We All Knew That - UK Supreme Court Rules on Patent Obviousness

Patents afford great protection for inventions, but have high threshold in order to ensure that few patents that disclose nothing new are issued. AS one can imagine from common sense, anything that is patented needs to not be obvious, as this would allow for the protection of something that lacks sufficient invention to merit protection. After all, if it is obvious, how can you claim you've invented or found it? Even with this is mind, what makes a patent 'obvious'? In a long awaited decision by the UK Supreme Court, the matter was (finally) put to bed, at least in the UK.

The case of Actavis Group PTC EHF v ICOS Corporation concerned a dosage patent owned by ICOS (EP1173181), which related to the use of tadalafil (more commonly known as Cialis) in a dosage form for the treatment of sexual dysfunction. The patent was exclusively licenced to Eli Lilly. Actavis initiated proceedings to revoke the patent, arguing that it was obvious (among other points), with the matter ultimately ending up with the Supreme Court.

The main point of contention in the case is section 3 of the Patents Act 1977, which sets out that "…an invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art". Put differently, an inventive step (a necessary component for being able to patent something) cannot include something that is 'obvious' to a person skilled in the art, having considered anything that forms the state of the art in which they are skilled in.

Typically the courts follow two tests on determining obviousness; (i) the Windsurfing/Pozzolli structure; and (ii) the EPO's problem-and-solution method.

The question of obviousness, as set out in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc., concerns an undetermined set of factors in the light of all the relevant circumstances. These may include "…the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success".

Lord Hodge then set out a number of factors that he considered were relevant to the case at hand. Without diving deeply into each one of them (totaling at nine different factors), they included:

• whether it was obvious to undertake a specific piece of research, at the priority date, which had a reasonable or fair prospect of success;
• the routine nature of the research and any established practice of following such research through to a particular point;
• the burden and cost of the research programme; and
• the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme.

Additionally, as the patent concerned is a dosage patent for the drug, one has to also take into consideration whether the specific dosage is indeed obvious.

The Court finally moved onto consider whether the patent in question was obvious. This began with the acknowledgement that it was obvious for the skilled team to pursue the pre-clinical and clinical research in order to implement the patent. The target for the research was also indeed to identify the appropriate dosage regime for tadalafil in the treatment of erectile dysfunction. The dosages tested would have included doses that were as low as described in the patent. This would, contrary to the decision at first instance, point to the patent being obvious more than not.

Clearly, as discussed by the Court, the approach to finding the correct dose would've been a 'no brainer' for the relevant skilled experts, and the patent was determined to be obvious. This was not contradicted even if following the EPO's problem-and-solution method.

In short, the Court found that "…the Court of Appeal was entitled to interfere with the trial judge’s assessment of obviousness and to hold that the… patent was invalid for lacking an inventive step".

The decision took a long hard look at the tests surrounding obviousness, and will clearly help further assessments of the same question in the future. The decision does also allow for the acceptance of routine or well-established inquiry as patentable subject matter, even if in this instance the dosage was obvious. 

Before the Supreme Court - Copyright Protection of the Design of Uniforms in the US Court of Appeal

In the light of the pending US Supreme Court decision regarding copyright protection in the design of cheerleaders' uniforms, this writer thought it would be good to set the scene for the decision by discussing the decision handed down by the Court of Appeal. The judiciary rarely takes on design copyright cases, as often their value is negligible or protection is not even sought (especially in the US where copyright registration is an important part of IP).

The case of Varsity Brands Inc. v Star Athletica LLC dealt with the design of a cheerleader uniform, comprising of several different designs, incorporating various colors that divide the uniform into specific shapes and segments (visible here). The designs themselves were of non-functional nature, and were only intended to be of aesthetic value. The original works were produced and sold by Varsity Brands, who noticed that a competitor, Star Athletica, also sold similar outfits in competition with Varsity's uniforms, and took the company to court for copyright infringement and a number of other civil claims in competition.

The Court of Appeal first took on the issue of whether Star Athletica has infringed Varsity Brands' copyright in the uniforms; the designs for which have been successfully registered at the US Copyright Office. After lengthy discussions, the Court did agree that successful registration at the Copyright Office could offer prima facie, although rebuttable, protection and acceptance of copyright in a given work. Star Athletica did, however, argue that the designs were in themselves useful article, and thus not protectable by copyright. The designs therefore would need to be "…identified separately from, and are capable of existing independently of, the utilitarian aspects of the article" for copyright protection to be afforded.

What amounts to a useful article is an article that has a utilitarian function that is not there merely to convey the appearance of the article (i.e. for aesthetic reasons). Following the above, the Court established that this would be determined by a two-prong test: "…first, whether the design for which the author seeks copyright protection is a 'design of a useful article,' and if so, second, whether the design of the useful article 'incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the [useful] article'".

Alan's Halloween outfit was totally non-functional

The Court then turned to the first prong of the test on separability, meaning that the article would not be a useful one, but only conveys the items appearance.  As illustrated by the Court's discussion, both appellate and first instance courts have struggled to formulate a concise and uniform approach in determining what would amount to a 'useful article'. The Court moved on to applying what they considered to be the correct approach, which would be applying a number of questions based on the Copyright Act itself. These questions are effectively to ask whether the design is "…a pictorial, graphic, or sculptural work", and if so, whether the design is a useful article within the definition above. The Court would then have to ask "…[w]hat are the utilitarian aspects of the useful article", which can include several aspects (for example, aesthetic, functional and non-functional elements).

Once the Court has identified the relevant utilitarian aspects of the design, it would then finally move onto assessing whether "…the viewer of the design [can] identify pictorial, graphic, or sculptural features separately from... the utilitarian aspects of the useful article", and if these features could exist separately from the design itself (i.e. are removable from the design and don't impact its functionality). If either one, or both, of the final questions fails, the design is not protected by copyright.

The Court subsequently moved onto its consideration of the copyright protection for Varsity Brands' designs. They quickly answered the first two questions in the affirmative, expanding on the second question that the designs, represented in sketches of the uniforms, have an "intrinsic utilitarian function that is not merely to portray the appearance of [clothing] or to convey information". They then set out the particular utilitarian aspects of the designs, which were to "cover the body, wick away moisture, and withstand the rigors of athletic movements". The Court rejected Star Athletica's assertion that the uniforms, through a decorative function, would not be copyrightable, as, rightfully so, this would cause artworks and other similar works to not be protected by copyright by virtue of their decorative function

Finally, the Court sought to answer the final two questions. In determining the separability of the pictorial, graphic or sculptural features (particularly the arrangement of stripes, chevrons, zigzags, and color-blocking), the Court saw that they could indeed be separated, as they do not enhance the uniform's functionality, and the uniforms remain fully identifiable even in the absence of this stylisation due to its distinctive shape. Additionally, purchasers would be able to distinguish each style from each other, and choose accordingly, making the designs separate and individual and therefore protectable. Even so, would they still exist independently of the utilitarian aspects of the uniforms, even if separable? The Court said yes, as the features could be incorporated into a number of garment styles, even if they are not meant for cheerleaders (meaning the designs are transferable), and do not affect the uniform's functionality for those purposes even if used or not. Following the answers to the questions the Court ultimately determined that the designs were copyrightable.

The Court distinguished this from the design of a dress, which, through its shape rather than a mere graphical addition adorning its surface, as its shape, cut and other features are "…inextricably connected with the utilitarian aspects of clothing" and thus can't be identified separately. This illustrates the difference in protectability for fabric designs and dress designs.

As is clear the US courts desperately need a unifying precedent to determine what the correct test is in relation to useful articles and the extent of copyright protection thereof. The Supreme Court's decision is still forthcoming, and this writer will be curious to see whether they follow the Court of Appeal's test, or formulate a different one entirely.

Thoughts on the Alice Corp v CLS Bank Decision

Software is big business in the 21st century. With over 400 billion dollars worth of revenue having been created in 2013 alone, and arguably the market is growing by the year, you can't help but understand the vehement defense of those interests even if it often seems to be for nothing but profit, and not the defense of a legitimate product or competitive edge. What gives software, and subsequently software patents (discussed in more detail here), a bad name are so-called 'patent trolls', or more officially Non-Practicing Entities (sometimes also called Patent Assertion Entities). The companies rarely produce or use the patents they control, but merely use them as a means to recover licensing fees, potentially affecting the marketplace and software development quite negatively. In light of this whether software should be patentable or not, and if so what the limits are, has been highly contentious and of interest to many. Finally the matter arrived in the open arms of the United States Supreme Court, which issued is ruling on the question a bit over a month ago (discussion of the earlier decision can be found here).

The case of Alice Corporation v CLS Bank International dealt with Alice Corporation's patented method of mitigating 'settlement risk', which is the uncertainty of whether only one party will pay what it owes to another, by the use of a third-party. The software or computer process creates 'shadow records' of the parties' debits and credits, effectively mirroring their payment capabilities within their real world finances. It then allows or denies any transactions based on those records, should they fall within the payment capabilities of the owing party, finally issuing the payment order to the bank responsible for that transaction. This mitigates the risk of such transactions for both parties, leaving much less uncertainty as to the other party's payment capabilities. The patent's claims in question are as follows: "...(1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims)" - all of which are handled through a computer. CLS Bank handle currency exchanges internationally, and sought a declaratory judgment to invalidate Alice Corporation's patent under 35 USC 101.

What abstract truly looks like

In determining whether Alice Corporation's patent is invalid, the Supreme Court had to decide whether it would fall under a patent ineligible category such as laws of nature or an abstract idea. This assessment, as expressed by Justice Thompson in the unanimous judgment of the court, would entail: "First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts... If so, we then ask, '[w]hat else is there in the claims before us?'" The second step entails an assessment of whether the patent is an 'inventive concept', or in other words, brings something more to the table than just the idea itself.

The Supreme Court in their judgment draw heavily from the case of Bilski v Kappos (more extensively discussed on this very blog). They aligned Bilski's method of hedging risk to Alice Corporation's mitigation method, and determined the patent was indeed an abstract idea and therefore ineligible for the patent. This is because, referring to the Bilski decision: "...all of the claims at issue were abstract ideas in the understanding that risk hedging was a ‘fundamental economic practice.’". As, according to Justice Thompson, there is no meaningful distinction between Alice Corporation's patent and Bilski's patent, the former can be concluded to be an abstract idea in the same vein.

Although the court did determine that the patent was ineligible it could still contain a transformative element which turns it into an 'inventive concept'.  To put into better terms, referring to Mayo Collaborative v Prometheus Labs: "A claim that recites an abstract idea must include “additional features” to ensure “that the [claim] is more than a drafting effort designed to monopolize the [abstract idea]". The mere addition of a computer into the process, as evident from the extensive precedent in this area, will not make non-patentable inventions into patentable ones unless the implementation via the computer is more extensive.

Alice Corporation's patent largely relies on a computerized method which handled the risk mitigation, and on the face of it, seems to fall within precedent as unpatentable. The court outright rejected Alice Corporation's argument that the computer plays a substantial and meaningful role and determined that the patent is not an 'inventive concept'. Expressed better by Justice Thompson: "...the claims at issue amount to “nothing significantly more” than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer". The Supreme Court therefore rejected the appeal and Alice Corporation's patent was deemed invalid.

The decision is very important, however is not necessarily the axe to the head of software patents on the block. Although the Supreme Court rejected patents which merely give instructions to a computer, if applied more thoroughly and in such a way that it solves a problem such as in Diamond v Diehr. This distinction was expressed incredibly well by David Kappos for SCOTUSBlog: "[t]he distinction between patentable software in Diamond v. Diehr and unpatentable software in Bilski and CLS Bank is not about software at all; rather, the difference is the presence or absence of a definitive invention versus abstraction. Diehr's new and useful process for curing rubber was held to be innately patentable – the fact that it happened to be manifest in a software language was tributary". To put into different terms, software patents should be a nuanced application, a solution to a distinct problem rather than a blanket cover for a larger area, stifling progression and potentially causing issues in the technological developments of the future. The reception of the decision has been wildly mixed, and rightfully so, since the decision does both good and bad things to the patent sphere in the US. What impact it will have remains to be seen more down the line, but hopefully this will tackle patent trolls more than it does legitimate businesses - regardless of your definition of 'legitimate'.

Source: The Verge

Retrospective - Software Patents in the US

With the Alice Corporation v CLS Bank Supreme Court decision looming in the horizon, and the patentability of software in the US faces its most recent judicial challenge, this writer thought it was best to look at the origins of the current stance of such patents in the United States. Software patents are incredibly lucrative, generating an estimated 20 billion dollars yearly to tech giants such as Google and IBM. Regardless of this their patentability can be questioned, and an answer that still stands today was provided by the US Supreme Court 4 years ago, which is now effectively being challenged by Alice v CLS.

The case in question is Bilski v Kappos, decided in mid-2010. It dealt with Bernard Bilski and Rand Warsaw's application for a patent (found on page 79) for a method which hedged risks in the selling of commodities over time. The method, roughly explained, would have a third party selling the commodities in question to parties at a fixed price, mitigating any spikes in price should a single entity buy those commodities in large quantities at once. This also ensures that the providers of the commodities would not suffer either, as the third party purchaser would safeguard them from a lull in demand after a big buyer would take their share, ensuring that the price of the commodities would not dip below the third party's fixed price. The patent application for this method, more specifically described under Claim 1 and Claim 4 (both under contention), the latter of which puts the former in a mathematical equation, were initially rejected by the patent examiner. The decision was subsequently appealed, and through an en banc decision of the Court of Appeals, finally ended in the US Supreme Court.

What the Court was faced was an assessment of whether the patent contravened 35 USC § 101, under which one cannot patent fundamental principles, abstract ideas, laws of nature or natural phenomena. Could a process such as Bilski's one be patented as a process under section 101, or would it be merely patenting an abstract idea? The Supreme Court would have to assess Bilski's method under the machine-or-transformation test to determine if it is a process or not: "...(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing". What this could be is the method's usage through a computer for example, making the method a more specific one as opposed to just a pure idea, being a process and thus patentable. The machine-to-transformation is not, according to the US Supreme Court, the only definitive test, but more of "...a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101".

Gavin always thought in the abstract

The majority's decision hinged heavily on its previous decisions of Gottschalk v Benson, Parker v Flook and Diamond v Diehr. The three decisions quite heavily dismiss the possibility of patenting processes very similar to the one which Bilski was attempting to patent, as the Court saw in each case that those processes would merely be patenting abstract ideas, leaving them outside the remit of patentability. Although Benson and Flook failed, Diehr succeeded as the process which was attempted to be patented was an actual process, unlike in the former two which attempted to patent formulas rather than real processes, leaving the door open for such attempts should they sufficiently fall within the Diehr precedent's line.

In the end the majority rejected Bilski's appeal, stating that "The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea". This can be said to be right based on the precedents used by the Court in their decision. Bilski attempted to patent an idea of how to hedge risks, lacking a secondary component which would make the method a process aside from just a principle under which a business would operate, clearly making it just an idea, not a process.

What the Bilski case establishes does have an impact on software patents, but can be argued to be distinguishable from the forthcoming Alice case to an extent. What Bilski attempted to patent was just an idea of a process; however should a software patent sufficiently establish a process akin to what was seen in Diehr, it could very well be patentable. On the face of it the Alice patent would seemingly fall under the Benson and Flook precedent, potentially causing it to be not eligible for patentability; however this remains to be seen once the Supreme Court presents its decision on the case.

Retrospective - Inventive Step in Patents

Improvements on older inventions is arguably the cornerstone of technological advancement, and more often than not can be equally or even more important than the original invention. This however has to be balanced between what is truly an improvement and what is merely something presented under the guise of an improvement only to be able to control currently or formerly patented subject matter. Under the Patents Act 1977 this is a matter of assessing whether the improvement in question is an 'inventive step' under the Act. The provisions defines this as being such if "...it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art". Although the section is clear in its intent, the test in how this would be assessed was left to the courts to further specify on.

The case in question which tackled the inventive step, laying down the modern application of this requirement was Windsurfing International v Tabur Marine (Great Britain), decided in 1985 in the Court of Appeal. It concerned a patent which protected the design of a wind surfboard, owned by Windsurfing International. The patent essentially consisted of a surfboard to which a triangular sail was attached, providing wind propulsion for the board, and a joint allowing for the sail to move according to where the wind was coming from. The defendant was licensee of the patent, operating in the UK. The two parties subsequently fell into a dispute, after which Windsurfing International sued the defendant for patent infringement. Although the case related to the old Patents Act 1949, the principle of inventive step still applies to the current 1977 Act even though the two pieces of legislation differ.

Cowabunga, dude!

The defendant challenged the patent through their argument that there was nothing new or novel about the patent where a sail is attached to a surfboard, asserting that the patent did not involve an inventive step, therefore allowing the Court to revoke the patent. Similar designs have been published in the US and the UK in related magazines in the late 1960s, and the defendant also presented evidence where a 12-year-old boy had made a similar craft as early as 1958 in the UK, predating the patent by over a decade.

Respective of all evidence presented in the case the Court was still faced with the question of whether the patent included anything which was new, and therefore involved an inventive step, protecting it from revocation. The question was aptly answered by Justice Oliver, who subsequently postulated the test for obviousness in relation to the inventive step:

 "...[the question] has to be answered, not by looking with the benefit of hindsight at what is known now and what was known at the priority date and asking whether the former flows naturally and obviously from the latter, but by hypothesizing what would have been obvious at the priority date to a person skilled in the art to which the patent suit relates, who is assumed to have access to what was known of the art in the [UK] immediately before the priority date".

The test, in other words, is an assessment of what the new idea or concept is which is protected; who would be a skilled person in the related art and what would his knowledge be based on commonly available information in the art be at the time; what are the differences between any pre-existing art which is used in comparison; and whether the differences or improvements in the new patent would have been obvious to the aforementioned person skilled in the art. The Windsurfing test has since been further clarified in the case of Pozzoli Spa v BDMO SA, but still remains quite relevant in deciding whether a patent truly involves an inventive step or not. In the case the patent was revoked, as prior art clearly showed the patent did not involve any steps which were not obvious to a skilled person in the art, with the Court heavily relying on the evidence provided where a 12-year-old boy had preempted the design, making the creation of such a craft quite obvious to anyone even remotely skilled in the area.

Similar considerations are made under other common law jurisdictions, such as under the Canadian Patents Act or in the United States; however the North Americans often refer to this as non-obviousness rather than an inventive step. Bar the different wording the substantial considerations are very much alike. This only shows how important true inventiveness is under patent legislation.

Retrospective - Interpretation of Patent Claims

Patents can be, and more often than not, are incredibly complex and technical. In such complexity accuracy is paramount, especially to guarantee proper protection for the rights you wish to protect. When a patent is applied for the person or entity registering the patent has to specify the claims relating to the patent, or in other words, what the person or entity endeavors to protect with their patent. The wording used when writing claims will create the remit in which protection is awarded for that patent. As such the claims of patents are hugely important, and should things get to litigation, what the wording used protects can be equally, or even more important than what is thought it protects. How these claims are interpreted therefore needs to be expanded on, and the United Kingdom House of Lords did so in the 1980s.

A modern use of angles

The decision in question is Catnic Components Ltd v Hill & Smith Ltd. The case concerned the production of steel lintels, which the plaintiff owned the patent for and manufactured. The lintels had a very specific rear support member, which under one of their claims was described as a "...second rigid support member extending vertically from or from near the rear edge of the first horizontal plate or part adjacent its rear edge". The defendant in question made a similar lintel, but one where the rear support member had an inclination between 6 to 8 degrees; something which deviated only that much from the plaintiff's vertical rear support member. This affected the load-bearing capabilities of the lintels, making the defendant's lintels approximately 0,6 to 1,2 percent weaker than the plaintiff's lintels. The plaintiff sued the defendant for patent infringement, ultimately ending up in the House of Lords.

Due to the slight deviation of the defendant's lintels' construction, the House of Lords had to decide whether this would still infringe the patent owned by the plaintiff. In more simple terms: whether the claim described above could be interpreted as such to include a slight deviation, or whether its express term of verticality would prevent the defendant from infringing the patent. This would have to be assessed based on the 'pith and marrow' of the claim; something which the Lords would have to consider in their judgment. What this encompasses was expressed well by Lord Diplock: "...a patent specification is a unilateral statement by the patentee, in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention (i.e. "skilled in the art"), by which he informs them what he claims to be the essential features of the new product or process for which the letters patent grant him a monopoly". How one would interpret claims based on their 'pith and marrow' was finally expressed by his Lordship:

"A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge. The question in each case is: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked."

This would indicate that patent claims should not purely be interpreted literally, but given a more of a purpose based assessment. Under this one could easily include slight deviations in the use of patented inventions, should the deviation still be within the purpose of the patent. A much larger change could clearly not fall under a claim, even under a purpose based assessment.

Under their Lordships' deliberation, the defendant had infringed the plaintiff's patent. Even though their construction was different, the claim was thought to have included these small variants. Clearly their Lordships intended to not limit the scope in which patent claims would be interpreted as being all too literal, and allowed for potential differences to still be included. Should strict compliance be an essential part of the patent, for more technical or functional reasons, one would have to interpret the claim more literally.

Even though the case pertained to the old Patents Act 1949, it is still accepted to apply to the current Patents Act 1977 equally. Lord Diplock's reasoning has also been utilized in several other common law countries; making the decision an important one even in today's patent litigation.