Businesses Split on Patent Case
Review of gas pedal patents by U.S. Supreme Court being watched closely by tech companies like Microsoft, others because of impact on software patent laws.
Some of the largest companies in the United States
are facing off in a Supreme Court case over gas pedals, with one side
hoping the justices will put the brakes on an out-of-control patent system.
The court is scheduled to hear arguments Tuesday on what's obvious when
older inventions are combined to create something new. The law says an
invention that's "obvious" isn't patentable, but the definition
isn't clear despite decades of litigation.
The ambiguity, critics say, has led to an explosion of patents as companies
stake claims on everything in sight, from strategies for avoiding taxes
to golf ball designs. The result has been extensive and costly legal wrangling
as companies of all sizes fight over who's infringing what. In some cases,
small companies acquire patents not to develop new products but to sue
for a quick windfall.
Microsoft Corp., Cisco Systems Inc., Intel Corp. and other New Economy
companies have filed briefs calling for a change to the system.
But Johnson & Johnson, GE and DuPont, have filed their own brief
arguing that major changes to the patent system would jeopardize billions
of dollars invested in product innovation. They want to protect pharmaceutical
and chemical products from generic manufacturers and counterfeiters, attorneys
involved in the case said.
Patent law experts consider KSR International v. Teleflex Inc. one of
the most important cases in years.
"It's extraordinarily likely that the case will be a landmark ruling,"
said Thomas Goldstein, a partner at Akin Gump Strauss Hauer & Feld
and counsel to Teleflex.
The KSR case -- which has attracted an unusually high number of friend-of-the-court
filings from corporations, the government and academia -- involves a dispute
over a brake pedal designed for pickup trucks.
Canada-based KSR manufactures gas pedals for General Motors Corp. It
made a pedal that can be adjusted for the height of the driver and uses
electronic signals rather than a mechanical cable to accelerate when the
pedal is pushed.
Both features were developed separately -- the adjustable pedal over
25 years ago -- but Teleflex, a manufacturer based in Limerick, Pa., sued
KSR in 2002, claiming that KSR's combination of the two features infringed
on a patent it was issued in May 2001.
KSR argued that the patent should be invalidated because the combination
of the two features is obvious.
The question of "obviousness" has long been a contentious area
of patent law because it is the most subjective, patent experts say. Many
inventions can seem obvious in hindsight. For example, 3M Co.'s Post-It
Notes "may seem to be obvious, but that is only because they have
been nearly ubiquitous in our daily lives for 25 years," the GE and
DuPont brief said. 3M also signed onto that brief, which supports the
"Upending nearly a quarter-century of jurisprudence at this point
would throw into question the validity of millions of issued patents,
cause the reassessment of patent licenses worth billions of dollars, make
patent litigation more difficult to settle, and inevitably create more
litigation for the courts," the brief said.
Gerald J. Mossinghoff, a former commissioner of the U.S. Patent and Trademark
Office, said 85 percent to 90 percent of the office's work focuses on
determining obviousness. Yet the Supreme Court has not ruled on obviousness
since 1976, adding to the importance of the case.
The Court of Appeals for the Federal Circuit, which was set up to consider
patent cases in 1982, developed the "teaching, suggestion, or motivation"
test in an effort to set an objective standard for determining whether
an invention is obvious.
The test says that where existing elements are combined to create an
invention -- such as combining an adjustable brake pedal with an electronic
one to create an adjustable, electronic brake pedal -- there should be
evidence that someone else might have come up with the same combination
in order to determine that the invention is obvious and therefore not
worthy of a patent.
For example, the evidence could be references in previous patents or
written comments in a technical journal.
Critics of the Federal Circuit argue that this has made it too difficult
to prove that a claimed invention is obvious and therefore too easy to
obtain a patent, because if a potential invention is obvious then technical
experts may not have written anything about it.
In addition, Microsoft and Cisco said in their brief that the Federal
Circuit's test lowers patent standards and actually hinders innovation,
rather than spurring it, as patents are intended to do.
The companies said the current system has led to "large numbers
of obvious patents" that make "inadvertent infringement"
more likely, and therefore patent infringement lawsuits more common.
This has spurred companies like Cisco to seek "hundreds of patents
for defensive purposes," the brief said.
Patent litigation is expensive, industry observers say. Emery Simon,
counselor to the Business Software Alliance, a trade group, said that
patent cases typically cost $2 million to $4 million per year and can
take several years to resolve.
These expenses can be passed onto consumers through higher product prices,
the companies said.
"A network router, a golf club, a software program, a ribbon bow,
a bra all become more expensive as more and more patent holders must be
paid royalties, and unnecessarily so where these obvious patents contribute
no innovation to the product being sold," Microsoft and Cisco's brief
But companies that support the Federal Circuit's test argue that it is
effective in countering the problem of "hindsight bias."
John Duffy, a George Washington University professor who helped prepare
KSR's Supreme Court filings, said that if the Supreme Court overturns
the Federal Circuit's standard, it would make it easier for businesses
to defend themselves against patent infringement suits by invalidating
questionable patents. That could result in less patent litigation overall,
Most legal experts expect the Supreme Court to modify the Federal Circuit's
standard in some way. Goldstein said the court could even set a new standard
for determining what's obvious.