Supreme Court Signals Change in U.S. Patent Protection Rules

By Susan Decker and Jeff St.Onge

Nov. 28 (Bloomberg) — The U.S. Supreme Court signaled it may make it easier to challenge patents granted to some inventions as the justices criticized a lower court test used for more than two decades.

The court heard arguments today in a bid by KSR International Co. to stop a lawsuit that accuses it of using Teleflex Inc.’s patented invention for adjustable gas pedals. KSR is asking the court to rule that innovations that merely combine existing products often don’t qualify for a patent.

Most patents are issued for improvements to existing products rather than entirely new inventions. Under the current standard, a challenger seeking to invalidate a patent on grounds it simply combined prior inventions must prove there was a “teaching, suggestion or motivation” to put those earlier inventions together.

“It is misleading to say that the whole world is embraced within these three nouns,” Justice Antonin Scalia said. “This is gobbledygook. It really is, it’s irrational.”

The test has been in effect since shortly after the 1982 creation of the U.S. Court of Appeals for the Federal Circuit in Washington, which handles almost all appeals in patent cases. It is the standard used by judges and officials in the U.S. Patent and Trademark Office. In today’s case, the appeals court ruled that Teleflex could pursue its infringement claim against KSR.

Patent experts who criticize the appeals court say it has “leaned too far in the direction of never seeing a patent they didn’t like,” Justice Stephen Breyer said.

`Non-Obvious’

Patents are issued to inventions that are “new, useful and non-obvious” — in other words, innovations that wouldn’t have been evident to a person who understands the basic technology.

The justices grappled with how to devise a standard that would make it easier to challenge patents. Justice Anthony Kennedy asked whether the court could keep the current test and “supplement it with other means” to challenge patents.

“In hindsight everybody says, `I could have thought of that,”’ said Chief Justice John Roberts. “If you don’t have the sort of constraint that their test imposes, it’s going to be too easy to say everything was obvious.”

About 1.6 million U.S. patents are in force, according to the patent office. That’s about 23 percent of more than 7 million patents issued in the nation’s history. Under current law, patents expire 20 years from the date the application was filed.

The current legal test “underlies 160,000 patents issued every year,” said Teleflex lawyer Thomas Goldstein in urging the court not to change the legal standard. A change “will create genuine dramatic instability,” he said. Teleflex, which has since sold its auto-pedal business, is based in Limerick, Pennsylvania.

`Wrong Answer’

Bush administration lawyer Thomas Hungar, arguing in support of KSR, said the test “asks the wrong question and in cases like this one, it produces the wrong answer.”

KSR lawyer James Dabney said that under current law, courts can’t invalidate patents “except in a very limited and narrowly defined circumstance.”

Justice David Souter questioned whether the test has been used so long that it ought to stay in place.

“If the error is common enough and long enough, the error becomes the law. And in effect is that what we are confronted with here?” Souter asked Hungar. “If we see it your way, are there going to be 100,000 cases filed tomorrow morning?”

A ruling for KSR may make it harder to get patents and easier to challenge them in court. Backing KSR are technology companies Intel Corp., based in Santa Clara, California, and Cisco Systems Inc., based in San Jose, California, which say getting a patent is too easy.

Johnson & Johnson

Supporting Teleflex are Tylenol maker Johnson & Johnson, based in New Brunswick, New Jersey; Scotch tape maker 3M Co., based in St. Paul, Minnesota, and Fairfield, Connecticut-based General Electric Co., the world’s second-biggest company by market value. Those companies say that weakening patent protection would hinder innovation.

The dispute over patent law also is being argued in Congress, where the technology industry is lobbying for changes to reduce the number of infringement suits and the amount of damage awards.

Computers and other technology-based products use thousands of patented inventions, and companies that make those products say they face too many frivolous lawsuits by patent holders. In contrast, drug and biotechnology companies say they need strong patent-enforcement rights to protect the billions of dollars they spend each year researching new products.

Teleflex sued Ridgetown, Ontario-based KSR in 2002. The suit said KSR infringed Teleflex’s patent for an electronic control combined with gas, brake or clutch pedals that adjust to the driver’s height.

Chevrolet Trucks

Closely held KSR makes the pedals for General Motors Corp.’s Chevrolet and GMC trucks and sport-utility vehicles. Teleflex developed the technology for use in Ford Motor Co.’s F350 pickup truck.

Teleflex sold its auto-pedal business in August 2005 to DriveSol Worldwide, an affiliate of Sun Capital Partners Inc., a private investment firm based in Boca Raton, Florida. Sun Capital has taken over the case.

A ruling in the case, KSR International v. Teleflex, 04- 1350, is expected by July.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net ; Jeff St.Onge in Washington at jstonge@bloomberg.net

 

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