04 March 2013

Inventiveness – It’s Just Not Obvious!

Light BulbI am going to go out on a limb, and suggest that the Holy Grail of patent law is an objective standard of nonobviousness.  Despite everybody having an opinion about how much ‘inventiveness’ should be required to justify the grant of a patent monopoly, there has never been a universally-accepted standard against which this can be assessed, and I suspect that there never will be.

I think it is worth having another look at this issue now, with new Australian legislation set to ‘raise the bar’ on inventive step (among other requirements) from 15 April 2013.  How successful will this latest effort be in striking the right balance of ingenuity against the reward of a patent?  I confess to being somewhat sceptical, based on the history of inventive step in the Anglo-Australian tradition, especially when other countries seem to be faring little better with their own approaches.

Arguably, the most disastrous attempt to introduce objectivity into inventiveness has occurred in Australia.  The Patents Act 1990 set out a formula for the assessment of inventive step that was so inflexible it proved possible, metaphorically speaking, to crawl under the bar, leading to what was possibly the worst ever patent judgment by the High Court of Australia, Philips v Mirabella [1995] HCA 15.

To be fair to the Australian Government responsible for the 1990 Act, it had set out to ‘fix’ a problem with inventive step that had arisen under the Patents Act 1952 as a result of possibly the second worst ever patent judgment by the High Court of Australia, Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd [1980] HCA 9 (better known as the ‘3M case’).  There, the court was so concerned with avoiding the trap of hindsight in assessing obviousness, that it resolved to set the inventiveness bar so low that it would be almost impossible to find an alleged invention to be obvious, unless it had walked up to the inventor on the street, stark naked and carrying a placard, and introduced itself!  The originally-proposed correction to this problem was subsequently the subject of a political compromise, which robbed it of most – if not all – of its practical effect.

In the end, it has taken a further 22 years to put an end to this failed experiment in extreme objectivity, and full credit is due to IP Australia for finally achieving this, following the failure of the Howard Government to do so in 2001 – again, due to a political compromise with the now-defunct Australian Democrats party.

‘Inventive Step’, the Early Years

The notion of ‘inventive step’ or ‘nonobviousness’ as a distinct ground of objection to a patent is relatively recent.  At the origins of the British patent law, from which the modern Australian law is ultimately derived, everything that was required for the grant of a patent was set out in Section 6 of the Statute of Monopolies 1623.  The statute declared all monopolies illegal, with one exception:

Provided alsoe That any Declaracion before mencioned shall not extend to any tres Patents and Graunt of Privilege for the tearme of fowerteene yeares or under, hereafter to be made of the sole working or makinge of any manner of new Manufactures within this Realme, to the true and first Inventor and Inventors of such Manufactures, which others at the tyme of makinge such tres Patents and Graunts shall not use, soe as alsoe they be not contrary to the Lawe nor mischievous to the State, by raisinge prices of Commodities at home, or hurt of Trade, or generallie inconvenient; the said fourteene yeares to be accomplished from the date of the first tres Patents or Grant of such priviledge hereafter to be made, but that the same shall be of such force as they should be if this Act had never byn made, and of none other.

Or, to summarise in modern English, a patent monopoly could be granted for up to 14 years to the inventor(s) of any ‘manner of new manufacture’.  There were some further limits on this – there were to be no patents for inventions that were ‘contrary to law’, or that were ‘mischievous to the State’ because they caused prices to rise or harmed trade, or were just ‘generally inconvenient’.

Much, then, was imbued in this term manner of new manufacture.  Obviously, in the 17th century it was not thought that any further explanation was required.  Clearly the invention subject of the monopoly needed to be ‘new’ (what we would now call ‘novelty’), but over the centuries the courts came to recognise that mere ‘newness’ was not enough, and that some greater contribution was required to justify a patent.

Something More than Mere Novelty

As a result, various tests were developed, generally on an ad hoc basis as required.  This can probably be regarded as an almost entirely subjective process.  If a decision-maker thought that something was undeserving of a patent monopoly, even if it was technically ‘new’, he (and it was always a ‘he’ of course) would devise some basis to exclude it.  One such test, set out by Dixon CJ in the Australian High Court case of Griffin v Isaacs (1938) 1B IPR 619, has become the ‘modified novelty’ standard for the innovation patent, i.e. that there must be a difference from the prior art which makes some substantial contribution to the working of the invention.

Another such test is the so-called ‘Microcell principle’ (after Commissioner of Patents v Microcell Ltd [1959] HCA 71), according to which no patent may be granted ‘for the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable.’

Australia’s first Commonwealth patent law, the Patents Act 1903, recognised lack of novelty as a distinct ground of objection.  The Commissioner of Patents was empowered to refuse an application if the claimed invention was not novel, and/or was the subject of an earlier patent application.  This was also a basis for a third party to oppose the grant of a patent.

Other objections to a patent had to be brought before a court.  Prior to the 1903 Act, actions for revocation of a patent could be brought under the common law, through proceedings by way of scire facias, which was a court order requiring the patent holder to appear and defend his or her patent against allegations of invalidity.  Over time, the courts had come to recognise various grounds for revocation, mostly falling under the general rubric of ‘manner of new manufacture’.

The 1903 Act extinguished the use of the writ of scire facias as a basis for repealing a patent.  Section 86 brought revocation within the scheme of the legislation, but maintained that ‘every ground on which a patent might at common law be repealed by scire facias shall be available as a ground of revocation’.  So there was still no explicit recognition of ‘inventive step’ as a requirement for a valid patent.  It was within this statutory scheme that the Microcell case was decided.

Formal Introduction of ‘Inventive Step’

By the time the Patents Act 1952 was enacted, a requirement for an ‘inventive step’ had been formally recognised.  The Commissioner of Patents was still required to assess only novelty of the claims in a patent application against the prior art (as is still the case in New Zealand, under that country’s 1953 Act). 

However, section 59 of the 1952 Act provided a complete list of grounds of opposition, which included ‘that the invention, so far as claimed in any claim, was obvious and did not involve an inventive step, having regard to what was known or used in Australia on or before the priority date of that claim.’ 

Similarly, reference to common law grounds of revocation was eliminated, and section 100 set out an exhaustive list of grounds of revocation, including an identical provision in respect of obviousness.

The Second Worst Australian High Court Patents Decision

It was in the context of the 1952 Act that the High Court came to consider the 3M case.  The primary question of obviousness in that case was whether it was permissible to combine information from multiple prior art documents in order to show that a claimed invention lacked an inventive step.  Of course combining prior art information – so long as it would not involve inventive ingenuity to do so – is now commonplace in the patent law of most countries, including the US, Europe and even New Zealand (notwithstanding the age of its current legislation).

Not in Australia, however – and, remember, this was a decision rendered in 1980, not the dark ages!  The High Court in the 3M case was so concerned about the risk of finding an invention obvious in hindsight that it declined to consider the content of any prior publications as being relevant to assessing inventive step in Australia, unless they had been proven to form part of the ‘common general knowledge’ of the skilled worker in the art at the relevant time.  The court was particularly concerned that, once the parts making up an invention were known, it would often be possible, by diligent searching, to find one, two or more pre-existing documents which disclosed all of those parts.  The court’s solution to this trap was, in effect, to require proof that the skilled person would already, as a matter of course, have access to all of the relevant pieces of information as part of their ‘stock in trade’, so that no searching would be required.

At this stage, Australia probably had the lowest standard of inventive step in the world.  The 1990 Act sought to correct this by setting out an explicit statutory requirement to consider prior art documents when assessing inventive step.

This has turned out to be a disastrous failure.

The Worst Australian High Court Patents Decision

Section 7, as originally enacted, permitted reference to a single source of information, other than the ‘common general knowledge’, but only if the skilled person ‘could … be reasonably expected to have ascertained, understood and regarded [the information] as relevant to work in the relevant art’.  This does not permit combining information from two or more documents, and in practice has entirely excluded prior art documents, such as patent specifications, in fields in which researching the prior art when developing new products is not commonplace.  In such cases, there is generally no evidence that the skilled person would have ‘ascertained’ a reference.

This was the context in which the Philips case was decided by the High Court.  In that case, Mirabella held a patent covering the use of phosphors, having certain specified properties, in low-pressure mercury vapour discharge lamps.  The specification identified various known phosphors with the desired properties.  However, Philips had abandoned an attack on the patent based on lack of inventive step, seemingly on the basis that it did not have the necessary evidence to satisfy the requirements of section 7 of the Patents Act 1990.  The general position seemed to be that Mirabella’s claims were not very inventive, but that there was insufficient evidence of this lack of inventiveness to meet the inflexible rules set out in the new Act.

The High Court observed that, under the ‘old’ law, i.e. even prior to the 1952 Act, let alone the 1990 Act, the ‘Microcell principle’ would apply.  That is, information in Mirabella’s own patent specification seemed to establish that the claimed invention was nothing more than the use of a known material (phosphors) in the manufacture of known articles (mercury vapour discharge lamps) for which purpose the known properties of phosphors made them suitable.

In order to bring this ‘traditional principle’ within the scope of the 1990 Act, the majority in the Philips case employed a tortured construction of the ‘manner of (new) manufacture’ requirement of the Act which left us with two separate ‘inventive step’ requirements: the express statutory scheme, based on the prior art; and a ‘threshold test’, based on ‘manner of new manufacture’.  Time and money has been wasted in many subsequent oppositions and court proceedings dealing with this disaster area, and even a subsequent constitution of the High Court seems to have been embarrassed by it, stating, with reference to the Philips decision (by way of footnote) that ‘the decision in Microcell has not always been properly understood; it does not involve a separate ground of invalidity or a discrete “threshold” test’ (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) [2007] HCA 21, at [106]).  (Personally, I think that is an overrule, though the court declined to say so explicitly, and the ground continues to be raised in patent oppositions and court proceedings.)

‘Ascertained, Understood and Regarded as Relevant…’

Following amendment in 2001, section 7 permits combining information from multiple sources, but still only if the ‘skilled person’ could reasonably have been expected to ascertain, understand, regard as relevant and combine the information in question.  In most cases, obtaining evidence to satisfy the court that all of these hurdles have been cleared has proven difficult.

The most extreme example of this is probably the Emperor Sports case (Commissioner of Patents v Emperor Sports Pty Ltd [2006] FCAFC 26, on appeal to a Full Bench of the Federal Court of Australia).  In that case, the alleged invention involved tear-off strips of material for use in touch football games.  The Patent Office examiner found a prior US patent document disclosing essentially the same invention for use in American football, in response to which the applicant amended the application to limit the claims to rugby and Australian rules football.

The claims were now novel, at least, so the question was (or should have been) whether applying something already known in American football to other football codes was obvious.  Clearly it would be, if the American football version were known in advance.  But what the court found was that:

…it self-evident that it could not be reasonably expected that a Rugby League or Australian Rules coach, referee, umpire or administrator would conduct a search in the United States Patent Office. Such an expectation would be fanciful rather than reasonable.

This is clearly an absurd outcome.  Nothing has been added to the stock of the world’s knowledge by adapting a simple idea from American football to rugby or Australian rules.  But this is the outcome that is mandated by the inflexible rules set out in section 7 of the 1990 Act.

The Raising the Bar reforms remove the requirement that prior art information must be ‘ascertained, understood and regarded as relevant’ by the skilled person.  They also remove the restriction that the skilled person, and associated common general knowledge, is limited to Australia.  We can only hope that this leads to substantial improvements in the assessment of inventive step, although history and the example set in other jurisdictions certainly offer no guarantees.

Even though the inflexible rules will no longer apply to applications examined under the revised law, courts will still have to decide whether particular prior art information is sufficiently closely-related to an invention to be ‘obvious’ to apply.  They will also have to develop their own rules for determining when it might be ‘obvious to combine’ information from different sources.  The United States experience, at least, gives little comfort that this will produce any more reasonable objective outcomes than we have seen in the past.

Comparison With the US Experience

In the US, the patent appeals courts – initially the Court of Customs and Patent Appeals, and later the Court of Appeals for the Federal Circuit – developed a test which was, like the Australian law, intended as a guard against inappropriate application of hindsight.  While this test did not place strict conditions on the selection of prior art documents, it required that there be some ‘teaching, suggestion, or motivation’ (and is thus known as the ‘TSM test’), such that a patent claim could only be shown to be obvious if some motivation or suggestion to combine the prior art teachings can be found in the prior art, the nature of the problem solved by the invention, or the knowledge of a person having ordinary skill in the art.

The idea was that this would prevent someone from coming along after the fact, finding a group of references which together disclose all of the individual features of a combination invention, and then asserting that the references render the invention obvious.  The appeals courts were looking for something specific, which was available at the time the invention was made, and which would show that the combination would have been obvious at that time.

Of course, like any formulaic test – and much like the situation that arose in the Philips case in Australia – eventually a case came along in which the evidence necessary to satisfy the TSM test was not available, despite the fact that the invention really did not give the impression of involving a great deal of extraordinary ingenuity.  That case was
KSR Int'l Co. v Teleflex Inc., which the US Supreme Court decided in 2007.

The Supreme Court tore down the edifice of the TSM test, describing it as a ‘rigid approach’ which, despite capturing a ‘helpful insight’ should not be treated as a ‘mandatory formula’, and calling it inconsistent with the ‘expansive and flexible approach’ mandated by 35 USC §103 and the Supreme Court’s earlier decision in Graham v. John Deere Co. of Kansas City, 383 U. S. 1 (1966).

This is all very well, but what did the Supreme Court provide by way of further guidance in place of the TSM test?  Would you believe ‘common sense’?  Three times, in three consecutive paragraphs: ‘common sense teaches … that familiar items may have obvious uses beyond their primary purposes’; ‘if [trying known options] leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense’; ‘rigid preventative rules that deny factfinders recourse to common sense … are neither necessary under our case law nor consistent with it.’

Most observers will recognise that ‘common sense’ is invoked by the court as a substitute for actual evidence of a fact.  This form of ‘common sense’, then, is just another form of legal fiction, not much different from the Australian High Court’s invocation of ‘traditional principles’ to bring back old-time inventive step analysis in Philips v Mirabella.  In reality, common sense is no basis for legal decision-making, because there is no such thing as a universally, objectively-agreed, ‘common sense’. 

For example, it was once ‘common sense’ in the west (and still is, in some countries) that women, or people of certain racial minorities, were not qualified for full participation in the political process.  To some, it is ‘common sense’ that marriage can only be the union of a man and a woman, while to others it is ‘common sense’ that this is just another form of discrimination.  In the absence of evidence, a judge’s ‘common sense’ is just another name for his or her subjective opinion on a matter.  Ask a different judge, you might well get a different answer.


The law on inventiveness has tended historically to swing between ‘subjective’ and ‘objective’ positions.  The reality is that neither approach has ever worked well.  Hard and fast ‘rules’ fail in situations where the inputs required for their use are inadequate or incomplete, and in the case of ‘obviousness’ this has generally resulted in outcomes that tend towards being unduly favourable to patentees.

On the other hand, there has never been an ‘expansive and flexible’ approach that does not lead to subjectivity and inconsistency in decision-making.  In most other areas of the law, the idea that individual judges might be sitting on the bench routinely applying their own notion of ‘common sense’ wherever an evidentiary vacuum exists would be frankly horrifying!

Which brings me back to where I started – that the entire notion of an effective, wholly objective, test of obviousness does not exist, never has existed, and may well never exist.  It might be that this is just one of the vagaries of patent law with which we will just have to live. 

It is likely to be some time before a case involving inventive step under the Raising the Bar reforms comes before the Australian courts.  When it does, it will be interesting to see whether the courts opt to interpret the new provisions in an ‘expansive and flexible’ manner, or whether they revert to type and seek to impose a new form of objective order on the law of inventive step.


arachne said...

Inventive step exists for the same reason every other requirement of patentability exists: so there is a fair trade between the monopoly granted and the knowledge disclosed. A trivial or obvious variation on an existing invention does not add any useful knowledge into the public domain and so does not deserve a monopoly.

Ideally our standard for inventive step (or any other requirement of patentability) would be identical to other jurisdictions. This is especially so since the information disclosed in a patent in one jurisdiction provides information too all jurisdictions.

What all jurisdictions should be collectively asking is: are we getting a fair trade? Are patents proving to be a useful source of technical information? Are there gaps? is there significant redundancy in the information?

Of course, these are not simple questions to answer. But if enough academics, economists, scientists and engineers try to answer these questions we might start to get closer to an efficient patent system.

Mark Summerfield said...

Thanks for your comment.

As a general principle I agree with you, at least with respect to comparable economies, although I think we still need to respect national sovereignty, and recognise that the trade-off provided by patent law is a matter of economic and innovation policy. A different balance might legitimately be struck by developing nations, by small developed nations, and by large developed nations.

Whether the measure should be knowledge contributed, or economic significance of the contributions, is probably also open to debate. The answer might well be different for, say, software innovations as compared with pharmaceuticals.

There is probably another article in all this. I'll give it further thought!



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John Darling said...

The EPO's PSA approach is a pretty objective test. The examiner has to provide evidence of an objective technical problem known to those of ordinary skill in the art and evidence that the "characterized in that" objective technical features of the claim were known and would solve the objective technical problem.

I think this approach would work in the U.S., and the rest of the world, particularly in view of SCOTUS's statement in KSR that "[o]ne of the ways in which a patent's subject matter can be proved obvious is by noting that there existed at the time of the invention a known problem for which there was an obvious solution encompassed by the patent's claims." 550 U.S. at 419-420 (2007). (We'll have to forgive them for using the term "obvious" to define obviousness.) SCOTUS also said that "[w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp." 550 U.S. at 421.

So when the rejection for obviousness/lack of inventive step is phrased as the application of a known solution to a known problem (and the objective evidence is provided in support), that's a pretty objective standard of obviousness/lack of inventive step. I don't fight too many of those rejections, but mostly because I don't receive too many. I see in the vast majority of the rejections for obviousness that I receive reasons for modifying/combining references that are simply, for lack of a better explanation, made up by the examiner. I fight all of those.

But you are correct that judges, as well as examiners, will resort to "common sense" to reject/invalidate applications/patents when an evidentiary vacuum exists, and they just don't "feel like" the claims are "worthy" of a patent. You have to fight those too.

Mark Summerfield said...

Thanks for your comment, John.

The 'problem-solution' approach is the EPO's attempt to provide an objective test of obviousness, and I agree with you that it is possibly the best we have, when it works! However, it suffers from a 'chicken and egg' problem which prevents it from being adopted more widely: you need to determine what the invention is before you can conduct a meaningful search, but the problem-solution approach then defines the problem (and thus the invention) by reference to the difference between the claim and the 'closest prior art'.

I was quite surprised that the US Supreme Court skirted so close to this 'Euro-approach' in KSR. But then, it is different for a court, because it does not carry out a prior art search, but simply works from whatever the parties bring to the table.

BTW, my pet hate in examination is 'official notice'. Really? This information is so well known that you say you don't need a reference, and yet you cannot offer a single reference in support?! It should not be permitted, in my view. A court will sometimes take 'judicial notice' of a fact that neither party has entered in evidence, but that is a different situation.



John Darling said...

It is hard to draft the claim without knowing precisely what the EP examiner will regard as D1, but my experience with EP examiners is that once they've identified D1, if you amend/argue as to why the objective technical features of the claim were not known and/or would not solve the objective technical problem the examiner has identified, they are open minded and give your arguments serious consideration.
The US obviousness analysis is supposed to involve the resolution of the four factual inquiries set forth in Graham, and objective evidence is required to resolve each one. If the evidence is there, I don't think you can argue that the legal determination of obviousness is a subjective one simply because you disagree with the conclusion. It is (supposed to be) an objective determination. However, I agree the US process is "more subjective" (for lack of a better phrase) than the PSA of the EPO simply because the way individuals weigh evidence is going to involve some subjectivity.
Official notice is the examiner's announcement to the applicant, and the world, that he/she is lazy. Examiners should not be permitted to rely on it.

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