Strategies for Non-Obviousness after KSR v. Teleflex Presentation at KAIST October 2010

Bruce D. Sunstein

Sunstein Kann Murphy & Timbers LLP Boston www.sunsteinlaw.com

©2010 Sunstein Kann Murphy & Timbers LLP

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KSR v. Teleflex: new rules for non-

obviousness (inventive step) KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398 (2007) Why it matters Issued patents are now more readily attacked. Patents applied for may be harder to get. Evaluating or managing a patent portfolio requires new approaches.

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Dealing with KSR v. Teleflex How to determine whether a patentable invention is present

 How the rules governing obviousness have developed

KSR v. Teleflex

   What KSR v. Teleflex held

in a nutshell

Who are the losers and winners under KSR v. Teleflex?

New rationale for obviousness Obviousness since KSR in the Federal Circuit: an overview 

Strategic implications of KSR v. Teleflex

 KSR and Inter Partes Reexamination: A Double Blow     USPTO Examination Procedure: New Guidelines Writing and prosecuting patents Portfolio management The heightened position of prior art searching

Take Home Lessons

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How to determine whether a patentable invention is present

Patent Act, law since 1952, requires an invention to be non-obvious.

“Obviousness” was drafted to be an objective standard.

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The obviousness standard of the law

A patent will be denied for an invention “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.” 35 U.S.C. § 103(a).

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How the obviousness standard has been applied Before KSR v. Teleflex, the Supreme Court last spoke about obviousness in 1966.

  The 1952 law was intended by Congress to ban the “flash of creative genius” test for patentable invention articulated by the Supreme Court in Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84, 90, 91 (1941).

Graham v. John Deere Co., 383 U.S. 1, 15 (1966)

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What the Supreme Court did in Graham v. John Deere Co.

Confirmed that the legal test under the patent law for obviousness is an objective one: “Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined.” 383 U.S. at 17-18.

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What the Supreme Court did in Graham v. John Deere Co.: “secondary considerations”

“Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.” 383 U.S. at 18.

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Secondary considerations remain important

The Federal Circuit follows this standard, even today, and sometimes calls them objective evidence of nonobviousness : “As this court has repeatedly explained, this evidence is not just a cumulative or confirmatory part of the obviousness calculus but constitutes independent evidence of nonobviousness.” Ortho-McNeil Pharmaceutical v. Mylan Labs., 520 F.3d 1358, 1365 (Fed. Cir. 2008)

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The Pre-KSR Federal Circuit Standard for Obviousness: “Teaching, Suggestion, Motivation” (TSM) An invention would have been obvious only “if ‘some motivation or suggestion to combine the prior art teachings’ can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art.” Recounted in KSR v. Teleflex, 550 U.S. 398, 407 (2007).

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KSR v. Teleflex

Involved a gas pedal assembly with electrical sensor KSR’s gas pedal assembly similar to that patented and exclusively licensed by Teleflex Teleflex sued KSR for Infringement KSR defense: patents invalid for obviousness

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What KSR v. Teleflex held

The Federal Circuit TSM test was applied erroneously



“There is no necessary inconsistency between the idea underlying the TSM test” and the standard for non-obviousness



“But a court errs where, as here, it transforms general principle into a rigid rule limiting the obviousness inquiry.”



The patent licensed to Teleflex was invalidated on basis of prior art not considered by the PTO when the patent was granted

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KSR v. Teleflex cont.

Summary judgment in favor of defendant KSR on the question of obviousness was appropriate, so a trial is not necessary.

“Where, as here, the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate.”

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Who are the losers and the winners under KSR

v. Teleflex?

Losers: patent holders and patent seekers

    Patent validity challenges in litigation License negotiations Other business transactions, including equity financing Higher standards for non-obviousness = more difficulty obtaining a patent

Winners: those at risk of infringement or in license negotiations as licensees

  Easier to challenge validity More favorable litigation settlements, licenses, other transactions such as equity investments

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KSR v. Teleflex:

New rationales for Obviousness I. Combining prior art elements according to known methods to yield predictable Results II. Simple substitution of one known element for another to obtain predicable results

 “A person of ordinary skill is also a person of ordinary creativity, not an automaton.”

III. Use of known techniques to improve similar devices in same way

 “… familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.”

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New Rationales for Obviousness, cont.

IV. Applying known technique to known device ready for improvement to yield predictable results V. Obvious to try

     When design need or market pressure exists to solve problem And finite number of identified, predictable solutions Then a person of ordinary skill has good reason to pursue known options within technical grasp If anticipated success achieved, success likely not innovative but merely ordinary skill and common sense. Then, combination that was “obvious to try” might show invention was obvious .

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New Rationales for Obviousness, cont.

VI. Known work in one field prompts variations for use in same or new field if variations predictable to one or ordinary skill

   variations prompted by design incentives or market forces If person of ordinary skill can implement a predictable variation, § 103 likely bars patentability If technique used to improve one device, recognized by person of ordinary skill could improve similar device in same way, using technique is obvious unless actual technique is beyond person’s skill

VII. Teaching, suggestion, motivation (TSM)

  Motivation may be implicit Motivation may be found in common knowledge, the prior art as a whole, or the nature of the problem itself

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Obviousness Since KSR

Supreme Court has raised the standard for non obviousness.

  Patents are easier to invalidate for obviousness.

Patents are harder to get.

“Common sense” in the obviousness standard adds subjectivity and unpredictability

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Obviousness in the Federal Circuit Since KSR Federal Circuit cases in wake of KSR v. Teleflex use modified TSM test

   

DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H.

Patrick Co., 464 F.3d 1356, 1367 (2006) Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (2006) Ortho-McNeil Pharmaceutical v. Mylan Labs., 520 F.3d 1358, 1364-1365 (Fed. Cir. 2008) Comaper Corp. v. Antec, Inc., 596 F. 3d 1343 (Fed. Cir. 2010)

Modified TSM means motivation to combine references may be found implicitly in the prior art or nature of problem to be solved.

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Obviousness in Federal Circuit Since KSR (Cont.) Obviousness avoidable when there is not a “finite number” (i.e. relatively small number) of predictable results: Ortho-McNeil Pharmaceutical v. Mylan Labs., 520 F.3d 1358 (Fed. Cir. 2008).

 Upholding finding of non-obviousness  Cites “secondary considerations”: unexpected results, skepticism of experts and copying, commercial success

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Ortho-McNeil Pharmaceutical v. Mylan Labs.,

520 F.3d 1358 (Fed. Cir. 2008) (cont’d)

 Provides road map for proving non-obviousness: ―

“In sum, this clearly is not the easily traversed, small and finite number of alternatives obviousness.” 520 F.3d at 1364 that KSR suggested might support an inference of

―

“the record shows powerful record also shows unexpected results (anticonvulsive activity) for topiramate. The skepticism of experts and copying — other respected sources of objective evidence of nonobviousness — as well as commercial success .” 520 F.3d at 1365

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Obviousness in Federal Circuit Since KSR (Cont.) Sanofi-Synthelabo v. Apotex, Inc., 550 F. 3d 1075 (Fed. Cir. 2008)

 Even if a solution is “obvious to try”, a wide range of possible outcomes and unlikelihood of success make invention non-obvious.

Obviousness in Federal Circuit Since KSR (Cont.) Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348 (Fed.Cir. 2007)

 Obviousness of a patent claim cannot be avoided simply by a showing of some degree of unpredictability in the art so long as there was a reasonable (i.e. not absolute) probability of success  Evidence showed a motivation to combine  At the other end of the spectrum from Ortho-McNeil Pharmaceutical v. Mylan Labs., 520 F.3d 1358 (Fed. Cir. 2008).

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Obviousness in Federal Circuit Since KSR (Cont.)

Takeda Chem. Indus. V. Alphapharm Pty.,

Ltd. 492 F.3d 1350 (Fed. Cir. 2007)

 “ in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness … .

” Id.,1357    Disclosure of a broad selection of compounds, any one of which could have been selected as the lead compound Prior art taught away from the invention by compound.

” Id. at 1359 “ direct[ing] one of ordinary skill in the art away from that If no rationale in prior art to establish a prima facie case of obviousness, then no need to consider objective indicia of nonobviousness Id. at 1360.

Similar holding, Eisai Co. Ltd. v. Dr. Reddy’s Labs., Ltd., 533 F.3d 1353 (Fed. Cir. 2008)

Obviousness in Federal Circuit Since KSR (Cont.)

Abbott Laboratories v. Sandoz, Inc., 544 F.3d 1341 (Fed. Cir. 2008) of obviousness attack) (patent on extended release formulation of antibiotic clarithromycin upheld in face

    Must look to particular technology for context in determining whether the claimed technology is an “identified, predictable solution” and “anticipated success” No error in holding below of nonobviousness of claimed extended release formulation because its behavior could not have been predicted based on the prior art. Court below: Although prior art references do not need to

explicitly teach or suggest the motivation to combine the references, each of the claimed limitations must still be found to exist somewhere in the prior art

Note: novel delivery system extended patent life!

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Obviousness in Federal Circuit Since KSR (Cont.)

In re John B. Sullivan and Findlay E. Russell, 498 F.3d 1345 (Fed. Cir. 2007)

  Improvement of existing technology found in prior art sufficient to establish prima facie case of obviousness Rebuttal evidence -including inventor ’ s declaration sufficient to prove non-obviousness

Innogenetics, N.V. v. Abbott Labs., 512 F.3d

1363, 1373 (Fed. Cir. 2008)

 Expert ’ s report may be deficient under Fed. R. Civ. P. 26 if declaration merely lists a number of prior art references and then concludes with a stock phrase that it would have been obvious to one skilled in the art to combine them

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Obviousness in Federal Circuit Since KSR (Cont.)

In re Kubin, 561 F.3d 1351, 1360 (Fed.

Cir. 2009)

  USPTO rejection of patent claim to gene sequence on the basis of “obvious to try” is upheld.

Rejection is appropriate when prior art contained detailed enabling methodology for practicing the claimed invention, a suggestion to modify the prior art to practice the claimed invention, and evidence suggesting that it would be reasonably successful.

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Obviousness in Federal Circuit Since KSR (Cont.) Crocs, Inc. v. International Trade Com'n, 598 F. 3d 1294 (Fed. Cir. 2010)

 Prior art teaches away from the claimed invention    Some claimed features do not appear in the prior art Hence an ordinary artisan would not have been motivated even to try, let alone make, this inventive combination Also commercial success, constituting objective evidence of non-obviousness is present

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Strategic implications of KSR v. Teleflex:

Weakness arises from prior art not considered Patents may be strengthened by getting prior art considered, through:

  Reexamination proceedings 

Requires prior art raising substantial new question of patentability

Reissue proceedings 

Requires showing, typically, that

• •

the patent claims more or less than patentee had right to claim in the patent, and the error arose without deceptive intent

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KSR and Inter Partes Reexamination: A Double Blow This forum favors the challenger Risk is unavoidable that claims will be narrowed or rejected in inter partes reexamination proceedings

   Inter Partes Reexamination allows back and forth among third party requester, patentee, and PTO; requester always gets to respond to patentee Statistics strongly favor the requestor See www.reexamination.com

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US Patent Practice Today

USPTO adopts KSR rationales for finding obviousness (MPEP § 2143 and passim) On September 2, 2010, USPTO issues updated guidelines on KSR and discusses court decisions since KSR

 Notably more balanced presentation than previous guidelines, which had no examples of nonobvious inventions  Nineteen examples: 9 reflect a determination of obviousness, 10 reflect a determination of nonobviousness

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New USPTO guidelines on KSR include a table of exemplary cases

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PTO Board of Patent Appeals and Interferences as to obviousness

Expected results for a controlled release tablet form of oxymorphone rendered claimed subject matter obvious and therefore not patentable. Ex Parte Kao, 2010 WL 200411 (Bd.Pat.App. & Interf. Jan 12, 2010) (NO. APL 2009-013710, APP 11/680,432, TECHLOGY CENTER 1600).

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PTO Board of Patent Appeals and Interferences

(cont’d) Contested (inter partes) reexamination led to a determination by the Board of Patent Appeals and Interferences that a stem cell patent held by WARF was invalid for obviousness. Foundation for Taxpayer and

Consumer Rights v. Wisconsin Alumni

Research Foundation, 2010 WL 1734377, B.P.A.I., No. 2010-001854, 2010). “In sum, there were a ‘finite number of identified’ and ‘predictable’ solutions which would have been readily applied by one of ordinary [skill] in the art to produce human embryonic stem cells.”— citing KSR v. Teleflex.

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PTO Board of Patent Appeals and Interferences

(cont’d)

Ex Parte Dey, 2010 WL 3195806, BPAI,

No. 2010-000924 (2010) held that “Examiner has not met his burden of properly identifying factual findings and reasoning for establishing a prima facie case of obviousness based on the applied prior art”. Because the references teach away from each other there was no proper rationale for their combination.

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Writing and prosecuting patents—some principles remain intact

Graham v. John Deere Co. analysis still the legal basis for obviousness

    Scope and content of prior art Differences between claimed invention and prior art Level of skill Secondary considerations (for example, commercial success, skepticism of experts, failure of others)

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Writing and prosecuting patents—some principles remain intact

(cont’d) Examiner must still provide “some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness” MPEP § 2142; KSR v. Teleflex, 550 U.S. 398 at 418.

Note that if the PTO gets the facts wrong, the rationale will be wrong too Examine rejections carefully to determine whether the rationale is articulated and that it is consistent with the references cited

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Writing and prosecuting patents—some principles remain intact

(cont’d) In order to establish a prima facie case, rejection must still account for all limitations of the claim: “’All words in a claim must be considered in judging the patentability of that claim against the prior art.’"MPEP (CCPA 1970).

present in the claim § 2143.03 citing In re Wilson, 424 F.2d 1382, 1385, 165 USPQ 494, 496 Examine rejections carefully to determine whether a prima facie case has been established by properly considering all the limitations

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Writing and prosecuting patents—some principles remain intact

(cont’d) Rebuttal evidence must still be considered, MPEP § 2145. Explicitly sanctioned evidence:

      Commercial success Long-felt but unsolved needs Failure of others Unexpected results Elements could not have been combined – i.e., for technological difficulties (a teaching away type rebuttal) Elements in combination do not perform same function each did individually (an In re Gordon type rebuttal)

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Writing and prosecuting patents—some principles are new, cont.

New rebuttal evidence explicitly mentioned by new USPTO guidelines

 Actual application of known technique (to improvement of “base” device) was beyond one of ordinary skill

Major impact is at level of appeal Reversal rate at Board of Patent Appeals and Interferences (BPAI) decreased dramatically since

KSR

   Pre-KSR reversal rate for TC 1600– 70-80%* Post-KSR reversal rate for TC 1600 – 30-40%* Actual post-KSR reversal rate for TC 1600 29%

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Strategic implications of KSR v. Teleflex:

Combination drugs particularly vulnerable When each component of a combination drug contributes properties to the combination that are expected, then the combination will be attacked as obvious.

To resist the attack for obviousness, it is important to show synergistic or unexpected results.

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Strategic implications of KSR v. Teleflex:

Combination drugs, cont.

Even when the prior art looks overwhelming, sometimes special claim strategies can make a difference.

   When the basic combination may be taught, consider claims to a unit dosage of the combination with specific ranges or ratios that may be novel and unexpected.

Consider method claims that address use of the composition under specific conditions or with specific types of administration that may be novel and unexpected.

Consider novel delivery systems and claims directed to them

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Strategic implications of KSR v. Teleflex:

Portfolio management A good-looking patent portfolio before KSR v. Teleflex may not be a good-looking patent portfolio after KSR v. Teleflex Evaluate each U.S. patent property in the portfolio for invalidity risk based on obvious combinations of prior art

 Weak patent properties should be evaluated for possible 

Rehabilitation through reexamination or reissue

 

Pruning from the portfolio Licensing or selling

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Strategic implications of KSR v. Teleflex:

Portfolio management, cont.

Revisit clearance problems—infringement risks—in light of KSR

 Heretofore nearly invulnerable patents may be vulnerable to prior art attacks under KSR v. Teleflex  For newly vulnerable patents consider the following approaches:  Renewed licensing negotiations  Reexamination proceedings, particularly inter partes (contested) - outcomes often favorable to attacking party  Litigation - declaratory judgment actions are much easier to maintain after Medimmune v. Genentech, 549 US 118 (2007)

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Prior art searching now critically important

Helps reduce risk of KSR v. Teleflex attack for obviousness on applications in portfolio Helps efficient claiming of subject matter Helps identify vulnerabilities in competitors’ patents Check out and use www.google.com/patents http://espacenet.com

!

and

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The new regime under KSR v. Teleflex

Issued patents are at greater risk of attack for obviousness, which may be found in summary judgment without trial.

Pending applications must contend with the higher and more subjective bar of the new obviousness standard.

Strategy is more important in drafting and prosecuting applications and in handling properties in patent portfolios.

Early and deep knowledge of prior art is of now of critical importance in formulating and implementing strategy.

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Strategic implications of KSR v. Teleflex: Writing and prosecuting patents— further strategic principles Draft applications bearing in mind prospective downstream rejections based on obviousness.

 Knowing prior art in detail when drafting application is critical!

Tell a story that includes a convincing showing of unexpected or synergistic results.

  The story should make good sense in relation to the prior art.

Questions of judgment and advocacy affect the extent to which prior art is discussed explicitly.

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KSR v. Teleflex: Take-Home Lessons

“obvious to try” may show obviousness “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.” Patentability of new compounds

  Seems to hinge on finite number of predictable results – i.e., Are there unexpected results?

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KSR v. Teleflex: Take Home Lessons, cont.

Prior art references can be distinguished on if they “teach away” from the combination cited for obviousness

 It is critical to study cited prior art references with great care to understand what they teach.

 Prior art references do not always actually teach what they seem to teach  

Frequently misconstrued by examiners Sometimes not enabling; i.e., do not permit a person of ordinary skill to practice the subject matter for which the reference is cited

Unexpected results can demonstrate non-obviousness

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KSR v. Teleflex: Take Home Lessons, cont.

The rationale for the proposed combination must extend to all the limitations of claimed invention

  If not, then a prima facie case of obviousness has not been established Moreover, it is critical to make a rigorous analysis of the rejection to determine whether all limitations of the claim have been accounted for by the examiner in the rejection

More patent claims – and creative ones – can make a difference

 Prior art attacks on claims must be mounted separately for each claim  A well crafted claim that captures the inventor’s creativity may be just the one for which a “common sense” combination of prior art references simply does not exist

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Conclusion:

Learn and deal with the prior art early and often.

Tell a story about the innovation.

Thank you.

Bruce D. Sunstein

[email protected]

www.sunsteinlaw.com