The Federal Communications Commission has released the details of consent decrees with four major broadcast groups. In exchange for terminating the FCC's investigation of payola allegations, CBS Radio, Citadel Broadcasting, Clear Channel and Entercom are to make "voluntary contributions" to the US Treasury of between $2 million and $4 million and agreed to adhere to a set of Business Reforms for the next three years.
Aside from the amounts of the contributions, the terms of the consent decrees and the associated Business Reforms are the same and may be considered as providing guidance to the industry as to the Commission’s current view of acceptable promotional practices by record labels and radio stations.
The Business Reforms begin by restating the traditional payola ban on soliciting, receiving or accepting cash or other items of value from a record label or its representatives in exchange for providing or increasing airplay of music from the record label or any of its artists.
The Commission now has further provided that no item of value may be accepted from an independent music promoter unless the promoter certifies in writing that it has not been compensated by the record label based upon airplay.
This general prohibition is subject to a major exception for permitted activity surrounding contests, promotions or giveaways. According to the consent orders, stations and their employees may solicit, receive and accept items of value to give away on the air, at station events or promotions, or for the benefit of charities. Such materials may include promotional items, gift cards, CDs, gift certificates, concert tickets, airfare, hotel rooms, vouchers and cash. However, they cannot be given to company employees or members of their immediate families or households. Moreover, if used in a contest, the rules and on-air announcements for the contest must clearly indicate the value of the prizes and identify the record label as the provider.
The Commission further clarified that stations and their employees may accept payment (whether cash or other items of value) from record labels for on-air advertising, provided that proper sponsorship identification announcements are made. In addition artists may appear at events or interviews for which their record label has subsidized "reasonable" costs, so long as onair announcements identify the record label as a sponsor. Beyond the restrictions that apply to all on-air advertising and promotion, stations and labels may enter into commercial transactions by which a station agrees to license, sell, distribute or promote a label’s artists, songs or records.
The Commission has also defined several categories of "nominal consideration" which stations and their employees may solicit, receive and accept from record labels for use by the station without running afoul of the payola policies. These include:
* Electronic copies of songs and up to 20 copies of a CD for the purpose of familiarizing station employees with the recordings.
* Electronic copies of recordings for posting on station websites to familiarize visitors with the recordings.
* Promotional items such as t-shirts, key chains, coffee mugs, baseball hats, posters, pens and bumper stickers, intended for the personal use of station employees and having an individual value of $25 or less.
* Up to 20 concert tickets (including associated backstage or "VIP"-type passes) to be used by station employees (plus additional tickets for employees who are working at the concert).
* Gifts of up to $150 to commemorate an employee's life events, professional achievements and holidays (such as for a birthday, wedding, birth of a child, job promotion or winning a music industry award).
* Meals and entertainment having a value of up to $150 per person (including an accompanying spouse or significant other) for an event attended by a record label employee and having a legitimate business purpose. Meals and entertainment exceeding $150 per person may be accepted if approved in writing by a station's compliance officer consistent with the terms of a company-wide compliance plan that the consent decrees require each company to adopt.
* Reasonable travel and lodging expenses to attend live performances and appearances by record label artists for the purpose of familiarizing station employees with the artists, subject to a limit of 20 such trips annually to be allocated among all company employees.
The Commission notes that there may be a natural increase in airplay of an artist's music during the period surrounding the artist's appearance at an event, contest or giveaway promoting the artist. However, if the increase in airplay results from an agreement or understanding with the record label or the artist, then the increased airplay is considered to have been sponsored by the label or artist and must be identified as such.
The Commission has also imposed documentation requirements – a database record of: each item of value received from a record label; the disposition and identification of contestwinners of prizes valued at more than $25; the addresses of recipients of prizes that exceed the monetary reporting threshold of the Internal Revenue Service (currently $600); and written agreements for all advertising by record labels.
Finally, the Commission required each of the four settling companies to engage in training to familiarize personnel with the requirements of the Business Reforms, to appoint a compliance officer, to designate a compliance contact in each market, to establish a hotline for employees to obtain advice on compliance and report violations, and to insert into all personnel contracts a clause relating to compliance with the sponsorship identification laws.
Enforcement of potential violations of these requirements is to be strict: upon issuance of a future Notice of Apparent Liability to any of the four companies alleging violation of the Commission's sponsorship identification laws, any accused employee is to be suspended, immediately investigated and required to undergo remedial training. If a violation is found, the employee is to be subject to further disciplinary action, including termination. While the Commission’s new guidelines only apply directly to the four settling parties, they comprise the Commission's most current thoughts about payola. Consequently, while not necessarily a safe harbor, they would seem to provide reasonable standards for stations' vigilance in this often gray area of policy.
If there is a common theme to the Commission’s consent decrees and their associated Business Reforms, it seems to be that the closest scrutiny will be directed toward consideration having an on-air component, whether music exposure, publicity or contest prizes. The Commission seems to be taking a more indulgent view toward consideration that merely has the potential to influence broadcast content, such as promotional items for employee use, personal gifts, and attendance at concerts and artist appearances. The key, which has remained relatively constant over the last four decades, is disclosure of situations which an outsider might construe as conferring an unfair advantage to the provider in crafting a station's on-air product.
http://www.wcsr.com/default.asp?id=114&objId=235
Friday, June 1, 2007
Supreme Court Issues Unanimous Decision Broadening the Obviousness Test for Determining Patent Invalidity
Suppreme Court Patent Decision: KSR Int'l Co. Vs. Teleflex Inc.
On April 30, 2007, the Supreme Court issued a unanimous decision in KSR Int’l Co. v. Teleflex Inc. that revised existing patent law on the issue of obviousness, making it easier for companies to challenge patents on the grounds that they cover products that are obvious combinations of existing technology. The Court decided that a patent claim reciting a combination of existing inventions and technologies for adjustable gas pedals was invalid for obviousness, reversing a decision by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit’s decision was based on a test known as the "teaching, suggestion, or motivation" (TSM) test. Under the TSM test, when a patent is based on the combination of multiple prior art references, a patent challenger must establish some suggestion, teaching, or motivation that would have led a person of ordinary skill in the art to combine "prior art" (public domain) teachings in the manner claimed in the patent. The Supreme Court criticized the Federal Circuit’s application of the TSM test as too rigid and too narrow.
Key Conclusions of KSR
* A patent claim reciting a combination of elements that can each be found in the prior art will likely be obvious when that combination yields "predictable" results.
* Courts and patent examiners should not focus solely on the problem the patent holder was trying to solve when determining obviousness. Rather, any need or problem known in the field at the time of the invention and addressed in the patent can provide a reason for the combination, thereby leading to obviousness.
* A patent claim can be invalidated by a showing that the combination of elements was "obvious to try." According to the Court, the influence of design or market trends upon the development of a claimed invention may make it obvious.
* KSR significantly broadens the universe of information that a Court may consider in determining whether there exists a teaching, suggestion, or motivation to combine prior art references so as to render a patent claim obvious.
Consequences of KSR
* Vulnerability of Inventions Comprising Combinations of Old Elements- Previously, a patentee could take comfort in Federal Circuit law holding that combinations based on entirely new, partly new, or all old elements could be patentable and that an accused infringer's attempts to merely cite the existence in the prior art of each claim limitation, without more, were not helpful to the invalidity defense. Now, although merely citing the existence of each claim limitation in the prior art may still not be enough to render a claim obvious, it does bring the accused infringer one step closer to invalidating the claim. This broadened obviousness analysis will most highly impact inventions in the mechanical and electrical areas, where predictability of results is more common than with such fields as microbiology.
* Presumption of Validity Opened to Attack in Certain Cases - Under Federal Circuit precedent, the burden to overcome the presumption of validity with clear and convincing evidence is more easily carried when the patent challenger cites prior art that was not considered by the U.S.P.T.O. examiner during prosecution of the patent application. In KSR, a key prior art patent had not been considered during prosecution, and the Court remarked: "We...think it appropriate to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here." This statement may open the door to more direct attacks on the presumption of validity in future cases where the patent challenger relies on previously-uncited prior art.
* Potential for Greater Use of Summary Judgment to Declare Invalidity- Reiterating that obviousness is ultimately a legal question for a district court judge to decide, the Supreme Court found that the case was ripe for resolution of obviousness on summary judgment because there was no genuine dispute of material fact as to the level of skill in the art, the content of the prior art, and the scope of the patent claim. While this treatment does not represent a change in the law, the Supreme Court’s approval of summary judgment in KSR may encourage district courts to more seriously consider disposing of patent cases before trial based upon obviousness defenses.
* Reaction by USPTO – On May 3, 2007, the Deputy Commissioner of Patents issued an internal Memorandum to examining group directors, indicating that the PTO would issue guidelines to its patent examiners on how to apply KSR to patent applications, but that in the meantime, the directors should note that the Supreme Court did not reject the TSM test and required explicit reasons for combining the teachings of prior art patents to render a claim obvious. The Memorandum concluded that it "remains necessary" to identify the reason supporting a proposed combination of prior art references.
Adapting to Change in Law Wrought by KSR
* Patent Applicants facing an obviousness rejection should ensure that the examiner followed the PTO's guidelines regarding KSR. Rejections not following the guidelines are subject to being withdrawn or overruled on appeal.
* Current patent litigants should reevaluate the likelihood of success of any obviousness defense asserted in the litigation, in light of KSR. If the claimed invention is in the mechanical or electrical area, then the litigants should explore whether any viable basis exists for classifying the results of the invention as "unpredictable." The likelihood of summary judgment resolution should also be considered. In this manner, patentees can reassess the invalidity risks of continuing with the litigation, and accused infringers can reassess how likely they are to end the litigation favorably, and at the very least, whether they have acquired any leverage with which to force a settlement of the case.
* Potential patent litigants - Patentees considering a lawsuit, as well as potential infringers facing a threat of litigation against them, should perform the same KSR analysis described above. The results of that analysis may impact the decision on whether the patentee should initiate litigation in the first place. If the patentee has threatened legal action, or even just offered a license, then the accused infringer may have grounds to initiate a declaratory judgment action against the patentee, and the KSR analysis can determine whether the infringer stands a substantial chance of prevailing in that action on obviousness invalidity grounds.
Ms. Sperry is an Associate, and Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where they both concentrate their practices on intellectual property litigation. The views herein expressed are solely those of the authors and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
On April 30, 2007, the Supreme Court issued a unanimous decision in KSR Int’l Co. v. Teleflex Inc. that revised existing patent law on the issue of obviousness, making it easier for companies to challenge patents on the grounds that they cover products that are obvious combinations of existing technology. The Court decided that a patent claim reciting a combination of existing inventions and technologies for adjustable gas pedals was invalid for obviousness, reversing a decision by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit’s decision was based on a test known as the "teaching, suggestion, or motivation" (TSM) test. Under the TSM test, when a patent is based on the combination of multiple prior art references, a patent challenger must establish some suggestion, teaching, or motivation that would have led a person of ordinary skill in the art to combine "prior art" (public domain) teachings in the manner claimed in the patent. The Supreme Court criticized the Federal Circuit’s application of the TSM test as too rigid and too narrow.
Key Conclusions of KSR
* A patent claim reciting a combination of elements that can each be found in the prior art will likely be obvious when that combination yields "predictable" results.
* Courts and patent examiners should not focus solely on the problem the patent holder was trying to solve when determining obviousness. Rather, any need or problem known in the field at the time of the invention and addressed in the patent can provide a reason for the combination, thereby leading to obviousness.
* A patent claim can be invalidated by a showing that the combination of elements was "obvious to try." According to the Court, the influence of design or market trends upon the development of a claimed invention may make it obvious.
* KSR significantly broadens the universe of information that a Court may consider in determining whether there exists a teaching, suggestion, or motivation to combine prior art references so as to render a patent claim obvious.
Consequences of KSR
* Vulnerability of Inventions Comprising Combinations of Old Elements- Previously, a patentee could take comfort in Federal Circuit law holding that combinations based on entirely new, partly new, or all old elements could be patentable and that an accused infringer's attempts to merely cite the existence in the prior art of each claim limitation, without more, were not helpful to the invalidity defense. Now, although merely citing the existence of each claim limitation in the prior art may still not be enough to render a claim obvious, it does bring the accused infringer one step closer to invalidating the claim. This broadened obviousness analysis will most highly impact inventions in the mechanical and electrical areas, where predictability of results is more common than with such fields as microbiology.
* Presumption of Validity Opened to Attack in Certain Cases - Under Federal Circuit precedent, the burden to overcome the presumption of validity with clear and convincing evidence is more easily carried when the patent challenger cites prior art that was not considered by the U.S.P.T.O. examiner during prosecution of the patent application. In KSR, a key prior art patent had not been considered during prosecution, and the Court remarked: "We...think it appropriate to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here." This statement may open the door to more direct attacks on the presumption of validity in future cases where the patent challenger relies on previously-uncited prior art.
* Potential for Greater Use of Summary Judgment to Declare Invalidity- Reiterating that obviousness is ultimately a legal question for a district court judge to decide, the Supreme Court found that the case was ripe for resolution of obviousness on summary judgment because there was no genuine dispute of material fact as to the level of skill in the art, the content of the prior art, and the scope of the patent claim. While this treatment does not represent a change in the law, the Supreme Court’s approval of summary judgment in KSR may encourage district courts to more seriously consider disposing of patent cases before trial based upon obviousness defenses.
* Reaction by USPTO – On May 3, 2007, the Deputy Commissioner of Patents issued an internal Memorandum to examining group directors, indicating that the PTO would issue guidelines to its patent examiners on how to apply KSR to patent applications, but that in the meantime, the directors should note that the Supreme Court did not reject the TSM test and required explicit reasons for combining the teachings of prior art patents to render a claim obvious. The Memorandum concluded that it "remains necessary" to identify the reason supporting a proposed combination of prior art references.
Adapting to Change in Law Wrought by KSR
* Patent Applicants facing an obviousness rejection should ensure that the examiner followed the PTO's guidelines regarding KSR. Rejections not following the guidelines are subject to being withdrawn or overruled on appeal.
* Current patent litigants should reevaluate the likelihood of success of any obviousness defense asserted in the litigation, in light of KSR. If the claimed invention is in the mechanical or electrical area, then the litigants should explore whether any viable basis exists for classifying the results of the invention as "unpredictable." The likelihood of summary judgment resolution should also be considered. In this manner, patentees can reassess the invalidity risks of continuing with the litigation, and accused infringers can reassess how likely they are to end the litigation favorably, and at the very least, whether they have acquired any leverage with which to force a settlement of the case.
* Potential patent litigants - Patentees considering a lawsuit, as well as potential infringers facing a threat of litigation against them, should perform the same KSR analysis described above. The results of that analysis may impact the decision on whether the patentee should initiate litigation in the first place. If the patentee has threatened legal action, or even just offered a license, then the accused infringer may have grounds to initiate a declaratory judgment action against the patentee, and the KSR analysis can determine whether the infringer stands a substantial chance of prevailing in that action on obviousness invalidity grounds.
Ms. Sperry is an Associate, and Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where they both concentrate their practices on intellectual property litigation. The views herein expressed are solely those of the authors and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
Supreme Court Limits Foreign Reach of U.S. Software Patents
Supreme Court Limits Foreign Reach of U.S. Software Patents
On April 30, 2007, the Supreme Court, in a 7-1 decision, issued its opinion in Microsoft Corp. v. AT & T Corp., which held that Microsoft was not liable for infringement of AT & T's patent, to the extent of foreign sales of computers loaded with Windows software. In so doing, the Court acknowledged a "loophole" in a key statute, but indicated that it was a matter for Congress, not the Court, to address. As a result, absent Congressional revision of the statute, software manufacturers selling their works overseas should be able to easily avoid liability for foreign sales under that statute, and software patent holders must place increased reliance on foreign patents.
In the litigation, Microsoft admitted liability for infringement as to computers sold and licensed domestically, but denied that AT & T could recover any infringement damages as to Microsoft’s foreign sales of Windows-loaded computers. Microsoft provided a master version of Windows software to foreign computer manufacturers, who made copies from that master version abroad and who then sold computers, loaded with the installed Windows copies (but not with the master version), to foreign users.
AT&T contended that Microsoft was liable as to foreign sales under 35 U.S.C.
§ 271(f), which is an "exception" to the "general rule . . . that no infringement occurs when a patented product is made and sold in another country." Generally, under § 271(f), infringement liability attaches to whomever without authority "supplies or causes to be supplied from the United States" either a "substantial portion of the components" of the patented invention, or any component thereof "especially made for use in the invention," with knowledge that the assembly of such components outside the U.S. would infringe the patent. 35 U.S.C. § 271(f)(1) & (f)(2).
The Supreme Court sided with Microsoft, finding that its master version of Windows sent abroad was not a "component" within the meaning of the statute, and that the act of copying that version abroad did not cause the copies to be "supplied from the United States."
Key Conclusions of Microsoft
* "Abstract software code is an idea without physical embodiment, and as such, it does not match § 271(f)’s categorization: ‘components’ amenable to 'combination.'" "In sum, a copy of Windows, not Windows in the abstract, qualifies as a ‘component’ under § 271(f)."
* "The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law." AT&T's recourse as to foreign sales is to obtain and enforce foreign patents against Microsoft.
* AT & T asserted that adopting Microsoft’s position would create a "loophole" through which a software manufacturer could easily circumvent § 271(f), by supplying a master to foreign manufacturers, rather than making installation copies in the U.S. The Supreme Court, however, observed that the "loophole" described by AT & T was a matter for Congress, not the Court, to consider.
Consequences of Microsoft
* Software manufacturers selling their works in foreign countries can avoid application of § 271(f) to foreign sales by exploiting the "loophole" described by AT & T, e.g., sending masters, rather than installation copies, overseas.
* Software patentees will need to place greater reliance on foreign patents to recover damages for sales of infringing software overseas. Consideration of the need for foreign patents should be done as early as possible, since some foreign countries have an "absolute novelty" requirement that bars seeking a patent in those countries, where the patent applicant already engaged in commercial activity involving the invention anywhere. Consultation with a patent attorney or agent would be recommended to address foreign patenting questions.
Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where he concentrates his practice on intellectual property litigation. The views herein expressed are solely those of the author and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
On April 30, 2007, the Supreme Court, in a 7-1 decision, issued its opinion in Microsoft Corp. v. AT & T Corp., which held that Microsoft was not liable for infringement of AT & T's patent, to the extent of foreign sales of computers loaded with Windows software. In so doing, the Court acknowledged a "loophole" in a key statute, but indicated that it was a matter for Congress, not the Court, to address. As a result, absent Congressional revision of the statute, software manufacturers selling their works overseas should be able to easily avoid liability for foreign sales under that statute, and software patent holders must place increased reliance on foreign patents.
In the litigation, Microsoft admitted liability for infringement as to computers sold and licensed domestically, but denied that AT & T could recover any infringement damages as to Microsoft’s foreign sales of Windows-loaded computers. Microsoft provided a master version of Windows software to foreign computer manufacturers, who made copies from that master version abroad and who then sold computers, loaded with the installed Windows copies (but not with the master version), to foreign users.
AT&T contended that Microsoft was liable as to foreign sales under 35 U.S.C.
§ 271(f), which is an "exception" to the "general rule . . . that no infringement occurs when a patented product is made and sold in another country." Generally, under § 271(f), infringement liability attaches to whomever without authority "supplies or causes to be supplied from the United States" either a "substantial portion of the components" of the patented invention, or any component thereof "especially made for use in the invention," with knowledge that the assembly of such components outside the U.S. would infringe the patent. 35 U.S.C. § 271(f)(1) & (f)(2).
The Supreme Court sided with Microsoft, finding that its master version of Windows sent abroad was not a "component" within the meaning of the statute, and that the act of copying that version abroad did not cause the copies to be "supplied from the United States."
Key Conclusions of Microsoft
* "Abstract software code is an idea without physical embodiment, and as such, it does not match § 271(f)’s categorization: ‘components’ amenable to 'combination.'" "In sum, a copy of Windows, not Windows in the abstract, qualifies as a ‘component’ under § 271(f)."
* "The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law." AT&T's recourse as to foreign sales is to obtain and enforce foreign patents against Microsoft.
* AT & T asserted that adopting Microsoft’s position would create a "loophole" through which a software manufacturer could easily circumvent § 271(f), by supplying a master to foreign manufacturers, rather than making installation copies in the U.S. The Supreme Court, however, observed that the "loophole" described by AT & T was a matter for Congress, not the Court, to consider.
Consequences of Microsoft
* Software manufacturers selling their works in foreign countries can avoid application of § 271(f) to foreign sales by exploiting the "loophole" described by AT & T, e.g., sending masters, rather than installation copies, overseas.
* Software patentees will need to place greater reliance on foreign patents to recover damages for sales of infringing software overseas. Consideration of the need for foreign patents should be done as early as possible, since some foreign countries have an "absolute novelty" requirement that bars seeking a patent in those countries, where the patent applicant already engaged in commercial activity involving the invention anywhere. Consultation with a patent attorney or agent would be recommended to address foreign patenting questions.
Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where he concentrates his practice on intellectual property litigation. The views herein expressed are solely those of the author and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
Supreme Court's KSR v. Teleflex Decision
I. SUMMARY
In KSR v. Teleflex, the Supreme Court reversed the Federal Circuit because the Federal Circuit’s approach in determining obviousness was too rigid and inflexible. The Federal Circuit applied its traditional “teaching, suggestion, motivation” (TSR) test in reversing the district court’s grant of summary judgment of obviousness. In reversing the Federal Circuit and re-affirming the district court, the Supreme Court stated "[t]hroughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here." The Supreme Court then reverted back to half-century old obviousness doctrine stemming from Graham v. John Deere Co., 383 U.S. 1 (1966) in formulating the current obviousness test.
Under the Supreme Court's current obviousness test, a patent claiming the combination of prior art elements is obvious if the claimed improvement is no more than the predictable use of prior art elements according to their established functions. The reason to combine known elements in the claimed fashion may stem from the interrelated teachings of multiple patents, the effects of market or community demands, and background knowledge possessed by a person of skill in the art.
In rejecting the TSR test as too rigid, the Court stated that:
[t]he diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will derive design trends. 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.
The Court continued its analysis by undercutting the "obvious to try" doctrine.
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 obvious under § 103.
II. POTENTIAL OUTCOME ON FUTURE LITIGATION AND PROSECUTION
The Supreme Court made it explicitly clear that the TSR test was too rigid and not in accord with Graham and its progeny. By adopting a more flexible approach, the Supreme Court opened the doors to more findings of obviousness, especially when the patent claims combinations of known prior art elements.
The effect on litigation will vary depending on the technology at issue. In mechanical cases, there may be more obvious findings on summary judgment because the claimed technology is easier to understand and usually involves combinations of known prior art elements. In chemical, electrical, and biotechnology cases, a more in depth obviousness analysis may be needed since predictability of results may not be easily apparent, the function of known prior art elements usually changes when chemically combined, and the background knowledge of a person of ordinary skill in the art may span several disciplines. Overall, no matter what technology is at issue, the Supreme Court made it easier for a defendant to prove obviousness under the clear and convincing burden of proof.
As above, the effect on prosecution will vary depending on the technology at issue. Unlike prior obvious rejections, however, the examiner no longer has to show a “teaching, suggestion, or motivation” to combine. Now, the examiner can show a prima facie case of obviousness by finding all the claimed elements in several prior art references and state that the claimed technology would have been “predicted” by combining these references because the established function of the elements remains unchanged. To overcome these rejections, the applicant will have to show either a “teaching away” or rely on declarations from the inventor or a person of ordinary skill in the art. The declarations will have to articulate why there was no reason to combine the references or that the function of the known prior art elements changes when combined.
A litigant or applicant, however, may still rebut a showing of obviousness by pointing to a "teaching away" in one of the references since this undercuts the "predictability" analysis the Court articulated.
In sum, issued patents that were initially rejected on obviousness grounds may now be found obvious under the same combination of prior art references. Furthermore, pending applications will now get closer scrutiny, and examiners may revisit reference combinations already asserted.
http://www.wcsr.com/default.asp?id=114&objId=241
In KSR v. Teleflex, the Supreme Court reversed the Federal Circuit because the Federal Circuit’s approach in determining obviousness was too rigid and inflexible. The Federal Circuit applied its traditional “teaching, suggestion, motivation” (TSR) test in reversing the district court’s grant of summary judgment of obviousness. In reversing the Federal Circuit and re-affirming the district court, the Supreme Court stated "[t]hroughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here." The Supreme Court then reverted back to half-century old obviousness doctrine stemming from Graham v. John Deere Co., 383 U.S. 1 (1966) in formulating the current obviousness test.
Under the Supreme Court's current obviousness test, a patent claiming the combination of prior art elements is obvious if the claimed improvement is no more than the predictable use of prior art elements according to their established functions. The reason to combine known elements in the claimed fashion may stem from the interrelated teachings of multiple patents, the effects of market or community demands, and background knowledge possessed by a person of skill in the art.
In rejecting the TSR test as too rigid, the Court stated that:
[t]he diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will derive design trends. 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.
The Court continued its analysis by undercutting the "obvious to try" doctrine.
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 obvious under § 103.
II. POTENTIAL OUTCOME ON FUTURE LITIGATION AND PROSECUTION
The Supreme Court made it explicitly clear that the TSR test was too rigid and not in accord with Graham and its progeny. By adopting a more flexible approach, the Supreme Court opened the doors to more findings of obviousness, especially when the patent claims combinations of known prior art elements.
The effect on litigation will vary depending on the technology at issue. In mechanical cases, there may be more obvious findings on summary judgment because the claimed technology is easier to understand and usually involves combinations of known prior art elements. In chemical, electrical, and biotechnology cases, a more in depth obviousness analysis may be needed since predictability of results may not be easily apparent, the function of known prior art elements usually changes when chemically combined, and the background knowledge of a person of ordinary skill in the art may span several disciplines. Overall, no matter what technology is at issue, the Supreme Court made it easier for a defendant to prove obviousness under the clear and convincing burden of proof.
As above, the effect on prosecution will vary depending on the technology at issue. Unlike prior obvious rejections, however, the examiner no longer has to show a “teaching, suggestion, or motivation” to combine. Now, the examiner can show a prima facie case of obviousness by finding all the claimed elements in several prior art references and state that the claimed technology would have been “predicted” by combining these references because the established function of the elements remains unchanged. To overcome these rejections, the applicant will have to show either a “teaching away” or rely on declarations from the inventor or a person of ordinary skill in the art. The declarations will have to articulate why there was no reason to combine the references or that the function of the known prior art elements changes when combined.
A litigant or applicant, however, may still rebut a showing of obviousness by pointing to a "teaching away" in one of the references since this undercuts the "predictability" analysis the Court articulated.
In sum, issued patents that were initially rejected on obviousness grounds may now be found obvious under the same combination of prior art references. Furthermore, pending applications will now get closer scrutiny, and examiners may revisit reference combinations already asserted.
http://www.wcsr.com/default.asp?id=114&objId=241
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