[Infowarrior] - SCOTUS Puts Limits on Patents

[Richard Forno]

High Court Puts Limits on Patents

http://www.nytimes.com/2007/05/01/business/01bizcourt.html

By LINDA GREENHOUSE
Published: May 1, 2007

WASHINGTON, April 30 ‹ The Supreme Court, in its most important patent
ruling in years, on Monday raised the bar for obtaining patents on new
products that combine elements of pre-existing inventions.

If the combination results from nothing more than ³ordinary innovation² and
³does no more than yield predictable results,² the court said in a unanimous
opinion, it is not entitled to the exclusive rights that patent protection
conveys. ³Were it otherwise,² Justice Anthony M. Kennedy wrote in the
opinion, ³patents might stifle, rather than promote, the progress of useful
arts.²

Because most inventions combine previously known elements, the court¹s
approach to deciding what sort of combination is so ³obvious² as to be
ineligible for patent protection will have widespread application. The
result will be to make patents harder to obtain and defend.

³Granting patent protection to advances that would occur in the ordinary
course without real innovation retards progress,² Justice Kennedy said. He
added that such patents were also undesirable because they might deprive
earlier innovations of ³their value or utility.²

Patent law experts said the ruling created a common sense standard that
could have a broad impact.

³Nearly every patent that contains a combination of prior ideas is at risk
because the court has dramatically broadened the standard of obviousness,²
said Cynthia Kernick, an intellectual property lawyer at Reed Smith in
Pittsburgh.

Judges will have more leeway to dismiss patent infringement lawsuits without
requiring a jury trial, and patent examiners, who generally grant patent
applications unless they find prior references to the same invention, will
now feel freer to deny claims, said Matthew Kreeger, an intellectual
property lawyer at Morrison and Foerster in San Francisco.

³And we could see thousands of cases asking the Patent Office to re-examine
patents it has already granted,² said Mr. Kreeger, who was one of the
lawyers who had prepared a brief filed by the Biotechnology Industry
Organization in support of the patent. ³It doesn¹t take a lot of resources
to ask for a re-examination.² To be eligible for a patent, an invention must
be novel, useful and not ³obvious² to a person of ³ordinary skill² in the
field. The Supreme Court case concerned a fairly typical dispute over
whether a combination of old elements in a new way was new or simply
³obvious² to any expert.

At issue was an adjustable gas pedal for use on cars and trucks equipped
with electronic engine controls. How could the vehicle¹s computer tell the
pedal¹s position? A Canadian company, KSR International, under contract to
General Motors, solved the problem by mounting an electronic sensor at the
pedal¹s fixed pivot point in order to communicate the necessary information.

A rival, Teleflex Inc., demanded royalties, claiming the device infringed
its patent on an adjustable gas pedal equipped with an electronic sensor.
KSR refused to pay on the ground that Teleflex had combined existing
elements in an obvious manner and that its patent was therefore invalid. KSR
won in Federal District Court in Detroit, but that decision was overturned
in 2005 by the United States Court of Appeals for the Federal Circuit.

That court, in Washington, has exclusive jurisdiction over patent appeals.
After years of permitting its judgments to stand unreviewed, the Supreme
Court has begun to take an active interest in the Federal Circuit¹s cases
and has overturned several, including a second case the justices decided on
Monday in favor of Microsoft in a dispute with AT&T.

In granting judgment for KSR on Monday, in KSR International Co. v. Teleflex
Inc., No. 04-1350, the Supreme Court listed several specific errors and
³fundamental misunderstandings² in how the Federal Circuit had analyzed the
case. In looking at the Teleflex patent, Justice Kennedy said, the appeals
court made the mistake of considering what ³a pedal designer writing on a
blank slate² would have done to solve the problem of the pedal and the
sensor. But the slate was not blank, he continued, and the Teleflex patent
was essentially an upgrade of existing technology.

Justice Kennedy said the problem was not necessarily the Federal Circuit¹s
overall approach, but rather its rigid way of applying a commonly used legal
test. The test requires a person challenging a patent as obvious to identify
a reason that would have prompted someone to combine two or more previous
inventions, such as published articles suggesting such a combination. This
has made it difficult to attack a patent as obvious, and has often precluded
summary judgment, instead requiring an expensive jury trial.

Justice Kennedy said that this test, in the Federal Circuit¹s hands, had led
to a ³constricted analysis² that paid too much attention to an inventor¹s
motivation and too little to a simpler inquiry: whether ³there existed at
the time of invention a known problem for which there was an obvious
solution.² The Teleflex patent fit that description, he said.

The federal government, which had sided with KSR, argued that the Federal
Circuit¹s approach had led to the granting of too many patents to obvious
inventions. Pharmaceutical and biotechnology industry groups, entering the
case for Teleflex, argued that innovation would suffer if patents became too
hard to defend.

In a sense, the case presented a moving target. While the KSR appeal was
pending, the Federal Circuit issued several decisions reflecting openness to
challenges to patents as unworthy because of obviousness. ³Those decisions,
of course, are not before us now,² Justice Kennedy said.

Court Sides With Microsoft

WASHINGTON, April 30 (AP) ‹ The Supreme Court sided with the Microsoft
Corporation on Monday, finding that patent law does not apply to software
sent to foreign countries.

In a 7-1 decision, the court rejected AT&T¹s position that it was entitled
to damages for every Windows-based computer made outside the United States
using technology that compresses speech into computer code.

AT&T had said computers running the Windows operating system infringed on
its technology for a digital speech coder system.

The decision could affect other lawsuits against Microsoft and save it
billions because of the global scope of its operations.

The Supreme Court said software should be treated like exported blueprints
and schematics.

Barnaby Feder contributed reporting.