Patent Law After KSR – A Brave New World

The following commentary is from Dan Bromberg, a partner at Quinn Emanuel Urquhart Oliver & Hedges, Inc., which filed an amicus brief on behalf of Time Warner, Inc., IAC/Interactive Corp., and Viacom, Inc. in the KSR case. The views expressed below are his own and do not necessarily reflect those of either Quinn Emanuel or the firm’s clients.

Although the Roberts Court was supposed to render unanimous decisions providing clear guidance, it often has failed to realize this goal. In yesterday’s KSR decision, however, the Court found that unanimity and fundamentally altered the patent landscape. Rejecting the rigid approach developed by the Federal Circuit on obviousness, one of the most important aspects of patent law, the Court instructed that “common sense” cannot be ignored in determining the validity of patents and emphasized patent law’s goal of rewarding true innovation.

The KSR decision asserts the Supreme Court’s authority over patent law more clearly and aggressively than any case to date. KSR does not simply require the Federal Circuit to adhere to the obviousness standard it recognized in Graham and leave it at that, as last Term’s eBay decision did in leaving the shape and impact of the new standard for injunctions to the lower courts to decide. Nor does KSR adopt a bright line rule that the Supreme Court easily could administer. Instead, KSR admonishes the Federal Circuit against using rigid rules and imposes a flexible standard, and then applies the standard to the facts of the case so as to leave no doubt about its application. Thus, the Supreme Court’s unanimous decision suggest that the Court plans to require the Federal Circuit to apply a flexible standard and to scrutinize how that standard is applied, at least on an occasional basis.

The practical impact of KSR will be immediate and broad. Numerous patents will now be open to challenge on obviousness grounds, and a substantial number of those may invalidated. In light of the Supreme Court’s rejection of the conclusory expert testimony in KSR, many obviousness challenges will be resolved on summary judgment. And by making it clear that obviousness must be judged under a flexible standard, the Supreme Court has limited the ability of the Federal Circuit to control how the PTO and the district courts apply this standard.

The impact of KSR is likely to be particularly great with respect to business method patents, particularly those that simply translate a technique used in brick & mortar retailing onto the Internet. It also may have a great impact in the high tech industry, where numerous incremental patents have been issued that are often used to extort settlements companies with complex products that allegedly use such patents. Finally, it will affect so-called patent trolls, especially those who buy up dubious patents in hopes of leveraging them into lucrative settlements.

The decision escalates a trend toward Supreme Court repudiation of Federal Circuit patent jurisprudence… Since the Federal Circuit was formed and entrusted with jurisdiction over patent appeals, the Supreme Court once largely deferred to it on patent matters. Although the Court intervened at times to resolve internal conflicts in the circuit and to ensure that Supreme Court precedent is obeyed, it largely left the development of patent law to the Federal Circuit. Lately, however, in such cases as eBay and MedImmune, it has been far less deferential, invalidating the Federal Circuit’s approach to injunctions and declaratory judgments. But it has left some discretion in the Federal Circuit’s hands on remand–in last Term’s eBay decision, for example, it left the implementation of the new approach to injunctions to the lower courts. Today’s decision, by contrast, both announced a rule and applied to declare a patent obvious, preventing the Federal Circuit from watering down the test on remand

In sweeping away the Federal Circuit’s teaching/suggestion/motivation test, the Court recognized that it reflects a helpful insight—that most inventions are based upon combinations of prior art and therefore it can be important to identify a reason to combine that art—but refused to make this insight the starting and ending point for obviousness analysis. It barely acknowledged the supposed concerns about hindsight bias that had led the Federal Circuit to adopt a strict approach to obviousness. And it rejected various subsidiary principles that the Federal Circuit had used in analyzing obviousness, such as focusing on the motives of prior patentees, prohibiting evidence that a combination was “obvious to try,” and prohibiting reliance on patents concerning other subjects.

It is true, as some have pointed out, that the Supreme Court did not replace the teaching/suggestion/motivation test with any clear rule. Nonetheless, it is clear that combination patents are no longer favored unless they create an unexpected synergy, the prior art taught away from them, or there was no economic motivation to combine. Combination patents will likely be found questionable in other situations.

Even outside the context of combination patents—and there undoubtedly will be substantial battles in the future over what constitutes a combination patent under KSR—the Supreme Court’s decision has altered the landscape by reinvigorating the role of the “person of ordinary skill in the art” in evaluating patents for obviousness. According to the unanimous Court in KSR, “[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.” As a result, after KSR, patents may be issued only for inventions that are more than “the results of ordinary innovation,” a principle that will support obviousness challenges far beyond the realm of combination patents.

It is, of course, difficult to predict how many patents will be invalidated as a result of KSR or how KSR will play out in individual cases. Nonetheless, it is clear that in patent law, after KSR, it is a brave new world.