Supreme Court Signals Shift in Obviousness Standard

A recent oral argument before the U.S. Supreme Court may be signaling a shift in the patent landscape towards increased difficulty in obtaining patents and more frequent invalidity findings in court actions. Why the concern? For over twenty years, the U.S. Court of Appeals for the Federal Circuit has applied a "teaching-suggestion-motivation" test (referred to as "TSM") in evaluating whether a claimed invention is obvious. The continuing viability of the TSM test was recently argued in KSR International Co. v. Teleflex, Inc. If the questions and comments from the Justices at oral argument are any guide, the TSM test is in serious jeopardy.

During the oral argument in KSR, the Justices focused much of their attention on the "motivation" prong of the TSM test. Under the current formulation of the test, a patent examiner making a rejection or someone challenging a patent in litigation must show a motivation to combine individual elements that are otherwise disclosed in prior art in a way that results in the claimed invention. The Justices raised concerns about what the "motivation" requirement really means and whether it can be effectively applied to particular cases, and they went on to question whether the TSM test should be the exclusive test for combining prior art references to show obviousness. At a broader policy level, the Court acknowledged criticism that the U.S. patent system was issuing too many patents but was circumspect about whether it - rather than Congress - should address the "problem." At the same time, the Court was mindful that changing the obviousness standard could significantly impact the many patents issued under the current standard, effectively stripping away the statutory presumption of validity that pre-KSR patents currently enjoy.

The Supreme Court is expected to rule in early 2007. If the Court overturns or modifies the TSM test, as many observers expect, patent seekers may have to focus their resources on patent applications best able to withstand a likely obviousness challenge, in addition to beefing up their patent prosecution budgets to reflect a tougher landscape for obtaining patents. Just as importantly, accused infringers will be better positioned to challenge the validity of issued patents in court. In any event, patent owners and applicants, companies faced with infringement risks, and the patent bar all will be anxiously awaiting the Supreme Court's decision.

Click for a copy of the oral argument transcript.