There Is Something Fishy About A Presumption Of Obviousness

Feb 200284 Journal of the Patent & Trademark Office Society 148

THERE IS SOMETHING FISHY ABOUT A PRESUMPTION OF OBVIOUSNESS

Philippe Signore [1]

Copyright © 2002 by Patent and Trademark Office Society; Philippe Signore

TABLE OF CONTENTS

I. Introduction

II. The Presumption of Obviousness Appears to Be Constitutional

III. The Presumption of Obviousness Finds No Support in Early Patent Statutes

IV. The Presumption of Obviousness Conflicts with the Prima Facie Concept

V. The Presumption of Obviousness Is Logically Unworkable

VI. Conclusion

I. INTRODUCTION

Early last year, Congressmen Berman and Boucher introduced a bill in the House of Representatives entitled the "Business Method Patent Improvement Act of 2001" (hereafter "the Act"). [2] This bill updates a previously-introduced bill [3] and exemplifies an ongoing legislative reaction to criticism against the patent system in general and, more particularly, against the issuance of patents coveringmethods of doing business. [4] The Act would create a presumption that certain method of doing business inventions are obvious and thus unpatentable. [5] Specifically, the act proposes to amend 35 USC 103 by adding the following:

(d)(1) A business method invention shall be presumed obvious under this section if the only significant difference between the combined teachings of the prior art and the claimed invention is that the claimed invention is appropriate for use with a computer technology, unless -

(A) the application of the computer technology is novel; or

(B) the computer technology is novel and not the subject of another patent or patent application.

(2)(A) An applicant or patentee may rebut the presumption under paragraph (1) upon a showing by a preponderance of the evidence that the invention is not obvious to persons of ordinary skill in all relevant arts.

(B) Those areas of art which are relevant for purposes of subparagraph (A) include the field of the business method and the field of the computer implementation.

To patent practitioners, a presumption that an invention is unpatentable because it is presumed to be obvious sounds fishy. Similarly, a presumption of guilt for certain criminal defendants would sound dubious to criminal defense lawyers. Besides the fact that such presumption of obviousness is discriminatory for singling out business method inventors and probably useless, [6] something appears fundamentally wrong with such a presumption. Today, the law is clear that the initial burden of production and persuasion to establish obviousness is on the USPTO. The USPTO must first make a prima facie case of obviousness before the patent applicant is required toprovide evidence of non-obviousness. [7] A presumption of obviousness would shift the initial burden of production for establishing patentability from the USPTO to the applicant and would therefore be contrary to today's patent laws. Of course, Congress has the power to make new patent laws and change existing ones, as long as the laws are constitutional. This article considers the constitutionality of this proposed presumption of obviousness, and exposes the lack of support for this presumption in early U.S. patent statutes and the inconsistency it would create with the well-established prima facie concept. In the end, though the presumption may be legally acceptable, it contradicts tradition and logic.

II. THE PRESUMPTION OF OBVIOUSNESS APPEARS TO BE CONSTITUTIONAL

A presumption of obviousness, or a presumption of unpatentability, would not violate the Constitution. Article I, section 8 of the U.S. Constitution explicitly grants Congress the power to secure "Inventors the exclusive Right to their respective ... Discoveries." [8] The original Constitution [9] establishes the foundations of our government, and as such includes few provisions directly dealing with individuals' rights. The constitutional identification of an exclusive right for individual inventors is therefore intriguing and leads one to wonder whether the Constitution codifies an inherent, or natural right for inventors, such as the right to protect their discoveries with a patent. If such a right to a patent existed, Congress would probably not be permitted to presumptively render certain inventions unpatentable.

The position that inventors have a natural right to their invention is not unreasonable. For example, one of the first French patent laws (of 1791) states that refusing to give a grant of property to an inventor forhis discovery would be an attack on the inventor's human rights. [10] Some have argued that securing intellectual property is justified because the creation of ideas requires labor, and labor should morally and ethically be rewarded. [11] In other words, labor should be rewarded for its own sake by the creation of intellectual property, without considering the effects on society of creating such property rights. Under this theory, patents could be viewed as the reward for the labor required during the inventive act, and every inventor who labors during the inventive act would be entitled to a patent. [12]

Another natural right-type justification for creating intellectual property is that an idea belongs to its creator because the idea is a manifestation of the creator's personality or self. [13] Recognizing an inventor's intellectual property rights is recognizing that inventor as a person. [14] Under this theory, the act of inventing is an initial step in the ongoing struggle for self-actualization, and patent rights protect the inventor's initial attempt to make his mark on the world. [15]

On the other hand, the justification for the American patent system and the protection of intellectual property rights via patents is generally framed in instrumental terms, i.e., based on the utilitarian concept that society gives inventors a property right to encourage labor and promote the public good. [16] For example, President Washington, in his first message to Congress in support of passing a patent statute, is reported to have stated "I cannot forbear intimating to you the expediency of giving effectual encouragement ... to the exertions of skill and geniusin producing" new and useful inventions. [17] Jefferson wrote, for example, that "an inventor ought to be allowed a right to the benefit of his invention for some certain time ... Nobody wished more than I do that ingenuity should receive a liberal encouragement." [18] Under this instrumental view, a patent system is a tool to improve society, not a means to secure some fundamental right to which inventors are naturally entitled.

Indeed, Jefferson explicitly rejected a natural right theory that would entitle inventors to an inherent exclusive right to their inventions, as he explained in a letter:

... while it is a moot question whether the origin of any kind of property is derived from nature at all, it would be singular to admit a natural and even hereditary right to inventors. It is agreed by those who have seriously considered the subject, that no individual has, of natural right, a separate property in an acre of land, for instance. ... It would be curious, then, if an idea, the fugitive fermentation of an individual brain, could, of natural right, be claimed in exclusive and stable property. ... Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body. [19]

In fact, the Constitution's "patent clause" is cast in instrumental terms. Under this clause, Congress has the power to create patent rights "to promote the Progress of ... the useful Arts." The Supreme Court has interpreted the clause as providing for intellectual property rights to encourage further intellectual creation. [20] As the Court of Customs andPatent Appeals (CCPA) observed, the Constitution "neither gave to nor preserved in inventors (or authors) any rights and set no standards for the patentability of individual inventions; it merely empowered Congress, if it elected to do so, to secure to inventors an 'exclusive right' for an unstated 'limited' time for the stated purpose of promoting useful art." [21] One must thus conclude that the Constitution does not protect a natural right to a patent. Accordingly, Congress would appear to be within its constitutional mandate if it passed a presumption of unpatentability for certain inventions as long as Congress believes that such presumption promotes "Progress of ... useful Arts."

III. THE PRESUMPTION OF OBVIOUSNESS FINDS NO SUPPORT IN EARLY PATENT STATUTES

Although a presumption of obviousness, or a presumption of unpatentability, would not violate the Constitution, such presumptions find no support in early patent statutes. Under the first U.S. patent law, passed during the second session of the first Congress in 1790, the Secretary of State, the Secretary of War, and the Secretary General could grant a patent if they deemed "the invention or discovery sufficiently useful and important." [22] This historical statute imposed on the applicant a certain burden of production by requiring the applicant to deliver an enabling specification "so particular ... to distinguish the invention or discovery from other things before known and used." [23] In other words, the specification had to be detailed enough that the invention was enabled and distinguishable from some prior art, but did not have to establish an absolute novelty. Therefore, the statute did not impose on the applicant an initial burden of production or persuasion that his invention was novel.

In 1793, in view of the lack of time and resources to examine patent applications for the invention's sufficient utility and importance, Congress eliminated such examination but required (in addition to delivering an enabling specification and model) that the applicant "swear and affirm that he does verily believe, that he is the true inventor or discoverer of the art, machine, or improvement, for which he solicits a patent." [24] The patent system thus became a registration-type system,wherein the Secretary of State's [25] duties were essentially ministerial without the power to refuse a patent for want of novelty, usefulness, importance, or obviousness. [26] Accordingly, under this system, neither the Secretary of State nor the applicant had a burden of production and persuasion to establish the novelty, usefulness, importance or non-obviousness of the invention.

This registration system lasted over 40 years until the increase in patents issued raised concerns over the system and generated criticisms surprisingly similar to those heard today in reference to the issuance of business method patents. Specifically, it was reported in 1836 that the lack of an examination into the merit or novelty of the inventions resulted in the following "evils":

1. A considerable portion of all the patents granted are worthless and void ....

2. The country becomes flooded with patent monopolies, embarrassing ... the community at generally, in the use of even the most common machinery and long-known improvements in the arts and common manufactures of the country.

3. [A] great number of law suits arise, which are daily increasing in an alarming degree, onerous to the courts, ruinous to the parties, and injurious to society. [27]

Out of these frustrations, Congress passed the Patent Act of 1836 and created a Patent Office charged with the duty to "make or cause to be made, an examination of the alleged new invention or discovery" and with the power to refuse patents for lack of novelty, usefulness, or importance. [28] Congress recognized that "[t]he duty of examination and investigation necessary to a first decision at the Patent Office, [was] an important one." [29] Upon refusal of a patent, the Commissioner had the duty to "notify the applicant ... giving him, briefly, such information andreferences as may be useful in judging of the propriety of renewing his application." [30] In other words, the Patent Office was created to discharge at least two essential duties: 1) to examine and investigate all patent applications and 2) to provide information and references in support of any refusal to grant a patent. Relieving the Office of these duties, via a presumption that certain inventions are obvious and unpatentable, would therefore conflict with the basis for creating the Patent Office in the first place.

IV. THE PRESUMPTION OF OBVIOUSNESS CONFLICTS WITH THE PRIMA FACIE CONCEPT

Perhaps the strongest case against a presumption of obviousness relates to its conflict with the well-established prima facie concept used during the obviousness analysis. In 1952, Congress significantly amended the patent statute and codified inter alia the non-obviousness requirement in 35 USC 103. Shortly thereafter, the Supreme Court interpreted the obviousness statute in the seminal case Graham v. John Deere and put forth its famous framework for applying 35 USC 103 with its four-part factual inquiry. [31] The Court concluded that 35 USC 103 "was intended merely as a codification of judicial precedents embracing the Hotchkiss condition, with congressional directions that inquiries into obviousness of the subject matter sought to be patented are a prerequisite to patentability." [32] In Hotchkiss, [33] the Supreme Court held in 1850 that when the claimed improvement lacked ingenuity and was within the skills of a person of ordinary skill in the art, the claimed improvement was not an invention. [34] Hotchkiss is often cited as one of the original cases establishing the non-obviousness requirement. [35]

The patent statute does not allocate the initial burden of production and persuasion for the obviousness analysis during proceedings before the PTO. One could argue that the preamble of 35 USC 102, to whichSection 103 is closely tied, implies that the analysis must start with the presumption that the invention is non-obvious until the PTO can rebut such a presumption. [36] Indeed, the CCPA has stated that "the precise language of 35 USC 102 that 'a person shall be entitled to a patent unless,' concerning novelty and unobviousness, clearly places a burden of proof on the Patent Office which requires it to produce the factual basis for its rejection of an application under sections 102 and 103." [37]

More recent decisions indicate that the CAFC has adopted the prima facie obviousness concept. [38] For example, in 1993 a CAFC panel explained that "[i]n rejecting claims under 35 U.S.C. ( 103, the examiner bears the initial burden of presenting a prima facie case of obviousness .... Only if that burden is met, does the burden of coming forward with evidence or argument shift to the applicant." [39] Concurring, Judge Plager explained that "when obviousness is at issue, the examiner has the burden of persuasion and therefore the initial burden of production. Satisfying the burden of production, and thus initially the burden of persuasion, constitutes the so- called prima facie showing." [40]

The origin of the prima facie concept is uncertain. [41] It has been stated that the prima facie notion "serves to level the playing field and reduces the likelihood of administrative arbitrariness." [42] The prima facie concept may thus be related to notions of fairness, with which a presumption of obviousness would conflict. Indeed, it seems unfair that individual inventors, who pay filing fees to have their applications examined, face the initial burden of production while the PTO's army of professional public servants, trained and paid to search prior art, sits idle.

V. THE PRESUMPTION OF OBVIOUSNESS IS LOGICALLY UNWORKABLE

In further support of maintaining the initial burdens of production and persuasion on the PTO, one might argue that this allocation is the only logical procedure to inquire into the obviousness of an invention: While it is possible to legally prove that an invention is obvious, it is virtually impossible to legally prove that an invention is non-obvious (or novel). One can confirm the non-obviousness (and novelty) of the invention relative to certain specific prior art. Such confirmation becomes more impressive as the number of applied prior art grows. However, one cannot guarantee the non-obviousness (or novelty) unless all the prior art is exhausted and considered. In other words, the proposition "my invention is novel and non-obvious" is only an hypotheses that can be falsified. [43] Even after a patent issues, the patent is only "presumed to be valid" [44] indicating that the invention is only presumed to be novel and non-obvious. The issuance of the patent does not prove the novelty and non-obviousness of the invention.

Legally proving that an invention is non-obvious would require demonstrating what a person of ordinary skill in the art knows. A person of ordinary skill in the art is a person who knows all the pertinent prior art available against the application. [45] The universe of such prior art is practically infinite because it includes every pertinent publication ever published and every pertinent patent ever issued anywhere in the world (prior to the application filing date), and every pertinent public use or sale in this country that took place more than one year prior to the application filing date. [46] Therefore, proving that an invention is non-obvious would require collecting and addressing a nearly infinite body of prior art, which is virtually impossible. Even proving that an invention is non-obvious by a preponderance of the evidence would require collecting over half of all the prior art available, i.e., half of infinity, which remains impossible. Therefore, it is virtually impossible to rebut the presumption of obviousness under the Act, which requires a "showing by a preponderance of the evidence that the invention is not obvious to persons of ordinary skill in all relevant arts."

On the other hand, as is well established under the present prima facie procedure, legally proving that an invention is obvious only requires a handful of pieces of prior art (sometimes a single reference is enough). One can legally refute that the identified prior art is sufficient to show obviousness without collecting the infinite entirety of prior art references. For example, one can show that the applied prior art actually teaches away from the claimed invention so that a person of ordinary skill in the art would not find the invention obvious based on the applied prior art. Therefore, placing the initial burden of production on the entity attempting to prove obviousness (the PTO) may be the only logical way to start the inquiry into the obviousness of an invention. Accordingly, creating a presumption that an invention is obvious and placing the initial burdens of production and persuasion on the applicant appears illogical and unworkable.

VI. CONCLUSION

While there may be problems with our patent system and business method patents, the solutions are unlikely found in micromanaging our patent laws by creating exceptions and special examination procedures for different fields of technology. Such an approach would further complicate our system, generate more uncertainties and frustrations, which would lead to further legislation. The proposed presumption of obviousness for business method inventions is an example of such dubious micromanaging effort. Even more disturbing, is the presumption's lack of support in the traditions of U.S. patent laws, and the inconsistency it would create with the well-established prima facie concept.

84 J. Pat. & Trademark Off. Soc'y 148

[1]. Philippe Signore is a patent agent in the electrical/mechanical practice group of Oblon, Spivak, McClelland, Maier & Neustadt, P.C.. The author gratefully acknowledges Alexander Gasser and Igor Sen for reviewing this work and providing useful comments. The opinions expressed herein are solely those of the author and do not represent those of Oblon, Spivak, McClelland, Maier & Neustadt, P.C.

[2]. H.R. 1332, introduced on April 3, 2001.

[3]. The Business Method Patent Improvement Act of 2000, H.R. 5364IH, introduced on October, 3, 2000.

[4]. See also the "Patent Improvement Act of 2001," H.R. 1333, introduced on April 3, 2001; Resolution H.RES. 110, introduced April 3, 2001; the "Patent Reexamination Enhancement Act of 2001," H.R. 1866, introduced May 16, 2001; H.R. 1886, introduced May 17, 2001; and H.R. 2231, introduced on June 19, 2001.

[5]. The Patent Improvement Act of 2001 also proposes a similar presumption of obviousness, but not limited to business method invention. The following discussion applies equally to that broader proposal.

[6]. If the only significant difference between the combined teachings of the prior art and the claimed invention is that the claimed invention is appropriate for use with a computer, and if the prior art shows that the application of the computer technology is already known in this field, then the PTO should reject the claimed invention as being obvious under today's version of 35 USC 103 over that prior art.

[7]. See e.g., In re Epstein, 32 F3d 1559, 1570, 31 USPQ 1817, 1825 (Fed. Cir. 1994) (Judge Plager concurring: "in patent law[,] the rule is that the burden of persuasion is on the PTO to show why the applicant is not entitled to a patent.") See also, In re Oetiker, 977 F2d 1443, 1449, 24 USPQ2d 1443, 1447 (Fed. Cir. 1992) ("The burden is on the Commissioner to establish that the applicant is not entitled under the law to a patent ... [W]hen obviousness is at issue, the examiner has the burden of persuasion and therefore the initial burden of production. Satisfying the burden of production, and thus initially the burden of persuasion, constitutes the so- called prima facie showing. Once that burden is met, the applicant has the burden of production to demonstrate that the examiner's preliminary determination is not correct. The examiner, and if later involved, the Board, retain the ultimate burden of persuasion on the issue.")

[8]. See e.g., H.R. Rep. No. 1923, 82d Cong., 2d Sess. 4 (1952); S. Rep. No. 1979, 82d Cong., 2d Sess. 3 (1952) (Cited in In re Bergy, 596 F.2d 952, 201 USPQ 352 (CCPA 1979).

[9]. By "original Constitution" is meant Articles I to VII, not including the Bill of Rights.

[10]. See the preamble of the law of January 7, 1791.

[11]. Hughes, "The Philosophy of Intellectual Property," 77 Geo. L.J. 287, 302 (1988) (applying Locke's property theory to intellectual property).

[12]. But see Davis, "Patents, Natural Rights, and Natural Property," Owning Scientific and Technical Information, 241, 242, Rutgers Univ. Press, 1989 (Identifying a problem with this theory: "If natural law gives one a right to the products of one's own labor, then granting a patent must sometimes take another's property without just compensation - that is, take an independent inventor's right to benefit from the otherwise salable product of her own labor.")

[13]. Hughes, "The Philosophy of Intellectual Property," 77 Geo. L.J. 287, 330 (1988) (applying Hegel's personality theory to intellectual property.)

[14]. Id., at 343 ("Hegel argues that recognizing an individual's property rights is an act of recognizing the individual as a person. That same reasoning applies to the externalization connection: if X owns a patent, people will recognize him as a particular person - the inventor of a unique innovation.")

[15]. Id., at 333 ("Acting upon things is an initial step in the ongoing struggle for self-actualization. Socially mandated property rights do not trigger this self-actualization; they are only a means to protect the individual's initial attempt to take command of the world.")

[16]. Id., 303-4.

[17]. Federico, "Commentary on the New Patent Act," JPTOS, Vol. 75, No. 3, at 164 (March 1993) (emphasis added).

[18]. Letter to Oliver Evans (May 1807), V Writtings of Thomas Jefferson, at 75-76 (Washington ed.), reported in Graham v. John Deere, 383 U.S. 1, 8, 86 S. Ct. 684, 689 (1966) (emphasis added).

[19]. Letter to Isaac McPherson, Washington Edition, Vol. VI, page 180 (1814) (reported in Federico, "Operation of the Patent Act of 1790," JPOS, Vol. XVIII, No. 4, April, 1936.) (emphasis added)

[20]. See e.g., Kendall v. Winsor, 62 US 322, 328 (1958) ("It is undeniably true, that the limited and temporary monopoly granted to inventors was never designed for their exclusive profit or advantage; the benefit to the public or community at large was another and doubtless the primary object in granting and securing that monopoly. This was at once the equivalent given by the public for benefits bestowed by the genius and meditations and skill of individuals, and the incentive to further efforts for the same important objects. The true policy and ends of the patent laws enacted under this Government are disclosed in that article of the Constitution, the source of all these laws, viz: 'to promote the progress of science and the useful arts,' contemplating and necessarily implying their extension, and increasing adaptation to the uses of society.")

[21]. In re Bergy, 596 F.2d 952, 201 USPQ 352 (CCPA 1979).

[22]. Patent Act of 1790, Chapter 7, Section 1, reproduced in Chisum, Chisum on Patents, Matthew Bender & Company, Inc., (2000) (hereafter "Chisum"), Appendix 9.

[23]. Id., at Section 2.

[24]. Patent Act of 1793 (reproduced in Chisum, Appendix 10).

[25]. The 1793 Act provided for the Secretary of State to issue patents whereas the 1790 Act gave that power to the Secretary of State, the Secretary for the department of war, and the Attorney General.

[26]. See e.g., Preston, "The Administration and Reform of the U.S. Patent Office," J. Early Republic, 331, 344-345 ("Although he could not deny anyone a patent, [the superintendent of the Patent Office] did what he could to discourage applicants when he felt their inventions were unworkable or not original. ... When Baltimore inventor Michael Withers applied for a patent in 1813 for winged gudgeons (a common piece of hardware), the superintendent begrudgingly issued it, telling Withers that imposition was the same as theft. ... [The superintendent] occasionally told applicants that their 'inventions' were such obvious improvements in common articles that even he had conceived of such a notion.")

[27]. Ruggles, Senate Report Accompanying Senate Bill No. 239, 24th Cong., 1st Sess, April 28, 1836, reproduced in Chisum, Appendix 12.

[28]. Patent Act of 1836, Chapter 357, Section 7, reproduced in Chisum, Appendix 11.

[29]. Ruggles, Senate Report Accompanying Senate Bill No. 239, 24th Cong., 1st Sess, April 28, 1836, reproduced in Chisum, Appendix 12.

[30]. Id.

[31]. Graham v. John Deere, 383 U.S. 1, 17-18, 86 S. Ct. 684, 694 (1966) ("Under ( 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or non-obviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or non-obviousness, these inquiries may have relevancy.")

[32]. Id., at 17, 86 S. Ct. at 693.

[33]. Hotchkiss v. Greenwood, 52 U.S. 248, 13 L. Ed. 683 (1850).

[34]. Id., at 267, 13 L. Ed. at 691.

[35]. Federico, "Commentary on the New Patent Act," JPTOS, Vol. 75, No. 3, at 182 (March 1993).

[36]. See e.g., Chisum ( 5.06[1], suggesting that argument.

[37]. In re Warner, 379 F.2d 1011, 1016, 154 USPQ 173 (CCPA 1967), cert. denied, 389 U.S. 1057, reh'g denied, 390 U.S. 1000 (1968).

[38]. See generally, Chisum ( 5.06[1], footnote 5.4.

[39]. In re Rijckaert, 9 F.3d 1531, 1532, 28 USPQ2d 1955, 1956 (Fed. Cir. 1993). See also, In re Oetiker, 977 F.2d 1443, 1445, 24 USPQ2d 1443, 1444 (Fed. Cir. 1992) ("the examiner bears the initial burden, on review of the prior art or any other ground, of presenting a prima facie case of unpatentability).

[40]. In re Oetiker, at 1449, 24 USPQ2d at 1447 (Judge Plager concurring) ("An applicant for a patent is entitled to the patent unless the application fails to meet the requirements established by law. It is the Commissioner's duty (acting through the examining officials) to determine that all requirements of the Patent Act are met. The burden is on the Commissioner to establish that the applicant is not entitled under the law to a patent .... In rejecting an application, factual determinations by the PTO must be based on a preponderance of the evidence, and legal conclusions must be correct.")

[41]. Id., at 1449.

[42]. Id., at 1449.

[43]. This position is reminiscent of Popper's "evolutionary epistemology" theory, wherein a scientific theory is only an hypotheses that either is refuted or, if fit, temporarily survives the scientist's attempted falsifications.

[44]. 35 USC 282 ("A patent shall be presumed valid.")

[45]. Custom Accessories, Inc. v. Jeffrey-Allan Industries, Inc., 807 F2d 955, 962, 1 USPQ2d 1196, 1201 (Fed. Cir. 1986) ("The person of ordinary skill is a hypothetical person who is presumed to be aware of all the pertinent prior art"). See also Chisum at ( 5.04.

[46]. See 35 USC 102, defining what is prior art.