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Court Rejects Patent as Obvious Following KSR

The Federal Circuit's first stab at applying a recent Supreme Court patent ruling suggests that the specialized court has bowed to a command from above to more vigorously weed out bad patents granted to obvious inventions.

Nine days after the Supreme Court slammed the Federal Circuit's track record of upholding too many patents on inventions that aren't truly innovative, the Court of Appeals dutifully applied a more "flexible and expansive" approach to evaluating obviousness, as the High Court mandated in its April 30 landmark decision in KSR v. Teleflex.

The end result was a unanimous decision May 9 by a three-judge appeals panel accepting the defense of Fisher-Price Inc. and its parent Mattel Inc. that one of the toy giant's electronic learning toys did not infringe the patent of Leapfrog Enterprises Inc.

Leapfrog sued Mattel in 2003 for $78 million, alleging Mattel copied patented technology from its successful LeapPad line. Leapfrog's interactive picture books help children learn to read phonetically by using an electronic device which generates sounds for letters when a child touches a letter. The sound depends on the letter's placement in the words.

Mattel argued that its PowerTouch toy, which sounds out words and syllables rather than letters, uses a different technology than LeapPad and that LeapPad wasn't a patentable invention anyway because it was simply an updated version of several older toys.

The Federal Circuit affirmed a 2006 Delaware District Court decision that one of the claims in Leapfrog's patent was invalid since a person of ordinary skill in the art of creating children's learning toys would have found it reasonably obvious to combine and update older devices to arrive at Leapfrog's toy--essentially a smaller, cheaper and more reliable version of earlier toys.

"Applying modern electronics to older mechanical devices has been commonplace in recent years," Circuit Judge Alan D. Lourie wrote for Judges Haldane R. Mayer and Timothy B. Dyk. "Leapfrog presents no evidence that the inclusion of a reader in this type of device was uniquely challenging or difficult for one of ordinary skill in the art."

Bench Backpedals

The Federal Circuit appears to have taken to heart the Supreme Court's admonition to be "more searching in ensuring that when a patent is granted, it's on a real innovation," suggested John Duffy, a George Washington University IP law professor and counsel on the KSR case.

Notably the Federal Circuit specifically repudiated what the High Court described as the circuit's "narrow, rigid" approach to obviousness that required all those challenging a patent on those grounds to point to a pre-existing and express "teaching, suggestion

or motivation" for others to do the same thing.

Judge Lourie wrote, "an obviousness determination is not the result of a rigid formula disassociated from the consideration of the facts of a case." The panel proceeded also to embrace KSR's edict that, even in the absence of an express suggestion or teaching in the prior art, an invention can be deemed obvious if a person with ordinary skill in the art using "common sense" could have arrived at the innovation.

"Indeed, the common sense of those skilled in the art demonstrates why

some combinations would have been obvious where others would not," Judge Lourie echoed.

Leapfrog's attorney Ron Shulman, a partner with Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif., said the Federal Circuit's shift in emphasis suggests a "substantially greater likelihood" that patents will now be held invalid for obviousness in cases where there is no express suggestion in the prior art.

"In times past, you didn't want to go to trial where all you were arguing was obviousness," he says. "While it's still preferable not to be in that position, it's less distasteful than it used to be."

Mattel's attorney James Galbraith, a partner with Kenyon & Kenyon in New York City, pointed out that the court's about-face is not brand new. As soon as the Supreme Court granted certiorari in KSR, the Federal Circuit "started to refine, and back away, from a rigid application of the so-called 'teaching, motivation, suggestion' test," he said.

Future Fallout

Taken together, KSR and Leapfrog not only signal greater rigor toward patentability, they also give the PTO more scope to refuse to grant patents for ordinary innovations, said Rochelle Dreyfuss, a professor of IP law at New York University.

"With this new case, the PTO can say 'Look, market forces produced that invention,'" she says. "And it can say to the inventor, 'You show me why market forces wouldn't have produced that invention.' So it shifts the burden of proof in the patent office."

Dreyfuss says the Federal Circuit's decision in Leapfrog is symbolic of a growing acknowledgement from the courts and the PTO that competition, not patents, drives innovation.

On top of making it harder to get a patent, KSR and Leapfrog will also reduce the expense of patent litigation because they approve summary judgment as a route for invalidating patents--a cheaper and quicker alternative to a full-blown jury trial.

Duffy sees the decisions as signs of a growing "appreciation for the need to reward true innovation and not sort-of phony innovation." He says, "That is causing the courts, including the Federal Circuit, to be more careful in enforcing patents to make sure that ?? 1/2 the good ones get enforced and the bad ones get invalidated."

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