We know who T-Boned the In re Translogic Technology, Inc. patent holder and their $86.5 million patent infringement verdict. Patent holders everywhere should be on the lookout for one of those new "KSR" cars bearing license plates with the letters "P.T.O." . . .
In re Translogic Technology, Inc. involved a patent covering a multiplexer-a type of complex electrical circuit. Patent holder Translogic initiated infringement litigation against alleged infringer Hitachi Limited in 1999. In 2003, a jury upheld the validity of Translogic's patent. In May 2005, following a finding of induced infringement, Translogic received an $86.5 million jury award for patent infringement damages. After the jury's verdict the district court entered a permanent injunction.
Shortly after the original filing of the district court litigation, Hitachi initiated the first of five third party requests for re-examination of the relevant patent in the PTO. The PTO merged the various requests into a single, separate proceeding which wound its way through the PTO during the pendency of the district court action. In 2004, the PTO rejected a critical portion of the Translogic patent on the grounds that the claims would have been obvious at the time of invention. In July of 2005, following Translogic's attempt at claim amendment, the PTO affirmed its rejection of the Translogic patent.
Various appeals ensued. The federal circuit consolidated them (staying the injunction) and-ouch-went with the PTO's determination. Cleaving to the dictates of the Supreme Court's decision in KSR International Co. v. Teleflex Inc. (while first making short work of a disputed claim limitation), the Translogic court served up a crash course on obviousness.
Patent holders navigating an obviousness-based validity challenge face a rocky road. After KSR, the relevant inquiry is whether differences between the patented subject matter and the prior art would have been obvious at the time of invention to a person of ordinary skill in the art. The old "teaching suggestion and motivation" ("TSM") test for obviousness continues its death spiral. Instead, KSR dictates that "common sense" and "flexibility" take precedence in determining whether an invention is obvious in light of prior art. All prior art is considered part of the public domain and it doesn't matter whether the art that suggests the new invention is in a different field or solves a different problem. As we predicted when KSR first issued, alleged infringers have freer reign to string together disparate inferences from different fields of endeavor to show that all elements of an invention existed in prior art references.
Despite five years of litigation, a jury's verdict and the issuance of a permanent injunction by the district court, patent holder Translogic could not overcome KSR's heavy toll. Translogic attempted to demonstrate that the prior art reference offered by Hitachi taught away from its invention because it involved a logic solution rather than multiplexers. The court disagreed, saying that one with "ordinary skill" in the art (circuitry) would look to logic for likely solutions. Translogic's other attempts to distinguish the prior art met a similar fate-easy dismissal under KSR's requirements that the invention exceed the capabilities of someone with ordinary imagination skilled in the art.
We wonder whether anyone took a wrong turn. The opinion does not discuss whether Translogic told their invention story in an effort to demonstrate the requisite amount of novelty. Nor does it discuss whether Translogic offered evidence of market-based motivations like long-felt need and the failure of others to offer a satisfactory competing product. Still, allowing an alternative proceeding to obviate five years of litigation and the work of the district court should give litigants and their trial counsel pause. Certainly, this decision creates an incentive for alleged infringers to utilize the PTO as an alternative forum for dispute resolution-"tire kicking" that, at best, may further complicate patent litigation and at worst, may have the undesired effect of wasting judicial resources.
Patent holders need to buckle up. Patent litigation has become a much riskier undertaking. Now, more than ever, the foresight of experienced counsel may prove to be the difference between patent holders who walk away from patent litigation and those who crash and burn.
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