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Presented by:

Brian Cholewa & Mike Wokasch

 ¢s the Supreme Court out to
change the patent system?
‡ Three important Supreme Court decisions on
patent law during the last year:
± K
 ± patent prosecution/litigation
±
  ± patent
commercialization
± 
  ± patent enforcement
 KSR ¢nternational Co. v.
Teleflex ¢nc.

K
 , 127 S. Ct. 1727 (2007).

 Êbviousness is . . .
‡ Êne of the three requirements examined by the Patent
Êffice and courts when determining patentability.

‡ § 103: "A patent may not be obtained though the

invention is not identically disclosed or described as
set forth in section 102 of this title, if the differences
between the subject matter sought to be patented and
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 to
which said subject matter pertains."
 So how do you know if
something is obvious?
‡ Graham Factors
± Determine the scope and content of the prior art;
± Determine the differences between the claims and the
prior art;
± Determine the level of ordinary skill in the art; and
± Secondary considerations:
‡ Unexpected results;
‡ Commercial success;
‡ Long-felt, but unresolved need; and
‡ Failure by others.

 , 383 U.S. 1 (1966).

 What the "F" is wrong with
obviousness?
‡ Formalistic approach: TSM test
± "A patent claim is only proved obvious if some
motivation or suggestion to combine the prior art
teaching can be found in the prior art, the nature of the
problem, or the knowledge of a person having ordinary
skill in the art."
± Adopted to minimize the effect of hindsight in Graham,
as obviousness is a subjective determination ± personal
and subjective.
± Court noted that TSM, however, is a "rigid approach."
 What the "F" is the new
obviousness standard?
‡ Functional and Flexible approach.
± "[A] court must ask whether the improvement is more
than the predictable use of prior art elements according
to their established functions."

‡ Graham Factors emphasized, but TSM not

completely out as it "capture[s] a helpful insight."
 Šow can KSR affect patent
prosecution?
‡ Drafting applications
± Focus on what the
invention accomplishes
that prior art does not.
± But, keep 'problem' out of
Background of the
¢nvention.
± Claims: Look for ways to
link elements in a way that
highlights that new
functionality, reducing the
likelihood that an examiner
will be able to identify
those elements in the prior
art.
‡ Êffice Action responses:
± Use declarations to opine
on the non-obviousness of
claimed invention.
‡ Unpredictability of the
invention/teach away; and
‡ Technical advances required
to implement the invention.
± Šighlight secondary
factors.
± Refuse to accept
conclusory assertions that
obvious to combine certain
references.
 Šow can KSR affect patent
litigation?
‡ Use of experts may increase ± opine on the
obviousness of a patented invention.

‡ ¢s "obviousness" now purely a question of law?

‡ Use of Summary Judgment more prevalent?

 KSR in a nutshell
‡ An Examiner can make a „  case for
obviousness by a showing predictability, flexibility
and/or common sense. At that point, the burden shifts
to applicant to prove with substantial evidence that it is
not obvious.

‡ The more flexible approach results in higher standards

in the patent system. Although patents may be more
difficult to obtain, they will likewise be more difficult to
invalidate.
 KSR cont.
‡ Refines the current analysis of obviousness, but leaves in
place important limitations of the requirement, including that
a reason to combine the prior art in the manner claimed
and the predictability and technical feasibility of the claimed
subject matter at the time of invention.
‡ Re-defines "person of ordinary skill in the art" by adding a
quality of "ordinary creativity."
‡ Resurrects an "obvious to try" standard when design or
marketplace demands dominate.
‡ Combination inventions that achieve predictable results are
likely to be obvious.
 motables from the Supreme
Court . . .
‡ "The combination of familiar elements according to known
methods is likely to be obvious when it does no more than
yield predictable results."
‡ "[W]hen a patent claims a structure already known in the
prior art that is altered by the mere substitution of one
element for another known in the field, the combination
must do more than yield a predictable result."
‡ "¢f a person of ordinary skill can implement a predictable
variation, Section 103 likely bars its patentability."
‡ "[A] court must ask whether the improvement is more than
the predictable use of prior art elements according to their
established functions."
 Living in a post-KSR world
‡ 2„  !"# (Fed. Cir. 2007).
± Fed. Cir. affirmed district court¶s finding of obviousness,
noting that the obviousness analysis requires a common
sense approach rather than any rigid formula.
‡ "An obviousness determination is not the result of a rigid formula
disassociated from the consideration of the facts of a case. ¢ndeed, the
common sense of those skilled in the art demonstrates why some
combinations would have been obvious where others would not. 
K
 ., 550 U.S. __ (2007) ('The combination of
familiar elements according to known methods is likely to be obvious
when it does no more than yield predictable results.')."
Med¢mmune v. Genentech
 Who should be paying
attention?
‡ Anyone in this room that's involved in the
commercialization of WARF technology.

‡ ¢t impacts:
± Š  you approach prospective licensees, 
± Š| you should be asking for during negotiations.
 What changed?
‡ Question for the Court: ¢s there an
"actual controversy" when the
dispute is over a patent that is
subject to a license between the
parties?
‡ Supreme Court:
± Yes. Licensee coerced to pay
royalties by threatened
enforcement action.
± A licensee does not need to
break or terminate its license
agreement in order to seek a
declaratory judgment that a
patent is invalid, unenforceable or
not infringed.
 Declaratory Judgment
‡ MedImmune is not limited to only licensed patents!
± "We hold that where a patentee asserts rights under a patent based
on certain identified ongoing or planned activity of another party,
and where that party contends that it has the right to engage in the
accused activity without license, an Article ¢¢¢ case or controversy
will arise and

 



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± "mo practical stopping point short of allowing declaratory judgment
actions in virtually any case in which the recipient of an invitation to
take a patent license elects to dispute the need for a license and
then to sue the patentee" (concurring).
!$ 
!%
&'%&(() (CAFC 05-1300)
 The negotiations . . .

‡ There is no longer a license negotiation "safe harbor."

‡ Things to avoid:
± Referring to a particular infringing activity;
± Presenting the prospective licensee the choice of either
licensing or engaging in infringing activity;
± Refrain from revealing any detailed infringement
study/analysis.
‡ mew safe harbors?
± File suit first.
± Enter a confidentiality agreement as soon as possible.
 Preventing post-license
challenges
‡ Will certainly work:
± More up-front money; fully paid-up
± More exclusive licenses

‡ Likely to work:
± Attorney's Fees for successful defense
± Step-up royalty payments for valid, enforceable patents.
± Seek "cooperative" licensees

‡ May not be enforceable

± Terminate upon dispute
± Êther punitive measures
 What does this mean for
WARF?
‡ 


  ‡  
$


 
± Be careful about what you ± Be careful about what you
say. say.
± Recognize the context of the ± Recognize the context in
offer of a license agreement. which you negotiated the
‡ Šave you sued other license:
people?
‡ ¢s this a settlement of a suit
‡ Šave you sued this you filed?
company in the past?
‡ Šave you accused the other
‡ Šave you said anything to
lead them to believe they're of infringement?
infringing? ± Licensee will have more
power once you execute a
license.
eBay v. MercExchange
 ¢njunctions aren't automatic

‡ There is no "general rule" that a permanent

injunction should be awarded in Patent Act cases
once infringement and validity have been shown.

‡ ¢nstead, a four-factor test applies.

 The four-factor test
Under the four-factor test, a plaintiff must show:
1. ¢t has suffered an irreparable injury;
2. Remedies available at law, such as monetary damages,
are inadequate to compensate for that injury;
3. Considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted;
and
4. The public interest would not be disserved by a
permanent injunction.
 Unlicensed«
Uncommercialized«
‡ This case will change how injunctions are awarded
in cases where WARF seeks protection of
unlicensed and uncommercialized patents.

‡ As of July 1st, district courts issued injunctions in

only 23 of 30 cases.
 Where does that leave
WARF?
‡ "Some patent holders, such as university
researchers or self-made inventors, might
reasonably prefer to license their patents, rather
than undertake efforts to secure the financing
necessary to bring their works to market
themselves. Such patent holders may be able to
satisfy the traditional four-factor test, and we see
no basis for categorically denying them the
opportunity to do so."
 What district courts are
looking at?
‡ Post-eBay cases suggest that district courts are
looking at the following:
± Are the parties competitors?
± Are both parties making products?
± ¢s the patent owner licensing the invention and/or willing to do so
± Does the patent cover the core product or a small piece?
± Does the infringer have a significant marketplace advantages over
the non-infringers?
± ¢s the infringement willful?
± Are there special non-monetary terms needed to control the
invention? (Bayh-Dole obligations?)
± ¢s an injunction going to put the infringer out of business?


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