The January 17, 2011, edition of Fortune magazine has Chief Justice John Roberts on the cover. Roberts is the Chief Justice of the United States Supreme Court, a Court now made up predominantly of conservatives by a 5 to 4 majority. It is the contention of the author of the article on Roberts that the Roberts Court is the most pro-business Court the United States has ever seen. If that is the case, which I am not at all sure is the case, it would have to mean that one can be “pro-business” while being “anti-patent,” which given the state of American manufacturing and the future of the U.S. economy seems questionable.
Of course, if you are anti-patent then you are anti-innovation because those who innovate are not the behemoths of industry, but rather start-up companies that absolutely require patents in order to attract funding, expand and create jobs. Thus, given the hostility toward patents it is entirely accurate to characterize the Roberts Court as anti-innovation. The Roberts Court increasingly puts hurdles in the way of high-tech job growth. You see, it is easy for anyone to characterize the Supreme Court as “pro-business” because selecting a victor in a “business case” almost necessarily means that a business has been victorious. But what business? One that is likely to innovate, expand, create jobs and form new industry? Or one that once innovated and expanded, but now finds themselves stagnant and laying off employees?
In part 1 of what will be a 3-part series I addressed the anti-innovator Supreme Court ruling in eBay v. MercExchange. See The Roberts Supreme Court: Pro-Business and Anti-Patent? Obviously, the 9 who wear black and go to work on the corner of First Street NE and Maryland Avenue know very little about patents, and they know less about property rights. The fact that they know little about property rights is hardly shocking to anyone who has followed the Court’s eminent domain rulings. I have to think that the Framers are rolling over in their graves, but I digress. In eBay v. MercExchange they actually ruled that the owner of a government granted right to exclude others is not entitled to a ruling at the end of a victorious litigation that would prohibit the losing defendant from engaging in activities that infringe a valid and enforceable patent. Thanks to eBay v. MercExchange it is now much more difficult to get a permanent injunction even when the patent is valid, enforceable and infringed, meaning that large companies can simply trample on patent rights if they want and smaller companies will be unable to meaningfully exclude them, thus compromising the entire reason for having a patent in the first place. Obviously the Roberts Court never took patent law while they were in their ivy league law schools.
As ridiculous as eBay v. MercExchange is, there is a case even more ridiculous and which more clearly demonstrates that the Roberts Court is not at all pro-business. In the matter of KSR v. Teleflex the United States Supreme Court re-wrote decades of law relating to obviousness and turned it into a question of “common sense.” The Federal Circuit had developed the law of obviousness to the point where we all knew what it meant and it was as objective a test as a subjective inquiry will allow, which means it was certain, defined and stable. The terms “certainty”, “well-defined” and “stable” are what businesses like. Businesses do not like moving targets, the rug being pulled out from under them and nebulous standards that could mean whatever a government bureaucrat says they mean on that given day. In short, businesses do not like being dictated to based on the side of the bed that a government bureaucrat wakes up on.
In KSR the Supreme Court explained: “We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach…” Thus, the Supreme Court favors a case-by-case approach to determining obviousness. Apparently they think a case-by-case approach as applied by 6,300 patent examiners, most of whom are not lawyers, will lead to predictable and uniform results. No, they just never appreciated the problem or dismissed it as being too difficult for them to figure out. Clearly, businesses do not appreciate expansive, flexible approaches that lead to decision making that is not uniform and is unpredictable. So saying that a case-by-case approach to obviousness is pro-business is absurd on its face.
The Supreme Court also went on to say: “One of the ways in which a patent’s subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent’s claims.” Yes ladies and gentlemen, Justice Kennedy did just attempt to define “obviousness” using the term “obvious” in the definition. So according to Justice Kennedy and the rest of the Supreme Court one can determine if the obviousness requirement of 103 is satisfied by proving there was an obvious solution encompassed within the patent claims. Now if you were trying to write a computer program or figure out some kind of artificial intelligence means to determine if an invention is obvious what would happen is an endless loop would occur. Is the state of education so poor in America that even Supreme Court Justices don’t realize you cannot define a term using the term itself?
The Supreme Court in KSR went on to say: “Rigid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it.” Thus, in the collective wisdom of the Supreme Court they have determined that even if there is really no legitimate way to demonstrate that various pieces of prior art would have been weaved together to those of skill in the art the factfinder (who may be a patent examiner, who may be a district court judge or who may even be a jury) should be allowed to use their “common sense” to fill in gaps in logic and reasoning that are otherwise not found in the literature. Isn’t that the type of whimsical bureaucratic arbitrary activity that you see in kangaroo courts? Isn’t this how governments in oppressive regimes interact with their citizens, simply doing whatever strikes them as appropriate?
All of this is particularly disturbing since the necessary consequence of the Supreme Court ruling in KSR returns the law of obviousness to its pre- 1952 state. 1952 was a big year for patent law. In 1952 the United States Congress engaged in a massive re-codification of the patent laws, the last such stern to stem overhaul of U.S. patent laws. The resulting 1952 Patent Act reviewed the statute and Supreme Court cases, keeping what was liked and specifically writing it into the new law and in some cases jettisoning that which was specifically disliked. No place was the jettison more pronounced than with respect to obviousness.
The law of obviousness had morphed over many years to the point where it was virtually impossible to obtain a patent. In fact, in order to obtain a patent one had to demonstrate a “flash of creative genius.” To satisfy the flash of creative genius test it was necessary to come up with a pioneering innovation or some kind of disruptive technology. Incremental advances were discouraged under the test, thereby thwarting the entire reason for a patent system. You see, the United States Constitution authorizes Congress to grant patents to foster innovation. When a patent is given to one true innovators do not stop, but rather they re-tool and work to engineer around. They also seek to improve and engage in ways that are not infringing. Thus, the patent system fosters the march forward of innovation. Yes, we would prefer leaps, but leaps are few and far between. A patent system that does not foster incremental advance is one that does not foster innovation, period.
A patent system that requires a flash of creative genius is a system that ignores the human condition, ignores history and pretends that game-changing innovation is the only type of worthwhile innovation. The “common sense” test for obviousness announced by the Supreme Court in KSR v. Teleflex takes backward toward the “flash of creative genius” standard. Unfortunately, if what the Supreme Court held in KSR is applied literally it is far worse than the flash of creative genius standard. Under KSR if an inventor set out to accomplish a task then that which results is obvious. Therefore, under a literal reading of KSR in order to obtain a patent one must be an accidental inventor. Simply put, rewarding those who accidentally stumble upon something and not rewarding those who set out to innovate is absurd. Only a group of individuals erroneously secure in their ability to know everything about everything would come up with such an asinine ruling.
Moreover, in order to reach its anti-innovation decision in KSR the Supreme Court had so specifically and intentionally ignore the language of 35 U.S.C. 103. One sentence in particular was added by Congress for the specific purpose of overruling previous Supreme Court cases that set forth the flash of creative genius standard. This one, very simple sentence, reads:
Patentability shall not be negatived by the manner in which the invention was made.
I say that the Supreme Court must have intentionally ignored this sentence, which seems like the only logical conclusion given that the legislative history makes clear that the manner in which one arrives at an invention is of no consequence. A more scary thought would be that the Supreme Court, who in a world of increased specialization still believes they have the mental acuity to pontificate correctly on every area of law, didn’t realize what they were doing. Truthfully, the Supreme Court likely didn’t know what they were doing and couldn’t have possibly formed the requisite intent to do anything within the realm of patents “intentionally.”
We all know that gone are the days that a lawyer hangs a shingle and takes whatever work wonders in the front door, whether it be writing a will, helping someone get a divorce, starting up a business, counseling on tax matters, representing you when you are injured, filing a trademark application, etc. etc. The law is too complicated, we all focus on no more than several areas and we do that because it would be malpractice otherwise. Ethical rules require that in order for lawyers to take a case we must be competent to handle the issues. There are no such competence requirements, apparently, for Judges. The Supreme Court pretends they can address every issue of law with equal superior knowledge, which is nearly comical and would be extremely funny if it didn’t come with such horribly negative consequences for the rest of us.
It is indeed shocking that at a time when the public is focused on job creation as the number one issue facing the country there are anti-patent and anti-innovation forces working to water down the value of a patent. It is even more shocking that those forces are sitting on the United States Supreme Court and so full of hubris that they don’t recognize the ridiculousness of their own rulings. In the patent realm the Supreme Court is collectively acting like the Emperor who isn’t wearing any clothes, and an arbitrary and capricious confidence without reason and desire to tinker in areas where they have little substantive knowledge does not a friendly, pro-business Court make.
The Supreme Court decision in eBay v. MercExchange doesn’t make it impossible to obtain damages for patent infringement, it just makes it much more difficult to exercise the exclusivity that is supposedly guaranteed by the patent granted by the United States federal government.
The Supreme Court decision in KSR v. Teleflex does not make it impossible to obtain a patent. Thankfully the Patent Office, the United States Court of Appeals for the Federal Circuit and the district courts have largely ignored much of the ruling and are increasingly moderating the decision to mean things that it clearly does not say.
The Supreme Court decision to come in the matter of Microsoft v. i4i, however, is another matter. The Supreme Court seems poised to gut the presumption of validity that has underwritten the value of a patent for a generation. If the presumption of validity is altered it will shift the patent landscape instantaneously. Rights already obtained will weaken immediately. It won’t be an eminent domain taking, but by any fair definition it should be. The Supreme Court is poised to unilaterally gut issued patents and turn them into nothing more than a registration, akin to a copyright. A pro-business Court would NEVER change settled expectations of property rights retroactively, halving (or worse) the value of the investment. No, such a ruling would be what one would expect in a dictatorship, where property rights exist at the whim of the dictator and/or his puppet bureaucrats.
Part 3 of this series will look at the anti-innovation and anti-business implications of what we all fear (and suspect) the Supreme Court will likely rule in Microsoft v. i4i, a case that will be heard this term.