Patently Obvious

Winners and Losers

The KSR decision has certain predictable consequences, attorneys say: More patent applications denied by the patent office on grounds of obviousness; more requests for reexamination of existing patents; more summary judgments in infringement cases, with federal courts declaring patents invalid as a matter of law instead of sending the cases to juries; more companies refusing to pay royalties or license fees to the owners of patents they consider questionable; and patent holders becoming more reluctant to bring suit for infringement.

But how dramatic will these consequences actually be? How will the patent picture change? Attorneys say it is too early to tell, given the backlog of applications at the patent office, and the fact that the TSM test is not to be junked but only applied less rigidly. But KSR’s repercussions already can be seen in a few lower-court decisions.

Allgeyer points to a July 31 ruling by James M. Rosenbaum, chief judge of the United States District Court in Minnesota, in the case of Andersen Corporation vs. Pella Corporation and W.L. Gore & Associates, Inc. Andersen Corporation charged the defendants with infringing its patent covering reduced-visibility window screens. Rosenbaum, citing KSR, made a summary judgment declaring Andersen’s patent invalid as obvious.

The Court of Appeals for the Federal Circuit also has changed its tune at least once since being overruled in KSR, Allgeyer says. In Leapfrog Enterprises, Inc., vs. Fisher-Price, Inc., and Mattel, Inc., the Federal Circuit ruled that Leapfrog’s patent applying to a children’s reading device was invalid because obvious; therefore, Mattel and Fisher-Price were not guilty of infringement.

Clear beneficiaries of KSR include companies accused of patent infringement and those that don’t want to pay to license patents they think should not have been granted. “One of the arrows in their quiver has gotten sharper,” McDonald says.

Those threatened by KSR include patent applicants whose inventions combine prior elements, start-up companies that depend heavily on a few patents to protect their markets, and companies whose patent portfolios generate a significant amount of their income through license fees. IBM, for instance, makes more than $1 billion a year licensing its patent portfolio, says Ronald Schutz, a patent litigator with Robins Kaplan Miller & Ciresi, a Minneapolis-based law firm.

IBM, in fact, has headed the list for years as the top patent receiver in the United States. Of the 173,772 patents issued by the patent office in 2006, IBM received 3,651. Also among the top 10 patent recipients last year were Samsung, Canon, Hewlett-Packard, and Intel.

As Taylor points out, “The IBMs and Honeywells of the world get most of their patents based on improvements in their existing technology. What’s new is the use or the unexpected result they get by combining them.” The “unexpectedness” of those results is squarely in the crosshairs of KSR.