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5/2/2007
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Supreme Court Ruling Fallout: Fewer Patents, More Litigation?

A Supreme Court decision this week makes it tougher to prove that a technology isn't obvious, one of the key hurdles for getting and defending a patent.

This week's Supreme Court ruling on patents is sure to affect companies in software and other areas of IT, where some of the most controversial patents have been issued and litigated in recent years.

Patent attorneys are predicting it will be harder to protect inventions after the ruling in KSR vs. Teleflex, that there will be more litigation to contest patents, and that even existing patents could become less valuable. "It's going to be much harder to get patent protection on everything, including software," said Steven Rubin, an intellectual property attorney with the firm WolfBlock, in an interview.

Vonage on Tuesday used the ruling to ask the U.S. Court of Appeals to toss out the ruling that it infringed on patented Verizon technology. That ruling put Vonage's viability in jeopardy.

Patent lawyers are spending this week sorting out the impact from KSR vs. Teleflex. The case tackled a fundamental tenet in patent law: whether an invention is obvious, and therefore not deserving of protection. The ruling likely will make it more difficult to get and defend a patent because it allows more factors to be considered when challenging the obviousness of an invention -- whether by the Patent Office before granting one, or by companies contesting a patent's validity in court.

The court also may have chipped away at the presumption that patents are valid once granted, Rubin said. Prior art is the legal term for the accumulated technical knowledge about an area, and it's one of the main judgments patent officials make when deciding if an invention is nonobvious enough to get a patent. The court ruled that in cases where new prior art arises during a trial that patent examiners hadn't considered, that "diminishes" the presumption of validity. Since there is nearly always some prior art that hasn't been considered, that makes it more likely companies accused of infringement will fight to have a patent invalidated, rather than pay licensing or a settlement. "There's this concern that all patents are less valuable," Rubin said.

The KSR vs. Teleflex case specifically involved patents that involve combining two existing technologies, and deciding when that combination is not obvious. The case involved an adjustable vehicle brake pedal. The Supreme Court rejected, in a unanimous decision, a "narrow, rigid" reading of what factors should be considered. Instead, the court allowed that many factors, such as market demand for a combination of technologies, could lead to a conclusion that an invention is obvious.

While it clearly rejected a "rigid rule" test, the court wasn't explicit about what takes its place. "What they have been less clear about is what the new test is," said Marc Brown, a patent lawyer with McDermott Will & Emery, in an interview.

Some of the most controversial patents of recent years have been so-called "business method" patents, such as a company patenting a particular way of doing business. One such example is a long-running case involving eBay and its "buy it now" option, which a jury decided violated a patent held by a small company, MercExchange. Business method patents already are difficult to get, said Brown, and this ruling will make it even more so. "They're going to be much more prone to attack," he said.

The ruling frequently refers to "common sense," and at one point describes the concept of "ordinary innovation" that's not patentable. Brown sees all this leading to inventions that aren't highly technical -- he describes them as products a jury and judge can actually understand -- facing a tougher standard. The court is "willing to allow more of a gut, visceral feeling to creep into the analysis," Brown said.

John Crossan, of Chapman & Cutler, sees the case as making it only slightly more difficult to get a patent -- more of a "return to basics" than a revolution. "All the Supreme Court did now is put the jurisprudence squarely in the middle of the road," he said in an interview.

But the case is having immediate impact on the practice of patent law, as the Vonage move for a new decision illustrates. Brown said he has a case pending now where he's discussing the potential of a summary judgment -- when a judge decides a case without a full, costly jury trial -- based on part of KSR vs. Teleflex that allows for more instances where such decisions are allowed. Rubin has an application he's working on this week that's been rejected by the patent office as obvious, and he's not sure what test to use to appeal the decision.

Said Brown, "There isn't a patent lawyer in the country that in the next few days isn't going to be talking about this." That includes attorneys for the nation's high-tech companies, who will need to re-assess what inventions they seek to protect, and how they make the case for protection.

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