Petition for Writ of Certiorari — Fata Aluminum, Inc. v. Vulcan Engineering Co., Inc

Supreme Court, U.S.

FILED

O11 791 UN 5 2002

_—-

No.

7

IN THE

Supreme Court of the United States

FATA ALUMINIUM, INC. AND FATA GROUP, S.P.A..

Petitioners,

Vv.

VULCAN ENGINEERING Co., INC.,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

PETER D. EHRENHAFT

Counsel of Record

ALAN I. HOROWITZ

MILLER & CHEVALIER,

CHARTERED

655 Fifteenth Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 626-5905

RICHARD H. STERN

DAVID C. FREDERICK

KELLOGG, HUBER, HANSEN,

TODD & EVANS, P.L.L.C.

1615 M Street, N.W.

Suite 400

Washington, D.C. 20036

(202) 326-7900

June 5, 2002

QUESTION PRESENTED

The Constitution authorizes Congress to grant pat-

ents for limited terms to inventors of new and useful

discoveries. It also limits the power of the govern-

ment to grant patents — and the potential monopoly

powers they impart. An indispensable requirement

to justify a patent is that the alleged invention is not

“obvious” under 35 U.S.C. § 103 — which means that a

person of ordinary skill in the relevant technology

would not have found it unduly difficult to decide to

combine the claimed elements of the patented de-

vice to arrive at the device, based on the presence of

those elements in earlier technology (“prior art”). In

Graham v. John Deere Co., 383 U.S. 1 (1966), this

Court construed § 103 within the constraints of the

Patent Clause’s limitations to require a court to eval-

uate three “primary considerations” to determine

whether patented inventions are obvious in the light

of the magnitude of the difference between what is

patented and the prior art. Since its creation in

1982, the Federal Circuit has increasingly departed

from this Court’s Graham test by imposing additional

proof requirements on parties challenging patent

validity and by elevating commercial success above

the Graham primary considerations. In this context,

the question presented — one of statutory construc-

tion in a constitutional framework — is:

Whether the Federal Circuit has improperly su-

perseded this Court’s legal test of obviousness

under 35 U.S.C. § 103 by adding further, nonstat-

utory criteria that trump this Court’s Graham

primary considerations.

ee a —_

-~. —- “

a a ~

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 296 of the Rules of this Court,

petitioners FATA Aluminium, Inc. and FATA Group,

S.p.A. state the following:

FATA Aluminium, Ine. is a wholly owned subsid-

lary of FATA Engineering and Contracting, S.R.L., an

Italian corporation, which in turn is owned and con-

trolled by FATA Group, S.p.A., the shares of which

are not publicly traded.

TABLE CF CONTENTS

Page

QUESTION PRESENTED ..................... i

CORPORATE DISCLOSURE STATEMENT ...... ii

TABLE OF AUTHORITIES .................... Vv

nr cee clea 6s Gace ss sass a6 bs k's 1

ea cheek evi se CN sb a6 00.0 6656 3:8 1

CONSTITUTIONAL AND STATUTORY

PR VERIOIND INVOLVED oc ccccccccccccccces 1

ee 1

REASONS FOR GRANTING THE PETITION ..... 8

I. UNDER THIS COURT’S LEGAL TEST FOR

OBVIOUSNESS, THE VULCAN PATENT

SE OEE ne sac vcccsceseuseass 9

A. This Court’s Test for What Is Obvious

Has Consistently Focused on the Level

of Inventive Merit of the Patented De-

vice Relative tothe Prior Art .......... 9

B. Vulcan’s Patent Is Invalid Under the

Graham Primary Considerations ...... 14

Il. THE FEDERAL CIRCUIT’S LEGAL TEST

FOR OBVIOUSNESS CONFLICTS WITH

GRAHAM AND ITS PROGENY ............ 16

Ill. THE FEDERAL CIRCUIT’S LEGAL TEST

FOR OBVIOUSNESS CONFLICTS WITH

THE TEST PREVIOUSLY APPLIED BY

THE REGIONAL CIRCUITS .............. 22

1V

IV. THE FEDERAL CIRCUITS LEGAL STAN-

DARD FOR OBVIOUSNESS DAMAGES

THE PATENTSYSTEM ..............___ 24

A. The Federal Circuit’s Standard Is Too

a SEE TEL Er ee Te aA, 25

B. The Federal Circuit Has Far Exceeded

Its Assigned Role in Patent Cases...... 29

CONCLUSION .............................. 30

APPENDIX:

Federal Circuit Opinion (Feb. 5, ES ata la

District Court Opinion (Aug. >. ieee 27a

District Court Final Judgment (Aug. 30,

MMM 44S Pe ariaee vay aide pe cet 73a

Order Granting Extension of Time for Filing

Petition for a Writ of Certiorari (Apr. 29,

NE h9 head Kb4 dade akc ula an 74a

Constitutional and Statutory Provisions

I occ euta ce. ery eee Tey eee 75a

Vv

TABLE OF AUTHORITIES

Page

CASES

ATD Corp. v. Lydall, Inc., 159 F.3d 534 (Fed. Cir.

SUD é'e.0-4056wk bde edd ieee eee 17

Alcor Aviation, Inc. v. Radair, Inc., 527 F.2d 113

Ce Tae: BGO xs 2 cree eee eee 23

American Monorail Co. v. Parks-Cramer Co.,

245 F.2d 739 (4th Cir. 1957) ............... 22

American Seating Co. v. National Seating Co.,

586 F.2d 611 (6th Cir. 1978) ............... 23

Anderson’s-Black Rock, Inc. v. Pavement Salvage

Ca., Se Bees Oe Ce kh nce ke hicdsas passim

Ashland Oil, Inc. v. Delta Resins & Refractories,

Inc.:

587 F. Supp. 1406 (E.D. Mich. 1984), rev'd,

776 F.2d 281 (Fed. Cir. 1985) ............. 23

776 F.2d 281 (Fed. Cir. 1985) ........... 16, 23

Atlantic Works v. Brady, 107 U.S. 192 (1883) .... 10

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,

SBR UE BG4 CA bd ns xistwneees 9, 10, 12, 28

Bristol Locknut Co. v. SPS Techs., Inc., 677 F.2d

ETF Gee Ge. BO | kc vac dicawers Teens 22

Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S.

Ee ae re ere en ay ce nr ry 29

vi

Cathodic Protection Serv. v. American Smelting &

Ref. Co., 594 F.2d 499 (5th Cir. re 22

Christianson v. Colt Indus. Operating Corp.,

496 U.B. GOO (IGGE) 2... ccc ccccccccccecc.,, 24

Chu, In re, 66 F.3d 292 (Fed. Cir. SD thar cote 17

Continental Can Co. v. Crown Cork & Seal Co..,

415 F.2d 601 (3d Cir. BD évceanatualeau 22

Continental Can Co. v. Old Dominion Box Co.,

393 F.2d 321 (2d Cir. 1968) ................. 22

Custom Accessories, Inc. v. Jeffrey-Allan Indus.,

Inc., 807 F.2d 955 (Fed. Cir. 1986) ...... 18, 23

Dann v. Johnston, 425 U.S. 219 (1976) ..... passim

Demaco Corp. v. F. Von Langsdorff Licensing

Ltd., 851 F.2d 1387 (Fed. Cir. 1988) ........ 19

Dembiczak, In re, 175 F.3d 994 (Fed. Cir.

BUD 6 0ss0sbebnnveen eee 16-17, 27

Dickinson v. Zurko, 527 U.S. 150 (1999) ..... 24, 29

Dual Mfg. & Eng’g, Inc. v. Burris Indus., Inc.,

619 F.2d 660 (7th Cir. 1980) ............ 22, 23

Ecolochem, Inc. v. Southern California Edison

Co., 227 F.3d 1361 (Fed. Cir. 2000), cert.

denied, 532 U.S. 974 | Py ee een 27

Eltra Corp. v. Basic Inc., 599 F.2d 745 (6th Cir.

i MER ET EE 23

vil

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki

Co., No. 00-1543, 2002 WL 1050479 (U.S.

>} S rrrrrrrrry Trey TT Tr rere 29

Florida Prepaid Postsecondary Educ. Expense Bd.

v. College Sav. Bank, 527 U.S. 627 (1999) ... 29

Gambro Lundia AB v. Baxter Healthcare Corp.,

110 F.3d 1573 (Fed. Cir. 1997) .............. 19

Graham v. John Deere Co., 383 U.S. 1

CRE bac suse eee cksSeuNends dacanesane passim

Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248

EE cceccwas es céndieanenseaseecesaesaens 2

Huang, In re, 100 F.3d 135 (Fed. Cir. 1996) ..... 26

Hybritech Inc. v. Monoclonal Antibodies, Inc.,

802 F.2d 1367 (Fed. Cir. 1986) .............. 18

Jungersen v. Ostby & Barton Co., 335 U.S. 560

tt . bc cauu he uvbnd sane eeksaweeenen 4,13

Keiser Indus. Corp. v. McLouth Steel Corp.,

400 F.2d 36 (6th Cir. 1968) ................. 22

Karsten Mfg. Corp. v. Cleveland Golf Co.,

242 F.3d 1376 (Fed. Cir. 2001) .............. 17

Kotzab, In re, 217 F.3d 1365 (Fed. Cir. 2000) .... 16

Lear, Inc. v. Adkins, 395 U.S. 653 (1969) .... 10, 25

Lee, In re, 277 F.3d 1338 (Fed. Cir. 2002) .... 16, 26

Lee Blacksmith, Inc. v. Lindsay Bros., Inc.,

O06 F.28 SE Cot Cie. 1978) ... oc cccccccccces 22

L.S. Donaldson Co. v. La Maur, Inc., 299 F.2d

412 (8th Cir. cn TET TERE e Tee 22

Nelmor Corp. v. Jervis Corp., 354 F.2d 923

Ne WS 6 oe oes sad ceed. 22

Owens-Illinois, Inc. v. Emhart Indus., Inc.,

644 F.2d 98 (2d Cir. ME SN koe aaa = 22

Pope Mfg. Co. uv. Gormully, 144 U.S. 224

aa HEE PT ET ROE Oe a nee 10, 25

Research Corp. v. NASCO Indus., Inc., 501 F.2d

wiscithaisctncisinncectsacy, MET Te 22

Reynolds Metals Co. v. Acorn Bldg. Components,

Inc., 548 F.2d 155 (6th Cir. RE eee eo 23

Richdel, Inc. v. Sunspool Corp., 714 F.2d 1573

Ps NN i cece toy ke. 21

Roanwell Corp. v. Plantronics, Inc.., 429 U.S.

Oe Ks whevawineseeng uit. Be 2

Robertson, In re, 169 F.3d 743 (Fed. Cir. 1999) .. 26

Rouffet, In re, 149 F.3d 1350 (Fed. Cir. 1998) . 17, 27

Ruiz v. A.B. Chance Co., 234 F.3d 654 (Fed. Cir.

MOE. Bec stG ar ieee yy tel Gane ee 18, 27

Sakraida v. Ag Pro, Inc., 425 US. 273

tee MEE CL Pe ne ae passim

Schreiber, In re, 128 F.3d 1473 (Fed. Cir. 1997) .. 26

Simmons Fastener Corp. v. Illinois Tool Works,

Inc., 739 F.2d 1573 (Fed. Cir.1984) ..... 18, 19

ee

ix

Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc.,

183 F.3d 1347 (Fed. Cir. 1999) ............... 7

Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530

a rer err rien ye 18, 19, 20

Tec Air, Inc. v. Denso Mfg. Michigan Inc.,

192 F.3d 1363 (Fed. Cir. 1999) .............. 19

United States v. Adams, 383 U.S. 39 (1966) .. 13, 27

Warner-Jenkinson Co. v. Hilton Davis Chem. Co.,

ne aS ea hae ais ate eee 29

Winner Int'l Royalty Corp. v. Wang, 202 F.3d

1340 (Fed. Cir.), cert. denied, 530 U.S. 1238

a ee a A ig ae 5 a alae 19

Zurko, In re, 258 F.3d 1379 (Fed. Cir. 2001) ..... 16

CONSTITUTION AND STATUTES

oe ee ae eee ee errr rere ere 1,11

EEE EO OS a a ee 1, 10, 75a

Administrative Procedure Act, 5 U.S.C. §§ 701

Se eee Oe cee Aes Ole dh eek ee ek oo 24

Patent Act of 1952, 35 U.S.C. §§ 1 et seq.:

RL ae eer re 1,10, 11, 75a

es oe ads ao a eka ko 0 26

REC TPT ee eee Eee passim

6UB.C.4100M) .....05...56005 1, 11, 75a

$8 U.S.C. § 10800) 000050 65c se... 1

ie Reo Peer eee 25t 3, 23

28 U.S.C. § 1296(a) .......................6... 22

OTHER MATERIALS

Martin J. Adelman, Randall R. Rader, John R.

Thomas & Harold C. Wegner, Cases and

Materials on Patent Law CEOGS) onc ccuan. 27, 28

Robert Desmond, Nothing Seems “Obvious” to the

Court of Appeals for the Federal Circuit: The

Federal Circuit, Unchecked by the Supreme

Court, Transforms the Standard of Obvious-

ness Under the Patent Law, 26 Loy. L.A. L.

Oe. PRE kos bs dc dee 20, 26

Paul M. Janicke, To Be or Not To Be: The Long

Gestation of the U.S. Court of Appeals for the

Federal Circuit (1887-1982), 69 Antitrust L.J.

este occ, MEE POET eT OPC bei are 21

Edmund Kitch, Graham v. John Deere Co.: New

Standards for Patents, [1966] Sup. Ct. Rev.

MEET COC eT ET PT ery a ee 27

Daniel J. Meador, Origin of the Federal Circuit:

A Personal Account, 41 Am. U. L. Rev. 581

GUE Secs ee eerc gen pean ieet ome ee 29

Robert P. Merges, Commercial Success and

Patent Standards: Economic Perspectives on

Innovation, 76 Cal. L. Rev. 803 i. 27

a a! see mek mnt Str Tine. VE haem:

x1

Eugene R. Quinn, Jr., Abusing Intellectual

Property Rights in Cyberspace: Patent Misuse 4

Revisited, 28 Wm. Mitchell L. Rev. 955

i era ed ca tea oy. 2

Simon Rifkind, A Specialized Court for Patent

Litigation? The Danger of a Specialized

Judiciary, 37 ABAJ. 425(1951) ............ 29

OPINIONS BELOW

The opinion of the court of appeals (App. 1la-26a) is

reported at 278 F.3d 1366. The opinion of the district

court (App. 27a-72a) is not reported.

JURISDICTION

The judgment of the court of appeals was entered

on February 5, 2002. On April 29, 2002, the Chief

Justice extended the time for filing a petition for a

writ of certiorari to and including June 5, 2002. App.

74a. The jurisdiction of this Court is invoked under

28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Patent Clause of the United States Constitu-

tion, Art. I, § 8, Cl. 8, and the relevant provisions of

the Patent Act, 35 U.S.C. §§ 101 and 103(a), are set

forth in the Appendix at 75a.

STATEMENT

1. a. The Patent Clause of the Constitution grants

Congress the power to issue patents to promote tech-

nological progress. That power is limited, however,

and does not authorize the government to issue pat-

ents for technological improvements that are not true

inventions. U.S. Const. Art. I, § 8, Cl. 8; Graham v.

John Deere Co., 383 U.S. 1, 5-6 (1966). “Innovation,

advancement, and things which add to the sum of

useful knowledge are inherent requisites in a patent

system which by constitutional command must ‘pro-

mote the Progress of .. . useful Arts.” Jd. at 6. Un-

less the constitutional requisites are satisfied, prolif-

eration of unworthy patents covering technical ad-

vances that are obvious would hinder rather than

promote technological progress.’ For that reason, a

' Professor Quinn has rephrased Grahams logic in these economics-

oriented terms: “We tolerate patents because of a perceived societal

benefit from increased innovation. We recognize that free market

economics will be skewed because of the exclusive rights conveyed by the

standard for the amount of technical merit that an

innovation must have to qualify for a patent is essen-

tial to the operation of the patent system. Congress

has respected that limitation, recognizing that it has

no power to “enlarge the patent monopoly without re-

gard to the innovation, advancement or social benefit

gained thereby.” Id.

From the first patent law adopted in 1790, it was

recognized that an innovation should receive a patent

monopoly only if it represented an unobvious techno-

logical advance. Id. at 7. In 1851, for example, this

Court held in Hotchkiss v. Greenwood, 52 U.S. (11

How.) 248 (1851), that the proper measure of techni-

cal merit for an unobvious invention was whether the

candidate for a patent monopoly exceeded the routine

skill of an ordinary artisan. A century later, Con-

gress codified the Hotchkiss standard of obviousness

by enacting § 103 of the 1952 Patent Act. In Graham,

a unanimous Court stressed that § 103 mandates the

Same inventive standard as is expressed in the Con-

stitution and embodies the same level of required

technological merit. 383 U.S. at 6; see also Roanwell

Corp. v. Plantronics, Inc., 429 U.S: 1004, 1005 (1976)

(White, J., dissenting from denial of certiorari) (“This

Court long ago established that the sine qua non of

patentability is ‘invention’ and that the protection of

the patent law does not extend to an ‘improvement

[that] is the work of the skilled mechanic, not that of

the inventor.”) (quoting Hotchkiss, citing Graham)

(alteration in original). The Court added that the

standard of patentability “has remained invariable in

this Court.” 383 U.S. at 19.

issued patent. The question, however, is to what extent are we willing

to accept the burdens placed upon us by innovations that seem hardly

worthy of the mantle of patent protection” Eugene R. Quinn, Jr.,

Abusing Intellectual Property Rights in Cyberspace: Patent Misuse

Revisited, 28 Wm. Mitchell L. Rev. 955, 998 (2002).

3

Between 1966 and 1976, this Court handed down

five opinions explaining and clarifying the inventive

standard set forth in § 103; it has not addressed the

issue since. In 1982, Congress created the United

States Court of Appeals for the Federal Circuit and

granted it exclusive intermediate appellate jurisdic-

tion in federal cases arising under patent law. 28

U.S.C. § 1295. In the last 20 years, unreviewed by

this Court, the Federal Circuit has created a differ-

ent inventive standard under § 103.

b. Whether a supposed invention is obvious is a

question of law based on several underlying factual

determinations. Graham, 383 U.S. at 17. While the

factual determinations are subject to deferential re-

view, the legal conclusion is subject to de novo appel-

late review. The proper legal test of obviousness is

purely an issue of law, a matter of statutory con-

struction of § 103 of the Patent Act, whose ultimate

determination is confided to this Court. This petition

does not concern the factual determinations made

below; it is concerned only with the proper construc-

tion of § 103, and the application of that construction

to the undisputed facts of record in this case.

2.a. In 1997, respondent Vulcan Engineering Co.,

Inc. (“Vulcan”) and petitioners FATA Aluminium,

Inc. and FATA Group, S.p.A. (collectively, “FATA”)

submitted competing bids to supply automobile en-

gine block and cylinder head metal casting lines for

General Motors Corporation’s Power Train Division

at Saginaw, Michigan (App. 3a, 37a). FATA underbid

Vulcan for part of the project, and GM awarded a

part of the project to FATA (App. 3a-4a, 39a). Vulcan

then asserted to GM (App. 4a, 39a-40a) that the only

way FATA could meet the technical specifications of

GM’s bid proposal was to infringe Vulcan’s patent

(U.S. Patent No. 4,736,787 — the “Vulcan patent”).

The Vulcan patent covers a system for continu-

ously-linked molding of metal parts, such as automo-

bile engine blocks, using the “lost foam” process. The

4

lost foam process is a variation on the “lost wax”

process, in which lost plastic foam substitutes for lost

wax.” Claim 1 of the Vulcan patent, the only one in

issue (App. 28a), covers a lost foam casting system

having these elements in combination (App. 3a, 28a-

29a):

¢ a set of gondolas connected to one another with

pivots; the gondolas carry flasks around a track;

e a drive mechanism for start-stop movement of

the gondolas;

¢ a number of flasks (very big cups, big enough to

hold engine blocks) that are adapted to fit into

the gondolas and thus be carried around the

track; the flasks are adapted to contain foam pat-

terns that form the molds for casting engine

blocks; and

¢ a closed curved track, on which the gondolas

move and on which are located:

- a sand loading and compaction station (at

which sand is poured into the flasks containing

foam patterns; the sand forms a mold around

each foam pattern; then the sand is compacted);

- a metal pouring station (at which molten

metal is poured into the molds, replacing the

foam patterns and destroying them); and

- a mold unloading system (which unloads en-

gine blocks or other cast metal parts from the

molds by dumping the sand/metal contents out

of the flask).

* App. 27a-28a. The lost foam process is described in the 1958 Shroyer

patent (App. 32a). Vulcan does not claim to have invented that process.

This Court previously considered a variation on the lost wax process for

molding metal parts in Jungersen v. Ostby & Barton Co., 335 U.S. 560

(1949). The wax, which helps form a mold in the shape of the final metal

object, is “lost” when it is melted during introduction of the molten metal.

In the lost foam process, the plastic foam helps form a mold in sand

surrounding it; the molten metal destroys the foam when introduced

during the process, and the foam is “lost.”

5

The system is akin to a big electric model railroad

set with an oval track, on which all of the boxcars of

the train are pulled around in a continuously-linked

process.* Each boxcar has a flask in it, into which a

foam pattern is placed. Sand is dropped into each

flask and forms a mold around each foam pattern.

The molds are then filled with molten metal, which

assumes the shape of the pattern and solidifies: the

molten metal vaporizes the foam. The molds are un-

loaded when the cast metal parts in them have suffi-

ciently cooled.

b. Vulcan sued FATA for patent infringement un-

der the Vulcan patent. FATA asserted various de-

fenses, including that Vulcan’s patent was invalid

because the alleged invention was obvious under

§ 103 and therefore lacked enough technical merit to

justify a patent monopoly. FATA also counterclaimed

for a declaration of invalidity on the same basis.

Trial by jury was waived.

The prior art in the record of this case showed the

existence of prior knowledge in the industry of vari-

ous subcombinations of the combination of elements

that Vulcan patented. Continuously-linked processes

were previously in use for sand molding systems, but

not for lost foam sand molding systems. App. 5la.

Lost foam automated systems were in use for sand

molding, but not for continuously-linked sand mold-

ing. App. 5la, 52a. Another lost foam system was

similar to that of the Vulcan patent, but it placed the

flasks on a powered roller conveyer instead of putting

them into gondolas. App. 52a-53a. Finally, although

technically not prior art, another GM casting system

* In a “continuously-linked” process, all of the boxcars (i.e., flask-

containing gondolas) are connected to one another in a single train. (The

Federal Circuit at times in its opinion refers to such systems as “continu-

ous” ones.) In the opposite kind of process (an “accumulating” process),

the gondolas are not connected and move independently of one another.

Continuously-linked casting systems have been in use since 1941. App.

33a. Vulcan does not claim to be their inventor.

iii iii

6

evidenced the state of knowledge of other workers in

the art before the alleged invention; this system was

virtually identical to that of the Vulcan patent but it

used a rotating turntable, instead of gondolas on an

oval track, to circulate the mold-containing flasks.

App. 52a. Accordingly, all of the claimed elements

(subsystems) of the patented system were previously

known or in use in other metal-parts sand-molding

systems, where the elements performed the same

functions that they perform in the patented system.

Those elements were not all present in combination

and in the identical arrangement of the Vulcan pat-

ent, however, in any single one of the various prior

art systems.

In addition to the prior art, the district court con-

sidered two other factors, which the Federal Circuit

emphasized on appeal. It found, even though all the

claimed elements of Vulcan’s system were present in

prior art systems, that no reference in the record sug-

gested combining these elements in the same way as

Vulcan combined them. App. 55a-56a. The court also

considered evidence of the commercial success of Vul-

can’s product. Vulcan asserted that, due to its pat-

ent, since 1987 it “has dominated the market for lost

foam casting production systems.” Vulcan Fed. Cir.

Br. 11. The court did not address whether Vulcan’s

claimed market power was the result of the merit of

Vulcan’s patented innovation; instead, it presumed

such a causal nexus. App. 56a.

The district court found FATA liable to Vulcan for

patent infringement, rejecting FATA’s contentions

that Vulcan’s patent was obvious in light of the prior

art. The court applied the following standard to re-

solve the obviousness issue: “[T]here is no basis for

concluding that an invention would have been obvi-

ous solely because it is a combination of elements

that were known in the art at the time of the inven-

tion. Instead, the relevant inquiry is whether there

is a reason, suggestion, or motivation in the prior art

7

that would lead one of ordinary skill in the art to

combine the references, and that would also suggest

a reasonable likelihood of success.” App. 50a-5la

(quoting Smiths Indus. Med. Sys., Inc. v. Vital Signs,

Inc., 183 F.3d 1347, 1356 (Fed. Cir. 1999)). The court

entered a final judgment (App. 73a) holding FATA

liable to Vulcan for $2.5 million and enjoined FATA

from infringing the patent.

3. The Federal Circuit affirmed. App. la-26a. In

determining whether the combination of old elements

was obvious, the Federal Circuit emphasized that no

prior art document specifically taught or suggested

combining into one system all of the elements of the

patented system. The Federal Circuit deemed that

factor determinative (App. 5a):

The district court found that there was no

teaching, suggestion, or reason in the prior art to

select aspects of the prior art and combine them

in the manner of the ’787 system. See Karsten

Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376,

1385, 58 USPQ2d 1286, 1293 (Fed.Cir.2001) (“In

holding an invention obvious in view of a combi-

nation of references, there must be some sugges-

tion, motivation, or teaching in the prior art that

would have led a person of ordinary skill in the

art to select the references and combine them in

the way that would produce the claimed inven-

tion.”); C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d

1340, 1352, 48 USPQ2d 1225, 1232 (Fed.Cir.

1998) (a showing of a suggestion, teaching, or mo-

tivation to combine the prior art references is an

“essential evidentiary component of an obvious- ~

ness holding”).

In addition, the Federal Circuit considered Vul-

can’s commercial success and the “[a]ppreciation by

contemporaries skilled in the field of the invention”

to be more significant than the presence of all the

claimed elements of the patented combination in

prior art casting systems (App. 6a):

8

The district court gave weight to the commer-

cial success of the Vulcan ’787 system. See De-

maco Corp. v. F. Von Langsdorff Licensing Lid..,

851 F.2d 1387, 1391, 7 USPQ2d 1222, 1225 (Fed.

Cir. 1988) (“The commercial response to an inven-

tion is significant to determinations of obvious-

ness, and is entitled to fair weight.”) The rec-

ord shows contemporaneous recognition of the

achievements of the Vulcan system, including

articles in trade journals and testimony of wit-

nesses concerning the belief in the engineering

community that the lost foam process could not

be effectively mechanized as a continuous on-line

process. Appreciation by contemporaries skilled

in the field of the invention is a useful indicator

of whether the invention would have been obvious

to such persons at the time it was made. See

Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530,

1538, 218 USPQ 871, 879 (Fed.Cir.1983) (“evi-

dence of secondary considerations may often be

the most probative and cogent evidence in the

record”).

The Federal Circuit therefore upheld the patent as

unobvious and affirmed the judgment that FATA was

liable for patent infringement.

REASONS FOR GRANTING THE PETITION

The standard that the Federal Circuit employed to

uphold the patent in this case directly conflicts with

the standard of what is an obvious technical improve-

ment under Graham and its progeny. Indeed, the

only way that the court below was able to uphold this

patent was (i) to trump the Graham primary consid-

erations with secondary considerations, and (ii) to

engraft on the Graham test a further evidentiary re-

quirement that is not found in Graham and that con-

tradicts this Court’s subsequent interpretation of

Graham. But for Congress’s conferring exclusive pat-

ent jurisdiction on the Federal Circuit in 1982, this

case would have been decided differently under then-

9

prevailing regional circuit applications of Graham.

The Federal Circuit’s remaking of patent law should

not be left unreviewed, because that court’s new stan-

dard is seriously damaging the patent system.

I. UNDER THIS COURT’S LEGAL TEST FOR

OBVIOUSNESS, THE VULCAN PATENT

WOULD BE INVALID

This Court has always interpreted § 103 in terms of

the constitutional standard of invention, which Gra-

ham describes. Under that test, the Vulcan patent is

invalid because it gives a statutory monopoly to a

slight improvement in technology that is unworthy of

patent protection.

A. This Court’s Test for What Is Obvious Has

Consistently Focused on the Level of In-

ventive Merit of the Patented Device Rel-

ative to the Prior Art

It has long been recognized that the patent system

needs a proper balance between providing incentives

to inventors and protecting the rights of the public to

competition and industrial progress.‘ This Court ob-

served more than a century ago:

It was never the object of those laws to grant a

monopoly for every trifling device, every shadow

of a shade of an idea, which would naturally and

spontaneously occur to any skilled mechanic or

operator in the ordinary progress of manufac-

tures. Such an indiscriminate creation of exclu-

sive privileges tends rather to obstruct than to

* “The Patent Clause itself reflects a balance between the need to

encourage innovation and the avoidance of monopolies which stifle

competition without any concomitant advance in the ‘Progress of Science

and useful Arts.’ . . . From their inception, the federal patent laws have

embodied a careful balance between the need to promote innovation and

the recognition that imitation and refinement through imitation are both

necessary to invention itself and the very lifeblood of a competitive

economy.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141,

146 (1989).

10

stimulate invention. It creates a class of specula-

tive schemers who make it their business . . . to

lay a heavy tax upon the industry of the country,

without contributing anything to the real ad-

vancement of the art.

Atlantic Works v. Brady, 107 U.S. 192, 200 (1883).

The requirement of § 103 that patents must not be

awarded to obvious improvements in technology acts

as a constitutionally mandated filter in the patent

system, to ensure that patent monopolies are al-

lowed, and that the public pays tribute, only on true

inventions and not on trivial mechanical advances.°

In 1952, Congress first created an explicit statu-

tory standard for obviousness (35 U.S.C. § 103).

First, § 101 of the 1952 Act replicates the Patent

Clause by stating that “[w]hoever invents or discovers

any new and useful... machine... may obtain a pat-

5 “Even if a particular combination of elements is ‘novel’ in the literal

sense of the term, it will not qualify for federal patent protection if its

contours are so traced by the existing technology in the field that the

‘improvement is the work of the skillful mechanic, not that of the

inventor.’ . . . The nonobviousness requirement extends the field of

unpatentable material beyond that which is known to the public under

[35 U.S.C.] § 102, to include that which could readily be deduced from

publicly available material by a person of ordinary skill in the pertinent

field of endeavor. Taken together, the novelty and nonobviousness re-

quirements express a congressional determination that the purposes

behind the Patent Clause are best served by free competition and ex-

ploitation of either that which is already available to the public or that

which may be readily discerned from publicly available material. ... The

novelty and nonobviousness requirements of patentability embody a

congressional understanding, implicit in the Patent Clause itself, that

free exploitation of ideas will be the rule, to which the protection of a

federal patent is the exception. .. . To a limited extent, the federal patent

laws must determine not only what is protected, but also what is free for

all to use.” Bonito Boats, 489 U.S. at 150-51 (citation omitted). See also

Lear, Inc. v. Adkins, 395 U.S. 653, 663-64 (1969) (“It is as important to

the public that competition should not be repressed by worthless patents,

as that the patentee of a really valuable invention should be protected in

his monopoly”) (quoting Pope Mfg. Co. v. Gormully, 144 U.S. 224, 234

(1892)).

11

ent therefor, subject to the conditions and require-

ments of this title.” Jd. § 101 (emphases added). Sec-

tion 103(a) then states that “[a] patent may not be

obtained . . . if the differences between the subject

matter sought to be patented and the prior art are

such that the subject matter as a whole would have

been obvious . . . to a person having ordinary skill in

the art to which said subject matter pertains.” Id.

§ 103(a) (emphases added).

This Court in Graham and in subsequent cases de-

veloped a consistent interpretation of § 103 to harmo-

nize the statute with the Constitution, which gives

Congress power “[t]o promote the Progress of Science

and Useful Arts, by securing for limited Times to...

Inventors the exclusive Right to their respective .. .

Discoveries.” Art. I, § 8, Cl. 8 (emphases added). The

Court concluded that Congress intended the standard

of obviousness under § 103 to coincide with the stan-

dard of the Constitution for Discoveries of Inventors

(terminology echoed in § 101). See Graham, 383 U.S.

at 6.° By interpreting § 103 in terms of the constitu-

tional meaning of Discoveries of Inventors, the Court

avoided the risk of an unconstitutional construction

of the statute.

Graham and its progeny prescribe a test for wheth-

er a technical advance is unobvious and therefore

qualified to become subject to a patent monopoly.

That test focuses on (1) the scope and content of the

prior art; (2) the ordinary level of skill of those work-

ing in the art; and (3) the differences between the

® Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57

(1969), echoes this point: “The patent standard fof § 103] is basically

constitutional.” Jd. at 61. Then, in Dann v. Johnston, 425 U.S. 219

(1976), the Court stated that “an exercise of the inventive faculty .. . has

long been regarded as an absolute prerequisite to patentability,” a legal

principle that Congress embodied in § 103 by “framing it as a require-

ment of ‘nonobviousness.” Jd. at 225-26 (citation and internal quotation

marks omitted). See also Sakraida v. Ag Pro, Inc., 425 U.S. 273, 279

(1976) (“the Constitution requires . . . ‘invention”).

12

elements set forth in the patent claims at issue and

in the prior art. Based on its analysis of these fac-

tual “primary considerations,” a court must then de-

termine whether, as a matter of law,’ the advance of

the claimed subject matter over the prior art is obvi-

ous, id. at 17, or, as the Court restated the test in

Johnston, “[t]he gap between the prior art and respon-

dent’s system is simply not so great as to render the

system” not obvious, 425 U.S. at 230.8

In determining obviousness, courts also may con-

sider “[s]uch secondary considerations as commercial

success,” which “might be utilized to give light to the

circumstances surrounding the origin of the subject

matter sought to be patented.” Graham, 383 U.S. at

17-18. Secondary considerations “may lend a help-

ing hand to the judiciary,” because judges lack tech-

nical expertise, id. at 36, and considering such fac-

tors may help “guard against slipping into use of

hindsight,” but that is all the secondary factors can

do, id. (internal quotation marks omitted). If it is not

a close case, as it was not in Graham, “these factors

do not ._. tip the scales of patentability.” Jd.;°

’ “The ultimate test of patent validity is one of law, . . . but resolu-

tion of the obviousness issue necessarily entails several basic factual

inquiries.” Ag Pro, 425 U.S. at 280 (citing Graham).

® In Bonito Boats, the Court further restated this test as one excluding

from patentability “that which could readily be deduced from publicly

available material by a person of ordinary skill in the pertinent field of

endeavor.” 489 U.S. at 150.

® In applying this legal test to the plow patent before it in the Graham

case, the Court considered two earlier patents, which had all of the

elements of the patent at issue, except that some plow elements were

arranged slightly differently. The Court said that it would assume that

no single item of prior art “disclose[d] such an arrangement as petitioners

claim in [their] patent,” 383 U.S. at 24, but based on the three factual

inquiries of the Graham test the only difference between the claimed sub-

ject matter and the combined prior art was obvious. In a part of the

opinion involving spray cans, the Court found obviousness based on two

of the patents in the relevant art containing all of the elements of the

patented claim. The Court rejected the patentee’s invocation of second-

13

Jungersen, 335 U.S. at 567. Nowhere in Graham did

the Court suggest that a court must or should make a

general practice of inquiring beyond the three pri-

mary considerations identified in that decision. The

Graham Court did not look for any teaching, sugges-

tion, or motivation in the prior art to combine the

references on which it relied to find obviousness.

And it rejected the notion that secondary consider-

ations, such as commercial success, could make a

claim patentable where “the differences between [the

claim] and the pertinent prior art would have been

obvious” based on the primary considerations. 383

U.S. at 35-37. (The same-day companion decision in

United States v. Adams, 383 U.S. 39 (1966), did not

bear on this issue.)

In each case construing § 103 after Graham, this

Court has strictly applied the Graham test and its

primary considerations to the record before it. The

Court has never imposed any additional require-

ments for establishing obviousness or created any ex-

ceptions to make unobvious a technical advance that

the Graham primary-considerations test made obvi-

ous. Twice, in Black Rock and Ag Pro, the Court re-

jected a patentee’s reliance on commercial success

when an alleged invention failed to pass muster un-

der the Graham primary considerations.

Black Rock applied the Graham test to a patent

whose four elements occurred separately in a patent

and prior art machines. The combination of the four

elements in one device created additional conven-

ience and commercial success, but (as in the case at

bar) no new or different function. See 396 U.S. at 60.

The Court stated that “strict observance” of the Gra-

ham test was necessary to carry out congressional

intent, and it said that more than creating conven-

ience and a “successful venture” was necessary to

ary considerations, including commercial success of the patented can, to

override the primary considerations. Id. at 35-36.

14

make the combination of the four elements not obvi-

ous. Id. at 62-63 (internal quotation marks omitted).

In Johnston, this Court applied the Graham factors

to a combination of a patent and information about

data processing equipment known to be used in the

banking industry. The Court focused on whether the

differences between the total prior art and claimed

subject matter were sufficient to make the supposed

invention unobvious. The Court considered the mag-

nitude of the differences and held: “The gap between

the prior art and respondent’s system is simply not so

great as to render the system nonobvious.” 425 U.S.

at 230. The Court did not make any inquiry into

whether the prior art contained any teaching, sugges-

tion, or motivation to combine the references.

Finally, in Ag Pro, the Court considered a system

for cleaning stables by flushing them with water. Six

patents contained all of the elements of the supposed

invention except an abrupt water-release feature

akin to flushing a toilet. See 425 U.S. at 276-77, 281.

Despite its “enjoying commercial success,” the pat-

ented combination was held obvious. 7d. at 282.

Again, the Court did not make any inquiry into

whether the prior art contained any teaching, sugges-

tion, or motivation to combine the references.

B. Vulcan’s Patent Is Invalid Under the Gra-

ham Primary Considerations

This patent does not pass muster under this

Court’s Graham test. Prior art molding systems dis-

closed all of the patent’s claimed elements, perform-

ing there the same functions as in the patented sys-

tem. Supra p.6. Under a Graham analysis, Vulcan’s

System is on a par with Graham’s plow. In both

cases, while “the prior art does not disclose such an

arrangement as [patentees] claim in [their] patent,”

383 U.S. at 24, nonetheless all of the claimed ele-

ments were present (differently arranged) in various

prior art devices, see id. at 22-23, 26 (Graham’s de-

vice); supra pp. 5-6 (Vulcan’s device). In addition,

15

the claimed elements performed the same func-

tions in the prior art systems and in Vulcan’s system,

supra p.6, as was true of the plow “stirrup” and

“hinge plate” in Graham, 383 U:S. at 26. Moreover,

in Black Rock’® and Ag Pro,'' that identical fact

pattern — same elements performing same function —

established that the differences between the pat-

ent and the prior art were so insubstantial that

the patent was obvious under a Graham primary-

considerations analysis.

Nonetheless, the Federal Circuit salvaged the in-

stant patent (i) because FATA could not find a spe-

cific teaching, suggestion, or motivation, documented

in the prior art, to combine the old elements in the

very manner that the patent combined them, and (ii)

by holding that commercial success trumped the

prima facie case of obviousness based on the Graham

primary factors. Absent these errors, the patent

would have been invalidated as obvious.

' In Black Rock, the Court held obvious a commercially successful

machine whose known elements, when combined, did not produce a

“new or different function.” 396 U.S. at 60 (internal quotation marks

omitted).

"In Ag Pro, this Court held obvious a commercially successful

patented barn flushing system, because “this patent simply arranges

old elements with each performing the same function it had been known

to perform, although perhaps producing a more striking result than in

previous combinations.” 425 U.S. at 282. The Ag Pro Court cautioned:

“A patent for a combination which only unites old elements with no

change in their respective functions .. . obviously withdraws what

already is known into the field of its monopoly and diminishes the re-

sources available to skillful men.” Jd. at 281 (internal quotation marks

omitted). Graham holds that Congress lacks power to authorize patents

that withdraw from the public domain what is already known or

available and thus add nothing to the body of useful knowledge. See 383

US. at 6.

16

II. THE FEDERAL CIRCUIT’S LEGAL TEST

FOR OBVIOUSNESS CONFLICTS WITH

GRAHAM AND ITS PROGENY

Since its creation in 1982, the Federal Circuit has

developed a construction of § 103 that differs in ma-

terial respects from a Graham analysis. The techno-

logical improvement at issue here was an obvious ad-

vance that could not earn a patent monopoly under

Graham, but the Federal Circuit applied a legal test

that transformed it into a valid patent.

A. The Federal Circuit has added to the Graham

primary-considerations test a further required fac-

tual showing: that a patent challenger must always

produce probative evidence of a teaching, suggestion,

or motivation in the prior art (for example, in another

patent) that specifically suggests to ordinary artisans

that they ought to combine the elements of the two or

more prior art references that together disclose the

elements of the supposed invention.’* In the present

'2 The evidence ofa prior art suggestion to combine references must be

specific, see In re Lee, 277 F.3d 1338, 1343 (Fed. Cir. 2002) (“The need for

specificity pervades this authority [on combining references].”) (collecting

cases), and it must be documented, see id. (“It must be based on objective

evidence of record.”). The suggestion to combine references cannot flow

merely from application of “common sense.” Id. at 1344 (holding that

Patent and Trademark Office (“PTO”) cannot combine references to find

obviousness simply on basis of “common sense”); see In re Zurko, 258 F.3d

1379, 1385-86 (Fed. Cir. 2001) (PTO “cannot simply reach conclusions

based on its own understanding or experience — or on its assessment of

what would be basic knowledge or common sense”).

Express findings of a suggestion in the prior art to combine the

references relied upon under § 103 must be made by the district courts

in infringement cases and by the PTO in denying patents. See, e.Z.,

Ashland Oil, Inc. v. Delta Resins & Refractories, Inc., 776 F.2d 281,

297 & n.24 (Fed. Cir. 1985) (district court must “elucidate any factual

teachings, suggestions or incentives from th{e] prior art” showing pro-

priety of combination and must make findings on suggestion to combine);

In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000) (“[P]articular findings

must be made [by PTO] as to the reason the skilled artisan, with no

knowledge of the claimed invention, would have selected these compo-

nents for combination in the manner claimed.”); In re Dembiczak, 175

17

case, that additional teaching, suggestion, or motiva-

tion in the prior art was found lacking. Therefore,

the Federal Circuit deemed it legally insufficient that

petitioners’ references — just as in Graham, Black

Rock, and Ag Pro — contained elements correspond-

ing to and performing in the same way as all of

the claimed elements of Vulcan’s patent (App. 5a-6a;

supra pp. 5-6). The present case is not a “sport.” It

reflects now-settled Federal Circuit doctrine. !?

The Federal Circuit’s requirement of a prior art

teaching, suggestion, or motivation finds no support

in the text of § 103 and conflicts with Graham and

this Court’s later decisions, none of which recognizes

any such requirement under § 103. In contrast to the

Federal Circuit’s obviousness methodology, each time

this Court has found a patent obvious under § 103, it

did so without locating in the prior art any such

teaching, suggestion, or motivation to combine ele-

ments. Instead, the Court simply pointed to the fact

that the same elements were present in prior art de-

vices, where a skilled artisan could have located

them, had he looked. Thus, in Graham, the Court

said: “It is .. . irrelevant that no one apparently

F.3d 994, 1000 (Fed. Cir. 1999) (“Because we do not discern any finding

by the [PTO] that there was a suggestion, teaching, or motivation to

combine the prior art references cited against the pending claims, the

[PTO’s] conclusion of obviousness, as a matter of law, cannot stand.”).

'S See, e.g., Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376,

1385 (Fed. Cir. 2001) (“In holding an invention obvious in view of a

combination of references, there must be some suggestion, motivation, or

teaching in the prior art that would have led a person of ordinary skill in

the art to select the references and combine them in the way that would

produce the claimed invention.”) (collecting cases); ATD Corp. v. Lydall,

Inc., 159 F.3d 534, 546 (Fed. Cir. 1998) (“There must be a teaching or

suggestion within the prior art, or within the general knowledge of a

person of ordinary skill in the field of the invention, to look to particular

sources of information, to select particular elements, and to combine

them in the way they were combined by the inventor.” (collecting cases);

In re Rouffet, 149 F.3d 1350, 1355-56 (Fed. Cir. 1998); In re Chu, 66 F.3d

292, 298 (Fed. Cir. 1995).

18

chose to avail himself of knowledge stored in the Pat-

ent Office.” 383 U.S. at 36."4

B. Moreover, the Federal Circuit has turned up-

side down the ranking of Graham’s “primary” and

“secondary” obviousness factors. Graham and this

Court’s other § 103 decisions direct lower courts to

focus on the primary factors and to consider second-

ary factors, such as commercial success, only in close

cases where they might tip the balance. In contrast,

the Federal Circuit requires that secondary factors

must be considered in every case (not just in close or

doubtful cases), and that the secondary considera-

tions are more important as indicators of unobvious-

ness than the primary considerations that this Court

identified in Graham.'® Indeed, the Federal Cir-

cuit has gone so far as to hold that, as in the present

case, the secondary considerations will trump a

prima facie of obviousness based on the Graham pri-

mary considerations.'® Moreover, the Federal Circuit

‘ The principle is not limited to “knowledge stored in the Patent

Office.” In Black Rock, the Court applied the same principle to machines

that competitors had previously sold.

'® Ruiz v. A.B. Chance Co., 234 F.3d 654, 667 (Fed. Cir. 2000) (“Our

precedents clearly hold that secondary considerations . . . must be

considered in determining obviousness.”); Custom Accessories, Inc. v.

Jeffrey-Allan Indus., Inc., 807 F.2d 955, 960-61 (Fed. Cir. 1986) (holding

that “[fJailure to consider such evidence [of commercial success] is clearly

error” and reversing district court for following regional circuit prece-

dents that commercial success “without invention will not make patent-

ability”) (internal quotation marks omitted); Hybritech Inc. v. Monoclonal

Antibodies, Inc., 802 F.2d 1367, 1380 (Fed. Cir. 1986) (commercial success

“must be considered before a conclusion on obviousness is reached and is

not merely ‘icing on the cake”); Stratoflex, Inc. v. Aeroquip Corp., 713

F.2d 1530, 1538-39 (Fed. Cir. 1983) (“not just when the decisionmaker

remains in doubt”). -

'6 Simmons Fastener Corp. v. Illinois Tool Works, Inc., 739 F.2d 1573

(Fed. Cir. 1984), is illustrative of the preemptive effect of commercial

success. The district court used the Graham primary factors to find the

patent clearly obvious; then, following pre-1982 local circuit precedent,

it refused to consider commercial success and invalidated the patent.

The Federal Circuit reversed “because the trial court erred as a matter

19

maintains that it must be presumed that the merits

of the alleged invention caused commercial success,

so that the patentee is not obliged to show (as it did

not show here) any causal nexus linking commercial

success to inventive merit.'”

The Federal Circuit’s reliance on commercial suc-

cess and other secondary considerations to trump the

Graham primary factors flatly conflicts with this

of law in refusing to consider” commercial success. Id. at 1574-75. The

Federal Circuit then quoted its own precedents, holding that evidence of

commercial success must always be considered, “not just when the

decisionmaker remains in doubt after reviewing the art.” Id. at 1575

(quoting Stratoflex, 713 F.2d at 1539).

The Federal Circuit continues to adhere to and extend its own rules on

commercial success. See, e.g., Winner Intl Royalty Corp. v. Wang, 202

F.3d 1340, 1350 (Fed. Cir.) (it is not error to find that commercial success

overcomes Graham primary factors), cert. denied, 530 U.S. 1238 (2000);

Tec Air, Inc. v. Denso Mfg. Michigan Inc., 192 F.3d 1353, 1360 (Fed. Cir.

1999) (holding that secondary considerations such as commercial success

can rebut prima facie case of obviousness based on prior art); Gambro

Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579-80 (Fed. Cir.

1997) (commercial success and other secondary considerations “are in-

variably relevant to a determination under Section 103,” and commercial

success combined with lack of teaching or suggestion to combine refer-

ences “requires a holding of nonobviousness”).

'? The Federal Circuit did not even pause in this case to ask whether

any specific causative or probative relationship existed between the

commercial success of the patented system and the actual merits of the

supposed advance in technology that it embodied. That was unnecessary

to the Federal Circuit, because it has established a presumption that, if

a commercially successful product is the same as the patented product,

the merits of the invention caused the commercial success, and it is up

to the infringer to prove otherwise. Winner Int1, 202 F.3d at 1351; Tec

Air, 192 F.3d at 1360; Demaco Corp. v. F. Von Langsdorff Licensing Ltd.,

851 F.2d 1387, 1394 (Fed. Cir. 1988). The district court stated that it was

following this presumption. App. 56a.

The presumption is contrary to this Court’s precedent under § 103,

because the Court held the supposed inventions obvious in all three § 103

cases (Graham, Black Rock, and Ag Pro) in which commercial success

was urged in support of unobviousness. In those cases, this Court did not

presume that the commercial success of the patented devices meant that

they had inventive merit.

20

Court’s decisions holding patents obvious under § 103

despite their commercial success. In this case, the

Federal Circuit supported its reliance on secondary

considerations to supersede the Graham primary

considerations by quoting an earlier Federal Circuit

opinion, Stratoflex, 713 F.2d at 1538: “evidence of

secondary considerations may often be the most pro-

bative and cogent evidence in the record.” In con-

trast, in Ag Pro, this Court held obvious a commer-

cially successful patented barn flushing system, be-

cause the system was obvious under a Graham analy-

sis: “this patent simply arranges old elements with

each performing the same function it had been known

to perform, although perhaps producing a more strik-

ing result than in previous combinations.” 425 U.S.

at 282. Similarly, in Black Rock, the Court held a

commercially successful machine obvious, regardless

of commercial success, because the patent failed un-

der a Graham analysis: the known elements, when

combined, did not produce a “new or different func-

tion.” 396 U.S. at 60 (internal quotation marks

omitted).

Commentators and academics have observed that

the Federal Circuit has superseded Supreme Court

law on commercial success and obviousness with a

widely different legal standard. See, e.g., Robert

Desmond, Nothing Seems “Obvious” to the Court of

Appeals for the Federal Circuit: The Federal Circuit,

Unchecked by the Supreme Court, Transforms the

Standard of Obviousness Under the Patent Law, 26

Loy. L.A. L. Rev. 455, 476 (1993) (hereafter “Des-

mond, Nothing Seems Obvious”) (“The CAFC rewrote

the Supreme Court’s Graham standard for obvious-

ness by greatly increasing the value of the secondary

considerations in its analysis to the point that mere

secondary considerations under Graham have become

21

the primary decision-making factors in a court’s obvi-

ousness analysis.”).!®

C. The Federal Circuit’s innovations in the con-

struction of § 103 conflict with this Court’s studied

effort in Graham and its progeny to avoid the risk of

an unconstitutional construction of § 103. This Court

has harmonized the statute and the Constitution by

reading the Constitution’s high level of invention into

the statute. See supra p.11. Thus, when the gap

between the prior art and the supposed invention

is too slight to satisfy the Constitution’s require-

ment of invention (i.e., the Discovery of an Inventor),

the supposed invention fails Graham’s primary-

considerations test. At least, that is what occurs un-

der this Court’s analysis, as explained in Graham

and later decisions. But that is not what occurs in

the Federal Circuit’s analysis. Instead, the Graham

primary considerations are trumped either by lack of

suggestion in the prior art or by commercial success.

The Federal Circuit has effectively read the require-

ment of invention out of § 103.’ Clearly, the analysis

that the Federal Circuit commands runs the risk of

replacing the constitutional standard of invention

with a lesser standard, and, by the same token, risks

an unconstitutional construction of § 103.

The time has come, after 20 years of increasing

Federal Circuit supersession of this Court’s obvious-

ness standard with a nonstatutory, conflicting stan-

dard, for this Court to restore the interpretation of

'® See also Paul M. Janicke, To Be or Not To Be: The Long Gestation of

the U.S. Court of Appeals for the Federal Circuit (1887-1982), 69 Antitrust

L.J. 645, 662 (2002) (noting that “Federal Circuit has expressly dis-

mantled many of the mechanisms the Supreme Court relied upon when

deciding obviousness questions’).

’® “Invention,’ since the advent of § 103, is no longer the prerequisite

to patentability which it was prior to 1952.” Richdel, Inc. v. Sunspool

Corp., 714 F.2d 1573, 1580 (Fed. Cir. 1983).

22

§ 103 that this Court held in Graham is compelled by

both the Constitution and congressional intent.

Ill. THE FEDERAL CIRCUIT’S LEGAL TEST

FOR OBVIOUSNESS CONFLICTS WITH

THE TEST PREVIOUSLY APPLIED BY

THE REGIONAL CIRCUITS

Before exclusive jurisdiction over patent appeals

was vested in the Federal Circuit in 1982, see 28

U.S.C. § 1295(a), other circuits followed the decisions

of this Court under § 103.”° Before 1982, this case

* See, e.g., Second Circuit: Owens-Illinois, Inc. v. Emhart Indus., Inc.,

644 F.2d 98, 100 (2d Cir. 1981) (“secondary considerations will not sup-

port a claim of invention if the subject matter of the patent does not pass

the section 103 test of non-obviousness”) (collecting cases); Continental

Can Co. v. Old Dominion Box Co., 393 F.2d 321, 326 (2d Cir. 1968)

(“Commercial success and solution of a long-standing need in the art

are secondary considerations which cannot breathe life into a patent

otherwise invalid because of obviousness.”); Third Circuit: Continental

Can Co. v. Crown Cork & Seal Co., 415 F.2d 601, 602 (3d Cir. 1969)

(secondary considerations cannot support nonobviousness if patent is

obvious on basis of prior art); Fourth Circuit: American Monorail Co. v.

Parks-Cramer Co., 245 F.2d 739, 741 (4th Cir. 1957) (commercial success

“may be invoked to aid a patent only . . . [in a] doubtful” case); Fifth

Circuit: Cathodic Protection Serv. v. American Smelting & Ref. Co., 594

F.2d 499, 513 (5th Cir. 1979) (where claims are clearly obvious based on

the Graham primary considerations, “we need not examine the secondary

considerations”); Sixth Circuit: Kaiser Indus. Corp. v. McLouth Steel

Corp., 400 F.2d 36, 41 (6th Cir. 1968) (“these considerations are truly

secondary and will not serve as a substitute for” the Graham primary

factors); Nelmor Corp. v. Jervis Corp., 354 F.2d 923, 925 (6th Cir. 1966)

(commercial success, while important in doubtful cases, does not make

patents valid if they are obvious from prior art); Seventh Circuit: Dual

Mfg. & Eng’g, Inc. v. Burris Indus., Inc., 619 F.2d 660, 666-67 (7th

Cir. 1980) (en banc) (commercial success cannot overcome prima facie

case of obviousness based on the Graham primary considerations); Lee

Blacksmith, Inc. v. Lindsay Bros., Inc., 605 F.2d 341, 345 (7th Cir. 1979)

(secondary factors should be considered “[o}nly in a close case”) (internal

quotation marks omitted); Research Corp. v. NASCO Indus., Inc., 501

F.2d 358, 362 (7th Cir. 1974) (secondary considerations are “useful make-

weights in doubtful cases”); Eighth Circuit: L.S. Donaldson Co. v. La

Maur, Inc., 299 F.2d 412, 423 (8th Cir. 1962) (evidence of commercial

success may be considered only in doubtful cases); Ninth Circuit: Bristol

Locknut Co. v. SPS Techs., Inc., 677 F.2d 1277, 1281 (9th Cir. 1982)

23

would have gone to the Sixth Circuit on appeal. That

circuit followed this Court’s Graham test and presu-

mably would have held the patent invalid as an obvi-

ous technical development.*’ But appeals now going

to the Federal Circuit result in judgments opposite to

those that the regionai circuits would have reached

before 1982.77 We recognize that § 1295 means that

this type of conflict is only one of principle and that

recurring divisions among the courts of appeals can

no longer be generated in patent matters. Nonethe-

less, that law did not empower the Federal Circuit to

create a new substantive law for patents — one that is

inconsistent with this Court’s decisions and those of

the regional circuits that decided these issues before

the Federal Circuit’s creation. The Federal Circuit

was created to bring about uniformity in patent law

and decrease forum shopping, not to create a new

substantive law of patents that supersedes the sub-

stantive law of this Court and the regional circuits.

(Graham's secondary factors should be considered only when the Graham

primary factors are not dispositive); Alcor Aviation, Inc. v. Radair, Inc.,

527 F.2d 113, 117 (9th Cir. 1975) (secondary considerations cannot make

an obvious method patentable).

2! See, e.g., Eltra Corp. v. Basic Inc., 599 F.2d 745, 756 (6th Cir. 1979)

(“commercial success and the satisfaction of long-felt needs are alone not

sufficient to establish that the product” is not obvious); American Seating

Co. v. National Seating Co., 586 F.2d 611, 622 (6th Cir. 1978) (holding

that, “[aJlthough in a close case secondary factors may tip the scales

toward patent validity, they cannot save a patent from invalidity when

. . . [as here] obviousness is clear”); Reynolds Metals Co. v. Acorn Bldg.

Components, Inc., 548 F.2d 155, 162 (6th Cir. 1977) (“commercial success

alone will not render a patent valid”).

» The Federal Circuit has reversed district court judgments because

the district court followed regional circuit law as to obviousness. See, e.g.,

Custom Accessories, 807 F.2d at 960-61 (reversing Northern District of

Illinois because the district court followed en banc Seventh Circuit

precedent, see Dual Mfg., 619 F.2d at 666-67, that commercial success

could not overcome a prima facie case of obviousness based on the

Graham primary considerations); Ashland Oil, supra, reversing 587 F.

Supp. 1406, 1415 (E.D. Mich. 1984) (same, prima facie obviousness based

on Sixth Circuit precedent and Ag Pro).

24

Christianson v. Colt Indus. Operating Corp., 486 U.S.

800, 820 (1988) (Stevens, J., concurring).

In Dickinson v. Zurko, 527 U.S. 150 (1999), this

Court granted certiorari to consider the propriety of

the Federal Circuit’s “departure from the norm” (id.

at 155) in refusing to follow the Administrative Pro-

cedure Act’s (“APA”) standard for judicial review of

agency actions, on appeals from PTO refusals to

grant patent monopolies.** The Court held that the

Federal Circuit’s “departure from the norm” should

be corrected, that it was not free to create its own

standard of judicial review for the PTO, and that

it should follow the same standard other circuits

used for reviewing other agencies. In Zurko, the

Court granted certiorari to correct the Federal Cir-

cuit in the absence of a direct conflict. Nonetheless,

the Federal Circuit’s standard of judicial review was

of sufficient national importance to warrant this

Court’s intervention.

The present case reflects another instance in which

the Federal Circuit has exceeded its charter by creat-

ing new substantive law superseding prior law in the

field. As it did in Zurko, this Court should rein in the

lower court and bring its patent jurisprudence into

congruence with the proper role of a subordinate

court in the federal judiciary system.

IV. THE FEDERAL CIRCUIT’S LEGAL STAN-

DARD FOR OBVIOUSNESS DAMAGES

THE PATENT SYSTEM

The Federal Circuit’s approach to obviousness un-

dermines the federal policies of limiting patent mo-

nopoly grants to true inventions. Thomas Jefferson,

* In Zurko, the PTO refused to grant a patent because it found that

the supposed invention “was obvious in light of prior art.” 527 U.S. at

153. The en banc Federal Circuit unanimously reversed the PTO because

it considered the agency’s fact-findings to be “clearly erroneous.” In the

Federal Circuit’s view, a deferential, APA standard of judicial review of

the PTO was unsuitable. This Court reversed.

25

the “first administrator of our patent system,” Gra-

ham, 383 U.S. at 7 (internal quotation marks omit-

ted), “did not believe in granting patents for small

details, obvious improvements, or frivolous devices,”

insisted “upon a high level of patentability,” id. at 9,

and cautioned against granting monopolies on slight

advances not “worth to the public the embarrassment

of an exclusive patent,” id. at 9, 10-11 (internal

quotation marks omitted). Accordingly, “‘competition

should not be repressed by worthless patents,” Lear,

395 U.S. at 663-64 (quoting Pope Mfg., 144 U.S. at

234), or trivial advances.

A. The Federal Circuit’s Standard Is Too Lax

1. The Federal Circuit’s approach is substantially

increasing the number of unworthy patents issued by

the PTO and enforced in the courts. That is a devel-

opment that this Court specifically warned against in

Graham (383 U.S. at 18-19):

We have observed a notorious difference between

the standards applied by the Patent Office and by

the courts. While many reasons can be adduced

to explain the discrepancy, one may well be the

free rein often exercised by Examiners in their

use of the concept of “invention.” . . . This is it-

self a compelling reason for the Commissioner to

strictly adhere to the 1952 Act as interpreted

here. This would, we believe, not only expedite

disposition but bring about a closer concurrence

between administrative and judicial precedent.

The Federal Circuit has gone far to eliminate the

discrepancy, but it moved in the wrong direction —

instead of raising the obviousness standard of the

PTO to that of this Court, it has lowered the obvious-

ness standards of the lower federal courts to that

condemned by this Court in Graham. Indeed, be-

cause the Federal Circuit’s construction of § 103 ap-

plies to grants and denials of patents by the Commis-

sioner of Patents as well as to obviousness determi-

nations in patent infringement cases in district

26

courts, the Federal Circuit has brought about the dia-

metric opposite of the change in the Commissioner’s

standards that Graham demanded.”4

2. The Federal Circuit’s requirement of document-

ing a suggestion in the prior art to combine the old

elements of the patented device creates a significant

practical difficulty because a teaching, suggestion, or

motivation to combine the elements of two or more

patented devices to arrive at the structure of a third

device rarely exists. If such a reference did exist, it

could anticipate, and thus invalidate, the patent un-

der § 102.” Furthermore, if a prior art reference did

suggest combining the elements of a patented device,

the author of the prior art reference would likely al-

ready have applied for a patent on the combination.

Therefore, “through its suggestion test, the CAFC

effectively ensured it would rarely find patents for

new combinations of prior art obvious.” Desmond,

Nothing Seems Obvious, 26 Loy. L.A. L. Rev. at 475-

76.

The stated purpose of the Federal Circuit’s require-

ment that any combination of two references must be

supported by a third reference suggesting the combi-

* See, e.g., In re Lee, 277 F.3d at 1342-43 (collecting authorities re-

quiring PTO to follow test of documenting suggestion in prior art before

combining references); In re Huang, 100 F.3d 135, 139 (Fed. Cir. 1996)

(“In deciding whether or not a claimed invention is obvious, we have

instructed the [PTO] that it must consider objective evidence of non-

obviousness — e.g. commercial success.”). Petitioners acknowledge that

§ 103 should be construed the same way in patent infringement cases and

PTO proceedings. Petitioners challenge, however, the low standard of

invention that the Federal Circuit applies equally in both contexts.

*° Section 102 provides that a claimed product will be unpatentable

(“anticipated”) if all of its elements in combination are identically

disclosed in a single reference. In re Robertson, 169 F.3d 743, 745 (Fed.

Cir. 1999); In re Schreiber, 128 F.3d 1473, 1477 (Fed. Cir. 1997).

27

nation is to “guard against falling into hindsight.”

Yet, in every one of the obviousness determinations

by this Court since the enactment of § 103, the Court

did not rely on anything in the prior art to justify

combining the elements of the prior art references.

The Federal Circuit’s remedy is excessive and over-

inclusive relative to the problem addressed, and is

therefore improper. Careful scrutiny of the primary

obviousness factors and detailed analysis of their im-

plications will suffice, as this Court’s determinations

of obviousness in Graham, Black Rock, Johnston,

and Ag Pro, and of nonobviousness in Adams, clearly

show.

3. Besides flouting this Court’s precedent, the

Federal Circuit’s elevation of Graham’s secondary

considerations above the primary considerations dis-

torts the underlying rational foundations of the pat-

ent system, as academics and commentators have

pointed out.”’ Because patents without commercial

* Ruiz, 234 F.3d at 664 (“In order to prevent a hindsight-based

obviousness analysis, we have clearly established that the relevant

inquiry . . . is whether there is a reason, suggestion, or motivation in the

prior art or elsewhere that would have led one of ordinary skill in the art

to combine the references.”); Ecolochem, Inc. v. Southern California

Edison Co., 227 F.3d 1361, 1371 (Fed. Cir. 2000) (same), cert. denied, 532

U.S. 974 (2001); In re Dembiczak, 175 F.3d at 999 (same); In re Rouffet,

149 F.3d at 1359 (same).

“7 One widely used textbook observes that the rationale supporting

reliance on commercial success rests on a chain of weak inferences

that add up to “a fragile thread on which to hang a conclusion of non-

obviousness.” Martin J. Adelman, Randall R. Rader, John R. Thomas

& Harold C. Wegner, Cases and Materials on Patent Law 455 (1998)

(“Adelman, Patent Law”). See also Edmund Kitch, Graham v. John Deere

Co.: New Standards for Patents, [1966] Sup. Ct. Rev. 293 (arguing that

basing unobviousness on evidence of commercial success depends on a

series of faulty inferences); Robert P. Merges, Commercial Success and

Patent Standards: Economic Perspectives on Innovation, 76 Cal. L. Rev.

803, 838, 842 (1988) (“Commercial success is a poor indicator of patent-

ability because it is indirect; it depends for its effectiveness on a long

chain of inferences, and the links in the chain are often subject to doubt.

28

value are not litigated, the Federal Circuit’s rule cre-

ates an unjustified presumption that “all patents

that are litigated should be held valid.” Adelman,

Patent Law 455. Furthermore, such patents are

least in need of monopoly incentives; yet, they impose

the heaviest monopoly tax on the public, because they

enjoy the heaviest sales.”® Elevating commercial suc-

cess over the Graham primary considerations thus

drags down the standard of patentability, contrary to

the consistent policy teachings of this Court — from

Atlantic Works through Graham and Bonito Boats —

that the public should pay patent monopoly taxes

only for a true invention, and that it is entitled to

free and open competition in the manufacture and

sale of products that lack the technological and in-

ventive merit to qualify for protection under the pat-

ent statute. See Bonito Boats, 489 U.S. at 151 (“[T]he

federal patent laws must determine not only what is

protected, but also what is free for all to use.”).

Because the Federal Circuit applies the same low

standard of invention in its review of the Com-

missioner’s rejection of patent applications as that

court does in patent infringement cases, the adverse

impact on the public is widened and made even more

harmful.”

. .. [The second objection to the commercial success doctrine is that it]

assumes an overly simplistic model of innovation.”).

* See Adelman, Patent Law 455-56 (“Commercially successful patents

are the ones that truly impose a monopoly tax on the market, and

therefore courts should be even more cautious in holding them valid.

Furthermore, it is in the area of innovations that quickly meet consumer

acceptance that the innovator has the best chance of recovering his

special costs without a patent monopoly.”).

*° Because the Federal Circuit’s construction of § 103 also has a

significant impact on the administration of the PTO, the Court may

consider it appropriate to call for the views of the Solicitor General.

29

B. The Federal Circuit Has Far Exceeded Its

Assigned Role in Patent Cases

The Federal Circuit was created in 1982 to respond

to a number of then-prevailing views of members of

this Court, the informed bar, and Congress that a

greater degree of uniformity in patent law decisions

would be desirable. A significant concern was ex-

pressed, however, that a new, specialized court would

insulate patent law from “the self-correcting forces”

of the general law and encourage development of a

separate body of law that could be “at odds with the

policies pursued by the general law.” Simon Rifkind,

A Specialized Court for Patent Litigation? The Dan-

ger of a Specialized Judiciary, 37 ABA J. 425, 425

(1951). See also Daniel J. Meador, Origin of the Fed-

eral Circuit: A Personal Account, 41 Am. U. L. Rev.

581, 587-88 (1992) (discussing “widespread sentiment

[that] was evident among the bench and bar” over

risks of specialized courts, coinciding with the con-

cerns that Judge Rifkind had expressed).

That concern has largely been borne out, as the

achievement of uniformity has come at the cost of

fidelity to this Court’s precedents and congressional

intent. In four cases over the past ten years, this

Court has seen fit to reverse or limit the Federal Cir-

cuit’s overly permissive holdings in favor of patents.*°

*° See Florida Prepaid Postsecondary Educ. Expense Ba. v. College

Sav. Bank, 527 U.S. 627 (1999) (reversing Federal Circuit’s ruling that

patent statute abrogated state sovereign immunity); Dickinson v. Zurko,

527 U.S. 150 (1999) (reversing Federal Circuit’s failure to apply APA

standard of review to PTO fact-findings); Warner-Jenkinson Co. v. Hilton

Davis Chem. Co., 520 U.S. 17 (1997) (reversing Federal Circuit’s failure

to consider all of the requirements under doctrine of equivalents);

Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83 (1993) (reversing

Federal Circuit's practice of vacating invalidity decisions as moot). See

also Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., No. 00-1543,

2002 WL 1050479 (U.S. May 28, 2002) (reversing Federal Circuit for

failing to follow Supreme Court’s Warner-Jenkinson decision).

30

Although the standard of obviousness arises in vir-

tually every litigated patent case, this Court has

never reviewed a Federal Circuit decision applying

the obviousness standard of § 103. Because that

court’s decisions depart markedly from this Court’s

precedents and the body of decisions of the regional

circuits antedating the establishment of the Federal

Circuit, this Court should now redress the Federal

Circuit’s aberrational construction of this fundamen-

tal provision of patent law.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

PETER D. EHRENHAFT

Counsel of Record

ALAN I. HOROWITZ

MILLER & CHEVALIER,

CHARTERED

655 Fifteenth Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 626-5905

RICHARD H. STERN

DAVID C. FREDERICK

KELLOGG, HUBER, HANSEN,

TODD & EVANS, P.L.L.C.

1615 M Street, N.W.

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June 5, 2002