Case Studies

The Aftermath of Bilski: What is an Abstract Idea?

In the Supreme Court’s decision in Bilski v. Kappos, the Court addressed, inter alia, whether business methods and other process claims were patentable under 35 U.S.C. § 101. Before Bilski, the Federal Circuit used a “machine or transformation” test to determine if processes were patentable – a process claim was patentable if the process was tied to a particular machine or apparatus or transformed an article from one state to another. The Supreme Court declined to adopt the “machine or transformation” test as the sole test of the patentability of processes, but instead stated that the “machine or transformation” test was a “useful and important clue, an investigative tool, for determining whether some claimed innovations are processes under § 101.” To be patent eligible under § 101, an invention must be novel and useful, so long as the claimed invention is not an abstract idea, an abstract idea restricted to use in a particular technological environment, or an abstract idea supplemented by insignificant post-solution activity.

Bilski served to obfuscate the standard for patentability of process claims, but also clarified the notion of an abstract idea. It is well accepted that abstract ideas themselves, laws of nature, and mathematical formulas are unpatentable, but applications of laws of nature or mathematical formulas “may well be deserving of patent protection.” Bilski v. Kappos, 130 S. Ct. 3230 (emphasis added).

Two later cases have clarified the definition of an abstract idea as it relates to patentability under § 101. The Supreme Court addressed the patentability of abstract ideas in Mayo Collaborative Services v. Prometheus Laboratories Inc., a unanimous opinion handed down in March 2012. The claimed invention at issue involved the use of drugs for the treatment of autoimmune diseases where the level of metabolite in the patient’s bloodstream determined the efficacy or toxicity of a thiopurine medication. The process at issue involved administering medication to a patient, determining the level of metabolite in the patient’s bloodstream, and adjusting the dosage to keep the level of metabolite in the patient’s bloodstream between a specified lower and upper bound. While there was a human element involved in the claims of administering the drug and determining the level of metabolite, the human steps did not add enough to make the patent claim an application of a natural law rather than a claim of the natural correlation between the level of metabolite in the patient’s blood and the efficacy or toxicity of a particular drug.

The Federal Circuit also opined on the patentability of an abstract post-Bilski in Research Corporation Technologies, Inc. v. Microsoft Corporation. At issue were algorithms related to digital image halftoning, which uses dots of primary colors to simulate a continuous tone. The Federal Circuit found that the patent claimed processes that had “functional and palpable application in the field of computer technology.” Further, the fact that certain claims linked the method to physical mediums – high contrast film, a film printer, computer memory, and printer and display devices – indicated that the claims were not directed to the abstract idea of halftoning itself, but specific applications of a halftoning algorithm.

KSR v. Teleflex and the Teaching, Suggestion, or Motivation Test

The Supreme Court addressed the issue of nonobviousness under 35 U.S.C. § 103 in KSR v. Teleflex. Before the Court’s decision in KSR, the Federal Circuit applied the teaching, suggestion, or motivation (TSM) test, which precluded patentability if some motivation or suggestion to combine the teachings of multiple pieces of prior art could be found in the prior art, nature of the problem, or knowledge of a person having ordinary skill in the art. In this case, the Teleflex patent at issue claimed an adjustable accelerator pedal with an electronic position sensor. KSR, prompted by a solicitation from General Motors for adjustable pedals, added a sensor to the pivot point of their adjustable pedals, and Teleflex sued for infringement. Stating that the Federal Circuit’s application of the TSM test was rigid, the Supreme Court rejected the Federal Circuit’s decision upholding the Teleflex patent as nonobvious under § 103. Because a person of ordinary skill in the art – recognizing that a person of ordinary skill is a person of ordinary creativity and not an automaton – could have combined pieces of the prior art to create the claimed invention, the Court found that the Teleflex patent was obvious under § 103.

The aftermath of KSR is that the Court has made it easier to invalidate patents on grounds of obviousness. Patents now have to be evaluated on whether they claim merely a combination of the prior art or are genuinely inventive. This decision will have an impact on both prosecution and litigation, as the TSM test is no longer the sole test for determining whether an invention is nonobvious under § 103 or is precluded from patentability because it is obvious.

In re Seagate Establishes a New Standard for Willful Infringement

In an en banc decision, the Federal Circuit established a new standard for finding willful infringement and enhanced damages in infringement cases. The Federal Circuit also addressed issues of attorney-client privilege and work product production when a defendant relies on the advice of counsel as a defense against an infringement claim.

Notably, In re Seagate overturned the Federal Circuit’s precedent inUnderwater Devices v. Morrison-Knudsen Co., a 1983 decision stating that when a potential infringer has actual notice of another’s patent rights, that party is under an “affirmative duty to exercise due care to determine whether or not [said party] is infringing.” Satisfying the affirmative duty under Underwater Devices required, among other steps, obtaining competent legal advice from counsel before the initiation of any possible infringing activity. The Federal Circuit noted that the affirmative duty requirement required by Underwater Devices set a threshold for willful action that was actually more akin to negligence rather than willfulness. By overturning Underwater Devices, the Federal Circuit held that proof of willful infringement requires at least a showing of objective recklessness, and post-Seagate, there is no affirmative obligation for a party to obtain the opinion of counsel before the initiation of possibly infringing activity.

In addressing the issue of attorney-client privilege, the Federal Circuit noted that the attorney-client privilege – one of the oldest and most established privileges in the law – belongs to the client, who alone can waive privilege. Because the purposes of opinion and trial counsel are significantly different, the scope of waiver only extends to opinion counsel. Since willfulness depends on an infringer’s pre-litigation conduct and the purpose of trial counsel is to participate in the adversarial process, the Federal Circuit held that the assertion of an advice of counsel defense only waives privilege to communications between the alleged infringer and opinion counsel, not between the alleged infringer and trial counsel. The Federal Circuit left some room in the decision for waiving privilege to the communications of trial counsel, but only in extreme circumstances such as if a party or counsel is engaging in chicanery.

Post-Seagate, it appears that obtaining a finding of willful infringement will become harder due to the higher standard necessary to find willful infringement. Further, the Federal Circuit’s decision to eliminate privilege waivers for trial counsel except in unusual circumstances should protect parties from having to choose between disclose sensitive communications with trial counsel (which could expose the client’s trial strategy or other sensitive information) or risking an assessment of treble damages from a finding of willful infringement (which would have a negative effect on a company’s profitability, or even put a company out of business).

For an initial consultation, call us today at (703) 740-8322