IP News

Supreme Court Issues Opinions on Obviousness; Whether Software Qualifies As 'Component'

In the highly anticipated decision KSR Int'l Co. v. Teleflex, Inc., No. 04-1350, 550 U.S. ____ (2007), the Supreme Court unanimously held that the Federal Circuit's rigid application of its 'teaching, suggestion, or motivation' ('TSM') test to determine obviousness was inconsistent with the 'expansive and flexible approach' of past Supreme Court precedents like Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) and United States v. Adams, 383 U.S. 39 (1966).

Teleflex is the exclusive licensee of the 'Engelgau' patent at issue. The patent claimed an electronic sensor combined with an adjustable automobile pedal that can transmit the pedal's position to a computer in order to control the throttle. Teleflex sued KSR, a manufacturer of pedal systems, claiming that KSR's addition of a sensor to its adjustable pedal system infringed the Engelgau patent. KSR responded by arguing that the claimed invention was obvious under '103.

Adhering to the Graham analysis for determining obviousness, the district court granted summary judgment to KSR and concluded that Engelgau's claimed invention was obvious in light of the teachings of the prior art that included adjustable pedals and the use of sensors to detect pedal position in order to control the throttle. In addition, the district court applied the TSM test, which requires that some 'motivation or suggestion to combine the prior art teachings' be found in the prior art before finding a claim obvious, and reached the same conclusion. The Court of Appeals for the Federal Circuit reversed, finding that the district court did not strictly apply the TSM test.

In reversing the Federal Circuit's decision, Justice Anthony Kennedy, writing for the Court, ruled that what matters most is the objective reach of the claim in determining whether a claim is obvious. The Court acknowledged three considerable errors in the Federal Circuit's narrow application of the TSM test. First, the Federal Circuit was wrong in holding that one needs to look only at the problem the patentee was trying to solve. The Court stated that the correct analysis looks to any problem or need in the field to find a reason for the combination found in the claimed invention. Second, the Federal Circuit wrongly assumed that a person of ordinary skill looks only to prior art that addresses the same problem he/she is trying to solve. The Court stated that '[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.' Finally, the Court stated that the Federal Circuit erred when it concluded that a claim cannot be obvious by a showing that the combination was 'obvious to try.' The Court stated that whenever need or market pressure drive a person of ordinary skill to pursue known options, then a combination that was obvious to try can be an indicator of obviousness under '103.

Even though the Court rejected the Federal Circuit's rigid application of the TSM test in this case, it held that there is ' ' no necessary inconsistency between the idea underlying the TSM test and the Graham analysis.' Thus, while the TSM test may not be rigidly applied, it can offer helpful insights in an obviousness analysis.

In Microsoft Corp. v. AT&T Corp., No. 05-1056, 550 U.S. ____ (2007), the Supreme Court held that copies of Windows operating system, made from a master disk shipped from the United States and installed on computers overseas, were not components supplied from the United States and thus Microsoft was not liable for infringement under '271(f).

AT&T has a patent claiming an apparatus for digitally encoding and compressing recorded speech. Microsoft's Windows operating system has software code that when installed on a computer has the potential to infringe AT&T's patent. Microsoft sent a master Windows disk abroad to be copied and those copies were used to install Windows on the overseas computers. The master disk was never installed on any overseas computer. AT&T sued Microsoft alleging that the installation of Windows on computers overseas infringed its patent, and thus Microsoft was liable under '271(f) because Microsoft 'supplie[d] ' from the United States, for combination abroad, components of AT&T's patented [invention].'

Microsoft responded by first arguing that software that is unincorporated is intangible information and not a 'component' under '271(f) and second, that the foreign-made copies of Windows that were installed overseas were not 'supplie[d] ' from the United States.'

The district court disagreed with Microsoft and held it liable under '271(f). The Federal Circuit affirmed and held that software may be a 'component' of an invention and that software copied abroad from a master disk shipped from the United States is 'supplied' from the United States under '271(f).

In reversing the Federal Circuit's decision, Justice Ruth Bader Ginsburg writing for the Court, remarked that until software is expressed as a 'copy,' it remains uncombinable and thus cannot be a 'component' of an invention under '271(f)'s categorization. The Court analogized software in the abstract to a blueprint that may contain instructions on how to combine components of a patented device, but is not itself a combinable component. Thus, the Court held that a copy of Windows, and not Windows in the abstract, qualifies as a 'component' under '271(f). Further, the Court held that since the copies of Windows installed on the foreign computers were not supplied from the United States, Microsoft's conduct falls outside of '271(f) liability.

The Intellectual Property Strategist will have in depth coverage of these two decisions in an upcoming issue.

Whether Using Trademarks As Keywords Is a 'Use in Common': A Circuit Split Waiting to Happen?

In Hamzik v. Zale Corp/Delaware, No. 3:06-cv-1300, 2007 WL 1174863 (N.D. N.Y. 2007), the District Court for the Northern District of New York dismissed plaintiff Hamzik's trademark infringement claims filed against defendant Zale for use of the phrase 'dating ring' or 'dating rings' on its Web site.

According to the Complaint, plaintiff owns the registered trademark 'THE DATING RING.' Defendant has never placed plaintiff's mark on any of its products nor used the mark on its Web site or elsewhere. However, plaintiff alleged that the phrase 'you typed: dating ring,' appears on defendant's Web site alongside links to various types of rings when a search is performed using the phrase 'dating ring.' The court was faced with the question of whether this was a 'use' of plaintiff's mark within the meaning of the Lanham Act.

The court held that the mere fact that the 'dating ring' search phrase entered by the computer user is displayed back on the Web site does not transform it into a 'use' within the meaning of the Lanham Act. The court further held that the displayed result (various rings for sale) in response to the search is not a Lanham Act use. Thus, relying on its own precedent, the court found that the use of a trademark to trigger a keyword ad or a search result is not a use in commerce. However, the court cautioned that there may be a 'use' if plaintiff's trademark appears on the displayed search results associated with the goods.

In Google Inc., v. American Blind & Wallpaper Factory, Inc., No. 5:03-cv-05340-JF, (N.D.Cal. 2007), the District Court for the Northern District of California denied Google's summary judgment motion that sought declaratory relief that Google's sale of trademarked keywords in its AdWords program does not constitute use in commerce within the meaning of the Lanham Act.

In deciding whether Google's sale of trademarked terms, belonging to American Blind & Wallpaper Factory, Inc. ('ABWF'), as keywords constituted use in commerce, the court surveyed the case law on the issue of the sale of trademarks as keywords. The court noted the emerging distinction between the Ninth and Second Circuits on this issue.

While noting that Google identifies sponsored links as such, the court in this case was ultimately guided by Ninth Circuit precedent and concluded that the sale of trademarked terms in the AdWords program is a use in commerce within the meaning of the Lanham Act. The court, while noting that the issue of sponsored links is an unsettled question in the Ninth Circuit, denied Google's summary judgment motion regarding the likelihood of confusion because ABWF presented evidence that found survey respondents falsely believed that a sponsored link appearing on a Google search results page was affiliated with ABWF.

Hany Rizkalla, Ph.D. is an associate in the New York office of Kenyon & Kenyon LLP. He can be reached at 212-908-6105.

Supreme Court Issues Opinions on Obviousness; Whether Software Qualifies As 'Component'

In the highly anticipated decision KSR Int'l Co. v. Teleflex, Inc ., No. 04-1350, 550 U.S. ____ (2007), the Supreme Court unanimously held that the Federal Circuit's rigid application of its 'teaching, suggestion, or motivation' ('TSM') test to determine obviousness was inconsistent with the 'expansive and flexible approach' of past Supreme Court precedents like Graham v. John Deere Co. of Kansas City , 383 U.S. 1 (1966) and United States v. Adams , 383 U.S. 39 (1966).

Teleflex is the exclusive licensee of the 'Engelgau' patent at issue. The patent claimed an electronic sensor combined with an adjustable automobile pedal that can transmit the pedal's position to a computer in order to control the throttle. Teleflex sued KSR, a manufacturer of pedal systems, claiming that KSR's addition of a sensor to its adjustable pedal system infringed the Engelgau patent. KSR responded by arguing that the claimed invention was obvious under '103.

Adhering to the Graham analysis for determining obviousness, the district court granted summary judgment to KSR and concluded that Engelgau's claimed invention was obvious in light of the teachings of the prior art that included adjustable pedals and the use of sensors to detect pedal position in order to control the throttle. In addition, the district court applied the TSM test, which requires that some 'motivation or suggestion to combine the prior art teachings' be found in the prior art before finding a claim obvious, and reached the same conclusion. The Court of Appeals for the Federal Circuit reversed, finding that the district court did not strictly apply the TSM test.

In reversing the Federal Circuit's decision, Justice Anthony Kennedy, writing for the Court, ruled that what matters most is the objective reach of the claim in determining whether a claim is obvious. The Court acknowledged three considerable errors in the Federal Circuit's narrow application of the TSM test. First, the Federal Circuit was wrong in holding that one needs to look only at the problem the patentee was trying to solve. The Court stated that the correct analysis looks to any problem or need in the field to find a reason for the combination found in the claimed invention. Second, the Federal Circuit wrongly assumed that a person of ordinary skill looks only to prior art that addresses the same problem he/she is trying to solve. The Court stated that '[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.' Finally, the Court stated that the Federal Circuit erred when it concluded that a claim cannot be obvious by a showing that the combination was 'obvious to try.' The Court stated that whenever need or market pressure drive a person of ordinary skill to pursue known options, then a combination that was obvious to try can be an indicator of obviousness under '103.

Even though the Court rejected the Federal Circuit's rigid application of the TSM test in this case, it held that there is ' ' no necessary inconsistency between the idea underlying the TSM test and the Graham analysis.' Thus, while the TSM test may not be rigidly applied, it can offer helpful insights in an obviousness analysis.

In Microsoft Corp. v. AT&T Corp ., No. 05-1056, 550 U.S. ____ (2007), the Supreme Court held that copies of Windows operating system, made from a master disk shipped from the United States and installed on computers overseas, were not components supplied from the United States and thus Microsoft was not liable for infringement under '271(f).

AT&T has a patent claiming an apparatus for digitally encoding and compressing recorded speech. Microsoft's Windows operating system has software code that when installed on a computer has the potential to infringe AT&T's patent. Microsoft sent a master Windows disk abroad to be copied and those copies were used to install Windows on the overseas computers. The master disk was never installed on any overseas computer. AT&T sued Microsoft alleging that the installation of Windows on computers overseas infringed its patent, and thus Microsoft was liable under '271(f) because Microsoft 'supplie[d] ' from the United States, for combination abroad, components of AT&T's patented [invention].'

Microsoft responded by first arguing that software that is unincorporated is intangible information and not a 'component' under '271(f) and second, that the foreign-made copies of Windows that were installed overseas were not 'supplie[d] ' from the United States.'

The district court disagreed with Microsoft and held it liable under '271(f). The Federal Circuit affirmed and held that software may be a 'component' of an invention and that software copied abroad from a master disk shipped from the United States is 'supplied' from the United States under '271(f).

In reversing the Federal Circuit's decision, Justice Ruth Bader Ginsburg writing for the Court, remarked that until software is expressed as a 'copy,' it remains uncombinable and thus cannot be a 'component' of an invention under '271(f)'s categorization. The Court analogized software in the abstract to a blueprint that may contain instructions on how to combine components of a patented device, but is not itself a combinable component. Thus, the Court held that a copy of Windows, and not Windows in the abstract, qualifies as a 'component' under '271(f). Further, the Court held that since the copies of Windows installed on the foreign computers were not supplied from the United States, Microsoft's conduct falls outside of '271(f) liability.

The Intellectual Property Strategist will have in depth coverage of these two decisions in an upcoming issue.

Whether Using Trademarks As Keywords Is a 'Use in Common': A Circuit Split Waiting to Happen?

In Hamzik v. Zale Corp/Delaware, No. 3:06-cv-1300, 2007 WL 1174863 (N.D. N.Y. 2007), the District Court for the Northern District of New York dismissed plaintiff Hamzik's trademark infringement claims filed against defendant Zale for use of the phrase 'dating ring' or 'dating rings' on its Web site.

According to the Complaint, plaintiff owns the registered trademark 'THE DATING RING.' Defendant has never placed plaintiff's mark on any of its products nor used the mark on its Web site or elsewhere. However, plaintiff alleged that the phrase 'you typed: dating ring,' appears on defendant's Web site alongside links to various types of rings when a search is performed using the phrase 'dating ring.' The court was faced with the question of whether this was a 'use' of plaintiff's mark within the meaning of the Lanham Act.

The court held that the mere fact that the 'dating ring' search phrase entered by the computer user is displayed back on the Web site does not transform it into a 'use' within the meaning of the Lanham Act. The court further held that the displayed result (various rings for sale) in response to the search is not a Lanham Act use. Thus, relying on its own precedent, the court found that the use of a trademark to trigger a keyword ad or a search result is not a use in commerce. However, the court cautioned that there may be a 'use' if plaintiff's trademark appears on the displayed search results associated with the goods.

In Google Inc., v. American Blind & Wallpaper Factory, Inc., No. 5:03-cv-05340-JF, (N.D.Cal. 2007), the District Court for the Northern District of California denied Google's summary judgment motion that sought declaratory relief that Google's sale of trademarked keywords in its AdWords program does not constitute use in commerce within the meaning of the Lanham Act.

In deciding whether Google's sale of trademarked terms, belonging to American Blind & Wallpaper Factory, Inc. ('ABWF'), as keywords constituted use in commerce, the court surveyed the case law on the issue of the sale of trademarks as keywords. The court noted the emerging distinction between the Ninth and Second Circuits on this issue.

While noting that Google identifies sponsored links as such, the court in this case was ultimately guided by Ninth Circuit precedent and concluded that the sale of trademarked terms in the AdWords program is a use in commerce within the meaning of the Lanham Act. The court, while noting that the issue of sponsored links is an unsettled question in the Ninth Circuit, denied Google's summary judgment motion regarding the likelihood of confusion because ABWF presented evidence that found survey respondents falsely believed that a sponsored link appearing on a Google search results page was affiliated with ABWF.

Hany Rizkalla, Ph.D. is an associate in the New York office of Kenyon & Kenyon LLP. He can be reached at 212-908-6105.