Innovation in the Twenty-First Century: Patent Standards for Non-Obviousness

Innovators and the practitioners who counsel them are well aware that among the biggest hurdles to overcome in obtaining strong patent protection is convincing a patent examiner that a claimed invention is non-obvious in light of the prior art. 35 U.S.C. § 103. Recently, in Innovention Toys v. MGA Entertainment*, 2011 U.S. App. LEXIS 55664 (Fed. Cir. 2011), which addressed the issue of when prior art is sufficiently relevant to a claimed invention to be considered in a non-obviousness inquiry, the Court of Appeals for the Federal Circuit (“CAFC”) reminded the community of inventors and patent professionals that both it and the Supreme Court have a broad view as to what art would be obvious for an inventor to consider when tackling an unsolved problem.

We discuss the law of “field of endeavor” – which controls the scope of prior art to be considered in a Section 103 analysis, and the takeaways from the Innovention decision. 

Patent Infringement and System Claims in the Information Age

The Court of Appeals for the Federal Circuit (“CAFC”) recently confronted the issue of infringement of systems claims in patents in Centillion Data Systems, LLC v. Qwest, 631 F.3d 1279 (2011), in which the patent at issue disclosed a system for collecting, processing and delivering information from a service provider, such as a telephone company, to a customer.  As with many systems, part of the claimed system involved a front-end personal computer maintained by an end user and part involved a back-end computer controlled by a service provider. 

Accordingly, the CAFC was left to address who, if anyone would be a user of the system and thus who could potentially be held liable for infringement.  As an increasing number of businesses use systems that are patented, try to patent systems, and try to avoid the patents of third parties that are directed to various systems, it is important for the attorneys who counsel them to be cognizant of both the CAFC’s holding and reasoning in Centillion.


Federal Circuit Reemphasizes the Importance of Compliance with the Written Description Requirement

Difficult economic times force companies to reevaluate current and future business opportunities.  For many companies, one of the most valuable ways to secure a stable future is to obtain a solid patent portfolio. 

In order for a company to have a strong patent portfolio it must first, of course, be innovative.  But also important, it must prepare and prosecute patent applications that support the full scope of the claims to capture and protect all to which the inventors should be due.   

            To assist their clients, many patent lawyers are tempted to draft very broad patent claims.  Should the Patent Office deem these broad claims patentable over the prior art and the patent proceed to issuance, the patentee may appear able to enjoy a right to prevent others from making, using, and selling a broad class of products or services. 

The Court of Appeals for the Federal Circuit (CAFC), however, recently reminded patentees that in addition to having claims directed to subject matter that is novel and non-obvious, 35 U.S.C. §§ 102, 103, a patent application must satisfy the requirements of 35 U.S.C. § 112, which include the written description requirement. 

How Much Is That Patent Worth?

America’s public companies are being subjected to greater scrutiny than ever before over their business decisions.   For many of these companies, the scrutiny extends to decisions with respect to acquiring and enforcing their own intellectual property rights, as well as with respect to honoring the intellectual property rights of others.  Although these rights may include all forms of intellectual property, e.g., trademarks, copyrights, and trade secrets, for many companies, the biggest exposure lies in decisions made with respect to patents.

Assigning a value to a patent is a difficult problem.  In order for the value to be meaningful, one must consider at least four issues: (1) the potential to increase revenue (IR); (2) the risk that a patent will be invalidated (RIV); (3) the risk that someone will design around (RDA) the technology; and (4) the risk that any commercial product or service will be covered by a multiple patents (RMP).

Broadest Scope of Inequitable Conduct Materiality Endorsed

A charge of inequitable conduct before the United States Patent and Trademark Office (“PTO”) may sound like a threat that would only be of concern to patent lawyers and their high technology clients.  However, because anyone can be sued for patent infringement without notice and patents can issue for any novel, non-obvious and useful invention, all attorneys should be aware of the increasingly common, and thanks to the Court of Appeals for the Federal Circuit, increasingly broad defense of inequitable conduct before the PTO. 

            Inequitable conduct is a defense that renders a patent unenforceable as a matter of equity due to an intentional, material misrepresentation or omission during prosecution of patent.  Because the doctrine is rooted in equity, the defense can be invoked when there is either a high level of materiality or a high level of intent, even if the other element is low. 

If there is a sufficiently high level of both materiality and intent, the patentee can also be subject to antitrust liability, Walker Process v. Food Machinery, 86 S. Ct. 347 (1965), and not just an inability to enforce the patent. 

            The issue of intent has always been recognized as fact specific and subjective.  By contrast, on its face the issue of materiality has the potential of being part of an objective standard.  However, as the Court of Appeals for the Federal Circuit (CAFC) recently explained in Digital Control Inc. v. The Charles Machine Work, 437 F.3d 1309 (2006), the rules or scope of what is “material” has changed over time and not always been consistently applied. 


Non-Compliance with Bayh-Dole Leads to Army Getting Patent Title

Among the many incentives used by the federal government “To promote the Progress of Science and useful Arts,” are: (1) providing direct funding to researchers; and (2) through the Bayh-Dole Act, 35 U.S.C. § 200 et seq., allowing researchers at small businesses and nonprofit organizations to apply for and to receive patent rights arising out of inventions that are developed with this funding.  Thus, recipients of federal grants can reap the benefits of a limited property right against the public, even though the public, through its tax dollars, funds the development of the inventions that give rise to those rights.

When an inventor receives federal funding, in order to avail himself of potential patent rights, he must agree to abide by a number of strict requirements.  These requirements are designed to protect the public’s investment in the research.  Unfortunately, historically, recipients have not fulfilled their obligations, and the funding agencies have not mandated compliance.  GAO/RCED-99-242, Reporting Requirements for Federally Sponsored Inventions Need Revision (Aug 1999). 

However, a recent action by the U.S. Army, which was affirmed by the Court of Appeals for the Federal Circuit, may signal an increased concern of funding agencies to force recipients to honor those obligations.  In Campbell Plastics v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004), the Court of Appeals for the Federal Circuit held that failure of a recipient of federal funds to meet certain requirements of its funding agreement can cause the recipient to lose its patent rights even absent any particularized harm to either the funding agency or the public.