Biotech Values

[DewDiligence]

Supreme Court Questions Obviousness Standard

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061128:MTFH21808_2...

>>
Tue Nov 28, 2006 5:55 PM ET
By Peter Kaplan

WASHINGTON, Nov 28 (Reuters) - U.S. Supreme Court justices criticized on Tuesday a crucial legal standard used to determine if patents are valid or merely "obvious" combinations of previous inventions that should be rejected.

In a case with broad implications for the U.S. patent system, the justices repeatedly questioned whether appeals court judges were using the right standard to define obviousness in patent lawsuits.

"This is gobbledygook. It's irrational," said Justice Antonin Scalia, echoing doubts expressed by a number of the justices.

The case pits two companies that manufacture vehicle throttle pedals but is being keenly watched by industries that rely heavily on patents, such as the drug, biotechnology and software industries. Obviousness in the most common ground for the U.S. Patent & Trademark Office to reject a patent.

The patent in dispute, held by Teleflex Inc. <TFX>, combines two existing inventions -- an adjustable pedal and an electronic throttle control. It was ruled obvious and invalid by a federal district court after a lawsuit was filed by Canadian manufacturer KSR International.

But the Court of Appeals for the Federal Circuit, a court that specializes in patent cases and established the obviousness test, overturned the decision, saying the combination could not be considered obvious under its long-standing test.

KSR appealed the decision to the Supreme Court, arguing that the test used by the federal circuit appeals court contradicted previous Supreme Court rulings and made it too easy to defend an obvious patent. The federal circuit's test says a patent combining two previous inventions can only be deemed obvious if some earlier "teaching, suggestion or motivation" existed to make the combination.

Justice Stephen Breyer said concerns over the legal standard were part of a larger controversy "as to whether there is too much (patent) protectionism and not enough attention paid to competition."

Patent lawyer Stephen Maebius, who attended the arguments, said the justices will probably end up "tweaking" the obviousness standard to make it easier to overturn bad patents.

"It would allow people to have some flexibility to let people go after the fringe patents, the ones that become punching bags for what's wrong with the patent system," said Maebius, of the law firm Foley & Lardner LLP.

The KSR case is one of several major patent cases the high court has agreed to consider in the past two years. In a key ruling involving online auctioneer eBay Inc.'s <EBAY> use of patents held by MercExchange, the high court ruled in May that judges must scrutinize patent cases closely before issuing an injunction barring companies from using infringing technologies.

During Tuesday's arguments, at least six of the nine justices expressed reservations about the federal circuit's obviousness standard. Several of them said judges should be free to use more of their own common sense as a guide.

"The more you narrow the obviousness standard to these three imponderable nouns (teaching, suggestion or motivation), the more likely it is that the patent will be granted," Scalia told the lawyer representing Teleflex.

However, the justices struggled to come up with an alternative test for what inventions are obvious. And they expressed concerns that wholesale changes to the patent standards could disrupt businesses and inventors.

If the high court strikes down the obviousness test, Justice David Souter asked, "Are there going to be 100,000 cases filed tomorrow morning?"
<<