Patent reform (judicial and legislative) in the USA - change is in the wind

The United States of America Supreme Court recently handed down two substantial decisions pertaining to patent law in the United States of America. 

In KSR International Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007), the Supreme Court considered an appeal relating to a patent for a gas pedal KSR had created. Teleflex sued, alleging that KSR's invention infringed Teleflex's prior patent for a pedal system. Among KSR's defences was the usual defence that Teleflex's patent was invalid because it was obvious. 

The Supreme Court clarified the traditional test for obviousness, being the so- called "teaching, suggestion, or motivation" test and held that a court must not consider this rule too rigidly. Rather, a court must inquire whether the improvement is more than the predicable use of previously disclosed inventions. A court should further analyze whether there was an apparent reason to combine the known elements in the fashion claimed by the patent applicant.

The net effect of this decision is to make it more difficult for those seeking to obtain patents and to make it easier for those seeking to invalidate patents. 

In the second decision, Microsoft Corp. v. ATT Corp., 127 S. Ct. 1746 (2007), the Supreme Court handed down a decision which will ultimately make it harder for patent holders in the United States to recover damages for alleged infringement that occurs abroad. 

In Microsoft, ATT held a patent on the digital processing of speech and it alleged Microsoft infringed this patent because the Windows operating system contained similar code. 

Microsoft claimed that there was no infringement because it sent the Windows software to foreign manufacturers via encrypted transmission. The software would then be decrypted and installed on computers manufactured and sold outside of the United States of America. However, there is a section in the Patent Act that creates liability where "components" are "supplied" from within the United States. ATT claimed that the component (Windows) was supplied within the United States and therefore liability was engaged. 

The Supreme Court disagreed, holding that the copies of Windows did not originate from within the United States and were therefore not supplied from within the United States. 

It remains to be seen how these two decisions will affect the state of patent law in the United States of America given the current reform processes under way there. The USA House of Representatives recently voted to enact sweeping reforms (the bill is set to be discussed in the Senate in October, barring delays) and it will be interesting to see how recent case law, taken together with reforms, will change the patent law landscape in the United States (and by extension throughout the world).