Does Dystar Provide the First Glimpse Into a Post-KSR World?

Now that the "simmering down" period has begun in the post-KSR era (and some practitioners are being coaxed back from high-rise window ledges), the process of digesting and applying the ruling to practice has begun. Greg Mandel posted a great piece today on Patently-O that breaks down the KSR decision and argues that the practical effect of the opinion may be overstated.

He may be right.

Despite efforts by the CAFC and the SCOTUS to clarify the concept, obviousness continues to be, as Judge Hand once lamented, as "fugitive, impalpable, wayward, and vague a phantom as exists in the whole paraphernalia of legal concepts." While some yearn for a "return-to-Graham" regime under KSR, it is worthwhile to remember that, in the years following Graham (1966), the patent system was in a confusing mess - district and regional circuit courts drifted into various and conflicting standards for obviousness. In fact, these conflicting standards prompted a great deal of forum-shopping by litigants, which became a primary motivation for creating the CAFC in the first place.

And it appears that the CAFC did a decent job of defining obviousness, which included the TSM test. As the KSR Court noted:

"In the years since the Court of Customs and Patent Appeals set forth the essence of the TSM test, the Court of Appeals no doubt has applied the test in accord with these principles in many cases. There is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis."

What the Supreme Court didn't like was the application of the test to the specific facts surrounding the prior art and Teleflex's patent:

"But when a court transforms the general principle into a rigid rule that limits the obviousness inquiry, as the Court of Appeals did here, it errs." (emphasis added)

"What we hold is that the fundamental misunderstandings identified above led the [CAFC] in this case to apply a test inconsistent with our patent law decisions." (emphasis added)

Accordingly, the Court listed the numerous errors made by the CAFC in its analysis, and found Teleflex's patent to be obvious (see Monday's post on this topic here).

However, it appears that the CAFC was one step ahead of the KSR Court when it issued three post-certiorari decisions related to obviousness (In re Kahn, Dystar and Alza Corp.) . Justice Kennedy acknowledged these decisions in the opinion and said:

"We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter . . . The extent to which they may describe an analysis more consistent with out earlier precedents and our decision here is a matter for the [CAFC] to consider in its future cases."

One of these cases, Dystar, is particularly interesting and is almost prophetic, given the language used in KSR. In fact, one can take portions of Judge Michel's opinion, and use them as rebuttals (or confirmation) for each of the errors perceived by the Supreme Court - a kind of KSR/Dystar "Oxford debate" if you will:

KSR: "The first error of the Court of Appeals in this case was to . . . [hold] that courts and patent examiners should look only to the problem the patentee was trying to solve."

Dystar rebuttal: "the suggestion test is not a rigid categorical rule. The motivation need not be found in the references sought to be combined, but may be found in any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself."

KSR: "The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. "

Dystar rebuttal: "Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense . . . Indeed, we have repeatedly held that an implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the 'improvement' is technology-independent and the combination of references results in a product or process that is more desirable." (emphasis added)

KSR: "A person of ordinary skill is also a person of ordinary creativity, not an automaton."

Dystar rebuttal: "Persons of varying degrees of skill not only possess varying bases of knowledge, they also possess varying levels of imagination and ingenuity in the relevant field, particularly with respect to problem-solving abilities. "

KSR: "When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp."

Dystar rebuttal: "Because the desire to enhance commercial opportunities by improving a product or process is universal—and even common-sensical—we have held that there exists in these situations a motivation to combine prior art references even absent any hint of suggestion in the references themselves."

In light of Dystar, it appears that the immediate effect of KSR will be on the language that is used when analyzing obviousness. "Motivation to combine" is essentially stricken from the patent lexicon (which presumably relieves Justice Scalia). Under KSR, the factfinder must "determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue."

Thus, the new rules of obviousness appear to require that there must be a "reason" for a combination (previously "motivation"), and that reason must be "apparent" (i.e., an explicit rationale must exist):

"To facilitate review [of an apparent reason to combine], this analysis should be made explicit [and mere conclusory statements will not work] . . . however . . . a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ ."

Thus, any "teaching away" arguments will remain the same, and will be available for attacking the reason to combine. Where previous battles waged over the "motivation to combine," future battles will take place in the context of whether or not the stated reason to combine references was "apparent," given the teachings (expressed and implied) contained in the references, as well as the knowledge and skill in the art.

The bugaboo here is that "the knowledge and skill in the art" will likely become a devil's playground for PTO examiners (you can only imagine the possibilities). If this provision isn't defined quickly for the examiners, it won't take long for the already-overburdened petitions office to be flooded with reams of 1.132 declarations, and the BPAI will have an advanced dose of "appeal mania" for every 103 rejection.

Side-note factoid on KSR/Dystar - many readers of the KSR decision noticed that the Court made a point of touting "common sense" when evaluating obviousness. The KSR decision mentions the phrase 5 times in the opinion. Dystar mentions it 10 times.

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DOWNLOAD:

Dystar Textilfarben GMBH v. C.H. Patrick, Co. (link)

Alza Corporation v. Mylan Laboratories, Inc. (link)

In re Kahn (link)