Well, we have gotten early indications from the major patent players as to how the substantive part of KSR will play out. TSM still has a place in the post-KSR world, at least according to Chief Judge Michel of the Federal Circuit and Deputy Commissioner Focarino of the USPTO. These are preliminary statements. We will not know what the Federal Circuit or USPTO really think until the first precedential opinion or interim guidelines issue. But these early comments make one wonder if KSR changes anything, particularly those like myself who witnessed the Federal Circuit's acceptance of, and reliance on, implicit TSM well before In re Kahn, DyStar, and Alza.
While the substantive impact may turn out to be minimal, KSR could have a significant procedural effect. The Court appears to have shifted the line between factual and legal parts of the nonobviousness analysis, moving what was (is?) the TSM test from being a question of fact to a question of law.
The Supreme Court in Graham established that nonobviousness was ultimately a question of law, but there were recognized underlying factual issues—content of the prior art, scope of the claims, and the level of the PHOSITA. When the CCPA, and then the Federal Circuit, started employing the TSM test, the test became another underlying factual component of the inquiry. As a result, there was not much left at the question of law level, and the Federal Circuit affirmed most appeals from rejections by the USPTO and or trials before district courts on the nonobviousness issue.
The Court in KSR introduces a procedural change, folding the TSM-like inquiry into the question of law level of the analysis. This move is most clearly witnessed in Part IV of the opinion, where Court rejects the existence of a dispute over an issue of material fact. Slip op. at 23. The Court goes out of its way to note that "[t]he ultimate judgment of obviousness is a legal determination," rejects the ability of a "conclusory affidavit[s] addressing the question of nonobviousness" to create a fact issue, and shows concern only to whether the first three Graham factors are "in material dispute." Id. In contrast, the final step, determining whether a PHOSITA would modify the prior art, is identified as a "legal question." Slip op. at 21. The earlier, general discussion of the substantive standard also supports this interpretation. The opinion focuses on what "a court" should analyze when determining whether there is "an apparent reason to combine." Slip op. at 14.
The implications of this procedural change are many. Making the TSM-like analysis a question of law facilitates more summary judgments on the issue of nonobviousness (although not as much as one would think, as I determined here). It also gives the Federal Circuit more freedom to reverse both USPTO and district court judgments on nonobviousness. This may lead us down a similar road as Markman has, giving the Federal Circuit so much flexibility that it injects even greater uncertainty into an area that is inherently uncertain, particularly after KSR. We might even end up with KSR hearings.
Admittedly, the Court does not explicitly say it is making this change. And, as the Federal Circuit has done in the past, TSM-like discussions can be framed as part of one of the first three Graham factors that have always been factual issues. However, the main focus of the opinion is on the Federal Circuit's "application" of § 103, and the language and application in KSR strongly suggest a change in the law/fact line in nonobviousness analysis (or maybe this is all just a "common sense" reading).
Chris Cotropia is an Associate Professor of Law at the University of Richmond School of Law and is part of the School's Intellectual Property Institute. Professor Cotropia was counsel of record and a co-author on the Brief of Business and Law Professors as Amici Curiae in Support of the Respondents in KSR.