April 30, 2007 10:11 AM PDT
Supreme Court loosens patent 'obviousness' test
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But some attorneys watching the case argued that the court failed to give enough direction on how the obviousness test should now be met. Some also suggested that the decision paves the way for the validity of previously issued patents to be called into question, likely leading to more litigation--or at the very least, a lengthy transition period as the Patent Office and the courts try to make sense of the Supreme Court's opinion.
Todd Goldstein, the attorney who argued Teleflex's case before the high court, said the economic consequences of changing the obviousness requirement "run into the trillions of dollars" because of the uncertainty the decision has created. Although there's no doubt the court intended to tighten the standard for issuing and upholding patents, "what we don't know is how far the judges want the decision to go," he said in a conference call with reporters. "We don't know the answer to what the new rule is yet."
It's not the Supreme Court's job to prescribe a detailed new test, and the justices were right to leave that decision with the lower courts, said David Kappos, IBM's assistant general counsel for intellectual property law. He also argued that the patent system will not encounter new chaos and that just the opposite will occur.
"What we have had is an era of extreme uncertainty caused by the issuance of many trivial and marginal patents under the old test," he said in a telephone interview. "What we're going to see now is actually more certainty because those trivial and marginal patents aren't going to get issued."
The ruling marks the latest in a string of patent cases that have prompted the Supreme Court to scale back decisions made by the patent appeals court. By the tech industry's description, the high court has so far behaved in a manner that begins to restore some of the balance to a patent system that critics say has been too often tipped in the favor of patent holders.
In a high-profile case last year involving eBay, the high court sided with the auction giant in making it more difficult for patent holders to obtain injunctions against the use of their inventions when infringement has occurred.
Separately on Monday, the justices knocked down a different Federal Circuit decision involving an ongoing patent spat between Microsoft and AT&T. The court ruled 7-1 that Microsoft is not liable for patent infringement that occurs when the "abstract software code" it supplies to foreign manufacturers is subsequently copied onto machines there.
The ruling also comes as Congress has begun a new foray into rewriting patent law. The latest bill attempts to prevent bad patents from being exploited by allowing third parties to submit evidence that a patent is not novel or is obvious, and by setting up a post-grant opposition process in which people could challenge just-issued patents outside of court.
Although technology companies were generally upbeat about the Supreme Court's latest ruling, its immediate effects aren't entirely clear.
"This may make the holders of some lousy patents a little less interested in going the litigation route because it may well be they realize that their chances of winning are lower," said CCIA's Black. "I have to mitigate that comment unfortunately a little bit by saying that an awful lot of litigation goes on here that isn't expected to go to trial; it's for extortion purposes."
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