[Ip-health] Economist: Patently obvious

[Thiru Balasubramaniam]

http://www.economist.com/business/displaystory.cfm?story_id=3D9122305

Intellectual property

Patently obvious
May 3rd 2007
 From The Economist print edition


America's Supreme Court raises the bar for what deserves a patent

IN 1572 the Privy Council of Elizabeth I, the queen of England, refused
to grant patent protection to new knives with bone handles because the
improvement was marginal. It is only natural that things progress, the
council reasoned; minor ameliorations do not cut it. This week
America's Supreme Court decided likewise.

Ruling on KSR International v Teleflex, a patent dispute centred on the
addition of electronic sensors to car-accelerator pedals, the court
said that the combination of two existing technologies was not
sufficiently =93non-obvious=94 to deserve a patent. =93Granting patent
protection to advances that would occur in the ordinary course without
real innovation retards progress,=94 wrote Justice Anthony Kennedy in his
opinion for the court. To obtain a patent's 20-year exclusivity, an
invention is expected to be novel, useful and non-obvious=97but the third
requirement has not been rigorously applied in recent years by the
patent office and the courts. Now examiners and the courts have more
discretion to use =93common sense=94.

The ruling has sweeping implications. =93Nearly every patent in force
today is prospectively open to challenge,=94 says Bruce Lehman, a former
commissioner of the United States Patent and Trademark Office who works
at Akin Gump, a law firm. He expects a huge increase in litigation,
longer waits to get patents and ultimately less certainty over their
legitimacy. Yet this is beneficial, believes Brian Kahin, an
intellectual-property expert at the Computer & Communications Industry
Association, an industry lobby, since it may reduce the number of
trivial or dubious patents.

The computer industry welcomes the ruling as a way to thwart the
growing number of frivolous lawsuits by =93patent trolls=94=97firms that ma=
ke
a business of suing others for violating questionable patents. But it
is a setback for the drug industry, which often seeks new patents for
minor tweaks to existing inventions, such as combining one drug with
another.

The ruling is just one in a string of recent cases in which the Supreme
Court has sought to reverse the trend towards making patents easier to
obtain and enforce. Last year in a case involving eBay, the biggest
online auction site, the court tightened the standards that determine
when an injunction can be used to force a firm accused of patent
infringement to stop trading. In January the court ruled in a dispute
between two biotech firms that companies which license a patent from
its owner may still challenge its legality.

And this week in a separate decision the court ruled in favour of
Microsoft, the world's biggest software company, and against AT&T, the
world's biggest telecoms firm, in a dispute over damages for patent
infringement. It ruled that such damages should be limited to sales in
America, but not abroad. This will help Microsoft in another
infringement case in which it was ordered to pay $1.5 billion to
Alcatel-Lucent, a telecoms-equipment firm, largely on the basis of
sales outside America.

The underlying problem is that as the number of patents, and the value
of each one, has increased tremendously, the system has been slow to
adapt (see chart). The flood of applications taxed patent offices,
creating huge backlogs and lengthy delays. Standards slipped. The
number of lawsuits and value of settlements shot up. Attempts over many
years by Congress to reform the system stalled, owing to a lack of
agreement between the computer and drug industries on what should
change. So the Supreme Court's decisions try to do what policy-makers
could not.

How non-obvious an idea needs to be to qualify for a patent has long
vexed America's legal minds. The invention had to be =93something more
than the work of a skilled mechanic,=94 the Supreme Court opined in 1850.
In 1941 it set the bar higher, requiring a =93flash of genius=94. In 1952
Congress loosened the standard, stating that the idea simply needed not
to be obvious =93to a person having ordinary skills=94.

This week's ruling provides the contours of a modern patent policy, by
implicitly stating that inventors ought to be familiar with practices
from other fields and that combining existing technologies is not
enough, says Dominique Guellec of the Organisation for Economic
Co-operation and Development. It may thus end the boom in reviled
=93business-method patents=94, which often entail the application of
obvious things, such as shopping or auctions, to an online setting. And
it will probably prompt patent regimes in other countries to become
more stringent, too.

---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org