Cycles of Obviousness

• Author: Ryan T. Holte & Ted Sichelman
• Position: Judge, United States Court of Federal Claims and Jurist-in-Residence Professor of Law, The University of Akron School of Law/Professor and Director, Center for Intellectual Property Law & Markets, University of San Diego School of Law
• Pages: 107-169

107

Cycles of Obviousness

Ryan T. Holte* & Ted Sichelman**

ABSTRACT: In 2007, the Supreme Court’s decision in KSR v. Teleflex

echoed earlier vicissitudes in the history of patent law when the Court

considerably expanded the circumstances in which a patent could be found

obvious. Here, we conduct the first comprehensive empirical study of pre- and

post-KSR district court and Federal Circuit decisions. Not surprisingly,

following KSR, we find a substantial increase in findings of obviousness as

well as a major shift in doctrine supporting these decisions. Although we find

that the Federal Circuit substantially altered course following KSR, its shift

was less robust than in the district courts. We speculate that these differences

between the Federal Circuit and district courts, as well as the vacillating

historical meanings of the nonobviousness requirement, reflect divergent views

among judges regarding the appropriate role nonobviousness should play in

promoting patent law’s fundamental aim of incentivizing innovation. As

such, we predict continued shifts and cycles of this critical component of

patentability.

I.INTRODUCTION ............................................................................. 109

II.THE CYCLES OF NONOBVIOUSNESS THRESHOLDS ......................... 118

* Judge, United States Court of Federal Claims and Jurist-in-Residence Professor of La w,

The University of Akron School of Law.

** Professor and Director, Center fo r Intellectual Property Law & Markets, University of

San Diego School of Law.

For feedback on earlier versions of this project, we thank Michael Carroll, Juscelino

Colares, John Duffy, Peter Lee, Mark Lemley, Shawn Miller, Lisa Ouellette, Michael Risch, David

Schwartz, Andrew Toole, Andrew Torrance, Kristin Osenga, and participants at the 2016 and

2018 PatCon Conferences at Boston College Law School and the University of San Diego School

of Law, the 2018 IP Scholars Conference at the University of California Berkeley School of Law,

and the 2019 Association of American Law Schools and Federalist Society Annual Faculty

Meeting Works-in-Progress panels. We provide special thanks to Matthew Minnick, who

performed countless hours of computational analysis of the data. We also gratefully acknowledge

the valuable research assistance of Jose Brambila, David Byrd, Chase Cooley, Kathryn Chambers,

Kevin Davis, Stephanie Dusaban, Daniel Fanning, Biswajit Ghose, Clay Kaufman, Hyeon Kim,

Soyeon Jeogn, Marissa Lim, Michael Morthland, Fatema Qader, Amber Sanges, Sharona Silver,

Julie Wolf, and Avraam Ziogas, as well as the research librarians at the University of San Diego

School of Law, for this project. Finally, we are particularly thankful to Shawn Mi ller for his

assistance with the regression analysis.

108 IOWA LAW REVIEW [Vol. 105:107

A.THE FIRST CYCLE: THE HISTORICAL ORIGINS OF

OBVIOUSNESS .......................................................................... 118

1.The “Ingenuity” and “Substantial Novelty”

Requirements ................................................................ 118

2.Early American Practice and the Adoption of an

“Ingenuity” Requirement ............................................. 121

B.THE SECOND CYCLE: FROM “INGENUITY” TO THE “FLASH

OF GENIUS” ............................................................................. 124

C.THE THIRD CYCLE: THE 1952 ACT TO KSR V. TELEFLEX........ 124

1.Reconceptualizing the Invention Standard as a

Nonobviousness Standard ............................................ 124

2.The Federal Circuit’s Creation of the TSM Test ........ 126

3.Criticism of the TSM Test ............................................. 127

4.KSR v. Teleflex: A Return to Pre-Federal Circuit

Standards? ...................................................................... 128

D.THE FOURTH CYCLE: THE FEDERAL CIRCUIT’S “NEW AND

IMPROVED” TSM TEST? .......................................................... 129

III.PRIOR EMPIRICAL STUDIES OF THE NONOBVIOUSNESS

DOCTRINE ..................................................................................... 130

IV.A TALE OF TWO COURTS?: THE FEDERAL CIRCUIT’S AND

DISTRICT COURTS' DIFFERING APPROACHES TO

NONOBVIOUSNESS ........................................................................ 135

A.STUDY METHODOLOGY AND DATA SOURCES ............................. 136

B.MAJOR RESULT #1: A SUBSTANTIAL INCREASE IN

OBVIOUSNESS FINDINGS IN THE DISTRICT COURTS AND

FEDERAL CIRCUIT .................................................................... 138

1.Total Cases Raising an Obviousness Defense .............. 139

2.Findings of Obviousness and Nonobviousness

Pre- and Post-KSR .......................................................... 140

i.District Court Rates of Obviousness Findings .............. 141

ii.Federal Circuit Rates of Nonobviousness Findings ....... 142

3.Trends in Prior to KSR .................................................. 143

4.Affirmance and Reversal Rates for the Federal

Circuit ............................................................................ 145

5.Decision Timing and Procedural Posture ................... 147

6.Importance of Technology Type in Obviousness

Decisions ........................................................................ 149

7.Regression Models ........................................................ 151

C.MAJOR RESULT #2: KSR’S EFFECT ON THE DISTRICT

COURT’S AND FEDERAL CIRCUIT’S REASONING AND

DOCTRINE DIFFERED ............................................................... 155

2019] CYCLES OF OBVIOUSNESS 109

V. SOME IMPLICATIONS OF (AND CAVEATS TO) OUR RESULTS ......... 160

A.POTENTIAL LIMITATIONS OF OUR STUDY .................................. 160

B.DOCTRINAL, ECONOMIC, AND NORMATIVE IMPLICATIONS OF

OUR FINDINGS ......................................................................... 161

VI.CONCLUSION ................................................................................ 167

APPENDIX ...................................................................................... 168

I. INTRODUCTION

To be patentable, an invention must not only be novel, but also

nonobvious.1 This standard, referred to by Judge Learned Hand as the most

“fugitive, impalpable, wayward, and vague a phantom as exists in the whole

paraphernalia of legal concepts,” has undergone wildly shifting, often cycling,

meanings throughout the history of patent law.2 For instance, there was major

1. 35 U.S.C. § 103 (2012).

2. Harries v. Air King Prods. Co., Inc. 183 F.2d 158, 162 (2d Cir. 1950). Similar ly, scholarly

views as to the importance and function of the nonobviousness requirement have varied

considerably. See also Michael Abramowicz & John F. Duffy, The Inducement Standard of Patentability,

120 YALE L.J. 1590, 1662 (2011) (“The existing framework for applying the obviousness doctrine

can, with minor extensions and adjustments, accommodate the inducement standard’s

insights.”); Rebecca S. Eisenberg, Obvious to Whom? Evaluating Inventions from the Perspective of

PHOSITA, 19 BERKELEY TECH. L.J. 885, 890 (2004) (“The Federal Circuit has deployed judicial

review in ways that make it harder to establish nonobviousness, diminish the role of

nonobviousness in limiting what may be patented, and reduce the threat of patent invalidity.”);

Edmund W. Kitch, Graham v. John Deere Co.: New Standards for Patents, 1966 SUP. CT. REV. 293,

301 (“The non-obviousness test makes an effort, necessarily an awkward one, to sort out those

innovations that would not be developed absent a patent system . . . . [T]he focus has always been

on the question whether the innovation could have been achieved by one of ordinary skill in the

art, or whether its achievement is of a greater degree of difficulty.”); E dmund W. Kitch, The Nature

and Function of the Patent System, 20 J.L. & ECON. 265, 283–84 (1977) [hereinafter Kitch, Function

of the Patent System] (retreating from his earlier views and advocating a “substantial novelty”

standard in order to promote the development of “prospect” patents); Glynn S. Lunney, Jr., E-

Obviousness, 7 MICH. TELECOMM. & TECH. L. REV. 363, 385–86 (2001) (“Ideally, under this view,

a patent should be given for an invention only if the invention would not have been developed

but for the patent. If the claimed invention would have been developed, commercialized, and

disclosed even without a patent, then granting or enforcing a patent would make little sense.”

(footnote omitted)); Robert P. Merges, Commercial Success and Patent Standards: Economic

Perspectives on Innovation, 76 CALIF. L. REV. 803, 846 (1988) (criticizing commercial success as an

indicator of nonobviousness); Robert P. Merges, Uncertainty and the Standard of Patentability, 7

HIGH TECH. L.J. 1, 4, 20 (1992) (proposing t hat nonobviousness should be based on

“uncertainty,” or the risk of failure inherent in the inventive process); A. Samuel Oddi, Beyond

Obviousness: Invention Protection in the Twenty-First Century, 38 AM. U. L. REV. 1097, 1127 (1989)

[hereinafter Oddi, Beyond Obviousness] (“These secondary considerations tend to objectify the

issue of obviousness, but they have little value in discriminating patent-induced from nonpatent-

induced inventions.”); A. Samuel Oddi, Un-Unified Economic Theories of Patents—The Not-Quite-Holy

Grail, 71 NOTRE DAME L. REV. 267, 271–89 (1996) (surveying various theories of patent law and

nonobviousness); Benjamin N. Roin, Unpatentable Drugs and the Standards of Patentability, 87 TEX.