The Standard for Invalidating a Patent for Obviousness? Still a Work in Progress

Jay Sandvos

By Jay Sandvos. A member of the Patent Practice Group

February 2012 IP Update

Five years ago, in its landmark decision in KSR International v. Teleflex, the Supreme Court expanded the arsenal for challenging a patent on the basis of obviousness. All knowledge in the prior art can now be cited to distinguish a true innovation from a mere product of connecting the dots in the relevant field.

The court’s enigmatic guidance is the subject of ongoing interpretation in the lower courts, not least in the Federal Circuit, which hears all appeals from patent cases. A divided panel on that court has provided insights into where things stand with regards to obviousness post-KSR.

In Celsis In Vitro, Inc. v. CellzDirect, Inc., the patent at issue claims a method for processing liver cells that involves subjecting frozen and thawed liver cells to “density gradient fractionation” in order to separate viable cells from non-viable ones. The viable cells are then frozen and thawed again “without requiring” a second density gradient step.

The appellate court recounts the background to this invention at some length, including the problems with existing methods for processing liver cells. Prior freezing processes had not been workable.

The trial court, for its part, had reviewed a large body of prior art and was impressed that not one reference discussed a multi-round freezing process. The trial court thereupon found that Celsis had a likelihood of success in fending off an obviousness challenge to its patent and granted a preliminary injunction. CellzDirect appealed from the injunction.

The majority opinion in Celsis noted that a proper obviousness analysis looks at: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness, citing Eli Lilly & Co. v. Teva Pharm. USA (2010).

The majority held that the trial court did not abuse its discretion in finding that Celsis had shown a likelihood of success as to nonobviousness. The opinion considered the unpredictability of the art, the failure of the extensive prior art to suggest a multi-round freezing process, the trial court’s finding that CellzDirect’s counter-arguments were not credible, and that not one of the defendant’s experts “actually perform[ed] the claimed process or document[ed] their alleged understanding before the time of the invention, despite having the financial, scientific, and professional incentive to do so.”

But the dissenting judge saw it all differently. He said that CellzDirect had been held to an improperly high standard of proof as to invalidity—namely,clear and convincing evidence– which in turn “perpetuates these errors and reinvigorates the pre-KSRstandard for obviousness, rigidly requiring an explicit teaching, suggestion, or motivation” test.

According to the dissent, “all of the claimed elements were present in the prior art.”  That is, the prior art taught a single-round freezing process, and the patent claim added no more than repeating this step and measuring cell viability a second time. The dissent refers to a Supreme Court decision from 1950 that found an invention obvious that just “unites old elements with no change in their respective functions.” The majority was also faulted for misapplying the “teaching, suggestion, or motivation” (TSM) test.

The Celsis majority found no need to expressly address any of this, and this reader too was not persuaded by the dissent. True, KSR did reject the “rigid” reliance on the TSM test as the sole means for analyzing obviousness. Yet the general understanding is that TSM is still useful when considered in combination with other relevant factors in a given case.

Here, the Federal Circuit’s majority broadly engages the factual context as to obviousness and considers many factors, including long-felt unmet need, failure of others, and a considerable body of prior art that was devoid of any suggestion of the claimed invention.

Nor does the majority decision actually utter anything like “teaching, suggestion or motivation” or demand “clear and convincing evidence” of obviousness from the accused infringer. While the dissent rails against applying a rigid TSM test, it instead substitutes a rigid test of its own: a unites-old-elements-with-no-change-in-functions test.

Celsis reminds us of the centrality of expert testimony in guiding a trial judge’s rulings and demonstrates that patentees can still win preliminary injunctions, notwithstanding recent trends to the contrary. At the same time, the obviousness analysis of the court’s majority opinion can be considered a typical application of post-KSR judicial thinking.