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Supreme Court to examine 'obviousness' of patents

Justices are expected to hear arguments Tuesday in a case that could have broad implications for the tech industry.

Software and hardware makers have long complained that a glut of so-called junk patents threatens to disrupt the way they do business.

One key gripe about the patent process is expected to take center stage before the U.S. Supreme Court on Tuesday morning. In their third major patent case this year, the justices are scheduled to hear arguments about what courts should consider when deciding to warrant protection.

"You have some people in industry who say, oh, come on, you've got to be kidding me. This is something we wouldn't ever bother to write down because it's obvious and we're in a fast-moving field."
--Timothy Teter, intellectual property lawyer

The case has its roots in an obscure patent spat about vehicle gas pedal designs involving two companies without mainstream name recognition: the Canadian company KSR International and Limerick, Penn.-based Teleflex. (Teleflex had sued KSR for infringement of its patent on a gas pedal design that KSR contends is no more than an obvious melding of two existing inventions.)

But the facts of the case are far less important than the potential ripple effects of the high court's eventual ruling.

High-tech companies say there's much at stake for them in the court's ruling. For example, when a tiny start-up called Eolas Technologies said that Microsoft's Internet Explorer infringed on a patent claimed to cover browser plug-ins and applets, one of the arguments lodged by the software giant and Web technologists was that the existence of old technology showed the Eolas idea was a no-brainer to anyone knowledgeable in the field. Seven years later, the saga continues to wend its way through the courts.

Several Silicon Valley heavyweights, including Intel and Cisco Systems, have submitted supporting briefs that urge the Supreme Court to revise an earlier ruling. That ruling, they claim, has helped make it easier to obtain patents on seemingly "obvious" combinations of pre-existing inventions.

If the tech outfits get what they want, "you will have more real investment in our research and development, you will have more confident innovators, and you won't have companies worrying about potentially infringing a patent they know is bogus in the first place," argued Will Rodger, director of public policy for the Computer and Communications Industry Association. CCIA's members include Google, Microsoft, Red Hat and Oracle.

Unless the court raises the bar for obviousness, high-tech companies, whose products often depend on combinations of thousands of patents, fear they can count on many more years of costly litigation against ideas they believe never deserved protection in the first place.

Deep-pocketed corporations aren't the only ones worried. The open-source and free-software communities are concerned that the practice of publishing their code and commentary publicly makes them an easy target for questionable patents purporting to cover their systems. Because software writers don't typically have a high tolerance for legal fees--or royalties to patent holders--the open-source system, too, could face grave setbacks, critics of the current standard argue.

Whether the high court upholds the controversial test for obviousness, constructs a new one or falls somewhere in between, the case is certain to make waves in the patent world, industry observers said.

After all, "the vast majority of all work in the Patent Office is deciding whether a claim is obvious or nonobvious," said Gerald Mossinghoff, a former assistant secretary of commerce and commissioner of patents and trademarks. He is now a senior counsel with the law firm Oblon, Spivak, McClelland, Maier & Neustadt in Alexandria, Va.

An obvious idea?
To land a patent, an invention is not supposed to be obvious to a person of "ordinary skill" in the same field.

Making that distinction, however, has proven tricky in cases where pre-existing inventions are combined to create ostensibly new ones. Studies have shown that most people aren't capable of throwing hindsight out the window when deciding whether an idea is too obvious to warrant protection, particularly when well-known elements are put together. That bias creates the risk that legitimate inventions get shut out of patent protection.

For example, after World War II, there was a widespread problem with leaky flashlight batteries, so someone devised a metal wrapping to curb the problem.

"A lot of people would think people have the capability to wrap things in metal, but the Federal Circuit says that's a real problematic situation," said Thomas Goldstein, the attorney slated to argue Teleflex's side before the Supreme Court justices. "You're going to invalidate a lot of patents that need protection."

So in 1982, the U.S. Court of Appeals for the Federal Circuit, newly enshrined as the nation's dedicated patent appeals venue, established what it thought would be a more objective test. It decided that so-called combination patents are perfectly valid, unless some implicit or explicit "teaching, suggestion or motivation" that the elements at hand be combined predates the patent.

And so opened the floodgates for a slew of obvious patents, critics of the system maintain. Many tech companies claim the rule has proven crippling because it effectively requires their engineers to keep a written record of plans to meld particular technologies if they have any hope of proving that a patent was too obvious to be granted. That requirement is more than a little ironic, they argue.

"You have some people in industry who say, 'Oh, come on--you've got to be kidding me," said Timothy Teter, a partner in the intellectual property practice at the firm Cooley Godward Kronish in Palo Alto, Calif. "This is something we wouldn't ever bother to write down because it's obvious, and we're in a fast-moving field."

Or, as the Electronic Frontier Foundation put it in its friend-of-the-court brief (click for PDF) on behalf of free and open-source software makers: "The suggestion test is particularly damaging to industries, like the software industry, that depend on incremental innovation and tend to be inhabited by practitioners who have neither the time nor the inclination to publicly document their actual work, let alone all the obvious suggestions for next steps they might ponder."

As a result, the Federal Circuit's test has granted patents to inventors "claiming nothing more than the straightforward combination" of existing technologies, attorneys for Intel and Micron Technology wrote in a joint brief (click for PDF) supporting KSR.

"I don't think U.S. industry is going to stand for a huge cloud being placed on their valuable patent portfolio."
--Gerald Mossinghoff, former patent commissioner

Some hardware and software makers have argued they're especially threatened by the standard because their products frequently include thousands of pre-existing components that they would like to be able to rearrange at will. Some say the lax rules have fueled the rise of patent speculators--disparagingly known as "patent trolls"--who make a living off predicting those incremental changes to existing high-tech inventions, landing patents and then going after companies for infringement.

"I think that many people are gaming the system," said Jim DeLong, a senior fellow at the Progress and Freedom Foundation. "This results in a diversion of creative energy away from solving problems and into calculations of planting landmines that other companies might step on in the future."

Because of the current rules, "the level of innovativeness necessary to patent technology today has been, as practical matter, reduced to a vanishing point," said attorney James Dabney, who plans to argue KSR's side before the Supreme Court.

The U.S. government, too, has sided with KSR--and by extension, the many hardware and software makers--in this case. In its brief with the Supreme Court (click for PDF), it suggested that the Federal Circuit test was the wrong way to go, and that the high court focus instead on whether the new combination of elements displays an "extraordinary level of innovation."

Backers of current test
Naturally, not everyone sees it that way. A number of large, heavily patent-dependent companies like General Electric, 3M, Johnson & Johnson and Procter & Gamble said they believed the current test has been working well and is critical for protecting and encouraging innovation. So did a number of smaller companies that happen to have large patent portfolios, as well as organizations representing intellectual property lawyers and independent inventors.

They argued that anything different from the Federal Circuit's test would erase the "predictability" they have come to expect in the patent application process and would inject too much subjectivity into deciding what is obvious.

"Changes to such settled rules of law involve numerous policy considerations, which should be left to Congress rather than the courts," attorneys for 3M, General Electric, Procter & Gamble, DuPont, and Johnson & Johnson wrote in their brief (click for PDF).

The companies' views reflect a broader split on patent reform. Compared with high-tech outfits, pharmaceutical companies have generally been more inclined to keep the status quo.

Although many technology companies have spoken out against the "teaching, suggestion or motivation" test, the industry's response to the case has not been uniform. For instance, IBM, which owns a massive patent portfolio, sided with neither KSR's nor Teleflex's position, characterizing each side's views as too extreme (click for PDF).

Predicting what course the Supreme Court will take is never an easy task. But the court this year has already shown its inclination to roll back one Federal Circuit decision. In a landmark ruling, stemming from a patent spat between eBay and MercExchange, a majority of the justices rebuffed the appeals court. They rejected the earlier finding, which critics argued had made it easier for patent holders to force shut-offs--or injunctions--of products that allegedly infringed on their property rights.

During oral arguments for that case in March, at least one Supreme Court justice seemed to be implying that the patent at the heart of the case, which purported to cover eBay's "Buy It Now" feature, was perhaps too obvious to be taken seriously. Justice Stephen Breyer suggested that if that process, which allows shoppers to skip the auction process and purchase items at a fixed price, could be patented, "then maybe A&P could patent its process for a supermarket."

Still, some attorneys monitoring the case predicted that the Supreme Court would shy away from making any extreme changes this time around. In this case, if the justices turned the Federal Circuit's obviousness standard completely upside down, the validity of hundreds of thousands of patents issued in the last quarter-century could be jeopardized.

"I don't think U.S. industry is going to stand for a huge cloud being placed on their valuable patent portfolio," said Mossinghoff, the former patent commissioner.