Obviousness Doctrine Post-KSR: Friend or Foe?

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1 INTELLECTUAL PROPERTY DESK REFERENCE PATENTS, TRADEMARKS, COPYRIGHTS AND RELATED TOPICS PATENT Obviousness Doctrine Post-KSR: Friend or Foe? Steven Gardner and Nicole N. Morris

2 235 Obviousness Doctrine Post-KSR: Friend or Foe? Steven Gardner and Nicole N. Morris I. Introduction The Supreme Court s opinion in KSR International Co. v. Teleflex Inc. 1 ( KSR ) altered the standards applied by courts and the United States Patent and Trademark Office ( PTO ) in determining whether a patent is obvious in light of prior art. In the post-ksr world, where do you stand? Answer: it depends. If you are trying to procure a patent or enforce your patent rights, the KSR decision is not your friend. Since the Supreme Court announced a flexible approach to obviousness, obtaining a patent from the PTO or combating an assertion in litigation that a patent is invalid as obvious is likely to be more difficult. On the other hand, if you are trying to invalidate a patent, the KSR decision is your friend and provides new strength to the obviousness defense. This article discusses the KSR decision, case law applying KSR, and practical implications for patent litigation and patent prosecution. II. The KSR Decision A patent claim claims obvious subject matter (and is invalid) when the differences between the patent claims and the prior art are such that the claims would have been obvious at the time of the invention to one of ordinary skill in the art. 2 Prior to KSR, the Federal Circuit often employed the teaching, suggestion, or motivation (or TSM ) test to resolve the question of obviousness. 3 Under the TSM test, a patent claim is obvious only if some motivation or suggestion to combine the prior art teachings can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. 4 In KSR, the Supreme Court explicitly rejected the Federal Circuit s rigid application of the TSM test to determine whether an invention is obvious and therefore invalid. The Supreme Court held that the Federal Circuit s approach was inconsistent with the Court s prior decisions and 103 of the Patent Act. 5 The Court noted that its prior decisions set forth an expansive and flexible approach to the obviousness inquiry and invited courts, where appropriate, to look at secondary considerations that would prove instructive. 6 Patent 201 The Supreme Court reversed the Federal Circuit s finding of non-obviousness and identified four other errors in the Federal Circuit s application of the TSM test. First, the Court found that the Federal Circuit erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve. 7 Second, the Court found that the Federal Circuit should not assume that a person of ordinary skill attempting to solve a problem will be led only to those 1 KSR Int l Co. v. Teleflex Inc., 550 U.S. 398 (2007) U.S.C. 103(a) (2000). 3 See KSR, 550 U.S. at See Al-Site Corp. v. VSI Int l Inc., 174 F.3d 1308, (Fed. Cir. 1999). 5 KSR, 398 U.S. at Id. 7 Id. at 420.

3 KILPATRICK STOCKTON elements of prior art designed to solve the same problem. 8 Third, the Court held that the Federal Circuit erred in concluding that a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try. 9 Finally, the Supreme Court found that the Federal Circuit drew the wrong conclusion from the risk of falling prey to hindsight, and that the Federal Circuit established rigid rules that prevented the fact finder from using common sense. 10 While the Supreme Court rejected the rigid application of the TSM test, the KSR decision did not eliminate the test as a rationale for finding obviousness. The Court stated, [t]he obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents. 11 Also, the Court stated 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. 12 The KSR decision contains a number of statements that other courts have since used in analyzing whether a patent is rendered obvious: (1) 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, 103 likely bars its patentability. 13 (2) [I]f 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. 14 (3) If the claimed subject matter is merely a simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for improvement, the invention is obvious. 15 (4) [W]hen a patent simply arranges old elements with each performing the same function it had been known to perform and yields no more than one would expect from such an arrangement, the combination is obvious. 16 (5) 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 these known options... If this leads to the anticipated success... 8 Id. 9 Id. at Id. 11 Id. at Id. at Id. at Id. 15 Id. 16 Id. (quoting Sakraida v. Ag Pro, Inc., 425 U.S. 273, 282 (1976)).

4 237 the fact that a combination was obvious to try might show that it was obvious under III. Practical Implications for Patent Litigators The Federal Circuit has issued forty-three opinions that cite KSR. 18 In 2008, the Federal Circuit reversed findings of nonobviousness five times, affirmed findings of nonobviousness eight times, and affirmed findings of obviousness three times. Post-KSR, the Federal Circuit seems to give greater weight to a prima facie case of obviousness than to objective evidence to nonobviousness. For instance, in Agrizap, Inc. v. Woodstream Corp., 19 the Federal Circuit held that the patent at issue, which involved a method and device for electrocuting pests, presented a textbook case of when the asserted claims involves a combination of familiar elements according to known methods that does no more than yield predictable results. 20 Moreover, the Federal Circuit was not persuaded by the patentee s secondary considerations of nonobviousness. The patentee offered objective evidence of nonobviousness, including commercial success, copying by the defendant, and a long felt need in the market for the invention. 21 The court compared this case to its first post-ksr opinion, Leapfrog Enterprises, Inc. v. Fisher-Price Inc., where it invalidated a patent because it resulted from a combination of familiar elements that yielded predictable results, even though there were strong secondary considerations of commercial success and long felt need. 22 In Leapfrog, the court ruled that [a]ccommodating a prior art mechanical device that accomplishes that goal [of teaching a child to read phonetically] to modern electronics would have been reasonably obvious to one of ordinary skill in designing children s learning devices. 23 As in Leapfrog, the Federal Circuit in Agrizap found that the combination of familiar elements yielding predictable results outweighed objective evidence of nonobviousness. Likewise, in Muniauction, Inc. v. Thomson Corp., 24 the Federal Circuit found that the combination of known elements was quite similar to that in Leapfrog. The patent at issue in Muniauction involved municipal bond auctions. The court found that the broadly written claims made it difficult to use secondary factors of patentability to establish nonobviousness, specifically, the secondary evidence offered by Muniauction lacked the requisite nexus to the scope of the claims. [C]ommercial success or other secondary considerations may presumptively be attributed to the patented invention only where the marketed product embodies the claimed features, and is coextensive with them. 25 Muniauction argued that an industry award it received and the subsequent press coverage of the award showed success of its products to rebut any prima facie showing of obviousness. The court Patent Id. at This figure is as of December 31, 2008 and includes appeals from the Board of Patent Appeals and Interferences F.3d 1337 (Fed. Cir. 2008). 20 Id. at Id F.3d 1157 (Fed. Cir. 2007). 23 Id. at F.3d 1318 (Fed. Cir. 2008). 25 Id. at 1328 (quoting Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299 (Fed. Cir. 2006)).

5 KILPATRICK STOCKTON rejected Muniauction s argument because the reports of success focused only on one portion of the invention as claimed. The Federal Circuit compared those narrow reports of success with the broad claims, finding that the success lacks the required nexus with the scope of the claims. 26 Since the KSR decision, the Federal Circuit has raised the bar on the requirement for objective evidence of nonobviousness. The court has invalidated a number of patents, ruling that the combination of familiar elements yielding predictable results outweighs any objective evidence of nonobviousness. 27 Patentees seeking to rebut evidence of obviousness now should consider offering a significant amount of evidence supporting objective, secondary considerations and also should consider having such evidence introduced and described through adequate expert testimony. A. Expert Testimony Experts are key witnesses in patent cases. In the post-ksr era, expert testimony regarding the scope and content of the prior art may prove critical to a party s success or failure regarding obviousness. First, make certain that your expert is a qualified technical expert. Testimony proffered by a witness lacking the relevant technical expertise fails to meet the standard of admissibility under the Federal Rules of Evidence. 28 In a recent decision, the Federal Circuit held that a witness not qualified in the pertinent art may not testify as an expert on obviousness or any of the underlying technical questions such as the nature of the claimed invention, the scope and content of the prior art, the differences between the claimed invention and the prior art, or the motivations of one of ordinary skill in the art to combine these references to achieve the claimed invention. 29 Additionally, the court found that the proffered expert, a patent attorney, was not qualified to testify on the issues of infringement and validity because he did not possesses the relevant technical expertise in the field of the invention. 30 Unless a patent lawyer is also a qualified technical expert, his testimony on these kinds of technical issues is improper and thus inadmissible. 31 An expert s education and experience must be sufficiently related to the subject matter of the [patent-in-suit] to allow him to speak with authority on the issues of validity and infringement. 32 Expert testimony is often critical evidence used to invalidate a patent for obviousness. A testifying expert often addresses whether there was or was not a motivation to combine or modify the prior art to arrive at the claimed invention. A testifying expert must generally be prepared to express an opinion about the knowledge of one of ordinary skill in the art. The Federal Circuit has suggested that it is important for an expert to opine on the limited number of ways to solve the problem 26 Id. 27 See CSIRO v. Buffalo Tech. USA, Inc., 542 F.3d 1363, (Fed. Cir. 2008) (vacating summary judgment of nonobviousness because the secondary considerations did not justify the entry of summary judgment in light of the evidence bearing on obviousness); but see Erico Int l Corp. v. Vutec Corp., 516 F.3d 1350, 1356 (Fed. Cir. 2008) (vacating a preliminary injunction because the defendant raised sufficiently substantial question of invalidity to show that the claims at issue are vulnerable. ). 28 Fed. R. Evid Sundance, Inc. v. Demonte Fabricating Ltd., 550 F.3d 1356, 1364 (Fed. Cir. 2008) (finding that a witness not qualified in the pertinent art may not testify as an expert as to anticipation, or any of the underlying questions.... ). 30 Id. at 1362 ( Admitting testimony from a person such as Mr. Bliss, with no skill in the pertinent art, serves only to cause mischief and confuse the factfinder. ). 31 Id. 32 Id. (quoting Cameo Indus., Inc. v. La. Cane Mfg., Inc., Civ. No , 1995 U.S. Dist. LEXIS 11294, at *10-11 (E.D. La. July 27, 1995)).

6 239 addressed by the claimed invention. 33 For example, in Ortho-McNeil Pharamceutical, Inc. v. Mylan Laboratories, Inc., 34 Ortho-McNeil filed an infringement action to prevent Mylan from producing a generic version of its epilepsy drug, topiramate. Citing KSR, Mylan argued that Ortho-McNeils s discovery of the drug was obvious to try because there was a small, finite number of options that was available to a person of ordinary skill in the art. 35 The Federal Circuit disagreed, finding that Mylan failed to demonstrate that a person of ordinary skill would have had some reason to select (among several unpredictable alternatives) the exact method that produced topiramate as an intermediate and would have stopped at that intermediate and test for properties unrelated to the purpose for which the drug was being created. 36 In reaching its decision, the Federal Circuit criticized Mylan s expert s testimony. The court stated that Mylan s expert simply retraced the path of the inventor with hindsight, discounted the number and complexity of the alternatives, and concluded that the invention of topiramate was obvious. 37 The court found that the expert s testimony failed to satisfy 103 requiring an analysis to examine the subject matter as a whole to ascertain if it would have been obvious at the time the invention was made. 38 The opinion suggests that an expert must do more than retrace the steps of the inventor the testimony must also evaluate, in detail, alternative paths that a person of ordinary skill would have chosen. An expert s ability to quantify the number of known alternatives to achieving a certain end may be an effective tool in demonstrating a finite number of solutions testimony that will aid in determining whether the invention was obvious to try. 39 Similarly, in Sanofi-Synthelabo v. Apotex, Inc., 40 the Federal Circuit affirmed the validity of Sanofi s patent covering the blockbuster drug Plavix. The Plavix patent covers a dextrorotatory isomer and the invalidity question arose from the fact that the racemate of the compound was known and described in earlier Sanofi patents. Apotex argued that the separation of enantiomers is routine and that there was both motivation and means for creating the Plavix compound from the known racemate that Sanofi had previously admitted was an important compound. The Federal Circuit rejected this argument because a person of ordinary skill in this field would not reasonably have predicted that the dextrorotatory enantiomer would provide all of the antiplatelet activity and none of the adverse neurotoxicity. 41 Ultimately, the expert should generally be prepared to explain the scope and content of the prior art; explain the differences between the prior art and the claimed invention; and express an opinion as to Patent Jonathon Campion & Sheila Collins, Obviousness in a Post-KSR World, in Patent Litigation 2008, at 407, 423 (PLI Patents, Copyrights, Trademarks, & Literary Property, Course Handbook Series No. 948, 2008) F.3d 1358 (Fed. Cir. 2008). 35 Id. at Id. (The anti-convulsive properties of the epilepsy drug were discovered by a researcher looking for an inhibitor for diabetes. The court affirmed the district court s denial of Mylan s motion for summary judgment of invalidity under 103). 37 Id. 38 Id. 39 Campion & Collins, supra note F.3d 1075 (Fed. Cir. 2008). 41 Id. at 1087.

7 KILPATRICK STOCKTON the level of ordinary skill in the art at the time of the invention and whether one of such skill would or would not have found in the invention to be obvious in light of the prior art. 42 B. Chemical vs. Mechanical Arts The Federal Circuit affirmed the district court s finding of non-obviousness in each of the chemical-arts cases appealed to the Federal Circuit in 2008 that addressed the obviousness issue. This is good news for owners of pharmaceutical or chemical patents. On the other hand, challenging the validity of mechanical and electrical art patents may have become somewhat easier. 43 In the chemical arts, a prima facie case of obviousness for a compound normally begins with the reasoned identification of a lead compound. 44 For those challenging the validity of a chemical arts patent, obviousness based on structural similarity can be shown by identifying some motivation that would have led one of ordinary skill in the art to select and then modify a known compound in a particular way to achieve the claimed compound. 45 The mechanical and electrical arts often involve the combinations of known elements. 46 Under KSR, the validity of claims to such combinations is more difficult to sustain. For example, where the claimed invention makes a routine addition of modern electronics to older devices or otherwise makes an improvement that applies known technology, the Federal Circuit has found the requisite motive to make the combination part of the knowledge and ordinary creativity of a person of ordinary skill. 47 IV. Patent Prosecution Hurdles KSR changed the landscape for both patent litigation and prosecution. Following the KSR decision, the PTO published new guidelines for patent examiners to assist them in making proper determinations regarding obviousness. 48 The revised guidelines state that examiners can still use the TSM test to reject a patent, but an invention may also be found obvious without using that approach. Post- KSR, examiners can also consider the following when making an obviousness rejection: combining prior art elements according to known methods to yield predictable results, simple substitution of a known element, use of a known technique to improve similar devices in the same way, or applying a known technique to a known device ready for improvement to yield predictable results. 49 In addition, the revised guidelines expand the universe of prior art to be considered by the examiners. Prior art that is in the field of endeavor other than that of the applicant, or solves a problem which is different from that which the applicant was trying to solve, may also be considered for the purposes of 42 See Frederick G. Michaud & David Schlitz, The Use of Experts to Prove Obviousness, in Patent Litigation 2008, at 429, 437 (PLI Patents, Copyrights, Trademarks, & Literary Property, Course Handbook Series No. 948, 2008). 43 See Susan A. Cahoon & Alton L. Absher III, Federal Circuit, KSR and Pharmas: The First Year and A Half, IP360 (Jan. 5, 2009). 44 Eisai Co. v. Dr. Reddy s Labs., Inc., 533 F.3d 1353, 1359 (Fed. Cir. 2008). 45 Id. at 1357 (citing Takeda Chem. Indus. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1356 (Fed. Cir. 2007). 46 See Muniauction, 532 F.3d at See Cahoon & Absher, supra note See Examination Guidelines for Determining Obviousness under 35 U.S.C. 103 in view of the Supreme Court decision in KSR Int l Co. v. Teleflex Inc., 72 Fed. Reg (Oct. 10, 2007) (the Guidelines ). 49 See U.S. Dep t of Commerce, U.S. Patent & Trademark Office, Manual of Patent Examination Procedures (MPEP), 2141 at (8th ed., rev ). The MPEP has also been revised in light of KSR, consistent with the Guidelines.

8 Since examiners have more tools regarding obviousness rejections, it is likely that more 103 rejections will issue from the PTO, thereby increasing the cost to prosecute patent applications. In responding to post-ksr rejections, many of the arguments that were used before KSR still have application. For example, one can still argue that there is no teaching, suggestion, or motivation to combine the references, but the arguments often cannot stop there. Depending on the specific reasoning cited by the examiner, patentees should also consider addressing some of the other rationales listed in the guidelines, such as how combining the prior art elements yielded unpredictable results or the combination was done in an unknown way to yield unpredictable results. 51 Patentees should also consider arguing why the combination of cited references would be impractical, expensive, or inoperative. In Andersen Corp. v. Pella Corp., 52 Andersen successfully argued that the prior art mesh would not have been considered by one of skill of the art because it was extraordinarily expensive. 53 Andersen submitted into evidence prior art references that taught away from the cited mesh because it was unusable as an insect screen. 54 In this case, by showing how the combination of the prior art references made it impractical and expensive to conceive the claimed invention, Andersen successfully overcame the obviousness challenge. It is still too early to describe the full impact of the KSR decision on 103 rejections by the PTO. One indicator, however, is how often the Board of Patent Appeals and Interferences ( BPAI ) upholds an examiner s decision. The percentage of appeals affirmed or affirmed in part by the BPAI increased from 55.8 percent in 2006 to 70.0 percent in This suggests that the BPAI will be more supportive of examiners and more flexible in reviewing 103 rejections. V. Conclusion The full impact is not yet known, but it certainly appears that examiners will make more obviousness rejections that will be upheld by the BPAI. While KSR has made it generally more difficult to refute a 103 argument, the impact of KSR has been less dramatic in the chemical arts because of the unpredictable nature of the art. The influence which KSR is having or will have on patent litigation will take more time to fully understand. Patent Id. at Id. at Civ. No , 2008 U.S. App. LEXIS (Fed. Cir. Nov. 19, 2008) (Andersen sued Pella and W.L. Gore for infringement of its window screen patent. The patented invention allows ventilation and blocks insects, but is easier to see through than traditional screens. In light of KSR, the district court granted defendants motion to re-open motions for summary judgment on the limited issue of obviousness). 53 Id. at *15-16 (finding that the record created a genuine issue of material fact as to whether the durability, transparency, and pricing of the prior art mesh would have discouraged an ordinarily skilled artisan from incorporating the mesh into an insect screen. ). 54 Id. at *12-13 (finding that the prior art references taught that the cited mesh possessed many characteristics that an ordinary skilled insect screen designer would have viewed as undesirable for an insect screen). 55 See BPAI Receipts and Dispositions by Technology Centers for Ex Parte Appeals, receipts/fy2008.htm (as of Sept. 30, 2008), and BPAI Receipts and Dispositions by Technology Centers for Ex Parte Appeals, uspto.gov/web/offices/dcom/bpai/docs/receipts/fy2006.htm (last visited Mar. 10, 2009).

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