Source: https://anticipatethis.wordpress.com/2006/07/
Timestamp: 2019-04-20 07:23:26+00:00

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According to this article in Business Week, there are presently 41 business method patents related to tax strategies, and 61 applications pending. In particular, the article briefly describes that John Rowe, executive chairman at Aetna, was sued in U.S. District Court in New Haven for patent infringement by Wealth Transfer Group, a firm that obtained a patent on grantor retained annuity trusts (GRATs) as a means of achieving substantial gift-tax savings. The article further recommends strategies, e.g. written assurance and indemnity agreements, for protecting oneself from liability over creative tax-saving methods.
Although the article does not provide any in-depth analysis, I believe it does well in highlighting the concerns of allowing patents on business methods . . . and was a thought-provoking light read. I recommend taking a look if you have a few minutes to spare.
A major drawback of this popular practice is that it usually involves the hazardous coupling of fire, combustible gases and inebriated participants. Reports of serious burns to body parts are not uncommon, this being especially true when the participants remove their clothing . . . .
1. The Federal Circuit has Departed from the Supreme Court’s Precedents Construing Section 103.
KSR also noted that prior to the creation of the Federal Circuit, at least seven regional Courts of Appeals followed Sakraida and Anderson’s-Black Rock, et seq. Further, this precedent was rejected by the Federal Circuit in Stratoflex, Inc. v. Aeroquip Corp., which provided that there was no legal basis for the judicial classification of “combination patents”, and subsequently fashioned the present “teaching, suggestion, motivation” test.
Numerous commentators and authors have since noted the divergence between the Federal Circuit’s precedents and prior Supreme Court decisions. In particular, it has been noted that the patent in Graham v. John Deere, arguably the premier Supreme Court case relating to obviousness, was held invalid without the detailed evidentiary showing that the Federal Circuit currently requires before deeming subject matter unpatentable under 103.
2. There is an Acknowledged Circuit Split in the Test for Determining Obviousness.
3. National Studies Have Identified the Federal Circuit’s Obviousness Precedents as needing Reform.
The Federal Trade Commission (FTC) release in 2003 a comprehensive study of the patent system, entitled: To Promote Innovation: The Proper Balance of Competetion and Patent Law and Policy. KSR asserted that the FTC recognized the Federal Circuit’s obviousness test as a core issue in assessing nonobviousness and a focal point of current patent debate.
Additionally, in 2004 the Nationa lReeseach Council of the Natioanl Academies of Science and Engineering release a report calling for various reforms of the current patent system. See A Patent System for the 21st Century (2004). KSR asserted that the second recommendation of this report was to “reinvigorate the non-obviousness standard.” The report cited the work of a number of legal scholars whom consider the present state of the evolution of patent law as requiring a reduced hurdle for non-obviousness, particularly with respect to business method patents.
4. KSR v. Teleflex is a Good Case for the Supreme Court to Review the Federal Circuit’s Obviousness Test.
Why? Well first, the Federal Circuit’s obviousness test is at least two decades old . . . and the issue is considered so settled that the Federal Circuit did not even publish the decision vacating judgment in this case. Secondly, the challenge to the validity of the patent claim at issue is substantial. Thirdly, the technology at issue is readily understood (gas pedals for automobiles). Fourthly, the facts of the case well illustrate how the present test severely weakens 103 and ignores the effect of exogenous changes, i.e. changes no attributable to the work of an inventor that can be commercially successful yet technologically trivial. Finally, throughout the case KSR has relied upon Supreme Court precedent with regard to “combination patents” and the case therefore provides the court with a clear opportunity to address the issue.
Teleflex, Inc., et al. v. KSR International Co.
The District Court Misapplied the “Teaching-Suggestion-Motivation” Test for Obviousness.
The CAFC vacated a summary judgment of invalidity by the district court (ED Mich.) in favor of Teleflex. In particular, the court found that the district court applied an incomplete teaching-suggestion-motivation test in finding Teleflex’s U.S. Pat. No. 6,237,565 (the ‘565 patent) obvious.
Teleflex originally sued KSR and alleged that KSR’s pedal assembly infringed the ‘565 patent. KSR defended on the basis that Claim 4 of ‘565 was obvious and invalid.
The district court’s finding of obviousness was based on the combination of the Asano patent (pedal assembly without the electronic control) with either 1.) the Rixon patent (assembly with sensor located in the pedal housing, and suffering from the problem addressed by the ‘565 patent); 2.) the Smith patent (electronic control on the support bracket of a pedal assembly, and directed to a different problem than that addressed by the ‘565 patent); or 3.) the Redding patent (assembly with a non-constant pedal pivot during adjustment, and cited by the Examiner in combination with the Smith patent during prosecution).
The CAFC held that the Asano patent does not address the same problem as the ‘565 patent, and therefore one of ordinary skill would not be led to combine Asano with the other patents in the particular manner claimed. In addition, the Rixon patent suffers from the same problem addressed by the ‘565 patent, but suffering from the problem “fails to provide a sufficient motivation to combine.” Further, the Smith patent is directed to the problem of wire chafing, a problem different from that of the ‘565 patent, and also is not related to an adjustable pedal assembly. A person of ordinary skill is led to combine prior art teachings when the references address the precise problem that the patentee was trying to solve. Finally, with respect to the Redding patent, the CAFC held that “the court’s task is not to speculate as to what an examiner might have done if confronted with a piece of prior art” but to “make an independent obviousness determination.” Speculation as to what the Examiner would have done if confronted with a different reference is not relevant to the court’s determination of obviousness.
In sum, the district court misapplied the teaching-suggestion-motivation test and a general issue of material fact existed as to whether a person of ordinary skill in the art would have been motivated to attach an electronic control to the support structure of the Asano pedal assembly.
A Supreme Issue of Obviousness.
With the recent granting of a petition for a writ of certiorari to the Supreme Court in KSR v. Teleflex, the issue of what constitutes obviousness under 35 U.S.C. § 103 is again, for better or worse, in the hands of our nation’s highest court.
said one end wall having an outlet opening formed therethrough which is rectangular in shape and extends in width from one side wall to the other side wall of said container, and extends in height from an upper edge which lies a distance less than the height of said outlet opening below the plane of the underside of said top wall to a lower edge which is greater than said thickness of a stick of chewing gum but less than twice said thickness.
U.S. Pat. No. D473503: Transparent United States Flag License Plate Cover.

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