BioWorld Columnist

Has the biotech industry just been knocked off the rails without even realizing it? If you are a patent attorney — or just someone who recognizes the importance of intellectual property in greasing the wheels of industry — then you may be weighing that very question following the Supreme Court's April 30 ruling in KSR v. Teleflex. The decision makes it likely that in the future a lot more patents will be found invalid.

Most of us know that to qualify for a patent, an invention has to be something you can reduce to practice (e.g., you can't patent a time machine if you can't actually make one); novel (you can't reinvent the wheel); useful (a fish does not in fact need a bicycle); and non-obvious.

This last point is particularly contentious. Just what is obvious? According to the high court, an adjustable pedal for automobiles made by Teleflex was merely an obvious combination of prior inventions. In reversing an Appeals Court decision, the Supremes changed the standards by which obviousness is judged ... and effectively reshaped the patent landscape. But don't get too worried just yet. While there are some uncertain and tumultuous times ahead, this is probably not the setback that industry associations feared.

The courts have been relying for years on a standard that says prior art must contain some teaching, suggestion or motivation for putting together inventions before the result can be considered obvious. This so-called "TSM test" had the virtue of giving patent examiners a relatively straightforward yardstick in judging obviousness. And since many things appear obvious in hindsight — and litigation necessarily relies on hindsight — it's nice to have something to tie the judgment back to material available before the invention.

Neither that test nor that phrase appears anywhere in patent law, however, and the current Supremes have little patience for anything that smacks of reaching beyond the plain language of law. The TSM test isn't necessarily prohibited following KSR, but there are some strict limits on how it might be applied. Famous 'Eureka!' moments like, "Hey, you got chocolate in my peanut butter!" may now be regarded not as innovation but as predictable tinkering falling outside the scope of patent protection.

Just how big a deal is this? Earlier this year, Eli Lilly concluded a six-year battle in defense of its atypical schizophrenia drug Zyprexa against generic competition, when an appeals court affirmed a ruling against Zenith Goldline Pharmaceuticals, Teva Pharmaceuticals and Dr. Reddy's Laboratories. The companies had claimed, among other things, that the Zyprexa molecule was obvious based on the earlier publication of structurally related molecules. The circuit court's affirmation specifically relied on the TSM test in rejecting the defendants' claims. It's impossible to be certain, but this case could have conceivably gone the other way if it had been argued after KSR. And Eli Lilly's top-selling drug could have gone poof!

That was the fear of industry associations like the Biotechnology Industry Organization, which filed a "friend of the court" brief in KSR arguing against a relaxation of standards.

BIO worried that because bench scientists use a well-known set of tools in pursuing their inquiries, almost any new discovery might be regarded as an obvious combination of the tried and true — a little PCR here, a little Western blot there. At the extreme, BIO seemed concerned that because, say, positional cloning was used to discover the gene for cystic fibrosis, finding the gene for Huntington's disease could somehow be regarded as obvious. Or that because fractionation, detergent extraction, proteinase digestion and sedimentation are all well-known lab techniques, Stanley Prusiner's discovery of the prion protein was a standard application of techniques any "person having ordinary skills in the art" would have used and therefore could not lead to a legitimate invention, much less a Nobel Prize.

Emerging 'Marketplace' Test

In fact, however, there is little danger that the courts are ever likely to interpret obviousness nearly so broadly.

Rather, what the high court seems to have in mind is what SCOTUSBlog, the Supreme Court blog, called a "marketplace" test. That means, in essence, that it is moving away from the formalistic TSM test and toward a more flexible standard that looks at whether there was a market need that compelled the combination of prior art. "[I]t often may be the case that market demand, rather than scientific literature, will drive design trends," wrote Justice Anthony Kennedy for the unanimous Court. "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility."

In other words, the kind of nonsense patents that have flooded in from software and Internet businesses over the past several years may no longer find a sympathetic hearing at the Patent and Trademark Office. Amazon.com's infamous patent on "One-Click Shopping," issued in 1999, might now be rightly regarded as a rather obvious application of browser cookies. To that extent, KSR may be doing us all a favor.

Indeed, the court was focused on questions of "design"— Kennedy used that word in various forms 69 times in his decision, by my count, often distinguishing combinations of known technologies to meet a market demand from true invention.

Gerry Elman, president of Elman Technology Law and editor of the Biotechnology Law Report, suggests it is a distinction between "predictable and non-predictable arts," and sees the case being more relevant to, say, mechanical innovations than to more unpredictable areas like biology and chemistry. Is that always a crystal-clear distinction? Unfortunately not, but the language is telling here. Few would regard the critical inventions that go into a novel drug as "design" issues. But that term might apply to some of the patents used to extend product franchises.

The Value of Lettuce

One wag once described a formulation patent used to extend the life of the heartburn drug Prilosec as the discovery that the bun on a hamburger won't get so soggy if you put a slice of lettuce over the tomato. The patent held up in court, but now things have changed. That's a threat to the status quo, sure, but it's not clear to me that these kinds of patents are vital to the industry or a benefit to the public.

But one thing is certainly victim to the recent ruling: predictability. As BIO stated in its reaction to the decision, "The impact of the decision on the biotechnology sector will be determined by how the opinion is applied by lower court judges and PTO examiners." There's the rub: You can be certain that claims of obviousness are going to become even more contentious in future litigation, and until it becomes clearer how the courts and the patent office deal with KSR, we'll all be scratching our heads. "Obviousness has now become similar to the Supreme Court's definition of pornography," says Elman. "They can't articulate it, but they'll know it when they see it."

There are choppy waters ahead, but when was anything predictable in this business? The industry can handle this challenge, and I daresay the public may even benefit from having a few less trivial patents around. But will KSR stop there? Naturally, I can't predict that.