SKGF_Advisory_Living in a Post KSR World_2007


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SKGF_Advisory_Living in a Post KSR World_2007

  1. 1. Living In A Post-KSR World Robert Greene Sterne, Kenneth C. Bass III, Jon E. Wright, and Matthew J. Dowd I. Introduction1 On April 30, 2007, the Unites States Supreme Court decided KSR International Co. v. Teleflex Inc.,2 perhaps the most closely watched patent case in the past forty years. The issue in KSR concerned the correct standard for determining whether a new invention is sufficiently inventive, or nonobvious, compared to what is known already. What the Court actually decided is debatable and discussed further below. Nevertheless, the decision produced much commentary from the patent community, as well as from the broader business community. The volume of commentary is indicative of the importance of the case, which will affect, to one degree or another, patents across all technologies. In this paper, we provide an overview of the effects of KSR seen at the levels of the Court of Appeals for the Federal Circuit (“Federal Circuit”), the district courts, and the United States Patent & Trademark Office (“PTO”). Other venues will also experience the consequences of KSR, such as the U.S. International Trade Commission, but we do not address all venues here. Our focus for this article is the Federal Circuit, the district courts, and the PTO. It is still too early to observe any definitive trends in the law, but changes are certainly afoot. The Federal Circuit’s developing obviousness jurisprudence has a less rigid feel in terms of finding a reason, or motivation, to make the claimed invention based on the prior art. The district courts are keenly aware of KSR. Jury instructions are changing, summary judgment seems more readily available for accused infringers, and preliminary injunctions may be out of reach for more patent owners. The PTO has spoken, but we expect to hear more. II. The Federal Circuit Since the Supreme Court’s decision, the Federal Circuit has squarely addressed obviousness in eleven cases, nine of which have been precedential. The box score, as of this writing, follows. 1 This paper is a work in progress as the post-KSR world evolves. It is also the precursor to a paper on this topic that will be part of the program of the upcoming The Sedona Conference Patent Litigation Conference VIII - - 2007, which will occur on October 11-12, 2007 at Sedona, AZ. The views expressed herein are for educational and dialogue purposes only, and do not necessary reflect the views of the individual authors, their clients, or their firm. All authors are part of Sterne, Kessler, Goldstein & Fox, PLLC, an intellectual property specialty firm located in Washington, D.C. For more information please go to the website . Copyright © 2007 SKGF, PLLC. 2 KSR Int’l Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007). 1
  2. 2. Invention Invention Vacated and Obvious Nonobvious Remanded Precedential 6 2 1 Nonprecedential 2 0 1 Total 8 2 2 In the nine precedential post-KSR obviousness decisions, 3 six (6) held the invention to be obvious, two (2) held the invention to be nonobvious, and one (1) vacated and remanded for further consideration. In the twelve total post-KSR obviousness decisions,4 eight (8) cases held the invention to be obvious, two (2) held the invention to be nonobvious, and two (2) vacated and remanded for further consideration. Judge Lourie has authored four of the nine precedential decisions. The other authors of the precedential opinions are Judges Linn, Dyk, Prost, and Bryson. Judge Newman dissented once and would have held the claimed invention to be nonobvious. Judges Rader and Moore have yet to be on a post-KSR panel which issued an obviousness opinion (excluding any cases summarily affirmed under Federal Circuit Rule 36). Technologies include pharmaceuticals, an electronic learning toy, a financial investment system, an exercise treadmill, an antibody-based antivenom, stem cells, and transgenic corn. While it is still difficult to discern any particular trends, we do note a few items of interest. First, the Federal Circuit has on several occasions emphasized the deference which should be accorded to the fact-finding by the district court or jury. KSR did not explicitly address the standard of review for obviousness cases so there is nothing doctrinally new here. But the implication of KSR was that courts had greater freedom to decide the ultimate issue of obviousness because it is a question of law. The Federal Circuit, in its post-KSR decisions, seems to have focused on distinctions between factual and legal disputes. Whether this is hindsight analysis is uncertain at this point. Nevertheless prudent litigants will craft their arguments to take advantage of the greater deference the Federal Circuit gives to the lower tribunal’s findings of fact. Second, a number of decisions appear to be analytically the same as pre-KSR obviousness decisions. For instance, the Federal Circuit first determines whether there is 3 One decision was originally non-precedential, but later reissued as a precedential decision. 4 We note that we have not included any cases that were summarily affirmed under Federal Circuit Rule 36. See, e.g., In re Benzer, No. 2007-1069 (Fed. Cir. Sept. 17, 2007), aff’g Ex parte Benzer, No. 2006-1881 (B.P.A.I. Aug. 11, 2006). 2
  3. 3. a prima facie case of obviousness. If so, the court then proceeds to the next step of asking whether that prima facie case has been rebutted. This analysis is entirely consistent with Federal Circuit precedent, but KSR may suggest that obviousness can be analyzed more holistically. Indeed, KSR includes no discussion of the concept of prima facie obviousness. Additionally, the language used in the opinions is quite similar to pre-KSR cases. Specifically, in a number of the opinions, the court inquires about “motivation.” At first blush, the continued use of “motivation” might raise eyebrows, as one could get the impression that the term “motivation” is now verboten. During oral argument,5 Justice Scalia referred to the TSM test as “gobbledygook.” Justice Breyer commented, “I just don't understand what is meant by the term ‘motivation.’” Chief Justice Roberts’ first question to Deputy Solicitor Hungar was, “What do you understand motivation to refer to in that test?” Mr. Hungar’s response was “Well, it’s not entirely clear, Your Honor.” In the KSR opinion itself, the Supreme Court never used the term “motivation,” other than in describing the TSM test or the ruling of the Federal Circuit.6 Instead, the Court uses the term “reason.” For example, the Court wrote that: it will be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue.7 In another section, the Court appreciated that inventions cannot be proven obvious merely by demonstrating that each element was somewhere in the prior art. Although common sense directs one to look with care at a patent application that claims as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does.8 5 KSR Oral Argument, available at 6 127 S. Ct. at 1734, 1738, 1741, 1743. 7 Id. at 1740-41 (emphasis added). 8 Id. at 1741 (emphasis added). 3
  4. 4. Later, the Court stated that, “[u]nder 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.”9 Thus, it would appear that the Supreme Court was trying to distance itself from the term “motivation.” In spite of that, the Federal Circuit has retained the “motivation” language as part of its obviousness jurisprudence. In most of the post-KSR opinions, the Federal Circuit analyzes whether there was a motivation in the prior art. Granted, sources of that motivation acceptable to the court seem more inclusive, but the continued use of the term “motivation” is noteworthy in comparison to its absence in the KSR opinion. With these thoughts in mind, we provide below brief summaries of the post-KSR obviousness cases decided by the Federal Circuit. 10 As most readers of this will be familiar with the Federal Circuit opinions, we provide only a concise summary, reciting only the minimum necessary to encourage discussion of the cases. A. Aventis Pharma Deutschland GmbH v. Lupin, Ltd.11 This case was a patent infringement action involving ramipril, a compound marketed as the successful blood pressure medicine Altace®. Lupin had filed an abbreviated new drug application (“ANDA”) for a generic version of Altace®. The district court held the patent to be nonobvious, but the Federal Circuit reversed on appeal. The patent at issue claimed a formulation of 5(S)-ramipril “substantially free of other isomers.” The Federal Circuit relied on several sources of prior art to conclude that the claimed invention was obvious. For example, the court noted that related, known compounds had the particular stereochemical configuration as ramipril. There was also a Schering patent that disclosed a mixture of stereoisomers of ramipril, including the one claimed by Aventis. Additionally, the court relied on work by a Schering scientist that qualified as prior art under 35 U.S.C. § 102(g). That work taught the synthesis of a mixture of the claimed ramipril compound and one of its stereoisomers (“SCH 31925 mixture”). This case illustrates well the effect of KSR. The district court had made its ruling prior to KSR. At that time, the district court thought it to be a close case, observing that “[i]f the standard . . . had been by a preponderance of the evidence rather than by clear and convincing evidence, the [c]ourt might have determined this case in Lupin’s favor.” On appeal and in view of KSR, the Federal Circuit determined that the purified form of a known mixture would be prima facie obvious if one of ordinary skill in the art would have a reason to think that the beneficial properties of the mixture are derived from particular components of that mixture. 9 Id. at 1742 (emphasis added). 10 We have not included any discussion of cases which were summarily affirmed by the Federal Circuit. See Fed. Cir. R. 36. 11 Nos. 2006-1530, -1555, 2007 WL 2593791 (Fed. Cir. Sept. 11, 2007). 4
  5. 5. First, this was a case that turned on the question of reason, or motivation. As the Federal Circuit noted, the district court’s decision hinged on the erroneous finding that Lupin had failed to offer clear and convincing evidence that “a person of ordinary skill in the art would have been motivated to purify 5(S) ramipril into a composition substantially free of other isomers.” The district court saw this as a close case based principally on the absence of a clear and convincing showing of motivation. Since the date of that decision, however, the Supreme Court decided KSR International Co. v. Teleflex Inc., which counsels against applying the “teaching, suggestion, or motivation” (“TSM”) test as a “rigid and mandatory formula[].” It remains necessary to show “‘some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness,’” but such reasoning “need not seek out precise teachings directed to the specific subject matter of the challenged claim.”12 Second, the court focused on the issue of structure obviousness in the chemical arts. “We have long held that ‘structural similarity between claimed and prior art subject matter, proved by combining references or otherwise, where the prior art gives reason or motivation to make the claimed compositions, creates a prima facie case of obviousness.’”13 That analysis applied here, where “a claimed composition is a purified form of a mixture that existed in the prior art.” The court hedged a bit, though. Such a purified compound is not always prima facie obvious over the mixture; for example, it may not be known that the purified compound is present in or an active ingredient of the mixture, or the state of the art may be such that discovering how to perform the purification is an invention of patentable weight in itself. Nevertheless, in the very next sentence, the court seemed to lay down a per se rule of prima facie obviousness for purified pharmaceutical compositions. [I]f it is known that some desirable property of a mixture derives in whole or in part from a particular one of its components, or if the prior art would provide a person of ordinary skill in the art with reason to believe that this is so, the purified compound is prima facie obvious over the 12 Slip op. at 13 (citations omitted). 13 Id. at 14 (citing Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., No. 06-1329, slip op. at 9 (Fed. Cir. June 28, 2007) (quoting In re Dillon, 919 F.2d 688, 692 (Fed. Cir. 1990) (en banc)). 5
  6. 6. mixture even without an explicit teaching that the ingredient should be concentrated or purified.14 Having found prima facie obviousness, the court concluded that Aventis had failed to prove unexpected results. Aventis had tried to use a comparison between 5(S)-ramipril and another isomer of ramipril. That was the incorrect comparison, however. The court pointed out that the correct comparison should have been with the SCH 31925 mixture, which included 5(S)-ramipril. When this comparison was made, no unexpected increases in potency were observed, only increases in potency one would expect from increasing the purity of 5(S)-ramipril. The end result of this case is that it may become significantly more difficult to patent pure isomers of pharmaceutical compounds if the mixtures are prior art. B. Forest Laboratories, Inc. v. IVAX Pharmaceuticals, Inc.15 The invention is directed to a substantially pure isomer of citalopram (marketed as the antidepressant drug Lexapro®). IVAX filed an ANDA for a generic version of Lexapro®, asserting the patent to be invalid. The district court held the claims to be valid as nonobvious, and the Federal Circuit affirmed. Forest had a prior patent that covered racemic citalopram. Additional research by Forest scientists identified (+)-citalopram as the active isomer. A prior art pharmacology paper (“Smith”) discussed the different isomers of citalopram but did not teach a method of isolating the claimed isomer. IVAX asserted that the patent was invalid as anticipated and obvious. Regarding anticipation, the court held that IVAX had failed to show error in the district court’s finding that Smith did not enable one to make and isolate (+)-citalopram. The obviousness analysis was not extensive and seemed to rely on the finding that the prior art did not teach a person of ordinary skill in the art how to isolate the claimed isomer. We agree with Forest that the district court’s key factual findings underlying its conclusions on obviousness are not clearly erroneous, and, based upon those findings, we find no error in the court’s conclusion that the asserted claims of the ’712 patent are not invalid for obviousness. As with their arguments on anticipation, Ivax and Cipla mainly emphasize the evidence that is favorable to their desired outcome without addressing the evidence favorable to Forest. The latter includes the failure of the inventors and others to resolve citalopram without undue experimentation 14 Id. at 15. 15 No. 2007-1059, 2007 WL 2482122 (Fed. Cir. Sept. 5, 2007). 6
  7. 7. and the testimony of Forest’s experts. The district court applied the Graham factors to conduct a thorough analysis of the evidence, and we find no clear error on facts and no error of law. These findings fully support the conclusion that the claimed subject matter would not have been obvious to one of ordinary skill in the art.16 In this case, it was clear that the obviousness argument failed because the prior art did not provide a reasonable expectation of success. The outcome seems consistent with Supreme Court’s guidance in KSR that “[i]f a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, §103 likely bars its patentability.” Here, the artisan could not implement the “predictable variation” because one could not have made the pure isomer based on the prior art of record. C. In re Sullivan17 The claimed invention was an antivenom composition comprising antibody fragments that bind to particular species of rattlesnake (pit vipers) venom. The examiner rejected the claim as obvious over combination of two prior art references, and the Board agreed. The Federal Circuit agreed that claim was prima facie obvious but vacated the Board’s decision because it did not consider evidence of nonobvious presented in three declarations filed under 37 C.F.R. § 1.132. During prosecution, the two inventors and an antivenom expert each submitted declaration for purposes of rebutting the obviousness rejection. The Board gave no consideration to the declarations because it thought that “the declarations of record relate only to the use of the claimed composition as an antivenom, and thus the Board expressly declined to give any meaningful consideration to them.” The Federal Circuit observed that the “applicant does not concede that the only distinguishing factor of its composition is the statement of intended use and, in fact, extensively argues that its claimed composition exhibits the unexpected property of neutralizing the lethality of rattlesnake venom while reducing the occurrence of adverse immune reactions in humans. Such a use and unexpected property cannot be ignored.” D. In re Trans Texas Holdings Corp.18 In Trans Texas, the Federal Circuit upheld the Board’s ruling that claims being reexamined and directed to a system of inflation-adjusted deposit and loan accounts were obvious. For example, claim 1 of one of the patents claimed “[a]n investment system for providing an improved capital structure for an institution” composed of a deposit account and an account management data processor, with other elements, such as “deposit accrual component” is adjusted “in a manner responsive to the rate of inflation.” Other involved 16 Citations omitted. 17 No. 2006-1507, 2007 WL 2433841 (Fed. Cir. Aug. 29, 2007). 18 Nos. 2006-1599, -1600, 2007 WL 2377009 (Fed. Cir. Aug. 22, 2007). 7
  8. 8. claims were directed to similar subject matter with various additional elements. For example, claim 9 of one of the patents claimed a method whereby the financial institution “provides a deposit account to a depositor, uses a portion of the funds deposited to obtain a financial instrument ‘whose rate of return adjusts with inflation,’ and pays the ‘depositor a rate of return on funds . . . based on a rate of inflation.’” The Board and Federal Circuit held that all of the elements were disclosed in the prior art, including the knowledge of those of skill in the art. First, Trans Texas argued nonobviousness for some claims “because, even if Mukherjee discloses deposit accounts responsive to the rate of inflation, Mukherjee does not disclose loan accounts that were fully adjusted with the market indicator of inflation (i.e., the inflation adjustment was equal to the increase in the market indicator of inflation), but instead only discloses loan accounts that were adjusted on a proportional basis with inflation (for example, a one percent increase in the market indicator would only result in a one-half or one-fourth percent inflation adjustment).” The Federal Circuit held that “[s]ubstantial evidence supports the Board’s conclusion that Mukherjee discloses fully adjusting loan accounts based on increases in the rate of inflation.” Second, Trans Texas argued that other claims were nonobvious because those claims had an element that required annuities. The Board found that prior art (Bodie) described a purchasing power annuity linked to consumer price levels. Trans Texas argued the Bodie taught away (e.g., teaching that annuities were not commercially available and a reluctance to price-indexed bonds), but the Board found that “Bodie never indicated that such proposals would not work and in fact noted that proposals for price- indexed bonds ‘have abounded.’” The Federal Circuit held that the Board’s finding was supported by substantial evidence. Third, Trans Texas argued that other claims were nonobvious because Mukherjee (prior art) did not teach the limitation “obtaining an asset whose rate of return adjusts with inflation.” The court held that the Board’s finding was supported by substantial evidence. For example, Mukherjee disclosed “the desire of institutional buyers to purchase ‘[inflation] index-linked securities’ and specifically note[d] that ‘[b]anks and cooperative credit societies’ sought to buy inflation-adjusted bonds ‘to help pay compensation on indexed deposit accounts.’” Fourth, Trans Texas argued that Mukherjee did not teach the limitation “obtaining . . . a mortgage secured by real estate” (responsive to the rate of inflation) of independent claim 22 of the ’673 patent and its dependent claims (23 and 24). The court seemed to agree, but the prior art supplied the missing element. “The Board did not err in concluding that it would have been obvious to combine the indexed loan accounts disclosed in Mukherjee with the well-known practice of offering loans secured by mortgaged real estate.” 8
  9. 9. E. In re Icon Health & Fitness, Inc.19 The invention in this case was directed to a treadmill with a folding base, allowing the base to swivel into an upright storage position. The issue was whether the following element rendered the invention patentable: “a gas spring connected between the tread base and the upright structure to assist in stably retaining said tread base in said second position.” Two prior art references disclosed all of the elements of the claim. First, Damark was an advertisement for a folding treadmill that disclosed all elements of the claim except for the gas spring. Teague disclosed a folding bed that had a novel dual-action spring rather than the prior single-action spring. The spring in Teague partially supports the weight of the bed in both open and closed positions. Icon had two main non-obviousness arguments on appeal. First, Icon argued that Teague was non-analogous art. Second, Icon argued that, even if Teague is proper prior art, the claimed invention is nonobvious because Teague teaches away from Icon’s invention. In response to the first argument, the Federal Circuit relied upon the broad claim construction that the law requires during reexamination. Icon argued that the gas spring limitation “must provide a force continuing to urge the mechanism closed when in the closed position.” But the court agreed with the Board that nothing in the claim or specification limited the broadest reasonable construction of the “gas spring” element. The court thus performed its obviousness analysis “while considering that Icon’s claims encompass everything reasonably seen to assist in stably retaining the tread base.” The Federal Circuit also held that Teague did not teach away from the claimed invention. Icon asserted that (1) Teague teaches away from the use of single-action springs; and (2) the use of dual-action springs described in Teague would render the invention inoperable. The court rejected each of these arguments. With respect to the first, the court found that Teague does not teach away from single-action springs. Rather, “[a]t most, Teague only teaches away from single-action springs in the context of decreasing the opening force.” Icon argued that “the gas spring limitation in its application must increase the opening force provided by gravity,” but, as the court noted, the single-action spring in Teague provided such a result. With respect to the second assertion, the court observed that “Icon’s argument may have carried some weight with more narrow claims, which it could have obtained by amendment. But faced with broad claims encompassing anything that assists in stably retaining the tread base, we reject Icon’s argument.” 19 No. 2006-1573, 2007 WL 2189161 (Fed. Cir. Aug. 1, 2007). 9
  10. 10. F. Pharmastem Therapeutics, Inc. v. Viacell, Inc.20 PharmaStem sued several defendants for infringement of its patents directed to cryopreserved umbilical cord stem cells that can be used to reconstitute a person’s immune system. The defendants offered cryopreservation services that allowed a person to store his or her umbilical cord blood for possible use later in life. After trial to a jury, the patents were found valid and infringed. The district court set aside the jury verdict and held noninfringement. The district court also denied defendants’ JMOL that the patents were anticipated and obvious. On appeal, the Federal Circuit affirmed the finding of noninfringement but reversed on validity and held the patents to be obvious. According to the Federal Circuit, the claims at issue were very broad. For example, claim 1 of U.S. Patent No. 5,004,681 reads as follows: A cryopreserved therapeutic composition comprising viable human neonatal or fetal hematopoietic stem cells derived from the umbilical cord blood or placental blood of a single human collected at the birth of said human, in which said cells are present in an amount sufficient to effect hematopoietic reconstitution of a human adult; and an amount of cryopreservative sufficient for cryopreservation of said cells. Other claims at issue were directed to similar subject matter, such as methods of using the preserved stem cells. With respect to invalidity, defendants argued that the claimed inventions were obvious in light of a combination of prior art references. The Federal Circuit noted that [t]he idea of using cryopreserved cord blood to effect hematopoietic reconstitution was not new at the time the inventors filed the applications that matured into the ‘681 and ‘553 patents. Two of the prior art references—articles by Ende and Knudtzon—suggest using cord blood for that purpose. Two others—an article by Koike and a doctoral dissertation by Vidal—suggest cryopreservation and storage of the cord blood until needed. The more challenging question, according to the court, was whether a reasonable expectation of success existed. Relying on prior art references and “admissions” of the inventors found in the patent specifications—which contradicted expert testimony—the Federal Circuit found a reasonable expectation of success. That collection of prior art shows (1) that bone marrow transplants can result in hematopoietic reconstitution; (2) 20 Nos. 05-1490, -1551, 2007 WL 1964863 (Fed. Cir. July 9, 2007). 10
  11. 11. that cord blood, like bone marrow but unlike adult blood, contains large numbers of progenitor cells; and (3) that the high concentration of primitive progenitor cells in cord blood suggests that in humans, as in mice, the cells responsible for hematopoiesis migrate at about the time of birth from fetal organs to the bone marrow. Under those circumstances, it was reasonable for the inventors of the patent, like the authors of the prior art references, to infer the presence of high concentrations of stem cells in cord blood, even though the prior art studies did not offer conclusive proof of their presence. Based on the finding that the “jury was legally required to find that that those of skill in the art would believe that cord blood contained hematopoietic stem cells,” the Federal Circuit held that no reasonable jury could find the invention nonobvious. In particular, the court suggested that merely proving a scientific idea was not patentable, citing to KSR’s statement that “[g]ranting patent protection to advances that would occur in the ordinary course without real innovation retards progress.” We conclude a reasonable jury could not have done so. While the inventors may have proved conclusively what was strongly suspected before—that umbilical cord blood is capable of hematopoietic reconstitution—and while their work may have significantly advanced the state of the science of hematopoietic transplantations by eliminating any doubt as to the presence of stem cells in cord blood, the mouse experiments and the conclusions drawn from them were not inventive in nature. Instead, the inventors merely used routine research methods to prove what was already believed to be the case. Scientific confirmation of what was already believed to be true may be a valuable contribution, but it does not give rise to a patentable invention. The Federal Circuit further commented that its prior decision in In re O’Farrell21 gave useful guidance. In that case, the court stated that obviousness did not require absolute predictability. At the same time, “an invention would not be invalid for obviousness if the inventor would have been motivated ‘to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful.’”22 21 853 F.2d 894, 903 (Fed. Cir. 1988). 22 Pharmastem (citing O’Farrell, 853 F.2d at 903). 11
  12. 12. The court then continued that the present cased differed from O’Farrell because Pharmastem did not argue that there was an array of choices from which to choose how to obtain the claimed invention. Rather, PharmaStem focused on the alleged “novelty of its proof that stem cells are present in fetal blood, a demonstration that Dr. Bernstein testified was necessary to give transplant physicians sufficient confidence in the use of cord blood for hematopoietic reconstitution to try the procedure on humans.” The court concluded that “proof sufficient to justify conducting in vivo procedures on humans, while useful,” does not prove patentability. Pharamstem presented evidence of secondary considerations, but the court found such evidence insufficient to overcome the obviousness. Pharmastem also argued that the jury’s verdict was supported by the successful reexamination proceedings in which the PTO considered some of the same prior art presented at trial. This argument failed. Judge Newman filed a poignant dissent. Judge Newman focused on several issues. First, she stressed that the panel “simply reweigh[ed] selectively extracted evidence, ignore[d] the actual peer response and acclaim at the time these inventions were made, and decide[d] that this long-sought advance would have been obvious to this court.” Second, Judge Newman thought that more deference should have been given to the PTO’s reexamination proceedings, which determined the reexamined claims to be nonobvious. G. Takeda Chemical Industries, Ltd. v. Alphapharm Pty., Ltd.23 Takeda’s patent was directed to a particular compounds useful for treating diabetes. The patent at issue covered a compound called pioglitazone, which is the active ingredient in ACTOS®.24 Alphapharm filed an ANDA to market a generic version of ACTOS®. In the subsequent patent infringement suit, the district court held the claimed invention to be nonobvious, and the Federal Circuit affirmed on appeal. The invention in Takeda was directed to a group of compounds useful for treating diabetes. The claimed compounds were structurally related to a prior art compound (“compound b”) disclosed in two earlier patents issued to Takeda. Appellant Alphapharm had argued that KSR required reversal, but the court disagreed. First, the Federal Circuit affirmed the district court’s finding that one of ordinary skill in the art would not have selected compound b as a starting point because, in part, the prior art as a whole taught away from that compound. Second, the court found that the “obvious to try” standard discussed in KSR was not applicable here partly because “the prior art disclosed a broad selection of compounds any one of which could have been selected as a lead compound for further investigation.” Third, the Federal Circuit agreed that, even if one had selected compound b as the starting point, there was “nothing in the prior art to 23 No. 06-1329, 2007 WL 1839698 (Fed. Cir. June 28, 2007). 24 ACTOS® had sales about $1.7 billion in 2003. 12
  13. 13. suggest making the specific molecular modifications to compound b that are necessary to achieve the claimed compounds.” H. Leapfrog Enterprises, Inc. v. Fisher-Price, Inc.25 In Leapfrog, the Federal Circuit affirmed the district court’s finding of obviousness.26 The claimed invention was an interactive learning device to help young children to read phonetically. The accused infringing product was Fisher-Price’s PowerTouch toy, which is an interactive electronic book designed to help children learn how to read. The district court concluded that the claimed invention was “obvious in view of the combination of U.S. Patent 3,748,748 to Bevan, the Texas Instruments Super Speak & Read (“SSR”) device, and the knowledge of one of ordinary skill in the art as represented by the testimony of Fisher-Price’s technical expert.” Essentially, according to the court, it seemed that what Leapfrog had done was put in electronic components into a learning device that had been around in mechanical form before. Bevan taught an older electro-mechanical learning toy (patent issued in 1973). The Federal Circuit agreed that Bevan disclosed “an apparatus that achieves the goals described above of associating letters with their sounds and encouraging children to sound out words phonetically through a similar type of interaction.” The SSR was a contemporary prior art learning toy made of electronic components and having “a slightly different mode of operation than Bevan.” As the court observed, “the SSR provides a roadmap for one of ordinary skill in the art desiring to produce an electronics-based learning toy for children that allows the use of phonetic- based learning methods, including the association of individual letters with their phonemes.” The Federal Circuit agreed that it would be obvious to combine Bevan and SSR “to update it using modern electronic components in order to gain the commonly understood benefits of such adaptation, such as decreased size, increased reliability, simplified operation, and reduced cost.” The combination of Bevan and SSR lacked only one element—a reader—but the court found that readers were well-known in the art, and that marketability and simplified use would have motivated the addition of the reader. Leapfrog argued that the district court failed to consider adequately the secondary considerations of nonobviousness, but the Federal Circuit disagreed, observing that the district court “explicitly stated in its opinion that Leapfrog had provided substantial evidence of commercial success, praise, and long-felt need, but that, given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that claim 25 would have been obvious.” 25 485 F.3d 1157 (Fed. Cir. 2007). 26 The court made the obviousness determination after the jury deadlocked. 13
  14. 14. I. Daiichi Sankyo Co. v. Apotex, Inc.27 In Daiichi, the patented invention was directed to a method of treating an ear infection comprising “the topical otic [i.e., ear] administration of an amount of ofloxacin or a salt thereof effective to treat otopathy in a pharmaceutically acceptable carrier to the area affected with otopathy.” Apotex filed an ANDA seeking approval to market a generic ofloxacin ear drop. One piece of prior art, Ganz, taught that a related antibiotic, ciprofloxacin, would be suitable for eardrops. Apotex’s expert opined that Ganz suggested the claimed invention. This testimony was not disputed by Daiichi, except on the basis that Ganz “did not convey the same teaching to one of lower skill in the art such as a practicing physician.” The district court erroneously found that a person of ordinary skill in the art was a pediatrician or general practitioner, rather than “a person engaged in developing pharmaceutical formulations and treatment methods for the ear or a specialist in ear treatments such as an otologist, otolaryngologist, or otorhinolaryngologist who also has training in pharmaceutical formulations.” According to the district court, Ganz would not have suggested the invention to a pediatrician because “the article reported that use of gyrase inhibitors ‘should be used only in difficult cases and exclusively by the otologist.’” This case seems to underscore the importance of the second factor of Graham— the level of ordinary skill in the prior art. The district court was reversed because it ruled incorrectly on the level of ordinary skill in the art, deciding that a person of ordinary skill in the art would be a pediatrician or general practitioner, rather than the correct, and more skilled, ear specialist, such as an otologist. Based on that incorrect factual finding, the district court did not adequately consider the importance of a reference that rendered the invention obvious. Moreover, one might argue that the case does not implicate KSR, as it would conceivably have been decided the same way prior April 30, 2007. The court simply found that the district court erred in determining the level of skill in the art. “Factors that may be considered in determining level of ordinary skill in the art include: (1) the educational level of the inventor; (2) type of problems encountered in the art; (3) prior art solutions to those problems; (4) rapidity with which innovations are made; (5) sophistication of the technology; and (6) educational level of active workers in the field.”28 Interestingly, the court could have invoked the Supreme Court’s discussion of the ordinary artisan, but did not. Recall in KSR that the Supreme Court seemed to think that the Federal Circuit set the bar too low for determining the skill of the ordinary artisan. As stated in KSR, “[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.” 27 No. 2006-1564, 2007 WL 2032123 (Fed. Cir. July 11, 2007), , designated precedential on Sept. 12, 2007. 28 Envtl. Designs, Ltd. v. Union Oil Co., 713 F.2d 693, 696 (Fed. Cir. 1983). 14
  15. 15. J. Frazier v. Layne Christensen Co.29 The invention in Frazier was directed to directed to a method of stimulating well water production. After a jury trial, the district court granted defendant’s motion for JMOL that the invention was obvious. On appeal, the plaintiff had four main arguments, none of which was found persuasive, and the Federal Circuit affirmed the district court. First, Frazier argued that the district court failed to identify with specificity the relied-upon prior art for the obviousness holding. The Federal Circuit disagreed, noting that “the district court’s opinion [made] clear that it relied on specific prior art references in its analysis.” Second, Frazier argued that the district court erroneously used the words “novel” and “novelty” in its obviousness analysis. The Federal Circuit said no, saying it was just the district court’s way of identifying differences between invention and prior art, and “a way of expressing the idea that no new insight was required to make the needed combination of prior art references.” Third, Frazier argued that the district court erred when redirect testimony of its expert was excluded. The Federal Circuit again disagreed. The district court stated that it would have granted judgment as a matter of law even taking the testimony into account. Finally, Frazier argued that the district court erroneously assessed the level of skill in the art. The Federal Circuit responded that “plaintiffs do not identify how that purported error undermines the district court’s judgment, and we fail to perceive any such effect.” K. Omegaflex v. Parker-Hanafin Corp.30 In Omegaflex, the invention was directed to a pipe fitting used with corrugated stainless steel tubing (CSST), often used for gas lines. The district court granted summary judgment of infringement and nonobviousness, but the Federal Circuit vacated and remanded for trial. Omegaflex sued Parker-Hanafin Corp. (“Parker”) for patent infringement. OmegaFlex sold its patented pipe fittings as the Autoline. OmegaFlex’s patented pipe fitting incorporated a “locating sleeve” that helped connect the pipes in difficult situations. Parker was a competitor of OmegaFlex and sold a competing product as FastMate. The FastMate fittings originally lacked the locating sleeve feature, but after a recall, the FastMate was resold with the locating sleeve. 29 No. 06-1584, 2007 WL 1875909 (Fed. Cir. June 29, 2007) (non-precedential). 30 No. 2007-1044, 2007 WL 1733228 (Fed. Cir. June 18, 2007) (non-precedential). 15
  16. 16. One prior art patent (“Sweeney”) taught all elements of the claimed pipe fitting except the locating sleeve. A prior art product sold by Parker, the Parker Compression Fitting (“PCF”), did not have an integrated locating sleeve but was sold with an option to insert such a sleeve when needed. Thus, all elements of the claim were in these two pieces of prior art. The Federal Circuit held that the district court erred in its analysis of (1) motivation to combine, (2) reasonable expectation of success, and (3) secondary considerations. First, with respect to motivation, the Federal Circuit held that the district court failed to give any weight to expert testimony that the ordinarily skilled person would have been motivated to combine the prior art to obtain the claimed invention. Second, the Federal Circuit also stated that it was erroneous for the district court to have disregarded Parker’s (non-movant’s) expert testimony that there was a reasonable expectation of success of combining the prior art. These rulings are consistent with other cases, such as In re Sullivan, supra, in which all evidence of obviousness or nonobviousness must be considered by the tribunal. Thus, contrary to the district court’s conclusion, there existed genuine issues of material fact. Finally, the court held that the “evidence also raises factual issues regarding secondary indicators of non-obviousness that prevent summary judgment.” Interestingly, the Federal Circuit stated that Parker's later decision to add such a sleeve to the FastMate fitting actually seems to support a finding of obviousness rather than non-obviousness. When construed in Parker's favor, the FastMate fitting's history is undisputed evidence that the idea of incorporating a locating sleeve to improve alignment capability was discussed and well within the knowledge of skilled artisans at an early stage. Although non-precedential, this case is a good example of a “combination” invention of old elements. The panel quoted KSR several times. L. Syngenta Seeds, Inc. v. Monsanto Co.31 The invention at issue was a transgenic corn plant modified to produce an insecticidal protein (Bt protein). The jury found that the claims were obvious, and the Federal Circuit affirmed. The claimed invention was directed to a transgenic corn plant that produces the Bt protein, “wherein the foreign DNA nucleic acid coding sequence has a G+C content of at least about 60%.” The principal prior art reference was a published patent application (“Barton”) which taught that “selecting codons rich in G+C would be likely to increase 31 Nos. 2006-1203, 2007 WL 1295028 (Fed. Cir. May 3, 2007) (non-precedential). 16
  17. 17. the expression of Bt in corn.” The court noted that this teaching was “consistent with the testimony of two experts at trial, who testified that it would have been obvious to a person of skill in the art to make a Bt gene more closely resemble a corn gene by substituting codons that are rich in G+C for the codons of the native gene that code for the same amino acids.” Syngenta based its nonobviousness argument on three issues: (1) teaching away, (2) no reasonable expectation of success, and (3) unexpected results. The Federal Circuit found each of these unconvincing. First, the court noted that, “[i]n the case of corn, as the defendants’ expert in molecular biology testified, such a gene [as described in Barton] would necessarily have a G+C content of more than 60 percent. The jury was free to credit that testimony and thus to conclude that, in light of Barton, a person of skill in the art would have found it obvious to produce a modified corn gene with a G+C content of more than 60 percent.” Second, with respect to expectation of success, the court concluded that “[t]he jury was entitled to rely on that portion of the Barton application in concluding that there was a reasonable expectation of success from such an increase in the G+C content of the codons in the genetic sequence.” Third, regarding unexpected results, the Federal Circuit held that “the jury had sufficient evidence, in the form of expert testimony, from which it could conclude that the degree of success at the 60 percent level was not substantially different from what could reasonably have been expected based on the prior art.” M. Pfizer, Inc. v. Apotex, Inc.32 Pfizer, Inc. v. Apotex is a pre-KSR case, but was decided after oral argument at the Supreme Court. The obviousness analysis appears consistent with KSR. Furthermore, as summarized more fully below, three judges at the Federal Circuit provided insightful comments in their dissents from the court’s decision to deny rehearing en banc. The invention was directed to a particular salt of amlodipine (i.e., amlodipine besylate). The compound is sold by Pfizer as Norvasc® and is used to treat angina and hypertension. The Federal Circuit held the claims to be obvious. Pfizer had requested rehearing en banc. A number of prominent amici filed briefs in support of Pfizer. Nevertheless, the court denied rehearing. Judges Newman, Lourie, and Rader would have agreed to rehear the case. Their dissents focused on the lack of deference to the district court’s fact-finding, the legal error of not adequately considering the unexpected results of the improved physical characteristics of the salt, and the various public policy ramifications of the panel’s obviousness analysis. 32 488 F.3d 1377, 1378 (Fed. Cir. 2007) (denying petition for rehearing en banc). 17
  18. 18. Judge Newman also stressed the purpose behind the Federal Circuit itself. A primary purpose for which our court was formed was to provide the judicial stability that supports commercial investment -- this was a unique judicial role, and was adopted in recognition of the dependence of technology- based industry on an effective patent system. It was recognized that a nationally uniform, consistent, and correct patent law is an essential foundation of technological innovation, which is today the dominant contributor to the nation's economy. Judge Lourie emphasized three points in his dissent. First, he thought the panel did not adequately defer to the district court’s factual findings of nonobviousness. Second, he thought it improper for the panel to disregard the unexpected physical properties of the claimed salt. Third, he considered the panel’s decision to “conflict[] with the statutory requirement that ‘[p]atentability shall not be negatived by the manner in which the invention was made’” in that the panel considered the invention to be a result of routine experimentation. Judge Lourie also recognized the importance of the issues involved. Chemical and pharmaceutical compounds often can be found to be prima facie obvious, as they are based on prior work that could reasonably suggest them, but commercialization of such compounds may depend on their possession of unexpected properties. Such properties may be biological or physical. A failure to recognize all such properties that may be relevant to the value of such a compound may doom the compound to being poured down the drain rather than becoming an important therapeutic. The general public, innovative companies, and, ultimately, generic companies, depend upon faithful adherence to this principle. Judge Rader likewise emphasized the importance of deference to the trial court’s factual findings and the important policy considerations in providing patent protection for new pharmaceutical inventions. First, Judge Rader noted that three different district courts had ruled that the patent was nonobvious. Second, he asserted that “‘obvious to try’ jurisprudence has a very limited application in cases of this nature. With unpredictable pharmaceutical inventions, this court more wisely employs a reasonable expectation of success analysis.” Third, he said “[t]he panel also mistakenly determined that the superior properties of the besylate did not overcome a prima facie case of obviousness because they showed no superior therapeutic value—the maleate salt form of amlodipine worked just as well as the besylate form in clinical trials.” Finally, Judge Rader thought the panel violated the second sentence of 103(a) by holding the invention “not patentable since it was made by a routine testing or a ‘well known problem solving strategy.’” 18
  19. 19. III. District Court Litigation Arguably, KSR’s most significant effect in the short-term will be at the district court level. District court judges will certainly be applying KSR more frequently than the appellate judges at Madison Place. Moreover, decisions at the trial court level will have a more immediate effect on on-going litigation. KSR is certain to affect at least three aspects of patent litigation: (1) jury instructions, (2) motions for summary judgment, and (3) motions for preliminary injunctions. A. Jury Instructions KSR reaffirmed that obviousness is a question of law that can be decided on summary judgment. With that reaffirmation comes the question of whether courts will revise the role of juries in patent trials. Juries tend to play an important role in patent trials.33 Under Federal Circuit law, the determination of obviousness can properly be submitted to a jury even though it is a question of law.34 KSR does not change this, but the Court’s reemphasis of the legal nature of the issue of obviousness may lead judges to be more willing to limit jury determinations of obviousness or to require special verdict forms for the factual issues. As a result, district courts may be more apt to enter judgment as a matter of law after trial. In those cases in which obviousness continues to be decided by the jury, the particular wording of the jury instructions will be important. In part for this reason, the Federal Circuit Bar Association recently promulgated Model Patent Jury Instructions. The section of the Model Jury Instructions relating to motivation reads as follows: In determining whether or not the invention(s) would have been obvious to one of ordinary skill in the art at the time the inventions were made, you must also consider whether a person having ordinary skill in the field at the time would have been motivated to select and combine the prior art references in order to make the claimed invention(s). In answering this question you must consider the entire body of knowledge and technical literature in the field, including that which might lead one skilled in the art away from, or toward, the invention(s). Thus, even though you may find that every feature of the patented invention(s) can be found in the prior art, this, by itself, does not prove that the patented invention(s) would 33 See generally Paul R. Michel & Michelle Rhyu, Improving Patent Jury Trials, 6 FED. CIR. B.J. 89 (1996) (providing an analysis of the role of juries in patent trials). 34 Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1547 (Fed. Cir. 1983). 19
  20. 20. have been obvious to one having ordinary skill in the field at the time. Features in the prior art may be combined to show obviousness where one having ordinary skill in the field, with no knowledge of the patented invention(s), confronting the same problem(s) or issue(s) as the inventor(s) at the time the invention was made, would have been motivated to select and combine those features from the prior art to make the patented invention(s) and have a reasonable expectation of success at solving the problem(s) or addressing the issue(s). The motivation to select and combine features and a reasonable expectation of success may be found in the teachings of the prior art references themselves, in the nature of the problem to be solved, or in the knowledge of persons having ordinary skill in the field at the time. There need not be an express or explicit suggestion to combine references.35 In contrast, we provide below a portion of jury instructions for obviousness in a recently tried case. As can be seen, they are clearly influenced by KSR. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility. A patent for a combination which only unites old elements with no change in their respective functions withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful individuals. This is a principal reason for declining to allow patents for what is obvious. * * * In placing yourself in the shoes of a person having ordinary skill in this field of technology in the mid 1990s at the time the inventions were made, you may, but do not have to, consider whether such a person would have been motivated to combine these prior art references in order to arrive at the claimed inventions. The analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim; instead, you can take account of the inferences and creative steps that a person of ordinary skill in the art would employ. Common sense teaches that 35 The Federal Circuit Bar Association Model Patent Jury Instructions § 4.3bv (2007). 20
  21. 21. familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. When a work is available in one field of endeavor, 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, it is likely to be obvious. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious36 B. Summary Judgment With higher case loads than ever, district courts are more apt to utilize summary judgment to dispose of cases. According to one report, federal district courts conducted about 3,600 civil trials in 2006, compared to 5,800 in 1962.37 Courts increasingly rely on summary judgment, which was granted in about 9 percent of all cases. 38 Summary judgment is particularly important in patent litigation. With the fact-intensive analysis of obviousness, however, summary judgment has been seen as less available when the issue is whether an invention is obvious. After KSR, courts may be more willing to grant summary judgment of obviousness in patent litigation. When the parties do not dispute any material facts, the 36 AOL Instructions from Two-Way Media LLC v. America Online, Inc., CV-04-089 (S.D. Tex. 2007). 37 See Adam Liptak, Cases Keep Flowing In, But The Jury Pool Is Idle, N.Y. TIMES, Apr. 30, 2007, at 14, 2007 WLNR 8118157. 38 Id. 21
  22. 22. obviousness determination should be decided by the court, not the jury.39 Indeed, the Court in KSR held that summary judgment was appropriate. Consider the recent result in Süd-Chemie, Inc. v. Multisorb Technologies, Inc.40 In this case, Süd-Chemie filed for infringement of its patent directed to “a laminated, water vapor permeable dessicant packaging material.” In granting summary judgment that the patent was invalid as obvious, Judge Charles R. Simpson, III applied “the newly articulated ‘expansive and flexible’ approach” promulgated by the Supreme Court. Notably, the district court referred liberally to KSR without citing to a single precedent from the Federal Circuit. Moreover, and perhaps to the horror of some, the district court found that the claimed invention did not “create some new synergy,” quoting the Supreme Court in Anderson’s-Black Rock, Inc. v. Pavement Salvage Co.41 One of the immediate effects of KSR was the renewal of summary judgment motions by parties involved in pending litigation. In any case in which a court had denied summary judgment prior to KSR, a moving party was well-advised to renewing its motion for summary judgment under the new legal standard. In certain cases, where the non-moving party argued that the prior art gave no motivation to make the claimed invention, the moving party would have a strong basis for the court to at least reconsider the motion. We have only word of mouth data on the impact of KSR concerning summary judgment motions in on-going district court litigations. Based on what we have been told from about a dozen patent litigators, summary judgment motions of obviousness have been renewed in many cases post KSR and the frequency of such motions has increased. This may indicate a sustainable trend in district court litigation. C. Preliminary Injunctions Assuming KSR has raised the bar to patentability, it has concomitantly lowered the likelihood of obtaining a preliminary injunction. This result will make it more challenging for a patentee successfully request that a court enjoin the accused infringer from continuing the infringing activity once litigation has started. As an example, consider the result in a patent infringement action in the Northern District of California. In MMJK, Inc. v. Ultimate Blackjack Tour LLC,42 plaintiff asserted a patent “directed to computer networked multi-player games of both chance and skill that allow subscription-based and non-subscription players (using an “alternative method 39 Structural Rubber Prods. Co. v. Park Rubber Co., 749 F.2d 707, 721 (Fed. Cir. 1984) (“[B]efore submitting the issue of obviousness to the jury, the court must consider whether there is an underlying factual dispute on that issue. If there is none, the issue should not be given to the jury since the application of the law to undisputed facts is for the court.”). 40 No. 3:03CV-29-S, 2007 WL 2669366 (W.D. Ky. Sept. 7, 2007). 41 396 U.S. 57 (1969). 42 MMJK, Inc. v. Ultimate Blackjack Tour LLC, No. C07-3236 BZ, 2007 WL 2428047 (N.D. Cal. Aug. 22, 2007). 22
  23. 23. of entry”) a chance to win prizes that have immediate value (i.e., cash, cash-equivalent notes and objects).” In denying plaintiff’s request for a preliminary injunction, Magistrate Judge Bernard Zimmerman squarely recognized the effect of KSR on the preliminary injunction “likelihood of success on the merits” prong. Citing KSR, Judge Zimmerman noted that “if design needs or market pressures urge solution to a problem, ‘and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options.’” Plaintiff had argued that the inclusion of “subscription and non-subscription- based paying and non-paying players in one site distinguishes it from the previous art.” But Judge Zimmerman opined that “[a]ll this amounts to, however, is a combination of technology previously employed.” Thus, “[i]n light of the KSR case, plaintiff has failed to demonstrate that it is likely to overcome defendant’s assertion that the . . . patent is invalid as obvious.” Motion for preliminary injunction was denied. IV. PTO At a July 2007 CLE presentation in Northern Virginia, Chief Judge Fleming of the Board of Patent Appeals and Interferences (“Board”) stated that “KSR has been a huge change for the Board. It has turned things upside down.”43 To the PTO, KSR represents a sea change in how both patent examiners and the Board deal with obviousness rejections over a combination of prior art references. To date, that change has been publicly reflected in several recent precedential Board decisions. Further, internal guidelines on how obviousness is to be treated by the patent examining corps have apparently been completed, training on them has been conducted, and the guidelines are now awaiting approval by the Office of Management and Budget (“OMB”) at the White Hosue before being officially announced. As explained further below, the PTO, including the Board and corps of patent examiners, views KSR as mandating a return to the well-tested factors in the classic Supreme Court decision in Graham v. John Deere.44 A. Patent Prosecution As noted above, the internal guidelines for examination post-KSR are complete and in use by the corps of examiners. The new guidelines will be made public when OMB has completed its review. Anecdotal evidence and off-the-record discussion with those responsible for drafting the new guidelines suggest that the obviousness analysis will be refocused on the Graham factors. Further, the new guidelines and training sessions apparently urge examiners to develop clearly delineated factual findings regarding the scope and content of the prior art before applying those findings to the law. The new guidelines apparently have substantial “buy-in” across the PTO organization. 43 “Winning Your Appeal at the Board of Patent Appeals and Interferences,” presented by Hon. Michael Fleming, Chief Administrative Patent Judge, USPTO, at Hot Topics in Patent Law CLE at George Mason University (July 17, 2007). 44 383 U.S. 1 (1966). 23
  24. 24. The well-known Graham factors include determining the scope and content of the prior art, analyzing the differences between prior art and the recited invention and determining the level of ordinary skill in the art. With these factual findings complete, the examiner then determines whether the person of ordinary skill can bridge the gap between the prior art and the claimed invention. The obviousness calculus has thus shifted from an evidentiary debate rooted in the old teaching-suggestion-motivation to combine (“TSM”) test, to a much more subjective approach epitomized in KSR and Graham. For applicants faced with a well-supported obviousness rejection, the Federal Circuit’s first post-KSR obviousness case in Leapfrog Enterprises, Inc. v. Fisher-Price, Inc.45 supra is highly instructive. Therein, the Federal Circuit relied in part on the fact that Leapfrog had presented no evidence that the inclusion of a reader in the combined device was “uniquely challenging or difficult for one of ordinary skill in the art’ or ‘represented an unobvious step over the prior art.” Therefore, just as examiners need to fully articulate and support obviousness rejections, so should Applicants present well- articulated evidence to the contrary. In many cases, presenting such evidence may require assistance from the inventor and/or increased reliance on technical experts via declarations under 37 C.F.R. § 1.132. Further, technically sound specifications that explain why the purported invention is not obvious will also be useful. Pre-KSR, a minimal background section was often preferred in patent specifications by applicants wary of creating harmful estoppels. Now, a more compelling background setting up the merits of the inventions and the challenges faced by the applicant is likely preferable. B. Board of Patent Appeals and Interferences46 With a set of three non-precedential decisions, the Board of Patent Appeals and Interferences (“Board”) recently signaled a fairly dramatic shift in how it will deal with the obviousness question post-KSR. In those cases, the Board has clearly raised the obviousness bar at the PTO. These precedential decisions apply KSR across three major technology areas—mechanical, electrical, and biotechnology. Drawing from the Supreme Court's cues in KSR, the Board put forth an obviousness analysis that emphasizes a functional approach based on the Graham factors. Those factors include consideration of the scope and content of prior art, the differences between the prior art and claimed invention, level of skill in the art and any secondary indicia of non- obviousness. In each case, the Board affirmed obviousness rejections based on combinations of prior art references and highlighted significant areas where such combinations are more likely to render a claimed invention obvious under KSR. Areas where combinations of 45 485 F.3d 1157 (Fed. Cir. 2007). 46 Selected portions of this section are excerpted from Michael V. Messinger & Jon E. Wright, “The BPAI Returns to Graham v. John Deere,” IP Law 360 (July 25, 2007); and from Eric K. Steffe & Elizabeth J. Haanes, “Patent Board Challenges Federal Circuit to a Deuel,” IP Law 360 (July 27, 2007). 24
  25. 25. prior art references are more likely to show obviousness include combinations based on known methods or predictable uses, or which achieve predictable results. Under this analysis as applied by the Board, combinations may be made to obtain the benefit of known advancements or improvements which are within the creativity of one of ordinary skill in the art. An explicit teaching, suggestion, or motivation need not be present in the references themselves but remains a plus for supporting a combination. Whether one agrees with the outcome of KSR or not, it is at the Patent and Trademark Office where the rubber hits the road, and the Board’s decisions offer significant insight on the PTO’s direction. We provide a brief analysis of the three precedential board decisions below. 1. Ex parte Smith47 Ex parte Smith dealt with a mechanical invention directed to a pocket insert integrated into a bound book. A first claim rejection under 35 U.S.C. § 103(a) was made based on a combination of two U.S. patents. The appeal of the rejection turned on “whether it would have been obvious to glue two separate sheets to form a continuous two-ply seam . . . rather than folding one sheet to create a seam along the folded edge.” Additional claims were rejected for being obvious based on the same two U.S. patents and further in view of a third U.S. patent. This second rejection turned on “whether it would have been obvious to improve a pocket insert by creating two pockets from a single pocket using an additional line of adhesive.” In affirming both obviousness decisions, the Board stated that the two references “together teach that a pocket can be made by either method and yield a predictable result.” The Board noted the appellants’ lack of evidence supporting a position against a combination, such as, a showing that the combination would been quot;uniquely challenging or difficult for one of ordinary skill in the art.” 2. Ex parte Catan48 Ex parte Catan dealt with an electrical arts invention directed to a consumer electronics device that used bioauthentication methods to control access to sensitive information. A single rejection was made under § 103(a) based on a combination of three prior U.S. patents. A first U.S. patent forming the basis of the rejection purportedly taught a consumer electronics device with a password authentication, but no authentication information provided by a bioauthentication device. A second U.S. patent was relied upon for teaching a bioauthentication device. A third U.S. patent was used as a link to further teach the substitution of password (e.g., a PIN) authentication with bioauthentication to access credit information. The Board affirmed the rejection under 47 Ex parte Smith, No. 2007-1925, 2007 WL 1813761 (B.P.A.I. June 25, 2007), available at 48 Ex parte Catan, No. 2007-0820, 2007 WL 1934867 (B.P.A.I. July 3, 2007), available at 25
  26. 26. § 103(a) based on all three patents, and further held the claims obvious over the first two patents alone—even without the linking patent. In Catan, the Board found that because “[a]dding bio-authentication to the [base reference] does no more to [that] device than it would do if it were added to any other device, the function remains the same.” The Board also found that bioauthentication “predictably” adds greater security and reliability to an authorization process. With respect to the linking patent reference in Catan, the Board demonstrated that elements of the teaching, suggestion, motivation test (“TSM”) are still valid tools in the obviousness calculus. The Board used the linking reference to buttress it obviousness rejection based on the first two references stating that “one of ordinary skill would have been motivated to combine the bioauthentication device of the [second reference] with the system in the [primary reference] because the [linking reference] teaches that one can substitute bioauthentication information for PIN information.” TSM thus remains a valid tool for determining obviousness, but it is no longer the sin qua non of patentability for combination inventions. 3. Ex parte Kubin49 In Ex parte Kubin, the Board affirmed an examiner's rejection of DNA claims as being obvious and failing to meet the written description requirement, but overturned a rejection for lack of enablement. The exemplary claim in Kubin’s patent application recites “[a]n isolated nucleic acid molecule comprising a polynucleotide encoding a polypeptide at least 80% identical to amino acids 22-221 of SEQ ID NO:2, wherein the polypeptide binds CD48.” SEQ ID NO:2 is the amino acid sequence of human NK Cell Activation Inducing Ligand NAIL (also referred to as p38 below), with amino acids 22 to 221 corresponding to the extracellular (exposed) portion of the protein. Here, the polynucleotide claims were rejected during examination as being obvious over three prior art references. The first described human p38 [NAIL] polypeptide via its binding to monoclonal antibody C1.7, and suggests that a cDNA encoding p38 could be cloned and sequenced by standard methods, such as those described in the second cited reference, a standard molecular biology textbook. The third reference disclosed the gene encoding the mouse ortholog of NAIL by sequence. According to the examiner, the claims were obvious given the availability of a monoclonal antibody to NAIL and routine methods for cloning and sequencing the human NAIL cDNA. The Board affirmed, relying in part on the Supreme Court decision in KSR. The Board’s obviousness determination is arguably contrary to longstanding Federal Circuit precedent relating to structural non-obviousness, exemplified by In re Deuel. 50 In Deuel, as in Kubin, the claims were to an isolated polynucleotide which 49 Ex parte Kubin, No. 2007-0819, 2007 WL 2070495 (B.P.A.I. May 31, 2007), available at 50 51 F.3d 1552 (Fed. Cir. 1995). 26
  27. 27. encodes a polypeptide. The polypeptide was in the prior art, and had been isolated, purified and partially sequenced. The examiner rejected the polynucleotide claim based on the isolated polypeptide, in view of standard methods to isolate and sequence cDNAs, citing an earlier edition of the same textbook cited by the examiner in Kubin. The Board affirmed, but the Federal Circuit reversed, noting that “a conceived method of preparing some undefined DNA does not define it with the precision necessary to render it obvious over the protein it encodes.” The Board in Kubin justified the departure from precedent in part by noting that “Deuel is not controlling and thus does not stand in the way of our conclusion, given the increased level of skill in the art and the factual differences.” However, virtually no factual distinctions or analysis of the level of skill in the art is provided by the Board in support of this conclusion. Granted, certain factual distinctions can be made, and the level of skill in molecular biology no doubt advanced between 1990, the filing date of Deuel, and Kubin's filing in 2000. Nonetheless, the methodologies and level of skill pertinent to cDNA cloning have remained relatively unchanged. For example, the prior art in Deuel identified the isolated protein and a partial N-terminal sequence, which allowed construction of a hybridization probe used to isolate the cDNA (quot;hybridization cloningquot;). In contrast, the prior art in Kubin identified the isolated protein and a monoclonal antibody which bound to the protein, allowing isolation of a cDNA clone from an expression library via antibody screening (“expression cloning”). Expression cloning and hybridization cloning, as well as polynucleotide sequencing, were well established, routine procedures by the mid 1980s, well before Deuel's filing in 1990. Thus, no apparent groundbreaking advances in the art occurred to make the isolation of the cDNA by Kubin any more predictable than the isolation of the cDNA by Deuel. Accordingly, it is unclear how factual differences or an increased level of skill in the art justify the Board’s conclusion that Deuel is not controlling. The Board attempted to further cast doubt on the viability of Deuel by arguing that the Supreme Court in KSR left the door open to more liberal use of the “obvious to try” standard. Indeed, according to the Supreme Court, where “there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp.” Based on this statement, the Board concluded that the “obvious to try” standard was applicable because quot;[t]he 'problem' facing those in the art was to isolate NAIL cDNA, and there were a limited number of methodologies available to do so.” However, the “problem to be solved” in Kubin was not a method of isolating NAIL cDNA, rather the problem was the structure of the NAIL cDNA. The prior art provided absolutely no structure, e.g., amino acid or polynucleotide sequence, by which a human NAIL cDNA could be inferred. Thus, it did not provide any identified predictable solutions, let alone a finite number of identified, predictable solutions to the problem. Where KSR may have opened the door, nothing in the KSR opinion mandated dispensing with the need for at least some structural similarity in the prior art. 27
  28. 28. 4. Ex parte Lyons51 Ex parte Lyons is a non-precedential decision we feel also deserves attention. The disclosed invention related generally to an apparatus and method for detecting small distances in the context of proximity sensing using gas flow. Four references were used to make six separate obviousness rejections under 35 U.S.C. § 103(a). In each case, Barada was the main reference, with Carraras and Zumbach the primary secondary references. The appellant argued, among other things, that there was no motivation to combine certain references because (1) Carraras and Zumbach were non-analogous art to the claimed invention, (2) the examiner relied on impermissible hindsight, and (3) the applied references do not solve the same problem presented by the inventor. For each of these three well-tested arguments for rebutting an obviousness rejection, the Board pointed to KSR to illustrate how the Supreme Court had in some way cut back on their efficacy. With respect to the non-analogous art argument, the Board pointed to KSR, where the Supreme Court stated that: When a work is available in one field of endeavor, 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 in the art can implement a predictable variation, section 103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.52 Without discussing in detail the merits of the non-analogous art argument, the Board stated that “we agree with the Examiner that the expanded coverage area of the variant elongated or rectangular nozzles of Carreras and Zumbach would have been recognized by a person of ordinary skill in the art as an improvement over the conventional nozzle orifices taught by Barada, given the limited surface area covered by Barada’s conventional nozzle orifice.” With respect to the hindsight argument, the Board again pointed to KSR and noted that “the U.S. Supreme Court reaffirmed that ‘[a] factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning.’ Nevertheless, in KSR the Supreme Court also qualified the issue of hindsight by stating that ‘[r]igid preventative rules that deny factfinders recourse to 51 Appeal No. 2007-1570 (B.P.A.I. July 31, 2007). 52 KSR, 127 S. Ct. at 1740 (emphasis added). 28
  29. 29. common sense, however, are neither necessary under our case law nor consistent with it’”53 With respect to the appellant’s third argument regarding the problem to be solved, the Board again pointed to KSR stating that “any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed.” Citing KSR, the Board noted that [t]he flaws in the Federal Circuit’s analysis relate mostly to its narrow conception of the obviousness inquiry consequent in its application of the TSM test. The Circuit first erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve. Under the correct analysis, any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed.54 In sum, the Board is using KSR not only to reject the prior TSM test but also to weaken the efficacy of other well-tested arguments applicants have used to rebut obviousness rejections. 5. Analysis of Board Decisions When viewed generally, Catan, Smith, Kubin, and Lyons provide guidance to both examiners and applicants in dealing with the obviousness question under the framework of Graham. For examiners, obviousness rejections must be fully articulated and well- supported. Citing KSR, the Board stated that to facilitate review, the obvious analysis “should be made explicit.” Like the Supreme Court, the Board also pointed to the Federal Circuit’s decision in In re Kahn,55 which stated that “[r]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness.” While the Board still requires examiners to articulate obviousness rejections, it has made the analysis more subjective and less rooted in the literal language of the prior art references themselves. In view of this more subjective approach, the Board takes care to require fully developed obviousness determinations lest rejections become entirely subjective and disputes devolve into unproductive, non-substantive, and essentially unreviewable arguments. Applicants should hold examiners to this standard and demand well-reasoned and fully articulated rejections. 53 Slip op. at 5-6. 54 KSR, 127 S.Ct. at 1732. 55 441 F.3d 977 (Fed. Cir. 2006). 29
  30. 30. C. Patent Reexaminations and the Central Reexamination Unit Over the past several years, the role of patent reexaminations has increased as parties have recognized the value of asking the PTO to reexamine a patent that is or will be involved in litigation. KSR will probably increase the attractiveness of reexaminations, especially where the prosecution history reveals that the applicant overcame an obviousness rejection using the now discredited teaching-suggestion- motivation analysis. The Central Reexamination Unit (“CRU”) is a PTO entity created in 2005 which is charged with conducting all reexaminations before the PTO. For the CRU to grant a reexamination request, the applicant must convince the CRU that there is substantial new question (“SNQ”) of patentability.56 From the above discussion, it should be clear that the PTO views KSR as affecting a sea change to the obviousness calculus. Because the obviousness standard is retroactive, the practical reality is that an SNQ of patentability likely exists for nearly every issued patent that faced and overcame an obviousness rejection based on a combination of prior art references. This is especially true where the patent applicant relied on the old teaching-suggestion-motivation to combine test in overcoming the obviousness rejection. Facing a potential flood of challenges to issued patents in view of KSR, the CRU will need to adopt standards by which the judge whether an SNQ exists vis-à-vis an applicant relying solely on KSR and previously reviewed prior art combinations. Based on our off-the-record conversations with PTO officials, the CRU has not yet developed those standards. Realistically and practically speaking, however, a reexamination applicant will likely have to do more than simply point to KSR and a previously considered prior art combinations. The minimum threshold for raising a SNQ based solely on previously considered prior art seems to be that this prior art most be viewed in “a new light.” A full development of the obviousness arguments will likely be required and reexamination applicants should expect the CRU to exercise its discretion in finding a SNQ of patentability in these circumstances. D. Report from the Trenches Finally, in trying to determine KSR’s actual effect on patent prosecution, we surveyed experienced patent attorneys and agents actively involved in the prosecution of U.S. patent applications at the PTO to get their feedback. The practitioners who are representing inventors before the PTO are likely to experience the most immediate impact of KSR. While our survey is admittedly unscientific, and no judge should ever let this into evidence, the responses have value at least because they provide some insight into the practitioner’s perception of KSR. That perception may affect the advice provided to the client, which in turn may affect whether a client files or continues prosecution of a given patent application. 56 See 37 C.F.R. § 1.515. 30
  31. 31. Our survey received 32 responses from patent attorneys and agents who believed they had had enough prosecution experiences involving obviousness since KSR to comment meaningfully about what they saw as happening in prosecution. Obviously (no pun intended) this is not a statistically significant sample based on the almost one million pending patent applications at the PTO. But we believe it does provide some anecdotal data on what is already happening with the examiners in patent applications covering a myriad of technologies. 1. What is the primary technology in which you prosecute patents? Our responses included practitioners who focus on a wide variety of technologies, including biotechnology, electronics, nanotechnology, pharmaceuticals, software, business methods, and others. 2. Since KSR, have you experienced any increase in the frequency of obviousness rejections? If so, quantify the increase as best you can. Based on the responses, it is probably too early to quantify any increase in obviousness rejections according to the bulk of respondents. However, several did comment that they though there was a significant likelihood that an examiner would impose an obviousness rejection in every case based on the post KSR standard where an examiner could use more than two reference—conceivably three to six references—in making a sustainable obviousness combination. 3. Have you noticed any change in the nature of obviousness rejections since KSR? If so, describe the change. Many respondents stated is was too early to tell. However, several did comment that it appears that examiners have “been emboldened” in making obviousness rejections and a less “likely to give in to non-obviousness” arguments, forcing cases to appeal. 4. What is the most common evidence of prior art now being cited by examiners who raise obviousness objections? Patents, publications, examiner statements of what was known to artisans? Most respondents stated that patents and printed publications were by far the most common evidence of prior art. Whether they are patents or printed publications appears to depend on the technical field of the claimed invention. We note that this could be driven by how innovation is documented in a field or by the search resources at the PTO. Some examiners seem to be taking “examiner notice” of what artisans of ordinary skill know in the field of the claimed invention. 31
  32. 32. 5. Have you noticed any increase since KSR in examiners filing declarations under 37 CFR 1.104(d)(2) (see MPEP 2144.03)? If so, quantify the increase as best you can. No respondent has had an examiner file a declaration as part of a rejection. Rather, the examiners are just articulating what artisans of ordinary skill know in the field of the claimed invention. 6. Has your success in rebutting obviousness rejections changed at all since KSR? If so, how? Most comment that it is too early to tell since they have not received Office Actions responding to their Amendments or Responses conducted under the post-KSR regime. However, many comment that they expect their success rates to drop because they are uncertain what arguments or evidence will be persuasive. Moreover, many comment that they expect the frequency of appeals to the Board to go up in routine prosecution. One final point is the great concern about whether that the new PTO rules on Claims and Continuations will further reduce the practical ability to overcome obviousness rejections in many circumstances. 7. Has the nature of your responses to obviousness rejections changed since KSR? If so, how? Answers to this question indicated that KSR has an immediate and significant impact on how patent applicants respond to rejections. First, the respondents suggest that a response to an obviousness rejection is less likely to rely on, at least solely, an argument based on an alleged lack of motivation in the prior art to achieve the claimed invention. Likewise, the respondents suggest that responses to obviousness arguments now contain more comprehensive replies and more often contain arguments based on a teaching away or unexpected results. Second, some respondents indicated that it is now advisable to strategize about the reply to the rejections more quickly after receiving the rejection. In the past, perhaps clients and attorneys alike felt that certain rejections could be prepared without much strategizing because the response would largely comprise legal arguments as to why no motivation existed. Now, however, the responses suggest that early strategizing is important. With a diminished ability to argue no motivation to combine (or at least a perception thereof), applicants and their attorneys will likely need more time to determine whether factual evidence of nonobviousness, e.g., unexpected results, needs to be developed or gathered. 8. Has there been any significant increase in the time needed to obtain an allowance since KSR? If so, quantify the increase as best you can. Most respondents says it is too early to tell. But some speculated that they believe the time needed will go up. One even predicted 50% on average. 32