This was published 16 years ago
US high court shakes up patents, affecting tech, pharmaceuticals
The US Supreme Court has shaken up the standard for patents in rulings that could have far-reaching implications for the technology sector, but also other industries such as pharmaceuticals.
Two rulings in the past week set new standards for challenges to patents, in the face of some calls to curb litigation from so-called "patent trolls" or firms whose sole existence is based on extracting royalty payments.
Legal analysts say the court's decisions may limit "junk patent" lawsuits that have affected the high-tech industry, but may also have some unintended effects of hurting patent protection for other sectors like pharmaceuticals.
In one key ruling, the nine US justices tossed out a patent for an adjustable accelerator pedal for motorists as "obvious."
The case involved a suit by auto parts makers KSR International against Teleflex, which developed a system that combines sensor technology with a mechanism to automatically set the height of vehicle control pedals for drivers of different sizes.
By ruling the patent as "obvious" the justices held that a company cannot hold a valid patent for a device that anyone could have invented, such as a wheel or door.
"Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may ... deprive prior inventions of their value," wrote Justice Anthony Kennedy.
"In the short-term, this case reduces the average value of patent holdings," said law professor Dennis Crouch at Boston University.
"Courts should find it easier to invalidate patents based on expert testimony and the jury's concept of obviousness. The story also becomes more important -- and attorneys who can tell an 'invention story' will be in demand."
In a separate case the same day, the high court ruled that AT&T could not collect damages from Microsoft for patented software sold in other countries.
The two decisions taken with an opinion earlier this year shifts power away from patent holders, analysts said.
Some in the technology sector say the court has given a boost to innovation by limiting frivolous litigation.
"We are encouraged by the Court's efforts to clamp down on obvious patents," said Ed Black at the Computer & Communications Industry Association. "It reaffirms what we have always said: "The patent system's purpose is to promote innovation, not patents."
CCIA had been outspoken last year when Research in Motion, maker of the popular Blackberry e-mail device, was sued by NTP Inc., a US firm that had accused RIM of violating its patents in its mobile software. RIM eventually settled the case.
Another case that drew wide attention was a suit against online auction firm eBay from a company that patented the use of a computer mouse to click and make an online purchase.
The decision also could benefit Internet telephony firm Vonage Holdings, which risks being shut down in a patent dispute with Verizon Communications.
"Vonage is trying to invalidate Verizon's patents," said John Fuisz, a Washington-based patent lawyer. "I'm sure the KSR decision will help them."
Some analysts said the court may be turning the tide too far and in the process discouraging innovation.
Although the impact of the case may be known only after further legal decisions, the pharmaceutical industry has argued against any weakening of the current patent system.
"Given the time and expense necessary to develop new drugs, intellectual property rights, especially those involving patent rights, are critical to (pharmaceutical firms) and their research and development efforts," said a brief filed in the case by the Pharmaceutical Research and Manufacturers of America.
The Biotechnology Industry Organization had made a similar argument, saying a change could "deter investment within the biotechnology industry."
Allen Baum, president of the Licensing Executives Society (LES), a group focused on intellectual property, said the court "may end up watering down the patent system to the point where it no longer serves the function intended to appropriately award innovation."
He added, "Right now we have Congress, the Supreme Court, and the Patent Office all making changes to patent law in response to intense pressure from those who believe that patents have become too strong."
Baum noted that the latest cases fail to distinguish between scientific categories of inventions.
"The same obviousness test is used for drugs and software," Baum said. "Will we inadvertently destroy the incentive to develop new medications in an effort to ensure inexpensive access to Internet phone calls?"