Anticipate This!™ | Patent and Trademark Law Blog

Microsoft Corp. v. AT&T Corp.

Posted in Opinion Commentary by Jake Ward on May 1, 2007

Title 35 U.S.C. § 271(f)(1) does not govern the manufacture and sale of components of U.S. patented inventions in foreign countries.

(Supreme Court 2007, 05-1056)

Title 35 U.S.C. § 271(f)(1) provides that it is an act of direct patent infringement to “suppl[y]. . . from the United States . . . components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States.”

In this case, AT&T Corp. alleged that when Microsoft Corporation’s Windows software was installed on a personal computer outside tbe U.S., the programmed computer infringed AT&T’s patent for a “Digital Speech Coder” system.  AT&T sought damages not only for each Windows-based computer made or sold in the United States, but also, under Section 271(f)(1), for each computer made and sold abroad.  Extending Section 271(f)—and consequently, the extraterritorial application of U.S. patent law—the Federal Circuit held that Microsoft infringed under Section 271(f)(1) when it exported master versions of its Windows software code to foreign computer manufacturers, who then copied the software code and installed the duplicate versions on foreign-manufactured computers that were sold only to foreign consumers.  The Supreme Court reversed.

In reversing the holding of the CAFC, the Supreme Court stated: 

Because Microsoft does not export from the United States the copies of Windows installed on the foreign-made computers in question, Microsoft does not “suppl[y] . . . from the United States” “components” of those computers, and therefore is not liable under §271(f)as currently written. . . .

Foreign conduct is generally the domain of foreign law, and in the patent area, that law may embody different policy judgments about the relative rights of inventors, competitors, and the public. Applied here, the presumption tugs strongly against construing §271(f) to encompass as a “component” not only a physical copy of software, but also software’s intangible code, and to render “supplie[d] . . . from the United States” not only exported copies of software, but also duplicates made abroad.  Foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries.  If AT&T desires to prevent copying abroad, its remedy lies in obtaining and enforcing foreign patents. . . .

REVERSED.

KSR Int’l Co. v. Teleflex Inc.

Posted in Opinion Commentary by Jake Ward on May 1, 2007

 In determining patentability under §103, a court must ask whether an improvement is more than the predictable use of prior-art elements according to their established functions.

(Supreme Court 2007, 04-1350)

  KSR v Teleflex

On appeal from the CAFC, the Supreme Court reversed for KSR and found Claim 4 of Teleflex’s U.S. Pat. No. 6,237,565 (the ‘565 patent) obvious.  Specifically, the Supreme Court held that the CAFC addressed the obviousness inquiry in a narrow, rigid manner that is inconsistent with §103 and Supreme Court precedent.

The technology at issue deals with adjustable pedal systems for vehicles using computer-controlled throttles.  Claim 4 of Teleflex’s ‘565 patent recites a position-adjustable pedal assembly with an electronic pedal position sensor attached to a  fixed pivot point.   Teleflex originally sued KSR at District Court and alleged that KSR’s pedal assembly infringed the ‘565 patent.  KSR defended on the basis that Claim 4 of ‘565 was invalid.  The District Court agreed, finding Claim 4 obvious and thus invalid. 

On the subsequent appeal, the CAFC held that the District Court’s recourse to the nature of the problem to be solved was insufficient to find Claim 4 of the ‘565 patent obvious.  The CAFC noted that unless the prior art references addressed the precise problem that the patentee was trying to solve, the problem would not motivate an inventor to combine the references.  That it might have been obvious to try that combination was likewise irrelevant. 

A more detailed summary of the facts and the disposition of the case at the CAFC may be found at this previous AT! post: Teleflex, Inc., et al. v. KSR International Co. 

In reversing the holding of the CAFC, the Supreme Court held as follows:

An Obviousness Inquiry Should Be Expansive and Flexible.

The way that the CAFC has been applying the TSM test is inconsistent with the expansive and flexible Graham framework.   A combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. See, e.g., United States v. Adams, 383 U. S. 39, 50–52 (Emphasis mine).  If a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, §103 likely bars its patentability.  A court must ask whether the improvement is more than the predictable use of prior-art elements according to their established functions.

To determine whether there was an apparent reason to combine the known elements in the way a patent claims, it will often be necessary to look to: 1) interrelated teachings of multiple patents; 2) the effects of demands known to the design community or present in the marketplace; and 3) the background knowledge possessed by a person having ordinary skill in the art. To facilitate review, this analysis should be made explicit (rejections on obviousness grounds cannot be sustained by mere conclusory statements).  But it need not seek out precise teachings directed to the challenged claim’s specific subject matter, for a court can consider the inferences and creative steps a person of ordinary skill in the art would employ.

The Teaching-Suggestion-Motiviation Test Captures a Helpful Insight into Obviousness, but is Not a Rigid Rule.

A patent composed of several elements is not proved obvious merely by demonstrating that each element was, independently, known in the prior art. (Emphasis mine).  There is no necessary inconsistency between the TSM test and the Graham analysis. But a court errs where it transforms general principle into a rigid rule limiting the obviousness inquiry.

The Obviousness Analysis as Employed by the CAFC was Thrice Flawed.

In correcting the flaws of the CAFC analyses, the Supreme Court provides: 

1)  Under the correct analysis, any need or problem known in the field and addressed by a patent can provide a reason for combining elements in the claimed manner.  Examiners are not constrained to looking at the problem the a patentee was trying to solve.  The question is not whether the combination was obvious to the patentee, but whether the combination was obvious to a person with ordinary skill in the art.

2)  It is common sense that familiar items may have obvious uses beyond their primary purposes.  A person of ordinary skill in the art is not necessarily led to solve a problem by only art designed to solve the same problem.

3)  A patent claim can be proved obvious merely by showing that the combination of elements was obvious to try. (Emphasis mine).  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.  If successful, this is likely the product of ordinary skill and common sense, and the fact that it was obvious to try might show that it was obvious under section 103.

Presumption of Validity for Patents Diminished?

The Supreme Court did not reach the question of whether a failure to disclose the relevant art for the present obviousness determination during the prosecution of the ‘565 patent voided the presumption of validity given to issued patents.  However, the Supreme Court noted that the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim —seems much diminished here.

Proper Inquiry for Obviousness in the Present Case.

The proper question was whether a pedal designer of ordinary skill in the art, facing the wide range of needs created by developments in the field, would have seen an obvious benefit to upgrading the prior art assembly with a sensor?  The other cited references explained where not to put the sensor, such that the designer would know to place the sensor on a non-moving part, the most obvious being a pivot point.

Under this analysis, Claim 4 was deemed obvious.  The Court noted that there was also no showing of a teaching away from the use of the references, nor any secondary factors to dislodge the determination of obviousness.