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VOL. 122 | NO. 100 | Thursday, May 31, 2007

Supreme Court Decision Could Shed Different Light on Patents

By Amy O. Williams

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The Case:
KSR International Co. v. Teleflex Inc.
Argued Nov. 28, 2006
Decided April 30, 2007

A recent ruling by the U.S. Supreme Court could change the way Memphis businesses look at patents.

One thing is for sure, it will definitely change the way attorneys look at them.

In a unanimous ruling on a patent case in late April, the court used a new, more flexible standard that favors competition and ultimately will make it more difficult to get - and keep - patents on new and existing products.

"This is big news, and not just in intellectual property law," said John R. Branson, shareholder in the Memphis office of Baker, Donelson, Bearman, Caldwell & Berkowitz PC. "It affects everybody - microbiologists, car makers, the Internet, everywhere."

The general consensus among Memphis attorneys who practice in the area of intellectual property is the ruling will make it easier to overturn existing patents and it will make new patents more difficult to get, Branson said.

At issue in that Supreme Court case, KSR International Co. v. Teleflex Inc., was a patent for a position-adjustable vehicle pedal assembly.

In the court's opinion, written by Justice Anthony Kennedy, "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive inventions of the value or utility."

Inventor or competitor?

Owning the patent to an invention, which can include anything from a drug to a gas pedal, as in KSR v. Teleflex, means the owner has the exclusive right granted by the government to manufacture, use or sell an invention for a certain number of years. Patents were created as a way to reward innovation while encouraging competition. The high court's rulings have swung back and forth over the years, from favoring the inventor to favoring competition.

This most recent ruling by the Supreme Court indicates a possible swing in the favor of competition by making it easier to challenge patents, Branson said.

For example, if someone invented a new way to make baseball bats, the new bats would have to be made in a way that an ordinary bat designer could not have come up with in the usual process of designing bats.

"People often think when they get a patent, they are protected," Branson said. "A lot of times, their problems are just starting."

This ruling makes those problems exponentially larger, potentially opening the floodgates for litigation against existing patents lacking the element of "obviousness."

"The notion that an invention has to be novel and not obvious in light of prior inventions is a long-settled principle under patent laws," said Mark Vorder-Bruegge Jr., a partner in the Memphis office of Wyatt, Tarrant & Combs LLP and a member of its commercial litigation and intellectual property and technology licensing practice groups. "But having said that, the way the patent office and the courts apply that principle, like many areas of the law, is subject to some evolution over time."

To the heart of the matter

Some comments made by the Supreme Court justices indicate the court might feel the U.S. Patent and Trademark Office has been too permissive in issuing patents, Vorder-Bruegge said.

The central issue in the case is competition. Does allowing people to invent products or technology encourage competition or does providing the protection of a patent serve as an incentive to inventors, and therefore also encourage competition?

"This is the policy question that has dominated patent law since the Constitution was written," Vorder-Bruegge said. "The question dates back to the founding of our country."

Patents are an integral part of the business of Memphis companies such as Wright Medical Inc., Smith & Nephew Inc. and Minneapolis-based Medtronic Inc.

Medtronic is the parent company of Memphis-based Medtronic Spinal and Biologics. The company holds patents on numerous pieces of technology and as a result has spent millions of dollars in patent litigation.

In 2005, Los Angeles surgeon Gary Michelson won a $1.35 billion settlement from Medtronic over some medical devices and instruments he had developed. Most recently, the U.S. Court of Appeals for the Federal Circuit ruled in favor of Medtronic in its patent litigation against Cross Medical Products Inc.

The court ruled in March that a type of screw used in spine surgery made by Medtronic does not infringe on a certain Cross Medical patent, and Medtronic would be allowed to continue selling these products.

Those million-dollar-plus settlements are typical in patent litigation, Branson said.

"It's too soon to say if this ruling will make (patent litigation) more expensive," he said. "Everyone's just speculating at this point."

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