Transcript Slide headline - Sunstein Kann Murphy & Timbers LLP

Patent Portfolio Strategies in the
Post-KSR Environment
Bruce D. Sunstein
Bromberg & Sunstein LLP
Boston
www.bromsun.com
© 2009 Bromberg & Sunstein LLP
KSR v. Teleflex: new rules for nonobviousness (inventive step)
KSR Intern. Co. v. Teleflex Inc., 127 S. Ct. 1727 (April 30, 2007)
Why it matters to Biopharma and
Medical Device Companies
Issued patents are now more readily
attacked.
Patents applied for may be harder to
get.
Evaluating or managing a patent
portfolio requires new approaches.
2
Dealing with KSR v. Teleflex
How to determine whether a patentable invention
is present
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How the rules governing obviousness have developed
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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
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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
KSR v. Teleflex
Strategic implications of KSR v. Teleflex
A note on the Bilski case and its impact on
diagnostics applications
Take Home Lessons
3
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.
4
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 1941.
 Graham v. John Deere Co., 383 U.S. 1 (1966)
Over recent decades the Federal Circuit has
refined the obviousness standard.
6
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.”
7
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
8
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
9
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.”
10
Who are the losers and the winners under KSR
v. Teleflex?
Losers: patent holders and patent seekers
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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
11
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.”
12
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.
13
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
14
Obviousness Since KSR
Supreme Court has raised the standard for nonobviousness.
 Patents are easier to invalidate for obviousness.
 Patents are harder to get.
“Common sense” in the obviousness standard adds
subjectivity and unpredictability
15
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
(Fed. Cir. 2008)
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” of predictable results
 Finite number: small in the context of the art
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
 Provides road map for proving non-obviousness
Sanofi-Synthelabo v. Apotex, Inc., No. 20071438, 2008 WL 5191848 (Fed. Cir. 1-12-2008)
 Even if a solution is “obvious to try”, a wide range of
possible outcomes and unlikelihood of success make
invention non-obvious
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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 “direct[ing]
one of ordinary skill in the art away from that
compound.” Id. at 1359
 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)
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Obviousness in Federal Circuit Since KSR, Cont.
Abbott Laboratories v. Sandoz, Inc., 544 F.3d
1341 (Fed. Cir. 2008)
 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
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 declarationsufficient 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
21
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
22
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
 Statistics strongly favor the requestor
 See www.reexamination.com
23
USPTO Guidelines Adopt KSR Rationales for
Finding Obviousness (MPEP § 2143 and passim)
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
III. Use of known techniques to improve similar devices in
same way
IV. Applying known technique to known device ready for
improvement to yield predictable results
V. Obvious to try
 Precedential Opinion: Ex Parte Kubin, Appeal 2007-0819, Appln
No. 09/667,859, Technology Center 1600 (May 31, 2007)
VI. Known work in one field, variations in same or different
field predictable
VII. Teaching, suggestion, motivation (TSM)
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Writing and prosecuting patents—some
principles remain intact
Graham v. John Deere Co. analysis still the legal
basis for obviousness
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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)
Examiner must still provide “some articulated
reasoning with some rational underpinning to
support the legal conclusion of obviousness”
MPEP § 2142
25
Writing and prosecuting patents—some
principles remain intact, cont.
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
Rationale for obviousness must be explicitly stated
But, if facts wrong, rationale wrong
Major impact will be 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%
27
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.
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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
30
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 (127 S.Ct. 764
(January 9, 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
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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.
33
A new threat to diagnostics patenting: In re
Bilski, 545 F.3d 943 (Fed. Cir. 2008)
Background: a Supreme Court minority would invalidate
a diagnostic method claim as involving only a discovery,
not an invention. Lab. Corp. v. Metabolite , 126 S.Ct. 2921
(2006)(dissent)
Bilski held ineligible, for a patent, a business method that
operated outside of a computer, but the dissent included
reference to Lab. Corp.
Classen Immunotherapies, Inc. v. Biogen Idec, 2008 WL
5273107 (Fed. Cir. Dec. 19 2008) (unpublished) held
ineligible, for a patent, claims to a method of evaluating
an immunization schedule
Prometheus Laboratories, Inc. v. Mayo Collaborative
Services, 2008 WL 878910 (S.D. Cal. March 28, 2008)
held patent-ineligible claims to a method of optimizing
therapeutic efficiency involving adjusting drug dosage
based on measured metabolite levels
34
Strategies for patenting diagnostics in
the new environment
Do not rely merely on patent filings aimed at
mechanisms of action
Where possible, identify and claim physical
structures and machines that utilize the
mechanisms of action
 New special purpose diagnostic tools
 New disposables that respond to the mechanism of action to
provide a new measurement
If structures and machines do not exist, urge your
team to develop them!
Key to show how the discovery is used either to
achieve a “transformation” of data or to be
harnessed by a machine—or both
35
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?
37
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
38
KSR v. Teleflex: Take Home Lessons, cont.
Combination or rationale must extend to all the
limitations of claimed invention
 If not, then a prima facie case of obviousness has not been established
 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
39
Learn and deal with the prior art
early and often.
Tell a story about the innovation.
Good luck!