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5/4/2007
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Supreme Court Isn't Done Re-Shaping Patent Law

It's updating the law to reflect today's business realities, from globalization to more collaborative, iterative innovation

The U.S. Supreme Court altered the intellectual property landscape last week by making it harder to obtain and defend a patent, a decision certain to ripple through the IT industry. Some of the most closely watched and controversial patent cases involve technology companies, including Verizon's recent lawsuit against Vonage, IBM's against Amazon.com, and Research In Motion's $612.5 million settlement with NTP last year. Last week's ruling isn't likely to be the end of the court's interest either, as the justices do their part to update the patent system to govern more iterative, collaborative, and global business innovation.

U.S. Supreme CourtThe case, KSR v. Teleflex, addressed a core principle of patent law: whether an invention (in this case a type of adjustable brake pedal) is obvious and therefore not deserving of protection. In a unanimous decision, the Supreme Court rejected a "narrow, rigid" reading of what factors should be considered in deciding obviousness. Instead, the court said many factors--including market demand for a combination of technologies or whether it's common practice in an industry to look for such combinations--could lead to a conclusion that an invention is obvious.

It's a significant precedent. "It raised the bar a notch or two," says David Kappos, the IBM VP and assistant general counsel who directs the company's intellectual property strategy. "The trivial patent filings, the mild engineering advancements, will no longer be patentable." Some think its impact is more dramatic than that. "There's this concern that all patents are less valuable," says Steven Rubin, an intellectual property attorney with the firm WolfBlock.

Some of the most controversial patents of recent years have been "business method" patents, such as when a company claims to have invented a particular way of doing business online. One example is a long-running case involving eBay and its Buy It Now feature, which a jury decided violated a patent held by a small company, MercExchange. (MercExchange disputes characterizations of its patent as a business method.) Business method patents already are difficult to get, says Marc Brown, a patent lawyer with McDermott Will & Emery, and this ruling will make them even more so. "They're going to be much more prone to attack," he says.

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For business technology managers, high-stakes patent disputes can cripple the products they use, or influence what's available. In the RIM case, a tiny patent holding company, NTP, had a very real chance of getting RIM's BlackBerry network shut down over patent infringement, until RIM forked over $612.5 million. In Verizon v. Vonage, Vonage's existence is at risk, as a court ruled it violated Verizon's patent for connecting IP calls to conventional phone numbers.

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