A NEW TEST FOR OBVIOUSNESS IN
COMBINATION PATENTS:
ECONOMIC SYNERGY
Tamir Packin*
INTRODUCTION
Suppose1 an inventor creates a new mechanical device by
combining two components that already exist in the prior art.2 The first
component is an adjustable accelerator pedal assembly for use in an
automobile.3 This adjustable pedal accommodates drivers of different
* Associate Editor, Cardozo Law Review, J.D. Candidate (June 2007). I would like to thank
the 2006-2007 Cardozo Law Review Editorial Board, for their invaluable help in publishing and
editing this note. I am particularly grateful to my Note Editor Haifeng Peng, whose mentoring
made this publication possible. Finally, I would like to thank Professor Alan Wolf for his input
and feedback.
1 This hypothetical is based on Teleflex, Inc. v. KSR Int’l Co., 119 Fed. Appx. 282 (Fed. Cir.
2005), cert. granted, 126 S. Ct. 2965 (2006), where the patent described is owned by Teleflex
Corporation, and the combination patent at issue is Adjustable Pedal Assembly with Electronic
Throttle Control, U.S. Patent No. 6,237,565 (filed Aug. 22, 2000). The controversial claim in the
‘565 patent is claim 4 which reads:
4. A vehicle control pedal apparatus (12) comprising:
a support (18) adapted to be mounted to a vehicle structure (20);
an adjustable pedal assembly (22) having a pedal arm (14) moveable in force and aft
directions with respect to said support (18);
a pivot (24) for pivotally supporting said adjustable pedal assembly (22) with respect to
said support (18) and defining a pivot axis (26); and
an electronic control (28) attached to said support (18) for controlling a vehicle system;
said apparatus (12) characterized by said electronic control (28) being responsive to
said pivot (24) for providing a signal (32) that corresponds to pedal arm position as
said pedal arm (14) pivots about said pivot axis (26) between rest and applied positions
wherein the position of said pivot (24) remains constant while said pedal arm (14)
moves in fore and aft directions with respect to said pivot (24).
2 An invention that is already known is called “prior art.” See BLACK’S LAW DICTIONARY
119 (8th ed. 2004) (defining prior art as “[k]nowledge . . . that is available . . . at a given time to a
person of ordinary skill in an art.”).
3 See ‘565 Patent, supra note 1. For a description of the adjustable pedal assembly, see U.S.
Patent No. 5,010,782 (filed Jul. 28, 1989) issued to Asano et al; see also Teleflex Inc. v. KSR
Int’l Co., 298 F. Supp. 2d 581, 592 (E.D. Mich. 2003), vacated and remanded, 119 Fed. Appx.
282 (Fed. Cir. 2005), cert. granted, 126 S. Ct. 2965 (2006) (“Asano teaches an adjustable pedal
assembly pivotally mounted on a support bracket with the pedal moving in a fore and aft
directions with respect to the support and the pivot remaining in a constant position during
movement of the pedal arm.”).
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heights by allowing for the pedal surface to be moved towards or away
from the driver to increase the driver’s comfort.4 The second
component is an electronic sensor used for actuating the electronic
control system of the automobile.5 This device is coupled to the pivot
of the pedal and measures the angle of rotation of the pedal shaft.6 The
measurement of the angle is then relayed to the electronic control
system of the automobile to increase or decrease the speed of the
automobile.7
If the inventor plans to economically exploit his invention, his next
logical step (after invention) would be to apply for a patent. A patent
for this type of device is termed a “combination patent.”8 To be
patentable, an invention must be useful,9 novel,10 and non-obvious.11
4 See ‘565 Patent, supra note 1 (The adjustability of the gas pedal comes from a mechanical
assembly that allows for the resting position of the pedal to be shifted towards or away from the
driver in a similar fashion to the way the seat in an automobile can be moved towards and away
from the steering wheel. Allowing for the shifting of the seat, the steering wheel and the pedal
allows the driver to be more comfortable. Additionally, an adjustable accelerator pedal allows for
shorter drivers to sit further back from the steering wheel, which provides for a safer distance
from the airbag. The adjustable pedal assembly described here allows the base of the pedal to
remain stationary, while the pedal lever, which the driver depresses to accelerate, is moveable up
and towards the driver’s seat, or down toward the floor of the automobile.).
5 See ‘565 Patent, supra note 1. For a description of the electronic sensor, see U.S. Patent
No. 5,063,811 (filed Jul. 9, 1990), issued to Smith et al., which describes the electronic sensor in
use with a non-adjustable accelerator pedal. See also Teleflex, 298 F. Supp. 2d at 592 (explaining
that Smith teaches the use of a “rotary potentiometer . . . attached to a fixed support member and
responsive to the pedal’s pivot shaft”).
6 See ‘565 Patent, supra note 1.
7 Id. (When the driver depresses the pedal it rotates around a stationary pivot point. It is to
this shaft that the electronic sensor is coupled. The electronic sensor can measure the level of
depression of the sensor by measuring the angle through which the pedal has rotated. In other
words there is an electric sensor that measures the level of pedal depression and sends the signal
to a computer system which then increases the engine speed. This is different from the way older
automobiles operated, where the depression of the gas pedal would actually pull on a cable a
cable that was linked to the fuel-intake valve of the automobile. In this way, pressing on the gas
pedal would mechanically increase the engine speed). Electronic control systems are
advantageous because they allow for improved traction control, reduced emissions, and simplified
cruise control systems.
8 See BLACK’S LAW DICTIONARY 1157 (8th ed. 2004) (defining a combination patent as a
“patent granted for an invention that unites existing components in a novel way”).
9 The applicant must show that the invention is useful:
Whoever invents or discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof, may obtain a
patent therefor [sic], subject to the conditions and requirements of this title.
35 U.S.C. § 101 (2000) (emphasis added).
10 The applicant must demonstrate that the invention is new and that he invented it before
anyone else. 35 U.S.C. § 102 states in part:
A person shall be entitled to a patent unless—
(a) the invention was known or used by others in this country, or patented or described
in a printed publication in this or a foreign country, before the invention thereof by the
applicant for patent, or
(b) the invention was patented or described in a printed publication in this or a foreign
country, . . . more than one year prior to the date of the application for patent in the
United States or
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The combination invention described here is useful12 and novel.13 It is
novel because this combination does not exist anywhere in the prior
art.14
However, whether the combination of the adjustable pedal and the
electronic sensor described here is “obvious” poses a difficult issue.15
(c) he has abandoned invention, or . . .
(f) he did not himself invent the subject matter sought to be patented, or
(g) …before [the applicant’s] invention thereof, the invention was made in this country
by another inventor who had not abandoned, suppressed, or concealed it.
11 35 U.S.C. § 103 reads:
(a) A patent may not be obtained though the invention is not identically disclosed or
described as set forth in section 102 of this title, if the differences between the subject
matter sought to be patented and the prior art are such that the subject matter as a
whole would have been obvious at the time the invention was made to a person having
ordinary skill in the art to which said subject matter pertains. Patentability shall not be
negatived by the manner in which the invention was made.
12 See DONALD S. CHISUM, CHISUM ON PATENTS § 4.01 (2005) (“To comply with the utility
requirement, an invention need not be superior to existing products or processes. However, it
must meet three tests. First, it must be operable and capable of use. It must operate to perform the
functions and secures the result intended. Second, it must operate to achieve some minimum
human purpose. Third, it must achieve a human purpose that is not illegal, immoral or contrary to
public policy.”). Accordingly, the utility requirement for patentability will not be discussed.
Furthermore, mechanical devices are almost always found to be useful, so the issue of utility does
not normally arise in similar circumstances. See id. (explaining that the utility requirement is
“easily met with most mechanical devices and processes”).
13 By its definition, a combination patent is new, or novel, and therefore passes the statutory
novelty requirement for patentability. The statutory requirements for novelty are outlined in 35
U.S.C. § 102. For statutory text see supra note 10. See CHISUM ET AL., PRINCIPLES OF PATENT
LAW 324 (3d. ed. 2004) [hereinafter PRINCIPLES OF PATENT LAW] (“Section 102 requires a
patent applicant to contribute something new to society . . . . The reason for this novelty
requirement is straightforward: it makes no sense to grant someone a patent on an invention that
already exists.”) (emphasis in original) (footnotes omitted); see also Mannington Mills, Inc. v.
Congoleum Indus., Inc., 610 F.2d 1059, 1070 (3d Cir. 1979) (“The purpose . . . is to provide an
incentive for private enterprise to devote resources to innovative research, to make the
investments required to put new inventions into practice, and to make the benefits of the invention
available to a wider public.”) (emphasis added).
This combination invention is new or novel because it claims an invention that does not
exist completely in one piece of the prior art. Instead, a combination patent describes elements
from different pieces of prior art, but combines these elements to form a new invention. See
supra note 8.
14 A cable actuated adjustable accelerator pedal assembly with the same limitations exists in
prior art, and nonadjustable electronically actuated accelerator pedals were also known, but the
combination of the two cannot be found, and is therefore new. See ‘782 Patent, supra note 3;
‘811 Patent, supra note 5. Because this Note is limited to the discussion of new combinations,
the novelty requirement will not be discussed. If the novelty requirement were not met, then the
issue of obviousness would not have to be discussed, because if the combination already existed
in the prior art, then the patent would be invalid in light of 35 U.S.C. § 102.
15 In Teleflex, the District Court pointed to the prosecution history of the patent in question
and concluded that if the United States Patent Office examiner had both the Smith and Asano
patents before him, he would have rejected the application on the grounds of obviousness.
Teleflex Inc. v. KSR Int’l Co., 298 F.Supp. 2d. 581, 595 (E.D. Mich. 2003). The examiner
originally rejected the application in question using the Smith patent, and U.S. Patent No.
5,460,061 (issued to Redding et al.) because the Redding patent disclosed the adjustable pedal
assembly, while the Smith patent disclosed the use of electronic control. To cure this
obviousness rejection, the applicant changed the adjustable accelerator pedal structurally so that it
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Defining obviousness, especially in combination patents, has been a
considerably challenging task for the courts.16 While the statutory
language for “obvious” has remained the same over the last fifty years,17
the approach used by the courts in developing a test to abide by the
statutory standard has significantly changed.18
There are two approaches that the courts have taken in defining the
standard for obviousness in combination patents. The Supreme Court
developed the first approach, known as the “synergy test,”19 which
requires that the known elements, when combined, must function in a
synergistic way, where the function of the whole is greater than the sum
of the parts.20 Under this “synergy test,” the above invention would be
obvious and therefore not patentable,21 because both the pedal assembly
and the electronic control elements of the combination function in the
same way that they do in the prior art.22 In other words, there is no
synergistic effect of combining the two components.23
The Court of Appeals for the Federal Circuit, however, has
recently applied its “teaching, suggestion, or motivation” test and
upheld such a combination patent in Teleflex Inc. v. KSR
International.24 The Federal Circuit’s test requires that in order for a
combination patent to be found obvious, there must be a “specific
reference” in the prior art to a “teaching, suggestion, or motivation” to
combine the elements of the combination in the same “manner” which
is now the same as the adjustable accelerator pedal that the Asano patent discloses. The District
Court reasoned that the examiner only allowed the patent to issue because he was not aware of the
Asano patent at the time. Id. The Federal Circuit rejected this reasoning and reversed relying on
their “teaching, suggestion, motivation” test. Teleflex Inc. v. KSR Int’l Co., 119 Fed. Appx. 282
(Fed. Cir. 2005). For more on the Federal Circuit’s “teaching suggestion, motivation” test, see
infra Parts I & II.
16 See Robert W. Harris, Prospects for Supreme Court Review of the Federal Circuit
Standards for Obviousness of Inventions Combining Old Elements, 68 J. PAT. & TRADEMARK
OFF. SOC’Y 66, 66 (1986) (“[O]bviousness is the most frequently dispositive patentability issue,
since most inventions can meet the comparatively liberal requirements of utility and novelty.”).
See infra Parts I, II, III.
17 See 35 U.S.C. § 103.
18 See infra Parts I, II, III.
19 See infra Part II for a discussion of the Supreme Court’s synergy test.
20 The synergy test was first introduced in Great Atl. & Pac. Tea Co. v. Supermarket Equip.
Corp., 340 U.S. 147 (1950).
21 See Petition for Writ of Certiorari, KSR Int’l Co., v. Teleflex Inc., 2005 WL 835463 (No.
04-1350). For a further explanation of the application of the synergy test to the current
hypothetical, see infra Part II.
22 Id.
23 Id.
24 119 Fed. Appx. 282, 288 (Fed. Cir. 2005) (“We agree with Teleflex that the district court’s
analysis applied an incomplete teaching-suggestion-motivation test in granting KSR summary
judgment. This is because the district court invalidated claim 4 of the ‘565 patent on obviousness
grounds without making ‘finding[s] as to the specific understanding or principle within the
knowledge of a skilled artisan that would have motivated one with no knowledge of [the]
invention to make the combination in the manner claimed.’”) (quoting In re Kotzab, 217 F.3d
1365, 1371 (Fed. Cir. 2000)).
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the combination patent claims (in addition to containing each element of
the combination).25 The Federal Circuit held that because there was no
specific reference in the prior art that suggested that the electronic
control should be mounted to the pivot of adjustable accelerator pedals,
this invention is not obvious, and is therefore patentable.26 The Teleflex
case has received a lot of attention from the legal community,27 both
because it unambiguously demonstrates a departure from the Supreme
Court precedent and because it points to a dying test for obviousness
that the Supreme Court will likely address and revive in the near
future.28
This Note argues that neither of these two tests for obviousness is
consistent with the guiding principle behind patent law. By addressing
the problems associated with both the Supreme Court’s test and the
Federal Circuit’s test, and ultimately drawing upon the underlying
economic justifications of patent law, this Note suggests that the Federal
25 This test is well established by the Federal Circuit. See id.; Ecolochem, Inc. v. Southern
Cal. Edison Co., 227 F.3d 1361, 1372 (Fed. Cir. 2000) (“[W]hen determining the patentability of
a claimed invention which combines two known elements, ‘the question is whether there is
something in the prior art as a whole to suggest the desirability, and thus the obviousness, of
making the combination.’” (quoting In re Beattie, 974 F.2d 1309, 1311-12 (Fed. Cir. 1992)
(quoting Lindemann Maschinenfabrik GMBH v. American Hoist & Derrick Co., 730 F.2d 1452,
1462 (Fed. Cir. 1984))); Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308, 1323-24 (Fed. Cir. 1999)
(requiring that for a combination patent to be found obvious the prior art most provide “some
motivation or suggestion to combine the prior art teaching.”); see also U.S. DEP’T OF
COMMERCE, U.S. PATENT AND TRADEMARK OFFICE, MANUAL OF PATENT EXAMINING
PROCEDURE § 2143.01 (8th ed., rev. 2005) (“Obviousness can only be established by combining
or modifying the teachings of the prior art to produce the claimed invention where there is some
teaching, suggestion, or motivation to do so found either explicitly or implicitly in the references
themselves or in the knowledge generally available to one of ordinary skill in the art.”). For a
further discussion of the “teaching-suggestion-motivation” test, see infra Part III.
26 Teleflex, 119 Fed. Appx. at 289.
27 Amici curiae briefs have been filed, including one by twenty-four intellectual property
professors in support of the certiorari petition. See Motion for Leave to File Amicus Curiae Brief
and Brief of Twenty-Four Intellectual Property Law Professors as Amici Curiae in Support of
Petitioner, KSR Int’l Co., v. Teleflex Inc., 2005 WL 1334163 (U.S. May 12, 2005) (No. 041350); Motion of the Progress & Freedom Foundation for Leave to File a Brief as Amicus Curiae
in Support of the Petition for a Writ of Certiorari and Brief of the Progress & Freedom
Foundation as Amicus Curiae in Support of the Petition for a Writ of Certiorari, KSR Int’l Co., v.
Teleflex Inc., No. 04-1350, 2005 WL 1198839 (U.S. May. 12, 2005); Motion for Leave to File
Amicus Curiae Brief and Brief of Cisco Systems Inc., Microsoft Corp., Hallmark Cards, Inc.,
V.F. Corp., and Fortune Brands Inc. as Amici Curiae in Support of Petitioner, KSR Int’l Co., v.
Teleflex Inc., No. 04-1350, 2005 WL 1503650 (U.S. Jun. 22, 2005).
28 Recently, the U.S. government stated that it supports the request for certiorari. Brief for the
United States as Amicus Curiae, KSR Int’l Co., No. 04-1350, 2006 WL 1455388 (U.S. May 25,
2006); see also, Pavan K. Agarwal & Harold C. Wegner, Patent Issues in the Appellate Pipeline,
Foley & Lardner IP Roundtable, Tokyo, Japan, May 26, 2005, at 19:
It is entirely possible (if not probable) that certiorari will not be granted in KSR. Yet, at
some time the existence of a direct conflict between the Federal Circuit and Sakraida
may provoke grant of review . . . Within the next two or so years, it is entirely possible
the Court will grant certiorari to consider at least an apparent conflict.
During the editing of this Note, the Court did grant certiorari, which triggered an even greater
amici participation.
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Circuit’s test be reformed to create a new test for obviousness in
combination patents.29 The new test has two prongs: first, one must
determine whether a suggestion to combine is found in the prior art.30 If
a suggestion is found, then the combination should be deemed obvious.
However, if a suggestion is not found, then the second inquiry will
focus on economic synergy. This second prong draws on the Supreme
Court’s synergy principle, but distinguishes between functional synergy
and economic synergy, requiring an economically synergistic effect in
drawing the line between obvious and non-obvious inventions. If the
economic value31 of the combination is not greater than the economic
value of the prior art elements which it combines, then the combination
should be deemed obvious and therefore unpatentable. While this
analysis does not necessarily define a workable test for the courts to use,
it provides a starting point through which tests that draw on similar
economic principles can be developed.
Part I and Part II will discuss the evolution of obviousness, from its
constitutional roots, through congressional action, and to the Supreme
Court’s interpretation of the statutory standards. Part III will track the
liberalization of the obviousness requirement shaped by the Court of
Appeals of the Federal Circuit. Part IV and Part V will then address the
problems associated with each existing test. Finally, Part VI will
examine the underlying economic principles behind obviousness and a
new economically justified test will be formulated. The test will draw
on the Supreme Court’s synergy test, and stay faithful to the
Constitution32 and controlling statutory authority.33 Two potential ways
of demonstrating ex ante economic synergy will then be briefly
explored.
I. THE EVOLUTION OF OBVIOUSNESS
A.
The Origins of Obviousness
The idea of granting patents “[t]o promote the Progress of Science
and useful Arts” was one of the founding principles of this country,34
yet defining a patentable progress of science has not been an easy task
29
30
31
See infra Part VI.
This is the traditional suggestion test used by the Federal Circuit.
See infra Part VI for a further discussion of economic value, which can be quantified in
multiple ways.
32 See infra note 33 and accompanying text.
33 35 U.S.C. § 103 (2000).
34 U.S. CONST. art. I § 8, cl. 8, reads: “To promote the Progress of Science and useful Arts, by
securing for limited Times to Authors and Inventors the exclusive Right to their respective
Writings and Discoveries.”
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and has been continually addressed by scholars, the courts, and
Congress.35 Congress relied on its constitutional authority when it
passed the first patent statute in 1790, requiring novelty and utility
before an applicant could obtain a patent.36 It was soon recognized that
trivial advances in science and useful arts should not be patentable37 and
that another requirement for patentability would be necessary.38
In 1851, the Supreme Court established the obviousness
requirement in Hotchkiss v. Greenwood.39 The patent in question in
Hotchkiss disclosed an improved method of making doorknobs using
potter’s clay instead of wood or metal.40 The Court held that the patent
in question was void despite the fact that the doorknobs disclosed were
better because they were made of clay.41 However, the Court suggested
that similar patents may be valid if they involved more “skill and
ingenuity.”42 This minimum requirement of “skill and ingenuity” was
essentially the first test for obviousness.43
35
36
See generally Graham v. John Deere Co., 383 U.S. 1 (1966).
See Patent Act of 1790, ch. 7, § 1, 1 Stat. 109.
[U]pon the petition of any person or persons . . . setting forth, that he, she, or they, hath
or have invented or discovered any useful art . . . or any improvement therein not
before known or used, and praying that a patent may be granted therefor [sic], it shall
and may be lawful to and for the Secretary of State, the Secretary for the department of
war, and the Attorney General, or any two of them, if they shall deem the invention or
discovery sufficiently useful and important, to cause letters patent to be made out in the
name of the United States, to bear test by the President of the United States, reciting
the allegations and suggestions of the said petition, and describing the said invention
or discovery, clearly, truly and fully, and thereupon granting to such petitioner . . . for
any term not exceeding fourteen years, the sole and exclusive right and liberty of
making, constructing, using and vending to others to be used, the said invention or
discovery.
37 See, e.g., P.J. Federico, Operation of the Patent Act of 1790, 18 J. PAT. OFF. SOC’Y 237
(1936).
38 See Knight v. Baltimore & O.R. Co., 14 F. Cas. 758, 759 (C.C.D. Md. 1840) (No. 7,882)
(“[I]f, before his first patent . . . the same principle, in the same combination, which he describes
as his improvement, was in public use, in ordinary carriages, upon common roads, the plaintiff
was not entitled to a patent for applying the same thing to railway carriages, unless the
improvement he claims contain something new and material, either in principle, in combination,
or in mode of operation, in order to adapt it to its new use.”); see also GEORGE TICKNOR CURTIS,
A TREATISE ON THE LAW OF PATENTS FOR USEFUL INVENTIONS IN THE UNITED STATES OF
AMERICA § 17 (2d ed., Little, Brown & Co. 1854) (1849).
39 52 U.S. (11 How.) 248 (1851).
40 Id. at 265. The Court reasoned that “the peculiar effect . . . is not distinguishable from that
which would exist in the case of the wood knob.” Id. at 267.
41 Id.
42 Id. at 267. The Court reasoned that even though the doorknob patent included no new
principle or effect, it might have been patentable if “more ingenuity and skill in applying the old
method of fastening the shank and the knob were required in the application of it to the clay or
porcelain knob than were possessed by an ordinary mechanic acquainted with the business.” Id.
43 In Rubber-Tip Pencil Co. v. Howard, 87 U.S. 498 (1874), the Supreme Court applied this
limit to patentability in order to hold that a patent for a pencil with an eraser permanently fixed to
the end of it was void due to obviousness. The Court held that even though this might have been
a good idea, the device was unpatentable. The Court also used this standard to limit the scope of
patentable inventions in Thompson v. Boisselier, 114 U.S. 1, 11 (1885) (holding that “it is not
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In 1952, Congress formally incorporated these concerns by
requiring that an inventor demonstrate a non-obvious advance in the art
before a patent could be issued.44 Title 35 of the United States Code
requires an applicant to show that his invention is useful,45 novel,46 and
non-obvious47 in order to obtain a patent. The requirement of nonobviousness, defined in section 103, states that a patent should not be
granted if
the differences between the subject matter sought to be patented
and the prior art are such that the subject matter . . . as a whole
would have been obvious at the time the invention was made to a
person having ordinary skill in the art to which the subject matter
pertains.48
In other words, if a hypothetical “person having ordinary skill in the art”
(PHOSITA) would find an invention obvious in light of prior art it
cannot be patented.49
Obviousness is difficult to define because it is extremely hard to
measure the extent of the advance that is required.50 This problem is
especially prevalent in the so-called combination patent:51 a patent
enough that [the] thing shall be new, . . . and that it shall be useful, but it must, under the
Constitution and the statute, amount to an invention or discovery”).
At this time the Supreme Court seemed generally uneasy about granting too many patents,
and began trying to find a way to limit what inventions were patentable. See, e.g., Atlantic Works
v. Brady, 107 U.S. 192, 200 (1883) (“It was never the object of . . . [patent] laws to grant a
monopoly for every trifling device, every shadow of a shade of an idea . . . Such an indiscriminate
creation of exclusive privileges tends rather to obstruct than to stimulate invention. It creates a
class of speculative schemers who make it their business to watch the advancing wave of
improvement, and gather its foam in the form of patented monopolies, which enable them to lay a
heavy tax upon the industry of the country, without contributing anything to the real advancement
of the arts.”).
44 Patent (Bryson) Act of 1952, Pub. L. No. 82-593, § 10, 66 Stat. 792 (codified as amended
at 35 U.S.C. § 103 (2000)).
45 See 35 U.S.C. § 101.
46 Id. § 102.
47 Id. § 103.
48 Id.
49 See id.; see also Nickola v. Peterson, 580 F.2d 898, 911 (6th Cir. 1978), cert. denied, 440
U.S. 961 (1979) (“a legal ghost called ‘a person having ordinary skill in the art’ (like the
‘reasonable man’ ghost in negligence cases)”); Flour City Architectural Metals v. Alpana
Aluminum Prods., Inc., 454 F.2d 98, 107-08 (8th Cir. 1972) (“We do not measure the knowledge
of any particular person, or any particular expert who might testify in the case, but, rather, we
measure the knowledge of a hypothetical person skilled in the art, who has thought about the
subject matter of the patented invention in the light of that art.”).
50 See PRINCIPLES OF PATENT LAW, supra note 13, at 532 (“The nonobvious requirement
embodied in section 103 of the patent code, lies at the heart of our patent requirement and, in
many ways is the most significant obstacle that a patent applicant faces. Indeed it has been called
the ‘final gatekeeper of the patent system.’” (quoting ROBERT PATRICK MERGES, PATENT LAW
AND POLICY 479 (2d ed. 1997))).
51 See Homer J. Schneider, Non-Obviousness, The Supreme Court, and the Prospects for
Stability, 60 J. PAT. OFF. SOC’Y 304, 317 (1978) (“Why are we slipping back and forth between
the Graham v. Deere single test and the A&P (or Black-Rock or Sakraida) additional test for
combination inventions? Why don’t we have the stability we looked for in Sec. 103 and Graham
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where all elements exist in the prior art. In this type of patent, the
“invention” is solely the idea of combining the existing elements to
form a novel one.
B.
The Economic Foundation of Obviousness
Traditionally, the requirement of non-obviousness is based on the
fact that patents grant monopolistic rights, which, by their nature, stifle
free markets.52 Deciding which inventions should be patentable
therefore requires a balancing of the benefits attained through the
disclosure of a given invention against the harms caused by limiting the
free market of ideas.53
Another way of defining obviousness, or deciding whether a patent
should be granted, is by asking whether society would benefit more
from the disclosure of this “invention” than it would be harmed by the
issuing of a patent, which gives exclusive monopoly rights to the
inventor.54 This type of cost-benefit productivity analysis is familiar in
v. Deere?”).
52 See Graham v. John Deere Co., 383 U.S. 1, 9 (1966).
53 This is both a familiar and very old concept. Thomas Jefferson stated that deciding which
inventions should be patentable requires “drawing a line between things which are worth to the
public the embarrassment of an exclusive patent and those which are not.” Id. (quoting Letter
from Thomas Jefferson to Isaac McPherson (Aug. 13, 1813), in 13 THE WRITINGS OF THOMAS
JEFFERSON 335 (Andrew A. Lipscomb & Albert Ellery Bergh eds., 1904)); see also Cover v.
Hydramatic Packing Co., Inc., 83 F.3d 1390, 1392-93 (Fed. Cir. 1996), cert. denied sub nom. Sea
Gull Lighting, Inc. v. Hydramatic Packing Co., Inc., 519 U.S. 869 (1996):
Inherent in our patent system is a “tension between the desire to freely exploit the full
potential of our inventive resources and the need to create an incentive to deploy those
resources” by granting the right to exclude to those who promote the progress of the
useful arts. In other words, there are public costs associated with the right to exclude,
and our patent system seeks to maintain an efficient balance between incentives to
create and commercialize and public costs engendered by these incentives.
Id. (quoting Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 152 (1989)).
Public costs include (1) inflated prices, invariably absorbed by the consumer, which
frequently accompany exclusive rights; and (2) overinvestment.
Id. at 1392, n.2 (quoting RICHARD A. POSNER, ECONOMIC ANALYSIS OF THE LAW 36-37 (3d ed.
1986)).
54 See PRINCIPLES OF PATENT LAW, supra note 13, at 1 (“Our patent laws are generally seen
to operate as part of an interdependent mix of incentives and restraints that bestow benefits and
impose costs on society and individuals alike. Under this view, patent law strives to strike a
balance between the promotion of technological invention and the dissemination of and access to
its fruits.”); see also Aronson v. Quick Point Pencil Co., where the Supreme Court described the
underlying purpose of patent law:
First, patent law seeks to foster and reward invention; second, it promotes disclosure of
inventions, to stimulate further innovation and to permit the public to practice the
invention once the patent expires; third, the stringent requirements for patent protection
seek to assure that ideas in the public domain remain there for the free use of the
public.
440 U.S. 257, 262 (1979).
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the field of economics and accordingly many patent scholars have taken
an economic approach to the study of patent law.55
In one view, the goal of the patent system is to provide incentives
for commercialization of inventions.56 Patents are necessary because
commercialization costs represent a significant amount of the
expenditure in developing a new invention.57 A different view explains
that patents are necessary not because of high commercialization costs,
but because of high innovation costs compared to lower fixed marginal
costs.58 According to either view the ultimate conclusion is that patents
are necessary to encourage inventors to develop new inventions.
Patents, however, are monopolistic rights, and monopolies
inherently stifle free competition.59 A balance must be reached in
deciding which inventions are valuable enough to the public that the
government wants to encourage their development and disclosure in the
form of a patent.60
55 See, e.g., PRINCIPLES OF PATENT LAW, supra note 13, at 2 (“[A] nuanced approach to
understanding the costs and benefits of patent law is needed to appreciate its effect on economic
welfare.”); WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF
INTELLECTUAL PROPERTY LAW (2003); Glynn S. Lunney, Jr., E-Obviousness, 7 MICH.
TELECOMM. & TECH. L. REV 363 (2001); F. Scott Kieff, Property Rights and Property Rules for
Commercializing Inventions, 85 MINN. L. REV. 697 (2000).
56 F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85
MINN. L. REV. 697 (2000); F. Scott Kieff, Facilitating Scientific Research: Intellectual Property
Rights and the Norms of Science—A Response to Rai & Eisenberg, 95 NW. U. L. REV. 691, 698699 (2001) (“According to the commercialization theory, the treatment of patents as property
rights enforceable by property rules . . . is necessary to facilitate investment and coordination
around the complex, costly, and risky commercialization activities required to turn nascent
inventions into new goods and services.”).
57 See Kieff, Facilitating Scientific Research, supra note 56.
58 Without patents, inventors would be reluctant to invest in high innovation costs (such as
research and development). By giving an inventor a limited monopoly on his invention, the
patent system allows the inventor to recover these costs. In other words, without the security of
patents, inventors would not be protected from those who have no innovation costs, and only
slight fixed marginal costs. See Lunney, Jr., supra note 55.
59 See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Research Patents, Inc. 402 U.S. 313, 343
(1971) (“Although recognizing the patent system’s desirable stimulus to invention, we have also
viewed the patent as a monopoly which, although sanctioned by law, has the economic
consequences attending other monopolies.”); Deepsouth Packing Co., Inc. v. Laitram Corp., 406
U.S. 518, 530 (1972) (“[W]e must consider petitioner’s claim in light of this Nation’s historical
antipathy to monopoly and of repeated congressional efforts to preserve and foster competition.”).
60 See, e.g., Lunney, Jr., supra note 55, at 385 (“[T]he decision whether to grant any given
patent requires a careful balancing of expected benefits and expected costs.”); Precision
Instrument Mfg. Co. v. Automotive Maintenance Machinery Co. 324 U.S. 806, 816 (1945):
A patent by its very nature is affected with a public interest. As recognized by the
Constitution, it is a special privilege designed to serve the public purpose of promoting
the “Progress of Science and useful Arts.” At the same time, a patent is an exception
to the general rule against monopolies and to the right to access to a free and open
market. The far-reaching social and economic consequences of a patent, therefore,
give the public a paramount interest in seeing that patent monopolies spring from
backgrounds free from fraud or other inequitable conduct and that such monopolies are
kept within their legitimate scope.
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Setting a standard for obviousness requires an economic
determination, and both the Federal Circuit’s test for obviousness and
the Supreme Court’s test for obviousness are fundamentally based on
economics.61 At the heart of the high standard for non-obviousness set
by the Supreme Court’s “synergy” test62 is the Court’s strong aversion
to monopolistic rights.63 The Federal Circuit’s low standard for
obviousness is a reflection of the Federal Circuit’s “simply property”
view of patents.64 Under the “simply property” regime, the Federal
Circuit does not view patents as monopolies and therefore has less of an
aversion to them than the Supreme Court.65
II. SUPREME COURT’S INTERPRETATION OF SECTION 103
The Supreme Court was cautious in interpreting § 103 and did not
hear the issue of obviousness until fourteen years after § 103’s
enactment in 1966.66 However, before developing the three-part test for
obviousness in Graham v. John Deere Co.,67 the Court stated that § 103
was “merely. . . a codification of judicial precedents,” which meant that
61 See Lunney, Jr., supra note 55, at 387 (“If a court was imposing too high or too low a
standard, an attorney or commentator could attempt to demonstrate that the court was
overestimating or underestimating the costs of and/or benefits from the patent bargain and should
adjust its standard of obviousness accordingly.”).
62 See infra Part II for a discussion of the Supreme Court’s “synergy” test.
63 See supra notes 59-60 and accompanying text. The Supreme Court’s test has been
analyzed from an economic perspective by scholars and was found to reflect the economic
predilections of the Court. See Schneider, supra note 51, at 327 (“Economic predilections—
namely that the [C]ourt thinks the economic price of patents is too high—best explain the
ambiguity of Supreme Court attitudes with respect to patents and the patent system.”).
64 See Lunney, Jr., supra note 55, at 387.
65 Id.
66 The Supreme Court first considered 35 U.S.C. § 103 in Graham v. John Deere Co., 383
U.S. 1 (1966).
67 Id. Graham represents the Supreme Court’s interpretation of § 103. The Court described
three factual inquiries which are critical in the determination of whether an invention is
unpatentable due to obviousness:
Under § 103, [a] the scope and content of the prior art are to be determined; [b]
differences between the prior art and the claims at issue are to be ascertained; and [c]
the level of ordinary skill in the pertinent art resolved. Against this background, the
obviousness or nonobviousness of the subject matter is determined.
Id. at 17. Additionally, the Court examined secondary considerations, such as a long-felt need for
the invention, or economic success of the invention. Under the Graham analysis, once an
invention is deemed prima facie obvious, then the inventor has an opportunity to present
“secondary” factors that demonstrate non-obviousness.
These secondary factors further demonstrate the reasonableness of an economic synergy
test, because they too look to the socio-economic effects of an invention. The Graham analysis,
however, differs fundamentally from economic synergy, because Graham allows for secondary
factors to demonstrate non-obviousness only once an invention is declared prima facie
obviousness in light of the three “primary” Graham factors. The economic synergy test, on the
other hand, changes the requirements for establishing prima facie obviousness.
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it embraced the Court’s prior decisions.68 Accordingly, the Court’s
earlier decisions, such as Hotchkiss v. Greenwood,69 remained valid
precedent.
Even before the modern statute was enacted, the Supreme Court
had adopted a distinct obviousness test for combination patents, known
as the “synergy test.”70 The synergy test was first introduced in A. & P.
Tea Co. v. Supermarket Corp.,71 where the Court invalidated three
claims for obviousness because the combination of existing elements
failed to achieve “unusual or surprising consequences”72 as the elements
did not perform “any additional or different function in the combination
than they perform out of it.”73 Additionally, the Supreme Court has used
its synergy test in several later opinions decided after the enactment of §
103, including Anderson’s-Black Rock, Inc. v. Pavement Salvage Co.,
Inc.74 where the Court found a combination patent obvious using the
synergy test.75
In Anderson’s-Black Rock the patent in question was for a machine
that combined an asphalt spreader with an asphalt heater.76 This
machine solved bonding problems present in earlier spreading machines
by allowing the new asphalt to achieve a stronger bond with the old
asphalt.77 The Court held that the patent in question was merely a
combination of “four elements known in the prior art on one chassis.”78
68 Id. at 17 (“We believe that this legislative history, as well as other sources, shows that the
[new § 103] was not intended by Congress to change the general level of patentable invention.”)
(footnote omitted).
69 52 U.S. (11 How.) 248 (1851).
70 See, e.g., Great Atl.. & Pac. Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147 (1950);
Sakraida v. Ag Pro, Inc., 425 U.S. 273, (1976).
71 340 U.S. 147 (1950).
72 Id. at 152.
73 Id. More specifically, the Court stated:
Courts should scrutinize combination patent claims with a care proportioned to the
difficulty and improbability of finding invention in an assembly of old elements. The
function of a patent is to add to the sum of useful knowledge. Patents cannot be
sustained when, on the contrary, their effect is to subtract from former resources freely
available to skilled artisans. A patent for a combination which only unites old elements
with no change in their respective functions, such as is presented here, obviously
withdraws what already is known into the field of its monopoly and diminishes the
resources available to skillful men. This patentee has added nothing to the total stock
of knowledge, but has merely brought together segments of prior art and claims them
in congregation as a monopoly.
Id. at 152-53.
74 396 U.S. 57, 61 (1969).
75 The Court held the combination claim obvious because it “did not produce a new or
different function, within the test of validity of combination patents.” Id. at 60 (quotations
omitted).
76 Id. at 57-59.
77 Id.
78 Id. at 59. “Three of the elements, the screed, leveler and spreader, when constructed on one
chassis would not be a patentable invention. However, plaintiff added to this combination the
element of a radiant burner. The burner, by itself, is also not patentable. Therefore, the question
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Several years later, the Supreme Court further elaborated on its
synergy test in Sakraida v. Ag Pro, Inc.,79 where the Court again
rejected the patentability of the combination claim because each of the
old elements found in the claim was used in its previously known
capacity and functionality.80 The Court found the patent in question
obvious despite the fact that the invention was valued by consumers
because it allowed them to achieve the desired result more efficiently.81
This decision establishes that combination patents must be
analyzed for obviousness under a separate standard. In order to avoid
being found obvious, a combination patent must show synergistic
effects.82 This functional synergy test presumes invalidity of a
combination patent unless there is a synergistic effect of the elements in
the combination claim.83
Examining the Teleflex hypothetical using the Court’s “synergy”
approach requires examining the two elements separately and then
examining the combination. The first element, adjustable pedal
assembly was used in the prior art to control automobile acceleration
and braking.84 Drivers would press on the accelerator pedal with their
foot when they wanted the car to accelerate and release the pedal when
here is whether the addition of the burner to the paving machine which contains the other three
elements has overcome the obviousness of the total combination.” Pavement Salvage Co. v.
Anderson’s-Black Rock, Inc., 404 F.2d 450, 454-55 (4th Cir. 1968) (Craven, J., dissenting)
(quoting Pavement Salvage Co. v. Anderson’s-Black Rock, Inc., 308 F.Supp. 941, 945 (S.D. W.
Va. 1967)).
79 425 U.S. 273 (1976). The patent in question in this case was for a “water flush system to
remove cow manure from the floor of a dairy barn.” Id. at 274.
80 The Court held that each of the old elements performed “the same function it had been
known to perform, although perhaps producing a more striking result than in previous
combinations. Such combinations are not patentable under standards appropriate for a
combination patent” Id. at 282 (citing A. & P. Tea Co., 340 U.S. at 153, and Anderson’s-Black
Rock v. Pavement Co., 396 U.S. 57, 60 (1969)).
81 Despite finding the invention obvious, the Court conceded that the invention is “doubtless
a matter of great convenience, producing a desired result in a cheaper and faster way, and
enjoying commercial success.” Id. The Court rejected the argument that “the combination of
these old elements to produce an abrupt release of water directly on the barn floor from storage
tanks or pools can properly be characterized as synergistic.” Id.
82 Id. at 282.
83 See Lunney, Jr., supra note 55, at 379-80 (“Where all of the elements were known, the
Supreme Court presumed that any given combination was obvious, unless there was some reason
that the suggested otherwise. The Federal Circuit, on the other hand, presumes that any given
combination is nonobvious, unless there is some suggestion in the prior art otherwise.”).
84 See ‘782 Patent, supra note 3, (“The present invention relates to a position adjustable pedal
assembly for a vehicle. More specifically, the present invention relates to an automotive position
adjustable pedal assembly to be used such as for brake, accelerator and clutch pedals, wherein a
position of the pedal is adjustable in the forward and rearward directions of the vehicle.”). This
element exists in several different forms, with slight variations in the prior art, each having slight
variations in mechanical operability. The adjustable mechanism of ‘782 Patent is the same as that
of the combination; it allows for the application of constant force regardless of the position of the
pedal. Id.
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they wanted the car to decelerate.85 In the combination patent, the
adjustable pedal functions in the same way; drivers still press the pedal
to accelerate and release the pedal to decelerate.86
The second element, the electronic control, was used in the prior
art to measure pedal depressions for non-adjustable pedals.87 The
sensor would measure the amount that the pedal was depressed by being
mounted to the pivot point of the pedal.88 As the pivot shaft would
rotate, the sensor would measure the angle of rotation to determine what
signal to send to the electronic control system.89 In the combination
patent, the sensor works in the same way.90 It is mounted to the pivot
point of the pedal and is used to measure pedal depression in the same
way.91 The difference is that in the combination patent, the pedal is an
adjustable accelerator pedal that was known in the art.92
Both elements are known in the prior art and they both function in
the same way that they do in the prior art. The adjustable brake pedal is
used because it is a comfortable means of triggering a desired
response.93 The electronic control is used in the same capacity that it
had been used in the prior art. Accordingly, this combination reveals no
synergistic effects and therefore under the Supreme Court’s standard it
is obvious, and therefore unpatentable. However, the Federal Circuit
85
86
87
See id.
See ‘565 Patent, supra note 1.
See ‘811 Patent, supra note 5:
An electronic accelerator pedal assembly for vehicles including a base bracket adapted
to be secured to the floor pan and having an upper housing fixedly supporting the
associated electronic componentry indicating accelerator pedal position, including the
output wiring free from the hostile environment zone beneath the accelerator pedal.
The accelerator pedal is hingedly connected to the basic bracket member at a lower end
and rotatably and slidably coupled to a spring biased follower member at its upper end
by a jointly radiating coupling, and the follower member transmits pedal travel to the
electronic componentry and includes a stop member for retaining the accelerator pedal
in idle position.
88 See id.
89 See id.
90 See id.
91 See id.
92 See ‘565 Patent, supra note 1.
93 See Teleflex Inc. v. KSR Int’l Co., 298 F. Supp. 2d 581, 592 (E.D. Mich. 2003) (citations
omitted), vacated and remanded, 119 Fed. Appx. 282 (Fed. Cir. 2005), cert. granted, 126 S. Ct.
2965 (2006).
The Court finds little difference between the teachings of the prior art and claims of the
patent-in-suit. Asano teaches the structure and function of each of the claim 4
limitations, except those relating to an electronic pedal position sensor. Specifically,
Asano teaches an adjustable pedal assembly pivotally mounted on a support bracket
with the pedal moving in a fore and aft directions with respect to the support and the
pivot remaining in a constant position during movement of the pedal arm. Thus, Asano
“fairly suggests” the same mechanical assembly design asserted in claim 4 of the
patent-in-suit.
Id.
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found the combination non-obvious, and therefore patentable because
the prior art lacked a suggestion to create the combination.94
III. THE FEDERAL CIRCUIT’S TEST FOR OBVIOUSNESS
In 1982, Congress established the Court of Appeals for the Federal
Circuit in an attempt to reach more uniform patent decisions without
overburdening the Supreme Court.95 The Federal Circuit, however, has
abandoned the Supreme Court precedent and the synergy test for
obviousness in combination patents and continuously liberalized the
obviousness requirement.96
Almost immediately after its establishment, the Federal Circuit
abandoned the Supreme Court’s synergy test for obviousness, stating in
an opinion that it did not view synergism as a requirement for
patentability in combination patents.97 In Chore-Time Equipment Inc. v.
Cumberland Corp.,98 the Federal Circuit explicitly stated that synergism
is not required for an invention to be found non-obvious and therefore
patentable.99 The Federal Circuit emphasized in Stratoflex, Inc. v.
94
95
Teleflex, 119 Fed. Appx. 282.
Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, § 402, 96 Stat. 25, 57
(1982) (codified at 28 U.S.C. § 1295, 35 U.S.C. §§141-46). Article III, Section 1 of the
Constitution grants Congress the authority to establish inferior courts. U.S. CONST. art. III, § 1.
96 See, e.g., Teleflex, 119 Fed. Appx. 282. Numerous commentators and scholars have noted
the fact that the Federal Circuit has abandoned the Supreme Court precedent. See e.g., A. Samuel
Oddi, Beyond Obviousness: Invention Protection in the Twenty-First Century, 38 AM. U. L. REV.
1097, 1123 (1989) (“The impact of Anderson’s-Black Rock and Sakraida, however, has not been
significant. The Court of Appeals for the Federal Circuit, which exercises exclusive jurisdiction
over patent appeals, essentially has ignored these decisions”); Paul M. Janicke, The Federal
Circuit and Antitrust: To Be or Not to Be: The Long Gestation of the U.S. Court of Appeals for
the Federal Circuit (1887-1982), 69 ANTITRUST L.J. 645, 661-62 (2002) (“[T]he Federal Circuit
has neatly abolished such Supreme Court Pronouncements . . . . The end result is that the Federal
Circuit has expressly dismantled many of the mechanisms the Supreme Court relied upon when
deciding obviousness questions.”); PAUL GOLDSTEIN, COPYRIGHT, PATENT, TRADEMARK AND
RELATED STATE DOCTRINES 459 (2002) (“In rejecting ‘synergism’ as a requirement of invention,
and the notion of a separate category for ‘combination patents, [the Federal Circuit] confronted
substantial Supreme Court authority. The Court had historically held mechanical inventions that
combined old element—‘combination’ patents—to a more stringent standard than other
inventions.”); Philippe Ducor, Recombinant Products and Nonobviousness: A Typology, 13
SANTA CLARA COMPUTER & HIGH TECH. L.J. 1, 58 (1997) (“Completely dismissing the Supreme
Court’s ‘synergistic results’ rule, the Federal Circuit requires that for a combination invention to
be obvious, the suggestion or motivation to make the specific combination must be found in the
prior art.”).
97 Chore-Time Equipment Inc. v. Cumberland Corp., 713 F.2d 774 (Fed. Cir. 1983).
98 Id.
99 “The requirement that an invention reflect ‘synergism’ or achieve a ‘synergistic result,’
before it may be held patentable appears nowhere in the statute . . . . References to synergism as a
patentability requirement are, therefore, unnecessary and confusing.” Id. at 781 (citations
omitted).
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Aeroquip Corp.100 that synergism cannot be a requirement because it is
not mentioned anywhere in the patent statute.101 The court further
criticized a separate classification for “combination patents” explaining
that almost every invention relies on the fundamentals taught by
previous inventions.102
In American Hoist & Derrick Co. v. Sowa & Sons,103 the Federal
Circuit found a jury instruction “wholly erroneous” because the jury
was instructed to use the synergy test to determine whether a
combination patent was valid.104 The court emphasized that while
synergy may be a factor in determining non-obviousness, it is not a
requirement.105 Eliminating the synergy requirement entirely lowers the
standard for patentability because non-synergistic combinations, which
historically could not have been patented, are now patentable. By
eliminating the synergy requirement, the Federal Circuit’s “suggestion
100
101
713 F.2d 1530 (Fed. Cir. 1983).
Id. at 1540 (where the court explicitly stated that “[a] requirement for ‘synergism’ . . . is
nowhere found in the statute.”) (citation omitted).
102 See id. (holding that “[r]eference to ‘combination’ patents is . . . meaningless [because]
[v]irtually all patents . . . describe . . . inventions formed of a combination of elements.”); see also
Nickola v. Peterson, 580 F.2d 898, 912 n.22, (6th Cir. 1978), cert. denied, 440 U.S. 961 (1979)
(“Because virtually every invention is an assembly of old elements, the statement cannot be
universally applied without risk of destroying the patent system. Unable to create from nothing,
man must use old elements, which must perform their normal individual functions.”) (citations
omitted); B.G. Corp. v. Walter Kidde & Co., 79 F.2d 20, 21-22, (2d Cir. 1935):
[T]he defendant argues that the supposed invention is no more than a substitution of
materials familiar to the art in the same uses; an aggregation of which each part
performs what it did before. We may concede as much arguendo, for the same may be
said of every invention. All machines are made up of the same elements; rods, pawls,
pitmans, journals, toggles, gears, cams, and the like, all acting their parts as they
always do and always must. All compositions are made of the same substances,
retaining their fixed chemical properties. But the elements are capable of an infinity of
permutations, and the selection of that group which proves serviceable to a given need
may require a high degree of originality. It is that act of selection which is the
invention; and it must be beyond the capacity of common-place imagination.
Id.
103 725 F.2d 1350 (Fed. Cir. 1984), cert. denied, 469 U.S. 821 (1984).
104 Id. at 1360. The jury instruction stated:
You must next determine whether the differences between plaintiff’s claimed invention
and the prior art, if any, and as you have found them to be, produce a new and
unexpected result. That is, you must determine whether the elements making up
plaintiff’s claimed invention combine so as to perform in some way or manner, a new
and unexpected function in combination than they perform separately. The reason for
this is that a patented invention which unites only old elements without producing
either a new and unexpected result merely withdraws from the public’s use that which
was known before.
Id.
105 Id. (“[I]n the patent law context, ‘synergism’ has no talismanic power; ‘synergism’ is
merely one indication of nonobviousness” (quoting Clark Equip. Co. v. Keller, 570 F.2d 778, 779
(8th Cir. 1978))).
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test”106 for combination patents has been liberalized to the point where
patents are rarely found obvious.107
The Federal Circuit’s suggestion test requires that for a patent to be
invalidated due to obviousness the prior art must include a specific
“teaching, suggestion, or motivation”108 to combine the elements from
the prior art in the “manner claimed”109 in the combination patent. The
Federal Circuit has held that this test can be implicit and does not need
to be explicit.110 The issue of how explicit the suggestion needs to be is
a topic of current debate; some commentators suggest that although the
Federal Circuit theoretically allows for an implicit suggestion, Federal
Circuit case law applying the “suggestion” test consistently requires an
explicit suggestion.111
106 See, e.g., ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1577 (Fed. Cir. 1984)
(“Obviousness cannot be established by combining the teachings of prior art to produce the
claimed invention, absent some . . . suggestion supporting the combination.” (citations omitted).
107 See Robert Desmond, Nothing Seems “Obvious” to the Court of Appeals for the Federal
Circuit: The Federal Circuit, Unchecked by the Supreme Court, Transforms the Standard of
Obviousness Under Patent Law, 26 LOY. L.A. L. REV. 455, 456 (1992-1993) (“Through its
decisions over the last ten years, the [Federal Circuit] has dramatically reinterpreted the standard
of obviousness. Certain patents that would have been invalid because they were obvious under
the Supreme Court’s standard have been construed as valid under the [Federal Circuit]’s new
standard of obviousness.”) (footnotes omitted); Id. at 475-76 (“through its suggestion test, the
[Federal Circuit] effectively ensured it would rarely find patents for new combinations of prior art
obvious”) (citing Rochelle C. Dreyfuss, The Federal Circuit: A Case Study in Specialized
Courts, 64 N.Y.U. L. REV. 1, 16, 26-28 (1989) (arguing that [the] pro-patent [Federal Circuit]’s
suggestion test is [a] very lenient test for combination patents)).
108 See Robotic Vision Sys., Inc. v. View Eng’g, Inc., 189 F.3d 1370, 1377 (Fed. Cir. 1999)
(“The party seeking a holding of invalidity based on a combination of two or more prior art
teachings must show some motivation or suggestion to combine the teachings.”); Micro Chem.,
Inc. v. Great Plains Chem. Co., Inc., 103 F.3d 1538, 1546 (Fed. Cir. 1997) (“A determination of
obviousness must involve more than indiscriminately combining prior art; a motivation or
suggestion to combine must exist.”) (citations omitted).
109 See, e.g., In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000) (“[P]articular findings must
be made as to the reason the skilled artisan, with no knowledge of the claimed invention, would
have selected these components for combination in the manner claimed.”); In re Rouffet, 149
F.3d 1350, 1357 (Fed. Cir. 1998) (“In other words, the examiner must show reasons that the
skilled artisan, confronted with the same problems as the inventor and with no knowledge of the
claimed invention, would select the elements from the cited prior art references for combination
in the manner claimed.”).
110 Ruiz v. A.B. Chance Co., 234 F.3d 654, 665 (Fed. Cir. 2000) (“The reason, suggestion, or
motivation to combine may be found explicitly or implicitly: 1) in the prior art references
themselves; 2) in the knowledge of those of ordinary skill in the art that certain references, or
disclosures in those references, are of special interest or importance in the field; or 3) from the
nature of the problem to be solved, ‘leading inventors to look to references relating to possible
solutions to that problem.’”) (quoting Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d
1568, 1572 (Fed Cir. 1996)).
111 It is interesting to note that the Federal Circuit inconsistently applies this standard, focusing
more on an “explicit” finding in the “prior art references themselves.” This is the case in our
hypothetical based on Teleflex Inc. v. KSR Int’l Co., 119 Fed. Appx. 282 (Fed. Cir. 2005)
(petition for cert. filed), where the Federal Circuit found that the patent in question was not
obvious, despite the simplicity of the combination because no prior art could be cited to show the
explicit combination. Id. In recent cases, however, the Federal Circuit has relied on the
knowledge of those of ordinary skill in the art, and the nature of the problem to be solved. See,
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The “teaching, suggestion, or motivation” test logically would not
support the conclusion of obviousness in most cases because an
inventor would rarely “suggest” a new combination invention without
patenting it as well.112 Moreover, in recent decisions, the Federal
Circuit has required such a specific reference to a “teaching, suggestion,
or motivation” such that the obviousness requirement has been greatly
relaxed for many combination patents.113
In the recent case of KSR v. Teleflex International,114 the Federal
Circuit upheld a combination claim for an electronic adjustable
accelerator pedal, finding it non-obvious because the District Court did
not find a specific “teaching, suggestion, or motivation” in the prior art
that suggested the combination of the electronic control with the
adjustable brake pedal.115 The Supreme Court has granted certiorari for
the Teleflex case, but has not rendered a decision as this note goes to
print.116
Both the Supreme Court’s “synergy” test and the Federal Circuit’s
“teaching suggestion motivation” test have been heavily criticized:117
the Supreme Court’s test as too strict,118 and the Federal Circuit’s test as
too liberal.119
e.g., Cross Med. Prod., Inc. v. Medtronic Sofamor Danek, 424 F.3d 1293, 1322 (Fed. Cir. 2005)
(“It has long been the law that the motivation to combine need not be found in prior art
references, but equally can be found ‘in the knowledge generally available to one of ordinary skill
in the art. Evidence of a motivation to combine references need not be in the form of prior art.
Evidence that a person of ordinary skill in the art recognized the same problem to be solved as the
inventor and suggested a solution is, at the least, probative of a person of ordinary skill in the art’s
willingness to search the prior art in the same field for a suggestion on how to solve that
problem.”) (quotations omitted). But see Federal Trade Commission, To Promote Innovation:
The Proper Balance of Competition and Patent Law and Policy, ch. 4, at 11 (Oct. 2003)
(panelists suggest that although the Federal Circuit recognizes that the suggestion may be implicit
or explicit, this is not the “feel” of current case law).
112 Desmond, The CAFC Unchecked, supra note 107, at 475.
113 See Lunney, Jr., supra note 55, at 373 (describing empirical evidence of Federal Circuit
decisions that shows that the hurdle for obviousness has significantly declined over the past
twenty years).
114 119 Fed. Appx. 282 (2005).
115 Id. at 290 (holding that “[t]he correct standard requires a court to make specific findings
showing a teaching, suggestion, or motivation to combine prior art teachings in the particular
manner claimed by the patent at issue.”).
116 See supra note 28 and accompanying text.
117 See infra Part II and Part III.
118 See infra Part II.
119 See infra Part III.
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IV. CRITICISM OF THE “TEACHING,
SUGGESTION, OR MOTIVATION” TEST
The Court of Appeals for the Federal Circuit’s test for obviousness
has been increasingly subject to criticism because it both provides an
inadequate standard for obviousness120 and radically departs from
Supreme Court precedent.121 In October 2003, the Federal Trade
Commission (FTC) released a comprehensive report which analyzed the
relationship between competition, patent law and policy.122 The report
identified the Federal Circuit’s “suggestion” test as one of the key
doctrines in need of reform,123 specifically mentioning that the
obviousness bar to patentability is extremely low because of the
requirement of an “explicit” and “definitive” suggestion to combine the
elements in the prior art.124 The FTC ultimately concluded that the
120 This section will describe the inadequacies of the Federal Circuit’s “teaching, suggestion,
or motivation” test for obviousness. Essentially, the major inadequacy of the test is that it sets the
obviousness bar too low. See Motion for Leave to File Amicus Curiae Brief and Brief of Cisco
Systems Inc., Microsoft Corp., Hallmark Cards, Incorporated, V.F. Corporation, and Fortune
Brands Inc. as Amici Curiae in Support of Petitioner, KSR Int’l Co., v. Teleflex Inc., No. 041350, 2005 WL 1503650 at 3 (June 22, 2005) (“[T]he Federal Circuit’s current interpretation of
35 U.S.C. § 103(a) hurts innovation by providing too lenient a standard for obtaining a patent.”);
Motion for Leave to File Amicus Curiae Brief and Brief of Twenty-Four Intellectual Property
Law Professors As Amici Curiae in Support of Petitioner, KSR Int’l Co., v. Teleflex Inc., No. 041350, 2005 WL 1334163, at 2 (May 12, 2005) (“This case provides the Court with an opportunity
to overturn the Federal Circuit’s much-criticized current approach to non-obviousness, which is at
odds with the statutory language, inconsistent with this Court’s precedent, and contrary to the
goals of the patent system.”); Motion of the Progress & Freedom Foundation for Leave to File a
Brief as Amicus Curiae in Support of the Petition for a Writ of Certiorari and Brief of the
Progress & Freedom Foundation as Amicus Curiae in Support of the Petition for a Writ of
Certiorari KSR Int’l Co., v. Teleflex Inc., No. 04-1350, 2005 WL 1198839, at 2-4 (May 12, 2005)
(“the Federal Circuit’s over-lenient application of the criterion that an invention be
nonobvious . . . establishes a one-way ratchet in favor of a patent grant. The resulting flood of
trivial patents retards innovation and competition [and] undermines the legitimacy of the patent
system as a whole.”).
121 See supra Part II for a discussion of the Supreme Court precedent.
122 Federal Trade Commission, To Promote Innovation: The Proper Balance of Competition
and Patent Law and Policy, supra note 111.
123 Id. at ch. 4.
Panelists identified the Federal Circuit’s application of the “suggestion test” as a core
issue in assessing nonobviousness and a focal point of current debate. As PTO Deputy
Commissioner for Patent Examination Policy Stephen Kunin phrased it, the Federal
Circuit is insisting that the PTO find “the glue expressly leading you all the way” and
that it “connect the dots . . . very, very clearly.”
Id. at 11 (footnotes omitted).
The problem addressed above is that the proof of obviousness requires a lot of time and
expensive fact finding and thus has increased the burden on the PTO and on the courts
significantly.
124 More specifically, panelists “disagreed with the Federal Circuit’s recent applications of the
test, which seem to require ‘specific and definitive [prior] art references with clear motivation of
how to combine those references.’” Id. (footnotes omitted). Former PTO Director Q. Todd
Dickinson summed up these sentiments:
[T]he courts have required the Office to apply only specific and definitive art
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Federal Circuit’s standard is too low, and essentially ignores the
statutory requirement for posing the obviousness inquiry from the point
of view of a PHOSITA, and recommended that the PHOSITA be
reinserted into the standard.125 This is analogous to the hypothetical
reasonable person standard used in many areas of law. By removing the
PHOSITA from the standard, the Federal Circuit’s test essentially
requires an invention to be obvious to layperson with access to the prior
art references. In other words, the Federal Circuit’s test removes the
“skill” in combining the references, requiring the prior art references to
contain precisely the manner for combining the prior art.
The National Research Council of the National Academies of
Science and Engineering also issued a report in 2004 analyzing the
current patent system and calling for various reforms.126 The standard
for obviousness was among the issues considered, and the Council’s
second recommendation was to “[r]einvigorate the non-obviousness
standard.”127 Additionally, a number of legal scholars have found that
the size of the step required for patentability has been reduced over the
last generation allowing patents to be issued for obvious inventions.128
A critical flaw in the “teaching-suggestion-motivation” test is that
scientists and inventors tend to publish only non-obvious information,
because there is no value in publishing obvious information.129 This
references with clear motivation of how to combine those references, and only that will
suffice for this obviousness determination. . . . [T]he examiner could not even rely on
the general knowledge that the examiner had in the field or even common sense for an
obviousness determination.
Id. at 12.
125 The FTC’s recommendation reads as follows:
The Commission urges that in assessing obviousness, the analysis should ascribe to the
person having ordinary skill in the art an ability to combine or modify prior art
references that is consistent with the creativity and problem-solving skills that in fact
are characteristic of those having ordinary skill in the art. Requiring concrete
suggestions or motivations beyond those actually needed by a person of ordinary skill
in the art, and failing to give weight to suggestions implicit from the prior art as a
whole, suggestions from the nature of the problem to be solved, and the ability and
knowledge of one of ordinary skill in the art, errs on the side of issuing patents on
obvious inventions and is likely to be unnecessarily detrimental to competition.
Id. at. 15.
126 See COMMITTEE ON INTELLECTUAL PROPERTY RIGHTS IN THE KNOWLEDGE-BASED
ECONOMY, NATIONAL RESEARCH COUNCIL, A PATENT SYSTEM FOR THE 21ST CENTURY,
(Steven A. Merill et al. eds., 2004) [hereinafter A PATENT SYSTEM FOR THE 21ST CENTURY],
available at http://www.nap.edu/html/patentsystem/0309089107.pdf.
127 More specifically, the Council recommends that “The requirement that to qualify for a
patent an invention cannot be obvious to a person of ordinary skill in the art should be
assiduously observed.” Id. at 6.
128 Id. at 61.
129 “[S]cientists, artisans, and creative people generally speaking strive to publish non-obvious
information. So if it is obvious to those of skill in the art to combine references, it is unlikely that
they will publish such information.” Id. at 90 (emphasis in original). This does not mean that
suggestions to combine are never able to be found in the prior art; it may well be that a creative
publication includes various obvious combination as examples in passing. However, it remains
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makes it difficult to invalidate patents for obviousness using the Federal
Circuit’s test because a specific reference suggesting an obvious
combination rarely exists.130
From an economic viewpoint, the Federal Circuit’s test ignores
exogenous economic or technological changes, which make something
obvious suddenly valuable.131 The premise of this concern is that any
technologically obvious invention, regardless of its economic value,
should not be patentable. Low standards for obviousness give inventors
the incentive to apply for many “obvious” combinations, which
increases the economic burden that the system imposes on a freemarket.132 Because of the Federal Circuit’s liberal obviousness
requirement, entrepreneurs are filing for patents for many combinations
found in the prior art, hoping that their combination is needed in the
solution to a future problem.133
The Federal Circuit’s “teaching-suggestion-motivation” test sets a
low standard for patentability and encourages patenting rather than
innovation. Instead of incentivizing inventors to create non-obvious
true that the goal is to publish non-obvious information, leaving the finding of suggestions to
combine to pure chance. It should be noted, however, that under the test proposed by this Note, if
such a suggestion is found, an invention will be deemed obvious. But the lack of such a
suggestion does not in and of itself lead to the conclusion that a combination is non-obvious.
130 Id.; see also Brief for the United States as Amicus Curiae, KSR Int’l Co. v. Teleflex, Inc.,
No. 04-1350, 2006 WL 1455488, at 14 (U.S. May 25, 2006) (explaining that demonstrating
obviousness under the Federal Circuit’s teaching-suggestion-motivation test, “may be difficult or
impossible even though the combination on it’s face would have been obvious. For example,
such affirmative evidence may be lacking if the claim arose in a newly emerging technical field
or if the combination was so obvious to persons skilled in the art that no one would have had need
or incentive to record the trivial extension of the art.”) (citing John R. Thomas, Formalism at the
Federal Circuit, 52 AM. U. L. REV. 771, 801-802 (2003)).
131 See LANDES & POSNER, supra note 55, at 304 (“[S]ometimes an idea is unknown not
because it would be costly to discover but because it has no value . . . If some exogenous shock
gives it value, it will be discovered more or less simultaneously by a number of those who can
exploit it.”); John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. CHI. L. REV. 439,
505 (2004) (giving as an example of exogenous shock the rise of the internet in which suddenly
“new but obvious ideas . . . have evident economic value.”).
132 Motion of the Progress & Freedom Foundation for Leave to File a Brief as Amicus Curiae
in Support of the Petition for a Writ of Certiorari and Brief of the Progress & Freedom
Foundation as Amicus Curiae in Support of the Petition for a Writ of Certiorari, KSR Int’l Co. v.
Teleflex Inc., No. 04-1350, 2005 WL 1198839, at 13 (May 12, 2005) (“Such actions are a
misdirection of technical resources, and a barrier to desirable innovation. They also greatly
increase the transaction costs of the system without any compensating incentives for creativity.”).
133 Id. at 12-13.
The Federal Circuit’s one-way ratchet in favor of patentability will have deleterious
effects on the whole innovation system. Entrepreneurs will devote their efforts not to
solving problems but to putting together new combinations of old elements in the
hopes that some one of them will turn out to be a future barrier to someone who is
trying to solve a problem, and thus a turnstile into which cash payments must be
inserted. The term “tollkeepers” is used.
Id. According to a recent criticism, “[e]ntrepreneurs are scattering patents like landmines, hoping
that every once in a while the genuine innovators will step on one.” Id. at 13.
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inventions which would “promote the [p]rogress of . . . useful [a]rts,”134
the Federal Circuit’s liberal standard of obviousness incentivizes
inventors to patent the obvious. Instead of encouraging innovation, this
type of system discourages innovation, requiring inventors to invest in
the patenting of obvious combinations instead of investing in the
development of new non-obvious technologies.135
134
135
U.S. CONST. art. 1, § 8, cl. 8.
Suppose an inventor invents a relatively simple invention: “Invention A.” Invention A can
be used for many purposes and can be combined with one hundred prior art references by end
users, each of which would achieve a desirable result. If the inventor does not patent (or disclose)
a possible combination, it will be patentable by someone else under the Federal Circuit’s test,
because there is no “suggestion to combine.”
The Federal Circuit’s suggestion test gives inventors the incentive to patent anything where
the value of the patent (monopoly) exceeds the costs of attaining the monopoly (i.e., potential
profit is greater than potential cost). While a patent is a monopolistic right, it does not give the
patentee the affirmative right to use or sell product, but only gives her the right to exclude others
from using or selling the product. Accordingly, the costs of attaining a true monopoly on a
combination invention include legal costs for filing a patent application as well as licensing costs
associated with any patented elements that are used in the combination. The “economic synergy”
removes this incentive for combinations which are not economically synergistic by making them
not patentable, and thus allows them to remain in the public domain.
A new test for obviousness would have different effects on the status quo depending on the
economics of the particular situation. In many situations where the prior art elements are all
patented, licensing costs in and of themselves would keep a good faith applicant from patenting
an inventions.
Assume the combination x + y = z, where the combination has no economic (or functional)
synergistic effects. The following examples illustrate the implications of switching from the
Federal Circuit’s test to the “economic synergy” test. The difference in the examples is in the
ownership of the parts of the combination (i.e., “x” and “y”).
Suppose that “x” is privately owned by inventor X, and that “y” is privately owned by
inventor Y. If Z is considering patenting combination “z” in order to sell the combination, she
has to consider: (1) the licensing cost of “x;” (2) the licensing cost of “y;” and (3) the patenting
cost of “z.” Because the combination of “x” and “y” does not increase their values, the licensing
costs of the parts would likely keep Z from attempting to patent the combination. In this
situation, the economic constraints on Z, will likely keep Z from seeking a patent if she is
attempting to sell the combination. The test for obviousness therefore would therefore have little
effect, and the economically optimal solution would be reached. However, if Z is acting in bad
faith, she may simply be attempting to “lay a trap” in the hopes that one day someone, probably X
or Y, will infringe on the combination. This is also sometimes referred to as a “blocking patent.”
See BLACK’S LAW DICTIONARY 1156 (8th ed. 2004) (defining a blocking patent as “[o]ne of two
patents, neither of which can be effectively practiced without infringing the other.”). By making
z unpatentable, the economic synergy test removes this possibility.
Now suppose both “x” and “y” are in the public domain. If z has some value (synergistic
or not), Z has an incentive to seek a patent as long as the costs of obtaining the patent are less
than the potential profits attained. Because the two prior art elements are in the public domain,
the only cost Z incurs in attaining a true affirmative monopoly is the cost of patenting. Therefore,
if the patenting costs are less than the value of the combination, Z will attempt to patent the
combination. Assuming there is no suggestion to combine (as is usually the case), Z will be able
to patent the combination. The profits she attains through this patent are derived partially from a
direct added cost to the pubic. This situation creates more public harm than public benefit. By
deeming z unpatentable, in the case of non-synergistic effects, the economic synergy test prevents
this situation. For a further explanation and analysis of the benefits of the economic synergy test
see infra, Part VI.
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V. CRITICISM OF THE “SYNERGY TEST”
The Federal Circuit has criticized the Supreme Court’s synergy test
because it invites hindsight,136 or in other words, it invites the
possibility that even though an invention is non-obvious and therefore
patentable, when viewed in retrospect in light of the prior art, a person
of ordinary skill in the art may use hindsight in determining that the
invention is obvious.137 This concern is what triggered the need for a
suggestion to combine the references, according to the Federal Circuit,
because if there is a suggestion in the prior art, there is some assurance
that hindsight will not be used, and non-obvious inventions will be
guaranteed the patentability that they deserve.138
Another criticism of the Supreme Court’s synergy test is that it
seemingly sets a higher bar for combination patents than for other types
of patents. The Federal Circuit has criticized the use of a separate test
for combination patents because virtually all inventions are
combinations of previous elements.139 The synergy test has also been
136 See, e.g., Ruiz v. A.B. Chance Co., 234 F.3d 654, 664 (Fed. Cir. 2000) (referring to
“fall[ing] victim to the insidious effect of a hindsight syndrome”) (citations omitted); In re
Dembiczak, 175 F.3d 994, 999 (Fed. Cir. 1999), abrogated on other grounds by In re Gartside,
203 F.3d 1305 (Fed. Cir. 2000) (cautioning of the “hindsight trap”); Loctite Corp. v. Ultraseal
Ltd., 781 F.2d 861, 873 (Fed. Cir. 1985), overruled on other grounds by Nobelpharma AB v.
Nobelpharma USA, Inc., 141 F.3d 1059 (Fed. Cir. 1998) (referring to “the tempting by forbidden
zone of hindsight”).
137 See Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 381 F.3d 1371, 1376 (Fed. Cir.
2004) (“Prior knowledge in the field of the invention must be supported by tangible teachings of
reference materials, and the suggestion to combine references must not be derived by hindsight
from knowledge of the invention itself.”); Interconnect Planning Corp. v. Feil, 774 F.2d 1132,
1143 (Fed.Cir. 1985) (“When prior art references require selective combination by the court to
render obvious a subsequent invention, there must be some reason for the combination other than
the hindsight gleaned from the invention itself.”).
138 The NAP explains that “The USPTO and the reviewing courts are concerned that an
invention that was genuinely non-obvious before it was made may often look obvious in
retrospect.” A PATENT SYSTEM FOR THE 21ST CENTURY, supra note 126, at 87 Also, the report
goes on to explain that “experience has shown that truly non-obvious inventions will be denied
patent protection unless the decision maker guards against the use of hindsight.” Id. at 89
(footnotes omitted).
139 The Federal Circuit has continually emphasized that almost all inventions are combinations
of previous elements. Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1566 (Fed.
Cir. 1983) (“virtually every claimed invention is a combination of old elements”); Environmental
Designs v. Union Oil Co. of Cal., 713 F.2d 693, 698 (Fed. Cir. 1983) (“Virtually all inventions
are combinations and virtually all are combinations of old elements”); Richdel, Inc. v. Sunspool
Corp., 714 F.2d 1573, 1580 (Fed. Cir. 1983); Pentec, Inc. v. Graphics Controls Corp., 776 F.2d
309, 317 (Fed. Cir. 1983).
Although this Note discusses combination patents, the Federal Circuit has also made clear
that it believes that its obviousness test should apply whether the invention is deemed a
combination or not. Custom Accessories v. Jeffrey-Allan Industries, 807 F.2d 955, 959 (Fed. Cir.
1986) (“That each element in a claimed invention is old or unpatentable does not determine the
nonobviousness of the claimed invention as a whole. There is no basis in the law . . . for treating
combinations of old elements differently in determining patentability . . . The critical inquiry is
whether there is something in the prior art as a whole to suggest the desirability, and thus the
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harshly criticized by scholars as simply muddying the test for
obviousness.140
Using a “synergism” test, however, does mean that the inquiry for
obviousness for combination patents is completely different than that
for other patents. Instead, the Graham factors141 would still have to be
addressed, but after the first two inquiries reveal that a combination
patent is at issue, the third factor—the determination of the “level of
ordinary skill in the pertinent art”—is to be presumed to have
anticipated the combination if no functional synergy exists.142 The
synergy test sets the standard for the “level of ordinary skill” too high;
just because the elements of the combination serve the same function,
does not mean that the invention was essentially available in the prior
art and that the combination would have occurred to the person of
ordinary skill.
This differs from the standard created by the Federal Circuit’s
suggestion test, which presumes that the “level of ordinary skill in the
pertinent art” does not contain the combination invention unless there is
a tangible reference or “suggestion” to it. This standard is too low
because it essentially reduces the “level of ordinary skill” to nothing.
Instead of asking whether the invention would have occurred to a
person of ordinary skill in the art, the Federal Circuit’s test assumes no
“common knowledge.” In doing so the test adopts a standard that has
been criticized as asking whether a “reference librarian” would have
been able to find the invention.143 For this reason the synergism test has
been said to be better suited for defining obviousness in combination
patents.144
obviousness, of making the combination.”) (citations omitted) (emphasis in original).
140 Homer J. Schneider, Non-Obviousness, The Supreme Court, and the Prospects for
Stability, 60 J. PAT. OFF. SOC’Y 304, 318 (1978) (“New rules aren’t needed to clarify the obvious.
Application of the nonobviousness test is muddied, not clarified, by unexplained resort to
‘combination of old elements’ considerations or searches for ‘synergism’ or ‘surprising
results.’”).
Justice Jackson himself admitted that the standard was too high when in a dissenting
opinion, he declared that, “the only patent that is valid is one which this Court has not been able
to get its hands on.” Jungersen v. Ostby & Barton, 335 U.S. 560, 572 (1949) (Jackson J.,
dissenting).
141 See supra note 67 and accompanying text.
142 Mary Helen Sears, Combination Patents and 35 U.S.C. § 103, 1977 DET. C.L. REV. 83, 99
(1977) (“In instances where inquiries (1) and (2) reveal a mere conglomeration of old elements
and only the fact of putting them together, whether or not in a particular order, is new, it is a
fortiori that the ordinary skill of the art could have provided the combination and there is no
patentable invention. It is but a concomitant of the Constitutional restraint, implicit in the Patent
Clause, upon patents that subtract from the resources available to skilled artisans, that the level of
ordinary skill at any given time affords the basis of associating old elements in any manner which
merely takes advantage of their known capabilities.”)
143 See Petition for Writ of Certiorari, KSR Int’l Co., v. Teleflex Inc., No. 04-1350, 2005 WL
835463 (U.S. Apr. 06, 2005).
144 See Lunney, Jr., supra note 55, at 390 (Arguing that “in dealing with combination patents,
2006]
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VI. ECONOMIC ANALYSIS OF OBVIOUSNESS
A.
The “Economic Synergy” Test
In deriving a test for obviousness, it is important to distinguish
between the lay-term “obvious”145 and the legal conclusion of
obvious.146 The finding that a given invention is obvious is a legal
conclusion that patenting the invention would not “promote progress”
and therefore it is not patentable.147 To “promote progress,” an
invention must be beneficial to society.148 Neither the Supreme Court’s
test nor the Federal Circuit’s test places sufficient emphasis on this
if we are looking for a test that better determines whether a new combination of prior art elements
entails some significant level of technical advance, the synergism test appears better suited to that
role than the suggestions test.”).
145 See, e.g., THE NEW OXFORD AMERICAN DICTIONARY (Elizabeth J. Jewell & Frank Abate
eds., 2001) (defining obvious as “easily perceived or under stood; clear, self-evident or
apparent.”).
146 This is defined by 35 U.S.C. § 103.
147 See U.S. CONST. art. I, § 8, cl. 8 (authorizing Congress” [t]o promote the Progress of . . .
useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . .
Discoveries.”). Cf. Eldred v. Ashcroft, 537 U.S. 186, 212 (2003):
[T]he Copyright Clause [is] both a grant of power and a limitation, and [we] have said
that the primary objective of copyright is to promote the Progress of Science. The
“constitutional command,” we have recognized, is that Congress, to the extent it enacts
copyright laws at all, create a system that promotes the Progress of Science.
Id. (citations omitted) (emphasis added).
148 Patents impose costs on society by creating limited monopolies. To promote progress, this
economic harm must be offset by a societal benefit. The proposal advocated by this Note does
not require than an invention have an immediate and noticeable effect on mankind, but rather
only that it benefit society enough to offset the harms caused by artificially limiting the free
market system with a patent. See supra Part I.A for an economic background.
Even before the creation of the Federal Circuit, the Supreme Court was careful to abide by
this constitutional standard. See Graham v. John Deere Co., 383 U.S. 1. (1966) discussing the
importance of the fact that the Copyright Clause is not only an enabling, but also a limiting
provision:
The clause is both a grant of power and a limitation . . . . The Congress in the exercise
of the patent power may not overreach the restraints imposed by the stated
constitutional purpose. Nor may it enlarge the patent monopoly without regard to the
innovation, advancement or social benefit gained thereby. Moreover, Congress may
not authorize the issuance of patents whose effects are to remove existent knowledge
from the public domain, or to restrict free access to material already available.
Innovation, advancement, and things which add to the sum of useful knowledge are
inherent requisites of the patents system which by constitutional command must
“promote the Progress of . . . useful Arts.” This is the standard expressed in the
Constitution and it may not be ignored. And it is in this light that patent validity
“requires reference to a standard written into the Constitution.”
Id. at 5-6 (emphasis in original) (citing Great A. & P. Tea Co. v. Supermarket Equipment Corp.,
340 U.S.147, 154 (1950)) (concurring opinion).
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constitutional principle, and as a result, both of these tests have been
heavily criticized by scholars.149
One way of determining societal benefit is to ask whether the
invention brings additional economic value.150 This Note relies on this
idea and proposes a two-prong obviousness test for combination
patents. The first prong is essentially the Federal Circuit’s suggestion
test. If a suggestion to combine exists in the prior art, then a
combination should be deemed obvious. If, however, a suggestion to
combine does not exist in the prior art, then one must look to the second
prong—economic synergy. The economic synergy test proposes that a
combination should be found non-obvious if the economic value of the
combination as a whole is greater than the economic value of the sum of
its parts.151
This second prong remedies the main criticism of the Federal
Circuit’s suggestion test— that the low standard for obviousness allows
for inventors to be given monopolies without requiring that their
inventions benefit society.152 It is true that if a suggestion to combine is
found in the prior art, a combination should be deemed obvious. This is
because if a suggestion to combine already exists in the prior art, then
149
150
See supra Part IV-V.
This idea is derived from the Supreme Court’s functional synergy requirement for
patentability in combinations. Functional synergy causes economic synergy because an added
function arguably directly results in added value. This is further supported by the strong
relationship between intellectual property and the economic development of our country. See
PRINCIPLES OF PATENT LAW, supra note 13, at 34 (“This United States today depends critically
on its ability to innovate—and to capture the benefits from invention—for its economic
prosperity.”); id. at 54-55:
National intellectual property resources are crucial for long term international
economic competitiveness. That is, we want our patent system to create both private
value, which it clearly has done, and enhance welfare for society as a whole, an
outcome where, some suggest, the patent system’s impact is uncertain.
Cf. Mazer v. Stein, 347 U.S. 201, 219 (1954) (“The economic philosophy behind the clause
empowering Congress to grant patents . . . is the conviction that encouragement of individual
effort by personal gain is the best way to advance public welfare through the talents of . . .
inventors in ‘Science and useful Arts’”).
151 Another way of conceptualizing the idea of economic value and therefore the economic
synergy test is to rely on economic demand curves. This is because the economic vale of an
invention is a direct function of the demand for the invention. Applying this type of analysis, for
a combination to be found non-obvious, the discovery of the combination must result in a
“synergistic” demand. In other words the new combination cannot simply redistribute (or share)
in the existing demand curves, but must itself create a new demand for either the parts
individually, or the combination as a whole.
The idea of synergistic demand functions is not intuitively convenient, but also
mathematically calculable. These types of calculations are often used in patent damage
calculations. See generally MARK A. GLICK, LARA A. REYMANN, & RICHARD HOFFMAN,
INTELLECTUAL PROPERTY DAMAGES: GUIDELINES AND ANALYSIS 43-72 (2003).
152 See supra, Part IV. The author of this Note could not find a single Federal Circuit
decision, where the Federal Circuit mentioned the patent clause of the U.S. Constitution. In stark
contrast, the Supreme Court has relied on this Constitutional provision in almost every decision
dealing with obviousness. See, e.g., supra note 148.
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disclosing the combination again adds no benefit to society.153
However, it does not logically follow that if there is no suggestion to
combine, an invention is non-obvious.
Innovators do not publish obvious things—instead, they try to
publish things which are non-obvious.154 As a result, a suggestion to
combine does not usually exist when a PHOSITA would find the
invention obvious.155 If an inventor (or a PHOSITA) fails to publish a
certain combination despite a specific economic incentive to do to so,
then it can be reasonably concluded that this combination was not
obvious to her. The Federal Circuit’s test must be modified so that
innovators have an incentive to publish the suggestion that the Federal
Circuit’s test requires—without this incentive, the required suggestion
will rarely be found,156 and almost everything becomes patentable.
The purest incentive is economic. Adding a second prong that
requires economic synergy determines whether a person having
ordinary skill in the art had an incentive to explicitly suggest a
combination. Suppose an inventor creates device A, valued at one
dollar. Another device B, valued at one dollar, exists in the prior art.
Suppose combining A and B produces an economically synergistic
effect, where the combination has a value of three dollars. The
inventor’s economic incentive is straightforward—by patenting the
combination, she is able to capitalize not only on her invention, but on
the synergistic effect of the combination.
The economic synergy test is also superior to the Supreme Court’s
functional synergy test because it more closely adheres to the guiding
principle of allowing patents for all things which benefit society.157 The
Supreme Court’s test is better than the Federal Circuit’s test because it
emphasizes that inventions can only be patentable if they promote
153 Once a suggestion is contained in the prior art, innovation is not necessary to create the
combination, and the creation of the combination does not benefit society. See, e.g., Rebecca S.
Eisenberg, Analyze This—A Law and Economics Agenda for the Patent System, 53 VAND. L.
REV. 2091, 2092 (2000):
In a formulation that has resonated with the courts, the nonobviousness standard
distinguishes the unpatentable work of the “ordinary mechanic” from the patentable
advances of more insightful inventors. One way of understanding this distinction is
that patents are unnecessary to bring about mundane improvements that are within easy
reach of those working in the field, but may be needed to motivate inventors to pursue
the nonobvious advances that require something beyond routine work.
See also Federal Trade Commission, To Promote Innovation: The Proper Balance of Competition
and Patent Law and Policy, ch. 4, at 6 (Oct. 2003), available at
http://www.ftc.gov/os/2003/10/innovationrpt.pdf (“when a patent elicits little social benefit—
such as when the invention could be expected anyway—patent law recognizes that withholding
the patent and avoiding any costs to innovation and competition will maximize consumer welfare
over time.”).
154 See supra notes 129, 130 and accompanying text.
155 See id.
156 See id.
157 See, e.g., Precision Instrument Mfg. Co., supra note 60, at 816.
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progress.158 However, the problem with the Supreme Court’s test is that
it essentially assumes that those combinations that do not create a
functional synergy are not valuable to society. There may be other
combinations, which do not create functional synergy but are valuable
to society, and should therefore also be found non-obvious. This is the
fundamental reason behind the criticism of the Supreme Court’s
approach as posing too high a standard for obviousness.159
The economic synergy test incorporates the synergism idea
developed by the Supreme Court and expands upon it. Assuming that
every function is associated with an economic value, all functionally
synergistic combinations will also be economically synergistic and
therefore patentable.160 Economic synergy expands upon the functional
synergy test because in addition to functional synergy, it incorporates
other social benefits such as increased efficiency in operation. Granting
patents to these economically beneficial combinations is consistent with
the Constitution’s “promoting progress” requirement.
Sakraida v. Ag Pro, Inc.,161 provides an illustrative example of the
advantage of this new test over the Supreme Court’s approach. There,
the Supreme Court found that the combination invention in question162
158 The Supreme Court’s synergy test is better suited to defining the “creative step” at the heart
of the obviousness inquiry. See Lunney, Jr., supra note 55, at 390. The Supreme Court has
recently reemphasized this standard:
While one great object was, by holding out a reasonable reward to inventors, and
giving them an exclusive right to their inventions for a limited period, to stimulate the
efforts of genius; the main object was ‘to promote the progress of science and useful
arts;’ and this could be done best, by giving the public at large a right to make,
construct, use, and vend the thing invented, at as early a period as possible, having a
due regard to the rights of the inventor. If an inventor should be permitted to hold back
from the knowledge of the public the secrets of his invention; if he should for a long
period of years retain the monopoly, and make, and sell his invention publicly, and
thus gather the whole profits of it, relying upon his superior skill and knowledge of the
structure; and then, and then only, when the danger of competition should force him to
secure the exclusive right, he should be allowed to take out a patent, and thus exclude
the public from any farther use than what should be derived under it during his
fourteen years; it would materially retard the progress of science and the useful arts,
and give a premium to those, who should be least prompt to communicate their
discoveries.
Eldred v. Ashcroft, 537 U.S. 186, 224-25 (2003) (quoting Pennock v. Dialogue, 27 U.S. 1, 33-34
(1829)) (emphasis added).
159 See supra Part V.
160 This assumption ties the functional synergy requirement to the Constitutional standard.
The Supreme Court, in articulating its synergy test essentially reaches the conclusion that
inventions that are functionally synergistic promote progress.
161 425 U.S. 273 (1976).
162 The patent in question in this case was for a “water flush system to remove cow manure
from the floor of a dairy barn.” Id. at 274. More specifically, “[t]he only claimed inventive
feature of the Dairy Establishment combination of old elements is the provision for abrupt release
of the water from the tanks or pools directly onto the barn floor, which causes the flow of a sheet
of water that washes all animal waste into drains within minutes and requires no supplemental
hand labor.” Id. at 277.
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would be useful and desirable by consumers because it would increase
efficiency.163 This type of combination, by definition, promotes
progress and should be patentable, but the Supreme Court held that the
invention in question was not patentable because it did not produce
functionally synergistic results.164
The underlying goal of patent law is to encourage inventors to
invent devices that benefit society.165 By disallowing a patent in a
situation like this, the Supreme Court essentially warns inventors that
they will not be awarded for a combination just because it benefits
society. This result is puzzling because patent law should incentivize
inventors to create such inventions and disclose them to the public.
Without patent law, such inventions may not be achieved, and society
would be deprived of their benefit.166 The economic synergy test
163 The Court conceded that the invention is “doubtless a matter of great convenience,
producing a desired result in a cheaper and faster way, and enjoying commercial success.” Id. at
282.
164 The Court rejected the argument that “the combination of these old elements to produce an
abrupt release of water directly on the barn floor from storage tanks or pools can properly be
characterized as [functionally] synergistic.” Id.
165 See e.g., Lunney, Jr., supra note 55, at 385 (“[T]he decision whether to grant any given
patent requires a careful balancing of expected benefits and expected costs.”); Pfaff v. Wells
Elect., Inc., 525 U.S. 55, 63 (1998):
As we have often explained, most recently in Bonito Boats, Inc. v. Thunder Craft
Boats, Inc., 489 U.S. 141, 151 (1989), the patent system represents a carefully crafted
bargain that encourages both the creation and the public disclosure of new and useful
advances in technology, in return for an exclusive monopoly for a limited period of
time. The balance between the interest in motivating innovation and enlightenment by
rewarding invention with patent protection on the one hand, and the interest in
avoiding monopolies that unnecessarily stifle competition on the other, has been a
feature of the federal patent laws since their inception.
166 Such inventions may be achieved regardless of patent law. Other business factors could
lead to the development of a combination despite the fact that the developer does not have
monopoly rights to the invention. A developer can still economically benefit from the
development of a combination through the use of various marketing techniques, such as blitz
marketing and establishing a brand name. While it is true that theoretically granting monopolies
to those combinations which would have been disclosed to the public without patents stifles the
free market unnecessarily, these marketing factors are impossible to quantify and incorporate into
patent law.
In recommending reform for the Federal Circuit’s test for obviousness, the FTC addressed
this concern by framing the analysis of obviousness as a simple “but for” inquiry: “whether an
invention likely would emerge in roughly the same time frame – that is, without significant
delay—‘but for’ the prospect of the patent.” This inquiry limits patents to those inventions that
would not have been developed “but for” the patent system. The rationale behind this view is that
obvious inventions would have been developed regardless of the patent system, and therefore
they should not be patentable. See Federal Trade Commission, To Promote Innovation: The
Proper Balance of Competition and Patent Law and Policy, supra note 111, ch. 4, at 6. This test
is also over-inclusive because many obvious inventions would not be developed without the
incentives of a monopoly. In other words, something obvious, when coupled with monopolistic
rights, becomes suddenly sought after, whereas without these monopolistic rights, it would not
have been developed.
While it would be economically ideal to not grant monopolies, in the certain situations
where they are not needed the FTC conceded that such a “but for” test is unworkable. Because
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protects the underlying goals of patent law by granting a patent in the
situation where a combination is beneficial to society, but does not
necessarily produce functional synergy. Allowing these types of
inventions to be patentable restores inventors’ incentives to create and
disclose such combinations.
The economic synergy test also responds to another criticism of the
Supreme Court’s test. The standard for obviousness realized by the
Supreme Court’s test has been criticized as too high because in virtually
all combination inventions each of the components functions in its
known capacity resulting in a lack of functional synergy.167 As a
consequence, the functional synergy test eliminates the incentives
created by patent law for these types of inventions. This is not a
desirable result, because many of these types of inventions benefit
society.
Focusing on economic synergy re-emphasizes the
fundamentals of patent law and deals with this criticism. It allows for
the incentives underlying patent law to be available to inventors who
create functionally simple devices that benefit society; for non-obvious
combinations the idea to combine or the innovativeness of the product
will add value, and therefore create a synergistic effect. At the same
time, functional synergy does not create incentives for inventors to
create devices that do not benefit society, because combinations that do
not economically benefit society will be deemed obvious.
The economic synergy adopts the benefits of the functional
synergy approach while addressing the concerns of both those who
believe the Federal Circuit’s standard is too low, and those who believe
the Supreme Court’s standard is too high.168 This test is consistent with
one cannot predict which inventions would have been developed without the incentives of the
patent system, the economic synergy test errs on the side of allowing patents for all inventions
that benefit society, regardless of whether extrinsic marketing factors would have led to their
development anyway.
167 The Federal Circuit has continually emphasized that almost all inventions are combinations
of previous elements. See supra note 139 and accompanying text.
168 One criticism of the Supreme Court’s test that the economic synergy test does not directly
address is the hindsight problem: a combination, which would not have been obvious to a
PHOSITA, is deemed obvious in retrospect. Hindsight was one of the problems that sparked the
Federal Circuit’s suggestion test. See supra Part V. However, a recent empirical study found that
the hindsight problem is prevalent even in recent cases that apply the Federal Circuit’s suggestion
test. See Gregory N. Mandel, Patently Non-Obvious: Empirical Demonstration that the Hindsight
Bias Renders Patent Decisions Irrational (Dec. 22, 2005), available at
http://ssrn.com/abstract=871684 (The Federal Circuit “require[s] a pre-existing suggestion,
teaching, or motivation in order to combine prior art references in a non-obvious analysis.
Neither of these fixes, however, successfully mitigates the impact of the hindsight bias.”).
The economic synergy test may pose less of a hindsight problem than the Supreme Court’s
test because it calls for determining the economic value of the parts of the combination and the
combination as a whole. Even if a PHOSITA looking in hindsight would call the combination as
a whole intuitively obvious and therefore not functionally synergistic, she is still likely to
associate this benefit with an economic value if the combination benefits society.
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Supreme Court precedent, with the Constitution and with 35 U.S.C. §
103.
B.
Two Potential Methods for Determining Patent Value
In applying the economic synergy prong to determine whether a
combination patent should be deemed obvious, several valuations must
take place. Assuming a simple combination of two elements in the prior
art, there are three components which much be evaluated: each of the
two elements in the prior art, and also the combination taken as a whole.
If the value for the combination taken as a whole does not amount to
more than the sum of the value of both of the elements in the prior art,
then the combination does not possess economic synergy.
This Note does not provide a workable test, but rather a
perspective through which the obviousness inquiry should be addressed.
This idea can be implemented in a variety of ways depending on one’s
definition of value. Black’s Law Dictionary defines value as: “The
monetary worth or price of something; the amount of goods, services, or
money that something will command in an exchange.”169 The value of
an invention may be different depending on the perspective taken. This
Note will briefly explore two possible perspectives of valuing an
invention—its fair market value,170 from the perspective of someone
having ordinary skill in the art, and the value of its patent from the
perspective of the inventor.171
The first issue which must be addressed when dealing with value is
that value is a function of time, especially when valuating a patent.172
Traditionally, the value of a patent decreases with time until, when the
patent finally expires, it has zero value.173 Because value is a function
169
170
BLACK’S LAW DICTIONARY 1586 (8th ed. 2004).
Fair market value is defined as the “price that a seller is willing to accept and a buyer is
willing to pay on the open market and in an arm’s-length transaction; the point at which supply
and demand intersect.” Id. at 1587.
171 The value of a patent from the perspective of the inventor is directly related to her
incentives in patenting an invention. This process of determining the economic value of a patent
is known as patent valuation.
172 Andy Gibbs, PatentCafe’s New Online Tools Analyze Patent Value—Part II, (July 1,
2005), available at http://www.ipfrontline.com/depts/article.asp?id=4660&deptid=8.
173 Id. This article further explains that this traditional value curve is not always followed:
[P]atent value traditionally declines as the end of a patent term approaches, ending in
zero patent value once the patent expires. However, patent value could be continually
increasing throughout its life if the product it protects continues enjoying rapidly
expanding sales and market share capture. Conversely, increasing value could be
abruptly terminated if a successful invalidity challenge is mounted, if the product
becomes overly regulated (or banned) in the marketplace, or if a competitor introduces
the next generation of technology that obsoletes the patented technology.
Id.
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of time, value must be taken at a specific point in time in order to
further this analysis. One possibility is to determine the patent value at
the point in time that the application for each patent was filed. A better
approach is to take the value at the point in time when the combination
application is filed, but to assume that monopolistic rights of the
relevant prior art patents would extend for the same period of time as
the combination, if a patent for the combination were issued.174
Patent valuation is a well accepted, constantly evolving field,
which involves complex economic models to determine the potential
value of a patent.175 Many companies currently offer patent valuation
services for a variety of reasons including: assisting investors in
determining in which patents to invest, assisting inventors in
determining which patent applications to pursue.176
The patent valuation approach presents a good baseline to this
economic synergy analysis, and many methods currently used in patent
valuation are more complex than would be required in this situation.
174 In other words, the terms of the existing patents would be extended so that the duration of
the patents would not affect the analysis.
175 See generally Robert Pitkethly, The Valuation of Patents: A review of patent valuation
methods with consideration of option based methods and the potential for further research, THE
JUDGE INSTITUTE OF MANAGEMENT STUDIES, WORKING PAPER NO. WP 21/97 (1997), available
at http://www.oiprc.ox.ac.uk/RPWP0599.pdf; Norman Carte, Patent Valuation: The Maximum
Achievable Profits Method, INTELLECTUAL PROPERTY TODAY, May 2005, at 32, available at
http://www.iptoday.com/Archives/2005/May/pdf/Carte%20Final.pdf; David E. Martin & Jason
O. Watson, Patent Valuation: Is Fair Market Fair? (unpublished manuscript, presented at the
FOSSTEC/WMSCI,
Jul.
10,
2005),
available
at
http://www.mcam.com/downloads/FOSSTEC05-PaperF95800-Patent_Valuation_Is_Fair_Market_Fair.pdf.
176 See, e.g., PatentValuePredictor.com, http://www.patentvaluepredictor.com/home.asp?
Unique=2262006162653, explaining the method PatentValuePredictor.com uses for valuating
patents:
Patents are a right to exclude others from making, using, or selling a product or service
covered by the claims of the patent . . . . A good deal of the Gross Domestic Product
(GDP) of any industrialized country, particularly the US, is covered by claims in
patents . . . . We model this situation by assuming a substantial fraction of GDP is
covered by all patents, and then estimating the fraction of the GDP covered by each
patent using sophisticated data analysis and additional modeling based upon macro
economic data and financial data. We model the profit associated with a patent to be
the fraction of the GDP covered by the patent (i.e., the nominal sales of product that
our model predicts to be covered by the patent) times the profit margin. From that
information we obtain the annual profit protected by the patent. Patents are each in
force for a term of about 17 years. We calculate the current value of the patent to be
value of the annual profit for the estimated remaining term of the patent.
General Patent Corporation is one such company describing its services:
Accurate and effective valuation is a vital aspect of good IP management. Many
situations require IP and patent valuation for an organization to make the most of the
opportunities that confront them. GPC’s valuation services can assist IP organizations
in mergers, acquisitions, divestitures, corporate reorganizations, public and private
equity financings, securitization with IP assets pledged as collateral, and capital
restructurings.
General
Patent
Corp.,
Intellectual
Property
Valuation,
available
at
http://www.generalpatent.com/General_Patent/IP_Services/44/.
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Patent valuation takes into account legal factors, commercial factors,
and technological factors,177 all of which may not be relevant for the
purpose of determining obviousness.
For the obviousness
determination, the primary factor should be the technological factors.
This is important in order to maintain consistency with the controlling
statutory authority which explicitly defines obviousness in terms of the
“a person having ordinary skill in the art.”178 Using a method that
essentially simplifies the current patent valuation techniques by
minimizing legal and commercial factors would enable the use of this
analysis as a simple mechanical test.
One way of implementing the valuation approach is by delegating
the responsibility of patent valuations to the United States Patent and
Trademark Office (USPTO).
The USPTO would then valuate
combination applications in order to apply an economic synergy test in
determining the question of obviousness. The method used by the
USPTO in valuation patents would have to be agreed upon as reliable
and be publicly disclosed, allowing for both predictability and
consistency in the determination of obviousness.
Alternatively,
applicants could choose to rely on real market data accumulated during
the one-year grace period before filing an application in order to
demonstrate economic synergy.179
Another possible way to determine patent value would be to have
“persons having ordinary skill in the art” estimate it directly.180 Under
this approach, the USPTO would empanel a board of persons having
ordinary skill in the art to determine whether an invention is obvious.
The board would be asked to assess the value of each part of the
177
A recent article explains that:
Patents have been referred to as the most complex legal documents that exist. Patents
define the legal boundaries of an innovation that the owner intends to exploit in
commerce in order to create economic value. These three primary determinants are
collective and interactive indicators of patent value: (1) legal factors; (2) commercial
factors; and (3) technological factors.
Andy Gibbs, Patent Café’s New Online Tools to Analyze Patent Value, (June 15, 2005), IP
Frontline.com, available at http://www.ipfrontline.com/depts/article.asp?id=4231&deptid=8.
178 35 U.S.C. § 103 (2000); see also Gibbs, supra note 177:
“Valuation” by different experts will be computed quite differently, even though they
would all be evaluating the identical patent. Different subject matter experts working
together towards the same general objective would be unable to agree on a single rating
system applied across the three patent factors that would adequately address the outside
influences on patent value known by each legal, commercial or technical expert.
Id.
179 35 U.S.C. § 102 provides that “A person shall be entitled to a patent unless . . . the
invention was patented or described in a printed publication in this or a foreign country or in
public use or on sale in this country, more than one year prior to the date of the application for
patent in the United States.” Essentially this allows an inventor to use or sell his invention for up
to a year, before he loses the right to apply for a patent.
180 This method is analogous to using the “reasonable person” standard in tort law.
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combination independently of the valuation combination as a whole.181
On its surface this analysis seems simple—each element of the
combination, and the combination as a whole would be assigned a
dollar amount. An economically synergistic combination would have a
greater value than the sum of the values of the separate elements of the
combination.
CONCLUSION
The considerable criticism of the Court of Appeals for the Federal
Circuit’s “teaching-suggestion-motivation” test for obviousness is a
strong indication that the test is in need of reform. The test radically
departs from the Supreme Court’s precedent and arguably sets the
standard for obviousness under 35 U.S.C. § 103 unconstitutionally low
because it allows combinations that do not “promote progress” to be
patented. Accordingly, a second prong should be added to the Federal
Circuit’s test to ensure that only combinations that promote economic
progress are patentable. Because the standard for patentability requires
an economic balancing between the oppressive effects of monopoly
rights and the public benefit of disclosure, the economic approach taken
by this test is particularly appropriate. The Supreme Court’s synergy
idea serves as a basis for this test, but is expanded beyond functional
synergy to encompass economic synergy as well. When a suggestion to
combine is not found in the prior art, the test for obviousness should
then ask whether the combination promotes economic progress. The
economic synergy test lowers the bar for obviousness from the
strictness of the functional synergy test, while maintaining
predictability, uniformity, and consistency with the constitutionally
mandated standard.
181 Alternatively, the process could be bifurcated and delegated to separate “boards” to assure
that the valuations of the parts do not affect the valuation of the combination as a whole.