Fortune Small Business recently ran “A guide to what you can (and can’t) patent” as a response to a question posed by a reader regarding the patentability of “an idea for a website.”

In an attempt to get the best information for its audience, Fortune went straight to the United States Patent and Trademark Office.

Good idea, right?

I’m not so sure.

Jennifer Rankin Byrne, the Office spokeswoman interviewed for the article, properly told the author that patentability might exist for any business method that underlies the web site idea.

So far, so good.

She didn’t stop there, though. Nope. In an apparent attempt to reference the basic requirements for patentability (utility, novelty, and nonobviousness), Ms. Rankin Byrne noted that:

“…it would have to be representing something very innovative and new….”

(emphasis mine)

What?

It has to be ‘very innovative‘? Since when? Since the Supreme Court decided KSR v. Teleflex, perhaps?

To make matters worse, she never mentioned the nonobviousness requirement:

“It would have to be some new, novel technology or old technology that’s used in a new way. It would have to be representing something very innovative and new. It would have to be something more than a concept. The person applying for the patent would have to explain in a very detailed way how it would work,” Rankin Byrne said.

Some PTO watchers may see this official comment as harmless, while others may view it as accurately reflecting current examination policy.

No matter.

What matters to me is how the article’s audience views it.

Seems to me that the Patent Office just sent a strong message directly to our small business community: We only grant patents on very innovative inventions, so please don’t waste your time disclosing your plain old novel, useful and nonobvious inventions.

NOTE: Fortunately, the author of the article included a paragraph that notes the proper requirements for patentability.

1. Patent trolls and “bad patents” continue to be the rallying cry of the reformers. Amazing, then, that no mention was made of eBay v. MercExchange, KSR v. Teleflex, or the PTO rules limiting the ability to file continuation applications. Not one mention.

2. Patent reform has been fully politicized. The reformers have deftly called on the majority’s ability to control the rules of debate. A dissenting Democratic voice, Marcy Kaptur (from my hometown of Toledo, OH) stated it best (paraphrasing):

“Our time should not be squashed on this important issue” (speaking in an elevated voice over the speaker telling her that her time has expired)

Let the games begin.

The Senators questioned the substance of the apportionment of damages and post-grant review provisions of the bill:

These changes “need to be more carefully examined to ensure that they do not undermine innovation, increase frivolous litigation, or undermine property rights,” the letter said.

Surprisingly, the Senators did not question the appropriateness of the bill in the wake of KSR v. Teleflex. Many proponents of patent reform have cited the low obviousness hurdle as one of the driving needs for patent reform..and the Supreme Court clearly addressed that issue in its recent KSR decision. It seems that, in the wake of KSR, any patent reform motivated by concerns over obviousness should be put on hold until the legacy of that case becomes clear.

“KSR v. Teleflex – What are you telling your clients?”

The conversations we’ve had have been nothing short of fascinating. They’ve left us wanting more…If you’d like to give us your input, send me an e-mail at jmb@rtipllc.com. Fell free to use the comments, too.

Here’s my list of the top ten policy implications of the case, presented in no particular order. I’ll address each of these topics over the coming weeks here on Promote the Progress. The alternate title listed for each topic should give you an idea of where I’m going…

1. Patent protection is no longer available for incremental – or ordinary – inventions (or “Death – and the potential for rebirth – in Detroit”)

2. Legislation and regulations directed at patent reform should immediately be placed on hold (or “now’s not the time for silly games”)

3. The Patent Office responds (or “383 U.S. 1: Learn it, know it, live it“)

4. Patent lawyers respond (or “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run“)

5. In-house counsel and business folks reformulate the file/don’t file calculus (or “Did you do something extraordinary today?”)

6. Premiums paid for key – read ‘extraordinary’ – inventive personnel will increase (or “did you hear? Company X is hiring…”)

7. Look for industry specific caselaw pronouncements of technologies that constitute mere ‘ordinary innovation’ (or “Silly rabbit, these tricks are for kids“)

8. Patent maintenance fees increase dramatically as grant and maintenance rates drop just as dramatically (or “Hey buddy, can you spare a couple grand?”)

9. The backlog disappears (or “Hey…wait just a minute here”)

10. The Federal Circuit gets a chance to restablish itself as the court that brings uniformity to our patent laws (or “Let’s get going“)

We had a great discussion on all things KSR, touching on everything from nuances of the opinion to its practical effects. We even had a mention of Sarbanes-Oxley. Ouch! As always, Bob and Craig’s team did a wonderful production job – you can barely tell I was sitting in a rental car in the Hertz lot at Denver International Airport while taping the show!

It’s a quick listen – about half an hour. I definitely recommend it as you look for materials to help you digest the KSR decision.

Listen to the podcast here.

In KSR v. Teleflex, a unanimous Supreme Court reminded the Court of Appeals for the Federal Circuit that Graham v. John Deere controls the obviousness inquiry and warned that a rigid application of the teaching / suggestion / motivation test as a litmus test for obviousness is inconsistent with the Graham framework. Stopping short of rejecting the TSM test outright, the Supreme Court slapped the test into submission, leaving it gutless and wanting for a purpose. Simply put, the TSM shortcut for an obviousness analysis is no longer available. The Court’s decision immediately focuses the obviousness spotlight back onto the framework that has controlled the issue for more than forty years, forcing everyone who has grown comfortable with the TSM litmus test shortcut – including the Federal Circuit, the Patent and Trademark Office, and the patent bar – to return to full and proper Graham analyses when assessing the obviousness of patent claims. Importantly, the Court’s opinion touches on several other issues, including the roles of ‘hindsight bias’ and common sense in an obviousness inquiry, a question about the rationale for affording a presumption of validity to the patent-in-suit – which avoided a Graham analysis during prosecution, and a rejection of the rigid rule that ‘obvious to try’ is per se insufficient to show obviousness. KSR v. Teleflex is, without doubt, a case of enormous importance that will likely be viewed as a pivot point in United States patent law in years to come.

I say no. Right now, Congress is last in line in the patent reform debate, in my eyes.

Why’s that, you ask? It’s simple, really. The question we wanted to have answered by the first reform bill in the 110th Congress is this: How much progress has been made to overcome the giant chasm that separates the stakeholders?

The Patent Reform Act of 2007 certainly fulfilled its purpose. It certainly provided the answer to that burning question – a resounding ‘zero’. Yesterday’s hearing showed us that the 110th, is, necessarily, starting at the beginning….again. We haven’t moved a bit.

Does that mean reform is a dead issue right now? Again, I say no. It’s ironic, really. As legislative reform spins its wheels in Congress, both the courts and the Patent and Trademark Office are working to ensure that significant reform is made.

And they’re doing it now.

Want examples? Try these on for size. Think about KSR (I know you were already). Think about the Federal Circuit’s continued ‘reminders’ [example 1][example 2][example 3] of the flexibility of the TSM test as we wait for KSR. Think about the Amgen denial and the potential Supreme Court review of the Cybor de novo standard for claim construction review. Think about the rules package that is apparently making its way down the pike. Think about MedImmune and its progeny (there’s your reform right there). Think about the continued development of injunctive relief law in light of eBay (settlement tables continue to wobble as we speak). And, as my sleeper pick, think about Eon-Net and its potential effect on egregious troll-like litigation ’strategies’.

Don’t get me wrong…Congress clearly still wants in on the reform business. It’s just going to be a little late to the party.

An ironic result, indeed, considering that the first decision – penned by Chief Judge Michel – was clearly written as a resounding defense of the TSM test.

One hand polishes the test…..

As described by Justice Scalia during the KSR oral argument, the Federal Circuit tried to “polish up” the TSM test in Dystar Textilfarben v. C.H. Patrick.  The Dystar panel saw an opportunity, in essence, to write an amicus brief for consideration by the Supreme Court in KSR.  Writing for a unanimous panel, Chief Judge Michel penned a detailed defense of the TSM test and explained that, despite being misunderstood by many, the test is quite flexible and does not require an explicit motivation.

…while the other tarnishes it…

Oddly, six weeks after the decision in Dystar and less than two weeks before oral argument in KSR, a completely different panel of the Federal Circuit summarily dismissed a question of whether a motivation to combine existed in Optivus Technology v. Loma Linda University Medical Center.  The panel gave its motivation analysis in a single sentence:

“Here, there is no question that the CDR establishes that a person having a working familiarity with particle beam technology as it relates to cancer treatment, motivated by the need for more effective and efficient proton therapy facilities, would have been led to combine the University of Washington’s neutron therapy facility with the proton beam therapy design outlined in the CDR.”

That’s it.  There is no question.  Now go away.

This substantial omission of an analysis of the motivation issue highlights the arbitrary nature of the test and certainly bolsters the argument for its demise.  The timing of the decision in Optivus Technology in relation to Dystar only magnifies its message.

It’s hard to imagine how these two decisions, taken together, could bode well for maintaining the test in its current form.