We All Knew That - UK Supreme Court Rules on Patent Obviousness

Patents afford great protection for inventions, but have high threshold in order to ensure that few patents that disclose nothing new are issued. AS one can imagine from common sense, anything that is patented needs to not be obvious, as this would allow for the protection of something that lacks sufficient invention to merit protection. After all, if it is obvious, how can you claim you've invented or found it? Even with this is mind, what makes a patent 'obvious'? In a long awaited decision by the UK Supreme Court, the matter was (finally) put to bed, at least in the UK.

The case of Actavis Group PTC EHF v ICOS Corporation concerned a dosage patent owned by ICOS (EP1173181), which related to the use of tadalafil (more commonly known as Cialis) in a dosage form for the treatment of sexual dysfunction. The patent was exclusively licenced to Eli Lilly. Actavis initiated proceedings to revoke the patent, arguing that it was obvious (among other points), with the matter ultimately ending up with the Supreme Court.

The main point of contention in the case is section 3 of the Patents Act 1977, which sets out that "…an invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art". Put differently, an inventive step (a necessary component for being able to patent something) cannot include something that is 'obvious' to a person skilled in the art, having considered anything that forms the state of the art in which they are skilled in.

Typically the courts follow two tests on determining obviousness; (i) the Windsurfing/Pozzolli structure; and (ii) the EPO's problem-and-solution method.

The question of obviousness, as set out in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc., concerns an undetermined set of factors in the light of all the relevant circumstances. These may include "…the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success".

Lord Hodge then set out a number of factors that he considered were relevant to the case at hand. Without diving deeply into each one of them (totaling at nine different factors), they included:

• whether it was obvious to undertake a specific piece of research, at the priority date, which had a reasonable or fair prospect of success;
• the routine nature of the research and any established practice of following such research through to a particular point;
• the burden and cost of the research programme; and
• the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme.

Additionally, as the patent concerned is a dosage patent for the drug, one has to also take into consideration whether the specific dosage is indeed obvious.

The Court finally moved onto consider whether the patent in question was obvious. This began with the acknowledgement that it was obvious for the skilled team to pursue the pre-clinical and clinical research in order to implement the patent. The target for the research was also indeed to identify the appropriate dosage regime for tadalafil in the treatment of erectile dysfunction. The dosages tested would have included doses that were as low as described in the patent. This would, contrary to the decision at first instance, point to the patent being obvious more than not.

Clearly, as discussed by the Court, the approach to finding the correct dose would've been a 'no brainer' for the relevant skilled experts, and the patent was determined to be obvious. This was not contradicted even if following the EPO's problem-and-solution method.

In short, the Court found that "…the Court of Appeal was entitled to interfere with the trial judge’s assessment of obviousness and to hold that the… patent was invalid for lacking an inventive step".

The decision took a long hard look at the tests surrounding obviousness, and will clearly help further assessments of the same question in the future. The decision does also allow for the acceptance of routine or well-established inquiry as patentable subject matter, even if in this instance the dosage was obvious. 

It Ends Now - US Supreme Court Decides on Trademark Licence Expiry on Bankruptcy

An often overlooked facet of business is the aftermath of bankruptcy, particularly in commercial arrangements that don't directly involve a debt to the solvent third party. An example of such an arrangement is trademark licencing, where the party licensing a trademark merely enjoys the benefit of using the mark, and does not have any monies owed to them through the use of the mark (to put things very simply by way of example). One question that hasn't been fully answered in the US is what happens to the licence after the licensor goes bankrupt. The Court of Appeals has been torn on the issue of whether the company going bankrupt can effectively cancel the licence, which has now been looked at by the Supreme Court, who handed their decision in late May.

The case of Mission Product Holdings Inc. v Tempnology LLC concerned the brand "Coolcore", which was owned by Tempnology. The mark had been licenced to Mission in the US and worldwide and also exclusively allowed them to distribute certain Coolcore products in the US. Tempnology filed for bankruptcy during the licence term, and subsequently requested the 'rejection' (i.e. revocation) of the licence through the US Bankruptcy Court. Mission challenged the rejection of the licence, with the matter ultimately ending up with the Supreme Court.

Under section 365(a) of the US Bankruptcy Code the debtor gives a debtor the option, subject to court approval, to "assume or reject any executory contract", i.e. a contract that neither party has finished performing prior to the bankruptcy proceedings. Any rejection of a contract under the provision is an immediate breach of that agreement under contract law, giving the other party the possible route of seeking damages as a result of that breach.

Michael's strategy was no longer a desirable option

In considering the actual meaning of the provision, the Court set out that the section is there to preserve the rights owned by the company before bankruptcy in bankruptcy, and similarly cannot expand on those rights in the same vein. Any trustee in bankruptcy would, therefore, retain those rights and obligations even once bankruptcy proceedings have begun. The Court continued that "…If trustees (or debtors) could use rejection to rescind previously granted interests, then rejection would become functionally equivalent to avoidance… [and] would roll back a prior transfer". The Court was therefore very careful in protecting granted rights, even in the event of bankruptcy.

The Court also rejected Tempnology's argument that, due to exceptions being present in section 365 (providing for protection after 'rejection' to specific parties), that all other parties would therefore not be protected in the same way, including trademark licensees.

Ultimately, the Court therefore held that, under section 365(a), a rejection of a trademark licence under the provision would amount to a breach of contract, and therefore the company cannot rescind that the contract previously granted.

The decision gives needed clarity due to a split in the Court of Appeals Circuits, but does raise further uncertainties that will need to be answered in the future. This writer understands that those would include the scope of non-debtor parties' post-rejection rights under law outside of bankruptcy. In any event, the decision will have a big impact on any bankruptcy proceedings, and companies will have to take heed if any bankruptcy involves trademark licences.