Just last week, Patently-O highlighted Professor Mossoff’s historical analysis of patent-takings jurisprudence.  That article took the CAFC to task for its continuation of the untrue myth that “patents were never secured as constitutional private property in the nineteenth century.”  In fact, argues Mossoff, “nineteenth-century courts applied the Takings Clause to patents, securing these intangible property rights as constitutional private property.” “It is time to set the historical record straight.”

Mossoff’s article was prompted by the April 2006 decision in Zoltek v. U.S. In that case, the CAFC found itself bound by the 1894 case of Schillinger v. United States where the Supreme Court ruled that a patent holder could not sue the government for patent infringement as a Fifth Amendment taking.

In Schillinger v. United States, 155 U.S. 163 (1894), the Supreme Court rejected an argument that a patentee could sue the government for patent infringement as a Fifth Amendment taking under the Tucker Act. Schillinger remains the law.

 With a petition for rehearing, Zoltek gave the CAFC another shot.

Without opinion (as is usual in denials), the petition for rehearing was denied.  However, two opinions were released.  Judges Dyk and Gajarsa filed a concurring opinion arguing first that there is no need for a taking claim because private parties already have a right to sue the government for unauthorized patent infringement under 28 U.S.C. § 1498. Second, the two judges argue that because patent rights are created by relatively recent federal statute, it is difficult to characterize limitations of those rights as a “taking of established property rights.”  

In dissent, Judge Newman laid out the holding in simple terms:

The panel majority holds that there is no jurisdiction [in any court] of a Takings claim for compensation for unauthorized use by the government of a patented invention. This ruling is contrary to decision, statute, policy, and constitutional right. I must, respectfully, dissent from the court's endorsement of this ruling.

 Judge Newman finds that the majority decision only makes sense if we reject the premise that patents are property.

Supreme Court Next: Judge Newman’s set this case up nicely for Supreme Court review on the issue of takings and more broadly what is meant by intellectual property.

Notes:

• Document: En Banc Denial with Opinions
• Document: Panel Decision
• SSRN: Mossoff Article (87 Boston University Law Review ___ (2007)).  
• Patently-O: Discussing Original Decision
• Patently-O: Discussing Mossoff Article
• Patent Hawk: Discussing En Banc Denial
• How Appealing: Discusses Dissent
• Professor Barros: Introduces Case
• Journal of IP Law & Practice (Oxford): Patents holders are not protected from US Government infringement by the Fifth Amendment
• Foley Attorneys: Explain how to avoid being trapped by Zoltek

In February 2006, the CAFC affirmed a lower court ruling that Ferring’s patent was unenforceable due to inequitable conduct.  During prosecution some 15 years earlier, Ferring had submitted several non-inventor declarations to support patentability, but did not disclose to the PTO that the some of the declarants had been paid consultants for the patentee in the past. Of course, this information was not requested by the PTO. Nonetheless, the CAFC found that the patentee’s non-disclosure created a material potential for bias because the “witness’s interest is always pertinent to his credibility” and that the intent could be inferred from the negligence in failing to disclose.

Judge Newman penned a strong dissent in the case, arguing that the decision revives “reviving the culture of attack on inventor rights and attorney reputations based on inference and innuendo.”

My colleagues, endorsing several novel and unsupportable presumptions of wrongdoing, do injury to the reasonable practice of patent solicitation, even as they defy the rules of summary judgment.

Now, Ferring (along with its co-plaintiff Aventis) has filed a petition for certiorari, requesting that the Supreme Court hear the case — asking whether the CAFC improperly lowered the standards for materiality and intent in its finding of inequitable conduct.

Inequitable conduct jurisprudence is interesting because it is virtually all judge-made law coupled with the rules of Patent Office practice (37 C.F.R. xxx), and the only Supreme Court case on the topic is the 1945 Precision Instrument decision that found inequitable conduct based on a joint-effort of fraud on the PTO and on the courts.  (It was an interference and both parties wanted to make sure that somebody got rights to the patent).  The facts in Precision Instrument involved some seemingly extreme conduct, although the court ruled generally that the doctrine of unclean hands “gives wide range to the equity court's use of discretion in refusing to aid the unclean litigant.” (finding that the lower court is not bound by any formula in exercising its discretion).

If we fast-forward to today, many if not most patent cases involve charges of inequitable conduct. (1998 AIPLA study showed that 80% of cases included such charges).  The charges are thrown in almost every responsive pleading because they just might stick.  In its petition for certiorari, Ferring argues that this permissive environment has been created by the CAFC’s “aggressive use of inherent judicial power.”

Ferring point to a number of failures of the CAFC’s methodology and suggests as an alternative that the test that return to the PTO’s rules under 37 C.F.R. 56 and simply ensure that those rules are followed. A 2004 report by the National Academies of Science (NAS) came to a similar conclusion:

In view of its cost and limited deterrent value the committee recommends the elimination of the inequitable conduct doctrine or changes in its implementation. The latter might include ending the inference of intent from the materiality of the information that was withheld, de novo review by the Federal Circuit of district court findings of inequitable conduct, award of attorney’s fees to a prevailing patentee, or referral to the USPTO for re-examination and disciplinary action. Any of these changes would have the effect of discouraging resort to the inequitable conduct defense and therefore reducing its cost.

I agree that it is time for a change — evidence of fraud should certainly be considered by the courts.  Fraud, however, comes with a higher standard of pleading.  Failure to follow PTO rules should be considered by the PTO in post-grant reviews. 

Links:

• Ferring v Barr Writ of Cert No Appendices.pdf (4005 KB)
• Ferring v Barr Writ of Cert With Appendices.pdf (6738 KB)
• Ferring v. Barr CAFC Opinion;
• Patently-O Discussion of Ferring Newman Dissent;
• Patently-O Discussion of Ferring Majority Decision;
• NAS 2004 Report. [from Promote-the-Progress]

Does Article III’s grant of jurisdiction of "all Cases . . . arising under . . . the Laws of the United States," implemented in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), require a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed?

Briefs are all in and oral arguments are scheduled for October 4, 2006.

The potential impact of this case should not be underestimated. A license agreement is generally thought of as a settlement of a dispute.  If MedImmune is right, however, an ongoing license agreement could actually be a litigation ticket.

DDC's Two comments:

• Although I didn't file a brief, I agree with much of the analysis of the two law professor briefs in support of the Respondent (Hricik & Cotter).  In general, however, what's wrong with Professor Epstein's free-market approach -- allowing validity challenges be a negotiated contract term.  Although the public has a strong interest in mooting invalid patents, it is rare a licensed patent has only one potential licensee and we now have a number of public interest organizations that are becoming experts of challenging bad patents through reexamination and litigation.
• Post Lear decisions are a mess. Hopefully the Court will at least use this case as a vehicle for clarifying the law.

Documents:

Merits:

• Party Briefs:
  • MedImmune Brief
  • Genentech Response
  • City of Hope Response

  • MedImmune Reply

• Amici in Support of Petitioner
  • Solicitor General
  • Law Professors (Dratler, Oddi)
  • Generic Pharma Assn
  • Medtronic
  • NRDC
• Amici in Support of Neither Party
  • Licensing Executives Society
• Amici in Support of Respondent
  • PhRMA
  • Licensing Professionals (Epstein)
  • Law Professors (Hricik)
  • Law Professors (Cotter)
  • Qualcomm Interdigital
  • Stanford_Columbia
  • AIPLA
  • 3M, GE, du Pont
  • BPLA
  • NYIPLA
• Petitions Stage
  • Genentech:
    • MedImmune’s Genentech Petition (6509 KB)
    • Genentech's opposition to certiori
    • MedImmune's Genetech Reply
  • Centocor: (Same Issue, cert denied)
    • MedImmune’s Centocor Petition
    • Centocor’s opposition to certiori
    • MedImmune’s Centocor reply

Links:

• CAFC Decision in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Centocor;
• MedImmune Petition Granted;
• Lear v. Adkins;
• Professor Miller’s comments;
• Supreme Court on the March;
• Supreme Court docket sheet.

By Dennis Crouch

The first round of briefs have now been filed in the much anticipated KSR case that will address fundamental questions of patentability. [Copies of briefs are found below] The doctrine of nonobviousness ensures that patent rights are not granted on inventions that are simply throw-away modifications of prior technology.  Questions of obviousness are at play in virtually every patent case, in both proceedings before the USPTO and during infringement litigation.

Obviousness has always been a “squishy” term, but over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed a somewhat objective nonobviousness doctrine using a teaching/suggestion/motivation (TSM) test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.  In an article several years ago, Professor John Duffy identified this obviousness issue as one that should attract the Supreme Court’s attention.

[The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old).

Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Now, Duffy, a former clerk of Justice Scalia, is part of the KSR team that is trying to change the rule of law.

The case itself concerns a patent covering a gas pedal for an automobile. KSR makes pedals for GM & Chevy trucks and was sued for infringement of the Teleflex patent.

Crouch’s notes: In my view, the question is not correctly presented because it focuses on the aspect of “proof.” Of course any decision on obviousness should be based on some sort of proof. I expect that the Court will, as they often do, ignore this particular question and instead answer the broader question of how “a court should go about deciding whether matter claimed in a patent should be deemed ‘non-obvious' subject matter.”  In fact, in its merits brief, KSR implicitly recognizes this more fundamental question in its summary of the case.

It is very likely that the Federal Circuit’s home-grown TSM test will be eliminated.  This leaves us with a gaping hole — the most likely successor is a return to Sakraida that would require a showing of some functional-shift caused by a combination of old elements. 

Petitioner KSR and a group of amici have recently filed their briefs on the merits.  Looking at the Amici thus far, you can see that KSR’s supporters are primarily law professors and large companies likely to get sued for patent infringement.  They are hoping to lower the obviousness standard — making it easier to invalidate a patent during litigation.  It is not clear, however, that the Sakraida standard is actually a higher patentability bar — that all depends on the meaning of a “functional-shift.”  That said, many of the potential defendants will be happy if the law becomes more unsettled — the result at least gives them more reason to appeal and would thus increase the plaintiff’s litigation costs (marginally lowering the number of infringement suits filed).  Notably, none of the major bar associations support the petitioner.

What follows is a brief review of those documents. The original documents themselves are accessible through links at the bottom of the article.

Petitioner KSR’s Brief

KSR’s strongest case is that the way the courts determine obviousness today (the TSM test) is not based on any statutory language nor is it based on any Supreme Court jurisprudence. Rather, the CAFC has created the TSM test out of whole cloth and crafted it in a way that inappropriately rejects Supreme Court precedent.  The extremely well researched and written brief traces the history of obviousness jurisdiction and uses that history as the primary basis for its conclusions.

One interesting argument is KSR’s position that provides 103(a) a condition for patentability rather than a condition for challenging patentability.  This appears to be an argument directed primarily to patent prosecution — that the applicant should be the one making an up-front showing of non-obviousness to satisfy section 103(a) rather than the PTO being forced to open with its rejection.   

Finally, KSR makes clear that the TSM test sets the patentability bar too low and allows too many technically trivial inventions to receive patent protection.

The only thing lacking here is any strong guidance for what obviousness test should arise to replace the soon to be displaced TSM test. KSR argues for little more than “adherence to [the Court’s] precedents.”  The result will certainly be a number of years of turmoil — especially on the side of patent prosecution.

Bush Administration in Support of Petitioner

The Government argues that the CAFC has “inappropriately broadens the category of nonobvious and therefore patentable inventions” by limiting the obviousness determination to a single rigid test. Rather, the Government would return to the rules of Graham v. John Deere, that try to determine “whether the claimed invention manifests the extraordinary level of innovation, beyond the capabilities of a person having ordinary skill in the art, that warrants the award of a patent.”

In particular, the brief points out that the TSM test is not wrong.  Rather, the problem is that the TSM test should not be the only test available to determine whether an invention is obvious. For instance, the Government argues that PTO Examiners should be able to reject claims based on their “basic knowledge” or “common sense.”

Law and History Professors (Sarnoff) in Support of Petitioner

Professor Sarnoff along with six other professors add to the debate by recognizing that the Supreme Court’s precedent, although “sound,” needs to be clarified: The professors

suggest [as a clarification to Graham] that the Court hold that the obviousness inquiry is designed to prohibit patents on inventions that could have been made by those skilled in the art within a reasonable period of time (following the time that the invention at issue was actually made) and within reasonable budgetary constraints.

The professors also suggest several modifications (clarifications) of the burdens of proof of patentability.  Their first suggestion would be to remove the evidentiary burden on the PTO (or challenger in litigation) to satisfy the TSM test. Thus, even if the TSM test remains in effect, the initial burden would presumably be shifted to the patentee to prove that the test is not satisfied.

Another clarification would relate to the presumption of validity.

[T]he Court should clarify that a clear and convincing burden of proof should not apply to issues for which the relevant evidence was not previously considered by the Patent Office.

Progress and Freedom Foundation in Support of Petitioner

PFF is a think tank that supports free markets and usually strong property rights. (Richard Epstein and John Duffy are both members of PFF advisory counsel).  A strong property regime in the patent system means that issued patents should be valid and should clearly show their scope of coverage.  PFF’s contribution is to explore how improper hindsight can be avoided even without strict evidentiary requirements:

But adopting the correct standard does not require that USPTO or the courts give in to subjective whim, because there are administrative mechanisms that can be used to make the exercise of subjective judgment fair and reasonably consistent over time.

For example, USPTO could adopt the current Federal Circuit test as a first cut, because it does indeed represent a crucial benchmark. Any invention which fails the “teaching-suggestion-motivation” test is clearly not patentable. But this need not end the inquiry. If the examiner thinks he/she has a special case in which this test does not capture the reality of the situation, perhaps the matter could be referred to a multiperson review committee, thus eliminating the influence of a single examiner’s whim. Or perhaps boards of outside experts could be established, or community peer review processes conducted over the Internet.

Documents:

• On the Merits
  • In Support of Petitioner
    • Petitioner's Brief on the Merits; [UPDATED WITH CORRECT VERSION]
    • Government's Brief in Support of Petitioner;
    • Law and History Professors (Sarnoff) in Support of Petitioner;
    • Law Professor (Strandburg) in Support of Petitioner;
    • Electronic Frontier Foundation in Support of Petitioner;
    • Judge Colianni in Support of Petitioner;
    • Intel and Micron in Support of Petitioner;
    • Progress and Freedom Foundation in Support of Petitioner;
    • Cisco and GM in Support of Reversal (Petitioner);
    • CCIA in Support of Petitioner;
    • Business Software Alliance in Support of Petitioner;
    • Time Warner, IAC, and VIACOM in Support of Petitioner;
    • AARP.
  • In Support of Neither Party
    • IBM in Support of Neither Party;
    • Ford & DaimlerChrysler in Support of Neither Party;
    • DC Bar Assn (Eccelston);
    • Professor Hollaar.
• Petitions Stage
  • Party Briefs
    • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
    • Teleflex’s Brief in Opposition;
    • KSR Reply Brief (314 KB);
    • Teleflex Supplement.
  • Amicus Briefs
    • Government in support of petition;
    • 24 Law Professors in support of petition;
    • Progress Freedom Foundation in support of petition;
    • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Prof Miller: KSR Lift-off!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious;
• Patent Hawk: Hindsight Problem;
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link];
• Petherbridge & Wagner Empirical Article [link]
• Cotropia Article: [link].
• The Patent at issue: [link]

Cite as Dennis Crouch, “KSR v. Teleflex: Rethinking Obviousness,” Patently-O, available at https://patentlyo.com/patent/2006/08/ksr_v_teleflex_.html

[S]ome patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so.

This quote invokes division of labor ideals.  Certain entities simply don’t have the ways, means, or inclination to manufacture, market, and/or sell their inventions.  For those entities, the Supreme Court says that there is no requirement to work the invention. But what about other entities — those with they ways, means, and inclination to work similar inventions?  Doesn’t the Supreme Court’s unanimous opinion imply that there is a basis for denying injunctions to large manufacturers who do not actually practice the inventions in the patents that they assert? 

More notes on the eBay case:

• Patent Validity as a Factor in Determining Injunctive Relief?
• Practice Tip?: Very Good Infringers Avoid Injunctions.
• Patently-O General Discussion of the eBay Decision.
• Patently-O on the Radio.
• Professor Randy Picker on the “unanimous” decision.

The Supreme Court has granted KSR’s writ of certiorari and now will address fundamental questions of patentability that have been raised. The doctrine of nonobviousness ensures that patent rights are not granted on inventions that are simply throw-away modifications of prior technology.  Questions of obviousness are at play in virtually every patent case, in both proceedings before the USPTO and during infringement litigation.

Over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed its nonobviousness doctrine using a motivation/suggestion/teaching test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the High Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.

Professor John Duffy has done a masterful job of shepherding this case through the system.  In an article several years ago, Duffy predicted the current rise of Supreme Court interest in patent case.  In fact, at that time he announced that the very issue now being debated in KSR was ripe for adjudication:

One very good candidate for [Supreme Court] review is the law governing whether an invention is not ‘‘obvious’’ at the time of invention. . . . [The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old). . . . None of this is to say that the Court will necessarily reject the doctrine developed by the Federal Circuit; it is only to suggest the Court is likely to end its long absence from this doctrinal area soon.

The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Robert Brauneis another GWU law professor led a group of 24 law professors in support of the petition. Although he did not file a brief (to my knowledge) Richmond Professor Christopher Cotropia argues that (1) recently, the CAFC has removed some rigidity from the obviousness determination and (2) the requirement for proof of a suggestion to combine should be thought of as a rule of evidence. [link].

According to Professor Duffy, the preliminary amici briefing schedule is as follows:

• Amici supporting petitioner or neither side: August 10, 2006 (45 days after cert granted).
• Amici supporting respondent: September 14, 2006 or 35 days after petitioner brief is filed — whichever is less.

Crouch’s Commentary: For those of you concerned about the potential impact of this case — It is very likely that the CAFC’s motivation test will be changed and briefs simply requesting “no change” are unlikely to to be given much weight.  Proposed solutions, including analogies to other areas of law (and foreign law) may be helpful.  In this case, I also believe that would be useful to provide the Court with a number of real-world examples of how the system works or how it should work.

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
  • Teleflex’s Brief in Opposition;
  • KSR Reply Brief (314 KB);
  • Teleflex Supplement.
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Prof Miller: KSR Liftoff!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious.
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link]

Dissent: Three justices, led by Justice Breyer would have heard the case and would have found the patent invalid:

There can be little doubt that the correlation between homocysteine and vitamin deficiency set forth in claim 13 is a "natural phenomenon." . . . [The claimed] process instructs the user to (1)obtain test results and (2) think about them. . . . At most, respondents have simply described the natural law at issue in the abstract patent language of a "process." But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge.

The dissent also took shots at the State Street decision that started the business method craze.

Neither does the Federal Circuit’s decision in State Street Bank help respondents. That case does say that a process is patentable if it produces a "useful, concrete, and tangible result." But this Court has never made such a statement and, if taken literally, thestatement would cover instances where this Court has held the contrary. The Court, for example, has invalidated a claim to the use of electromagnetic current for transmitting messages over long distances even though it producesa result that seems "useful, concrete, and tangible." Morse. Similarly the Court has invalidated apatent setting forth a system for triggering alarm limits inconnection with catalytic conversion despite a similarutility, concreteness, and tangibility. Flook. And the Court has invalidated a patent setting forth a process that transforms, for computer-programming purposes,decimal figures into binary figures—even though theresult would seem useful, concrete, and at least arguably (within the computer’s wiring system) tangible. Gottschalk.

Documents:

• Read the LabCorp v. Metabolite Dissent 04-607.pdf
• NYTimes Article by Andrew Pollack

Tom Goldstein, attorney for respondents (and SCOTUS Blog proprietor) has filed a response to the SG.  In the response, Teleflex argues that CAFC precedent continues to evolve and extensively discusses the recent Kahn decision that detailed the full scope of CAFC obviousness treatment.

In Kahn, the court affirmed the PTO’s finding of obviousness, explaining at great length that a "teaching, suggestion, or motivation" can be found "implicitly" based on precisely the factors that the Solicitor General says are relevant: "what the combined teachings, knowledge of one of ordinary skill in the art, and the nature of the problem to be solved as a whole would have suggested to those of ordinary skill in the art." 441 F.3d 987. In Cross Medical, the court of appeals applied the "implicit" obviousness standard to reverse a district court ruling that a patent was not obvious, explaining that obviousness could be found on the basis of a "problem [that] was within the general knowledge of those of ordinary skill in the art," 424 F.3d 1322, even if the patent is not directed at "the identical problem addressed in [the] prior art," id. No fair distinction can be drawn between the rule proposed by the Solicitor General and the flexible standard articulated by the Federal Circuit in these more recent decisions and adhered to in this case.

Teleflex's arguments regarding "implicit" motivation is an attempt to show that the CAFC has softened its approach to nonobviousness.  The "implicit" argument is also an attempt to subtly shift the conversation -- The question before the court is whether any "proof" of a motivation should be required. Of course, the proof could take the form of explicit or implicit evidence.

SG Support = Certiorari: A recent (unreleased) study by a patent law professor looked at all invited amici petition briefs filed by the solicitor general for the past five terms. The SG gave an unqualified recommendation for certiorari (as in KSR) in 15 cases. In all 15 cases, the Supreme Court then granted certiorari. 

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
  • Teleflex Supplement
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Discussion of Government's Brief in Support of Certiorari;
• Patently-O Discussion of Microsoft’s Amicus Brief;
• Patently-O Discussion of the CAFC decision;
• Patently-O Discussion of Law Professors Brief;
• Patently-O Discussion of In re Kahn.

The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

If I understand them, the four justices are telling lower courts to reevaluate a patent’s validity and enforceability at the injunction stage — even after those issues have been decided in the patentee’s favor.  If you remember, the question of an injunction only arises after the patent has been found valid, enforceable, and infringed.

Perhaps there are parallels between Kennedy’s position and the sentencing of a convicted criminal.  At the sentencing stage, the sitting judge has a rather free hand to consider the evidence at hand in mitigating the prison time — even if the jury made opposite conclusions.  Here, even if the jury found that the patent was valid and infringed, Kennedy would allow the court to deny an injunction based on the patent’s “suspect validity.”

Of course this approach is wrong, but if you are a cautious patent attorney the solution is simply to not write vague or questionable patent applications.

Links:

• Patently-O General Discussion of the eBay Decision.
• Patently-O on the Radio.
• Professor Randy Picker on the “unanimous” decision. 

Like that little blue engine, KSR’s case continues to move forward despite significant obstacles. Now, the Solicitor General has filed its brief on behalf of the U.S. government supporting KSR’s petition for certiorari.

This case takes a direct assault on the Federal Circuit’s longstanding obviousness jurisprudence that requires some explicit reason as to why one of ordinary skill in the art would have known to combine two or more references to solve a particular problem.  The question presented reads as follows:

Whether a claimed invention can be “obvious,” and therefore unpatentable under 35 U.S.C. 103(a), without proof of some “teaching, suggestion, or motivation” to modify or combine the prior art in the manner claimed.

The statute in question, 35 U.S.C. 103(a) is not so specific.  Rather, the statute requires that a patent be denied if

the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.

35 U.S.C. 103(a).  The Solicitor General’s brief, filed last week, sees the disjunct between the CAFC rule, Section 103(a), and prior Supreme Court decisions such as Graham.  In a blunt rebuke, the SG argues that “the Federal Circuit’s teaching-suggestion-motivation test extends patent protection to non-innovative combinations of familiar elements.”  Rather, the SG argues for a return to the broad factors outlined in Graham for determining the level of one of ordinary skill in the art: “the scope and content of the prior art, the differences between the prior art and the claims at issue, and the level of ordinary skill in the pertinent art.”

The SG’s support for certiorari is rare in patent cases and is often the most cherished of a petitioner’s amici.

Notes: Of course, most inventions involve “a combination of old elements” where each element is found somewhere in the prior art.  (In re Kahn).  After the teaching-suggestion-motivation test is gone, what standard will a patent examiner use to decide whether a new combination is non-obvious? To be sure, the current test is formalistic and has been both under– and over-inclusive.  However, has anyone proposed a better test — one that can be carried out by the PTO even in light of the high-turnover and young workforce in the agency’s examining corps? A patent attorney e-mailed his fear that a less formal test will give examiner’s permission to make the dreaded “because I say so” conclusory argument.

The EPO also has a rather formalistic approach known as the "problem-solution" test. That test also has its detractors, but is seen by many as a superior approach. In the UK, the “Windsurfing” test takes its name from the case of Windsurfing Int’l v. Tabur Marine. In that case, the court looked to whether, when viewed without knowledge of the alleged invention, the differences between what is known to a “skilled but unimaginative technician” and the alleged invention constitute steps that would have been obvious to the technician or whether they require any degree of invention. The hypothetical technician does not consider the commercial consequences which might follow if the step or process in question were found in practice to achieve or assist the objective which he had in view.

Another e-mail that I received focused on the low-tech nature of this case. 

Like sectional couches with remote controls in the arm rest (recall that nightmare?), the technology [here] is so simple that everyone believes they understand it once it is laid out for them.  The technology most [patent attorneys] deal with on a day to day basis is not this simple - drugs, catalysts, biotechnology, automation, software.  The risk of a result-driven declaration of the law on obviousness is keeping me awake at night.

These comments at least have anecdotal weight — in the recent eBay oral argument, Chief Justice Roberts was heard to quip that even he could have invented invention in question (or at least created the software flow-charts).

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Discussion of Microsoft’s Amicus Brief
• Patently-O Discussion of the CAFC decision;
• Patently-O Discussion of Law Professors Brief;
• Patently-O Discussion of In re Kahn;

• Coast-to-Coast Show link.
• MP3 download.
• Windows Media stream.
• Craig Williams’ Blog: May it Please the Court.
• Robert Ambrogi’s Blog: LawSites.

The Supreme Court is contemplating hearing this case that questions the standards for inherent anticipation of a patent. The drug in question is Paxil, and the case history has more twists than a Hazzard County road. But, the question now before the Court is simple:

Whether a compound that is inevitably produced by the prior art is inherently anticipated by the prior art, and thus not novel under 35 U.S.C. 102.

Another way to focus on the particular question is whether any human recognition of the inherency is required.

Here, Paxil (a PHC hemihydrate) is inevitably produced by a PHC anhydrate, and PHC anhydrate (A.K.A. Ferrosan) was well known before the Paxil patent.

Judge Posner (sitting by designation) determined that Paxil was not inherently anticipated because its inevitable production from Ferrosan was not a “scientific []certainty.” On appeal, the CAFC reversed that particular decision — finding that the patent was inherently anticipated because PHC hemihydrate “inevitably results from production of” PHC anhydrate.

Now, the Solicitor General has provided the government’s views on the case, and supported the CAFC decision:

The court of appeals correctly held that the patent claim is invalid because PHC hemihydrate was inherently anticipated by the prior art that inevitably produced it. . . . a characteristic of a pre-existing product is not patentable even if no one had previously recognized that characteristic.

Because the Gov’t fully supports the CAFC decision, it also recommended against hearing the case.

• Discussion of the original panel opinion: Part I, Part II, Part III, and part IV.
• Discussion of the en banc order and new appellate opinion: Part V, Part VI.
• My premature conclusion: Part VII.
• Solicitor General’s Brief
• Aaron Barkoff’s Orange Book Blog

Earlier this year, the Supreme Court granted MedImmune’s petition for certiorari to determine when a patent licensee can challenge the validity of a patent.  The CAFC has held on a number of occasions that a licensee in good standing has no standing to sue for declaratory judgment because it is not under threat of being sued for patent infringement.  However, this conclusion pushes against the Supreme Court’s 1969 decision in Lear v. Adkins which held that a public policy interest in invalidating bad patents was strong enough to warrant a limitations on a licensee’s ability to give up its right to challenge a patent’s validity. 

The specific question presented is as follows:

Does Article III’s grant of jurisdiction of "all Cases . . . arising under . . . the Laws of the United States," implemented in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), require a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed?

MedImmune’s brief and the first batch of amicus briefs have been filed and are reviewed below.

MedImmune’s Argument is quite simple — neither the Declaratory Judgment Act nor the Constitution exclude patent licensees from the scope of DJ jurisdiction, and such a per se rule is wrong because there are situations where an actual case or controversy exists between the licensee and licensor.  The linchpin of MedImmune’s case is their argument that “apprehension of suit is not a necessary condition [of establishing a concrete legal controversy], and this Court has never suggested such a thing.”

U.S. Government filed its brief and presents a number of interesting arguments. Specifically, the SG argues that the CAFC “has erected an unwarranted obstacle to declaratory relief in patent cases” that “cannot be justified by considerations of patent policy.”

[The CAFC’s] limitation on the availability of declaratory relief cannot be squared with this Court’s cases or with the congressional purposes underlying the Act. As demonstrated by decisions of this Court involving pre-enforcement challenges to statutes, it is sufficient for a declaratory judgment plaintiff to demonstrate a genuine risk of enforcement and a reasonable likelihood that he would engage in the proscribed conduct if the threat were removed. A declaratory judgment plaintiff need not run the risks entailed in actually violating the law in order to make out an “actual controversy.” See, e.g., Steffel v. Thompson, 415 U.S. 452, 459, 475 (1974). Indeed, this Court has already rejected the proposition that a licensee’s ongoing payment of patent royalties negates any justiciable dispute over the validity of the patent. Altvater v. Freeman, 319 U.S. 359 (1943). Yet the Federal Circuit’s insistence on compliance with its two-part test requires a patent licensee to commit a material breach of its license agreement in order to create an “actual controversy.” That result is contrary to the congressional purposes behind the Act, which was adopted to free parties of the requirement that they act at their peril on their own interpretation of their rights before being able to obtain a judicial construction of those rights.

When the Petitioner and Government briefs are examined together, you will see that they have presented a strong attack on the CAFC’s decision, and might just change the face of the licensor-licensee relationship.

Professor Brief (Dratler & Oddi) argue that DJ jurisdiction should extend “up to the constitutional limits. Indeed, it would begin and end with those limits.”  Licensee’s should fall within this standard.

The Generic Pharmaceutical Association discusses the CAFC’s requirement of an “actual controversy” and argues that “Article III controversies arise even when the patentee is not about to commence an action.  This argument is even more focused in the recent briefs in the Apotex v. Pfizer case.

Medtronic discusses the importance of DJ actions in patent cases. The case is especially compelling in areas where dozens of patents are licensed in a single agreement that sweeps together both the good and the bad.

National Resources Defense Counsel is not interested in patent issues, but believes that this case could have some effect on its ability to bring certain environmental litigation.  NRDC presents three requisites of an Article III case or controversy: injury in fact, causation, and redressability.  Here, MedImmune satisfies those requisites because it is paying a license fee under protest, the causation is the allegedly invalid patent, and the redress is to declare the patent invalid.

The Licensing Executive Society (LES) directly addresses Lear v. Adkins, arguing that case “held that licensees could not be precluded from challenging the validity of a licensed patent under the doctrine of licensee estoppel.” However, because of inconsistent application of the Lear doctrine, licensees today have difficulty in known when or even if they can challenge the validity of their licensed patent. “The Court is now in a position to resolve uncertainty in this area by issuing a ruling that clarifies and explains the continuing validity and scope of the Lear doctrine. LES urges the Court to provide such clarity.”

Documents:

• Merits:
• Party Briefs:
• MedImmune Brief
• Amici in Support of Petitioner
• Solicitor General
• Law Professors (Dratler Oddi)
• Generic Pharma Assn
• Medtronic
• NRDC
• Amici in Support of Neither Party
• Licensing Executives Society
• Petitions Stage
• Genentech:
• MedImmune’s Genentech Petition (6509 KB)
• Genentech's opposition to certiori
• MedImmune's Genentec Reply
• Centocor:
• MedImmune’s Centocor Petition
• Centocor’s opposition to certiori
• MedImmune’s Centocor reply

Links:

• CAFC Decision in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Centocor;
• MedImmune Petition Granted
• Lear v. Adkins;
• Professor Miller’s comments
• Supreme Court on the March.

FTC v. Schering-Plough (on petition for certiorari).

In a March 2005 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers regarding the patented blood pressure drug K-Dur.  In the settlement, Schering-Plough made a “reverse payment” to the potential infringers to settle the lawsuit. The FTC had concluded that the settlement was an "unreasonable restraint of trade."  The 11th Circuit, however, disagreed, finding that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law (and thus spurring deals totaling billions of dollars). 

In its petition for certiorari, the FTC presents the question:

Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.

Before considering the petition, the Court requested the Solicitor General’s views on the case — i.e., the Court asked the DOJ to comment on whether FTC’s case should be heard.  In a response made public today, the Government’s view is that the issues are important, but the FTC has not brought a good case. 

[Reverse payment] settlements may pose a risk of restricting competition in ways that are not justified by a lawful patent, to the detriment of consumers. This case, however, does not present an appropriate opportunity for this Court to determine the proper standards for distinguishing legitimate patent settlements, which further the important goals of encouraging innovation and minimizing unnecessary litigation, from illegitimate settlements that impermissibly restrain trade in violation of the antitrust laws.

The DOJ’s arguments are essentially that: (1) the particular issues were not squarely addressed by the appellate court and (2) there is no circuit split.

As Foley’s Hal Wegner has noted, the Solicitor General’s view is not controlling.  For instance, in the upcoming LabCorp v. Metabolite case, the SG unsuccessfully argued against certiorari.

I’m sure that we’ll find more information at the Orange Book Blog.

In 2005, the CAFC decided Teva v. Pfizer and declared that the court does not have declaratory judgment jurisdiction over a case between an ANDA filer and the patent holder unless the patent holder at least threatens suit.  Orange Book listing - on its own– does not create a reasonable apprehension of suit.

Apotex is facing the same situation in the present case.  They filed their ANDA request, Pfizer did not file suit or threaten litigation.  However, Apotex is afraid that as soon as it begins to manufacture the new drug that Pfizer will sue and potential force Apotex to pay “massive patent liability.”

Thus, Apotex has asked the Supreme Court to determine whether declaratory judgment jurisdiction can exist based on this “prospect of massive patent liability that deters generic manufacturers from entering the marketplace.”

The Supreme Court has asked the Solicitor General to present the government’s view on whether declaratory judgment jurisdiction can exist in this situation.  This request by the High Court is seen as a potential stepping stone to grant of Petitioner's request for certiorari.  The FTC made its position clear on this issue in a recent brief in the Tamoxifen Citrate Antitrust Litigation (“Under the panel ruling, pharmaceutical companies are now free to pursue this anticompetitive ploy without fear of antitrust liability.”).

Notes:

• Orange Book Blog has the briefs;
• Joseph Miller’s Notes.

In eBay, the concurrence almost begged lower courts to force compulsory licenses when the asserted patent is a “business method.”

In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

In LabCorp, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.  Although the claim in question is a “medical method” it is not far afield from the much maligned “business methods.”

It appears highly likely that Justice Kennedy’s group of four (Justices Kennedy, Stevens, Souter, and Breyer) will stick together in an attempt to invalidate this patent (and potentially many others).  And, they only need one more Justice to have a majority.  On the other hand, as Professor Joseph Miller points out, the loose language of Kennedy’s concurrence might be a sign that they could not get a majority for the LabCorp decision.

I wondered though, as I read eBay, whether it was a sign the Court is not striking down the claim in LabCorp … on the theory that the Kennedy Four in eBay, knowing they had failed to muster a majority in LabCorp, were all the more determined to speak plainly, and a bit sharply, about the problems with the contemporary patent system that make automatic injunctions especially imprudent (assuming, for a moment, the merits of that critique).

Chief Justice Roberts, who led the more conservative concurrence will likely not take part in the decision because of a potential conflict of interest.