using uncorroborated and subjective common knowledge. If that were to happen, the patent examination process would become less objective and more costly. Applicants would have to rely more upon the use of objective indicia of non-obviousness, such as unexpected superior results, satisfaction of a long-felt un-met need, or commercial success of the claimed invention. That might in turn increase the cost and uncertainty in obtaining a patent and in some industries might discourage inventors from filing patent applications. On the other hand, the validity of the patents issuing in the new era should be enhanced and less susceptible to obviousness attacks, compared with many currently pending patents.

A lowering of the threshold for determining obviousness would have a profound impact on patent owners and their ability to enforce their rights in the US. The presumption of validity attached to US patents that have already been granted would be cast in doubt, or at least those patents allowed based on the MTS test. Licensees and would-be infringers would logically be empowered and expected to challenge more patents for obviousness, previously considered an inherently weak and risky position. Patent owners, conversely, having lost a sizeable weapon in their arsenal to resist validity attacks, may find themselves back-peddling, relying predominantly on objective indicia of nonobviousness during patent challenges, either before the courts or the USPTO.

In the short term, the picture might appear somewhat bleak for patent applicants and patent owners, especially those in the pharmaceutical and biotech industries where patents are a company's lifeblood. Proponents of the anticipated check on the patenting system, however, argue that more meritorious patents with enhanced validity will issue, eventually ridding all industries of the need to fend off patent infringement claims based on overly broad, specious patents. They argue that such a result will benefit industry as a whole and improve the integrity and reputation of the US patent system worldwide.

The standard of obviousness in Europe is centered around the concept of the 'inventive step'. The European Patent Convention (a treaty that provides a framework for the application and award of European patents) sets out to harmonise the factors which should be considered when deciding whether an invention is too obvious to be patentable.

Article 56 EPC states that:

The evaluation of obviousness should, theoretically, be similar, if not the same, throughout the EU. Recently, however, two separate actions in England and the Netherlands have highlighted the fact that this may not be the case. Both revolved around the same patent, yet the two yielded very different results for the patent-holder.

The action the English High Court involved an application by Conor Medsystems Inc. for the revocation of a European patent for a taxol-coated coronary stent owned by Angiotech Pharmaceuticals Inc. ("Angiotech"). In February 2006, the court considered how obviousness should be determined and, having carried out an analysis of the prior art, found the patent to be invalid for obviousness. The Court of Appeal later upheld the High Court ruling.

In the District Court of The Hague, meanwhile, Angiotech alleged that its patent was being infringed by Sahajanand Medical Technologies ("SMT"). The Dutch Court upheld Angiotech's claims and granted it an injunction against SMT in May 2006. This decision has been appealed. In January 2007, one day after the UK appeal decision, in fact, the District Court in The Hague upheld the validity of the patent for a second time — concluding that Conor Medsystems' stent was an infringement of Angiotech's patent. Conor Medsystems intends to appeal this decision.

The argument of obviousness in the English dispute was that the sole difference between the disclosure contained in the prior art and Angiotech's invention was the specific use of taxol in a drug-eluting stent. The claimants argued that a skilled cardiologist, in consultation with a skilled person in the field of anti-mitotic drugs, such as an oncologist, would have perceived taxol as being "worth experimentation". Angiotech argued that the properties of taxol were such that the skilled person would not think that it was suitable for local administration in a drug-eluting stent.

The court had to determine whether it could be shown that the skilled person would have a sufficient expectation of success so as to induce him to incorporate taxol in a drug-eluting stent. It concluded that this expectation would be met if the skilled person would test or screen taxol, not on the grounds that it would work, but on the grounds that it might.

The evidence presented suggested that taxol would be seen as a possible candidate for testing, as it had been used successfully as an anti-mitotic drug in the treatment of cancer by the priority date. Whilst taxol was considered both toxic and difficult to administer systemically in relation to cancer treatments, the proposed amount of the drug needed to be used on a stent was known to be much less, reducing the risk of any negative side effects in patients. The court decided that in this instance, the skilled person would have chosen to test taxol, based on both his common general knowledge and his knowledge of taxol itself: the patent was therefore invalid for obviousness.

In January 2007, the Court of Appeal upheld this decision, affirming that the 'Diplock' test set out in the Johns-Manville case¹² was, in this situation, the correct approach: that is, "it is enough that the person versed in the art would assess the likelihood of success as sufficient to warrant actual trial". Interestingly, Lord Justice Jacob attempted to step back from coining or re-iterating an all-encompassing definition of 'obviousness', stating that, "In the end the question is simply 'was the invention obvious?'" Answering this question will involve taking into account a number of factors, for example, the attributes and common general knowledge of the skilled man, the difference between what is claimed and the prior art, and whether there is a motive provided or hinted by the prior art. He noted that some factors are more important than others: that commercial success can sometimes demonstrate that an idea was a good one, whilst at other times "obvious to try" may come into the assessment. It is the nature of the invention itself that will determine which factors will he considered most important in assessing obviousness.

The Dutch court, on the other hand, applied a "problem-solving method" when considering the state of the art in relation to this invention. This method contains the following three steps:

1. Analysing what the state of the art was just before the invention;
2. Establishing the objective technical problem to be solved, based on the differences between the "nearest" art and the alleged invention; and
3. Determining whether the invention would be obvious to the average professional, based on the nearest art and the objective technical problem.

The key issue that the Dutch court considered was also the obviousness of the invention. SMT argued that, on reading the prior art, the average professional would immediately think of using taxol in order to prevent restenosis. The court held that in order for it to find an insufficient level of inventiveness, the average professional would, according to established case law, have to be "led" by previous publications to administer taxol to a patient. In other words, he should have chosen taxol, expecting it to prevent restenosis, as a consequence of technical "pointers" in the current state of the art. This approach is, of course, narrower than the view taken by the English court, which was concerned with whether taxol was simply "well-worth testing", but similar to the MTS test currently at issue in the US.

The court noted that whilst some prior art stated that anti-mitotic drugs helped to prevent restenosis, it made no suggestion that the substances listed did, in fact, prevent it. Meanwhile, other prior art disclosed the fact that taxol is an anti-mitotic drug. It was not possible to determine from any publication, however, why the average professional would have been led specifically to use taxol and not another drug from the "extremely broad class of structurally diverse agents" cited. The inventive step in Angiotech's patent was therefore not obvious.

The differing results of these cases suggests a potentially worrying lack of European harmonisation in the approach to this complex area of law. Many other European jurisdictions will apply the three-part "problem-solving method" when attempting to establish whether an inventive step was obvious. In practice, a large number of secondary indications will also be applied to the assessment: for example, how far the invention departs from the 'beaten track', whether it satisfies a long-felt deficiency in a particular area, whether other experts have been making 'futile' efforts in attempting to satisfy such deficiency, its commercial success etc. Such secondary criteria are, in fact, not far removed from the factors cited by the English Court of Appeal. How, then, did the two countries' courts reach such different verdicts?

Whilst theoretically working from the same starting point, the judges in these cases took individual approaches to the situation, defining the object of the patent differently and using slightly different tests for obviousness according to the laws of their jurisdiction. Both judges were presented with differing arguments and evidence and both placed emphasis on different parts of such arguments and evidence, leading to different factual findings. The parties in the English action, for example, agreed that important evidence had to be obtained from oncologists rather than cardiologists, whilst the Dutch court did not examine what might have been obvious to a skilled oncologist. Each judgment is certainly logical, however, which begs the question: if the two courts had been presented with exactly the same evidence, would they still have produced different verdicts? Whilst in this scenario, it seems more likely that the courts would have agreed, the individual constructions of the patent and the slight variation in the tests applied still leave scope for contrasting results.

It remains to be seen whether these cases have a lasting impact on the way in which the courts determine what constitutes an inventive step. It is clear that an invention may be obvious despite being missed by the art, the English court observing that, "patents should not be granted for things that have been obvious for a long time". Interestingly, the English court also noted that Angiotech's patent specification gave no indication of any likelihood of success in preventing restenosis and no indication as to the toxicity, side-effects or efficacy of taxol. It was therefore wrong to permit such considerations to weigh against the obviousness of testing taxol. Might the court have come to a different conclusion if the company had included such details in its specification? If this is the case, future patent applications will have to be drafted with the different approaches to obviousness firmly in mind. In any event, it seems clear that there may be a growing need for an overriding European Patent Office Board of Appeal decision establishing harmonisation in the approach to obviousness throughout the EU.

The discrepancies revealed in different jurisdictions' attitude to obviousness serves to highlight how significant and redoubtable an issue it has been and continues to be. Courts appear to find it difficult to define obviousness, and none of the various tests suggested over the years has met with complete success. Indeed, some judges are loathe to even attempt a definition, shying away from creating anything remotely resembling an overelaborate doctrine. If the US Supreme Court affirms the flexible Graham factor approach, it will move closer to the flexible approach now adopted by the English courts. If, on appeal, the Dutch Supreme Court agrees, harmonisation could result — at least until the next time this issue comes under scrutiny.