KSR, patent obviousness and USPTO practice

In 2007 the U.S. Supreme Court decided its first patent obviousness case in decades, KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007).  Shortly thereafter, the PTO issued a set of examination guidelines, based on KSR.  Almost three years later, the PTO has come out with a revised, and very different, set of guidelines (September 2010).

One of the most surprising elements of the 2007 PTO guidelines was their treatment of the teaching, suggestion, or motivation test (TSM) for obviousness.  Under that test, to reject a claim as obvious over a combination of references, it was necessary to identify a teaching, suggestion, or motivation to combine the two references.  To reject a claim as obvious over a single reference, it was necessary to identify a teaching, suggestion, or motivation to modify the single reference to fall within the scope of the claim.  The TSM test had been consistently relied on by the Federal Circuit over many years as the sine qua non of an obviousness determination, at least since ACS Hospital Sys. v. Montefiore Hosp., 732 F.2d 1572, 1577 (Fed. Cir. 1984).  The TSM test was also discussed extensively by the Court in KSR, which expressed its appreciation of the test but cautioned the Federal Circuit not to apply it in a “rigid” or “formalistic” way.

According to the 2007 Guidelines, however, in addition to TSM there came into being with KSR six other tests for obviousness.  These tests gave the examiners six new ways to reject claims and so help achieve the reduction in the patent allowance rate which was such an important goal for the PTO under its then-Director, Jon Dudas.  The six new, TSM-free ways to reject claims which the PTO read into KSR back in 2007 were:

A) The results of the combination of prior art elements are “predictable” and the elements when combined “perform the same function as they did separately.”

B) “The prior art differs from the claim  by the substitution of some components. The substituted components were known. . . . the result of the substitution is predictable.”

C)  “[The] [c]laimed invention has an ‘improvement’ over a base device (or method, product) taught in a reference.  The prior art also teaches a ‘comparable device’ improved in the same way. . . . the result of the improvement is predictable.”

D) “Claimed invention has an ‘improvement’ over a base device (or method, product) taught in a reference. The prior art teaches a known technique that is applicable to the base device. . . . applying the known technique would have yielded an improvement and was predictable.”

E) There exists a “[r]ecognized problem or need in the art including market pressure or design need,” having a “[f]inite number of identified predictable solutions,” one of which leads to the claimed invention.

F) “The prior art teaches a base device (or method, product) similar or analogous to the claims. Design incentives or market forces would have prompted change to the base device. Known variations or principles would meet the difference between the claimed invention and the prior art” (see note *).

These tests also require, as all obviousness determinations do, a reasonable expectation of success in making the combination or modification.

Since 2007, the Federal Circuit has repeatedly reiterated the universal applicability of TSM to the determination of obviousness.  See, e.g., Rolls Royce PLC v. United Technologies Corp., 603 F.3d 1325 (Fed. Cir. 2010) (“To preclude hindsight in th[e] [obviousness] analysis, this court flexibly seeks evidence from before the time of the invention in the form of some teaching, suggestion, or even mere motivation (conceivably found within the knowledge of an ordinarily skilled artisan) to make the variation or combination.”).

In the 2010 Guidelines, however, only two of the new tests for obviousness appear to survive.  The validity of the 2007 Guidelines is reiterated, but the document coyly states that “the other rationales discussed in the 2007 KSR Guidelines are not the focus of separate discussions in this 2010 KSR Guidelines Update.”  75 Fed. Reg. at 53646.  The 2010 KSR Guidelines insist only that, in addition to TSM, there are two other tests for obviousness:

(a) “substituting one known element for another,” which requires that “the result obtained would have been predictable.”  75 Fed. Reg. at 53649.

(b) “the obvious to try rationale,” which requires “a recognized problem or need in the art” and “a finite number of identified, predictable solutions to the recognized need or problem.”  Id. at 53653.

We examine here briefly the extent of caselaw support which the PTO was able to find for the two non-TSM obviousness tests that it discusses in the 2010 Guidelines.

For “substituting one known element for another,” we see a number of cases cited.

  • In re Icon Health & Fitness, 496 F.3d 1374 (Fed. Cir. 2007), and Agrizap, Inc. v. Woodstream Corp., 520 F.3d 1337 (Fed. Cir. 2008), are cited only for the notion of analogous art, which I don’t think anyone has argued was affected by KSR.
  • Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) is best known for its test for infringement of a method claim performed by multiple entities.  The PTO, however, sees it as supporting the “substituting one known element for another” rule.  The element substituted (in a 1998 application) was a Web browser to administer a financial auction in lieu of special-purpose communications software.  The Federal Circuit panel did not discuss TSM expressly.  However, it did look at references teaching the desirability of the modification.
  • Aventis Pharma Deutschland v. Lupin, Ltd., 499 F.3d 1293 (Fed. Cir. 2007), was about whether enantiomers of a particular compound were obvious over the racemate.  The Federal Circuit first stated that TSM is needed.  It then made some general statements about the obviousness of the components of mixtures, relying on an ancient (pre-Graham v. John Deere) CCPA case.  It then got down to discussing obviousness in the case at hand, where there was an excellent motivation to separate out the particular enantiomer claimed.  It is the general statements that the PTO seeks to make something out of, but it is not clear that they negate the prior statement that TSM is needed.
  • For Eisai Co. Ltd. v. Dr. Reddy’s Labs., Ltd., 533 F.3d 1353 (Fed. Cir. 2008), and Procter & Gamble Co. v. Teva Pharmaceuticals USA, Inc., 566 F.3d 989 (Fed. Cir. 2009), both of which affirmed nonobviousness, the PTO’s own description of the cases notes that their holdings involved “reason to modify” and “reason to select and modify,” i.e., TSM.  75 Fed. Reg. at 53659.
  • In Altana Pharma AG v. Teva Pharms. USA, Inc., 566 F.3d 999 (Fed. Cir. 2009), the PTO’s own summary of the case’s holding says that it required “some line of reasoning that would have led one of ordinary skill in the art to select and modify a prior art lead compound in a particular way to produce the claimed compound.”  75 Fed. Reg. at 53660.  This again is just TSM.

In sum, the PTO’s search of the caselaw has found at most one case, Muniauction, where the Federal Circuit omitted to expressly mention TSM, although it did discuss evidence of motivation to modify.  Thus, the support for the existence of an independent “substituting one known element for another” obviousness test is doubtful.

Turning to the “obvious to try rationale,” the PTO was able to find only two Federal Circuit cases which actually affirmed a finding of obviousness, Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324 (Fed. Cir. 2009), and Bayer Schering Pharma A.G. v. Barr Labs., Inc., 575 F.3d 1341 (Fed. Cir. 2009).  Perfect Web is actually about something else, however:  whether the motivation to modify the prior art may come from “common sense,” to which the panel gives an affirmative answer.  There is a quote from KSR about “obvious to try,” but the Perfect Web panel does not apply that quote in any way that one can see.  Bayer Schering is a better case from the PTO’s point of view, since the reasoning there was that if the prior art made it obvious to try each one of just two possibilities, then each of them is separately obvious.  However, this can also be understood in terms of TSM:  if the motivation leads a person of skill in the art to just two possibilities, then it cannot merit a patent to have tried one of them.  In particular, since the number of options was just two, it would seem difficult to generalize from this holding to any “finite” number of possibilities as the PTO seeks to do, unless one gives to “finite” the meaning “very small.”

In sum, the PTO’s new guidelines appear to back down significantly from the 2007 Guidelines in light of the reality of the Federal Circuit’s recent cases.  This is in line with the general trend of the PTO under Director Kappos to back away from some of the more extreme positions taken by Director Kappos’ predecessor, Jon Dudas, and give applicants greater opportunities to obtain allowance of claims.

Flavio Rose, Irell & Manella, Los Angeles

*)Determining Obviousness under 35 USC 103 in view of  KSR International Co. v. Teleflex,” (January 2008, visited September 15, 2010).

note IPEG: further reading, Whealan, Lynch, “The Role of the Supreme Court & the PTO in the Development of Patent Law

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