Top U.S. Court Clears Way for More Patent Challenges (Update1)

By Greg Stohr

April 30 (Bloomberg) -- The U.S. Supreme Court made it easier to challenge patents for failing to introduce genuine innovations, siding with Intel Corp. and Cisco Systems Inc. and dealing a setback to the drug and biotechnology industries.

The justices today unanimously overturned a decades-old test used by the lower court that handles patent appeals, saying the lower court went too far to shield patents from legal attack. The ruling threw out a Teleflex Inc. lawsuit that accuses KSR International Inc. of using a patented invention for adjustable gas pedals.

The decision extends a Supreme Court trend that has put new limits on patent rights. In today's case, the justices heeded arguments from large computer companies and automakers that the lower court test, which centered on the requirement that an invention be ``non-obvious,'' had given too much power to developers of trivial technological improvements.

``Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress,'' Justice Anthony Kennedy wrote for the court.

In a second ruling today, the court gave software makers new protections from patent lawsuits on exports, ruling that Microsoft Corp. doesn't owe damages to AT&T Inc. for copies of the Windows operating system installed on computers overseas.

Invalid Patent

The gas-pedal case concerned claims that a patent was invalid because it simply combined prior inventions. The U.S. Court of Appeals for the Federal Circuit had required challengers to show a ``teaching, suggestion or motivation'' -- typically in writing -- to put the earlier inventions together.

Companies that are frequent targets of patent-infringement claims urged the Supreme Court to overturn the Federal Circuit test. The group included Intel, Cisco, Microsoft, Time Warner Inc., Viacom Inc., Micron Technology Inc. and automakers General Motors Corp., Ford Motor Co. and DaimlerChrysler AG.

Other companies, more concerned about protecting their own patents, took the opposite side in the case. General Electric Co., 3M Co., Procter & Gamble Co., DuPont Co., Johnson & Johnson and trade groups for the brand-name drug and biotech industries signed briefs backing Teleflex in the case.

The disputed Teleflex patent covers an electronic sensor combined with gas, brake or clutch pedals that adjust to the height of the driver. Teleflex says its method took less space than previous combinations.

KSR, based in Ridgetown, Ontario, makes adjustable pedals for GM's Chevrolet and GMC trucks and sport-utility vehicles.

Too Obvious

A federal judge in Detroit ruled the technology was too obvious to qualify for a patent. The Federal Circuit in Washington revived the suit, ordering the judge to reconsider whether the patent was valid.

Teleflex argued that the Federal Circuit standard avoided the problem of ``perfect hindsight'' by requiring proof that an innovation was obvious at the time it was created.

Teleflex, based in Limerick, Pennsylvania, sold its auto- pedal business in August 2005 to DriveSol Worldwide, an affiliate of Sun Capital Partners Inc., a private investment firm based in Boca Raton, Florida. Sun Capital has taken over the case.

The case is KSR International v. Teleflex, 04-1350.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net .

Last Updated: April 30, 2007 11:07 EDT

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