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In two rare landmark rulings the US Supreme Court bashed some sanity into “Lawyers Gone Wild Vol 15”, otherwise known as the US patent system.

In 1981 the US patent swung under control of patent lawyers and experts, with the establishment of a single specialised patent court - the Court of Appeals of the Federal Circuit (CAFC).

By 2007, the US patent system has become a tool by which lawyers extort increasingly huge sums from unwitting and conflicted high-tech sectors. Step by step, CAFC turned the patent system from a tool to promote innovation to a tool for creating conflict, litigation, and profit-through-force.

CAFC, and the Supreme Court judgments are very relevant to Europe's position today.

SCOTUS made two rulings.

In the first, on AT&T vs. Microsoft, the justices decided 7-to-1 that distribution of software source code cannot violate patents. The source code is not a “component” (the thing that is patented) until it is installed on a PC. Think about what this means for open and free software.

In the second, Teleflex vs. KSR, SCOTUS bitch-slapped CAFC, saying it had “interpreted “obviousness” in a rigid, narrow manner” inconsistent with Section 103. In other words, CAFC had been twisting the rules to suit its own purposes. SCOTUS said:

Section 103 forbids the issuance of a patent when “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 at the time of the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

SCOTUS didn't just tell CAFC to start applying the (well known) law, it lectured the patent establishment about why this law existed in the first place:

“Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress,'' wrote Justice Anthony Kennedy.

The diversity of inventive pursuits and of modern technology counsels against confining the obviousness analysis by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasizing the importance of published articles and the explicit content of issued patents. In many fields there may be little discussion of obvious techniques or combinations, and market demand, rather than scientific literature, may often drive design trends.

In other words, people invent because they need to satisfy a market need, not because they want to publish scientific papers, and when the patent system starts to make its own rules, it retards progress.

Let me say that again, in bold, so no-one misses it.

Today, the US Supreme Court held, unanimously, that the specialised CAFC patent court had been bending patent law and as a consequence, retarding progress.

Now, why is this relevant to plans to create a single European patent court? Perhaps it's partly because the patent industry is firmly in control of patent policy in Europe, as it was in the US before these rare SCOTUS decisions. Perhaps it's because a single court means a single law, and the basis for that law is likely to be the twisted EPO interpretation of the EPC, an interpretation that over a fifteen years corrupted the essence of the patent convention until banned subject matter like software became a prime hunting for the patent lawyers. This happened in the States, no surprise it would happen here too.

But above all these reasons, the really terrifying aspect of the EPLA proposals is simply this: there is no equivalent to the US Supreme Court. Yes we have a European Court of Justice, but it is firmly excluded from any competence over the emerging EU patent system.

Think of it for a second… a system with all the flaws of the US system, and none of the correcting mechanisms. A lot of lawyers are going to make a killing in Europe's high-tech sector. High-five, it's Lawyers Gone Wild vol.16!!

Even if the ECJ was given some competence by a new EU-EPLA proposal, this would only be competence in matters where difficult legal questions of EU law arise, not in core matters of substantive patent law.

When saying "long swing back to sanity", do you have some evidence suggesting that this is the first time the Supreme Court has intervened against the CAFC mis-developments, and that this will be sustained by further interventions?

It remains to be seen how demanding the courts can become on non-obviousness. The EPO's boards of appeal have a very similar methodology of non-obviousness as the CAFC. What the SCOTUS criticises could also apply to the EPO. However, if the formalistic rules that now allow mass-granting of low-inventivity patents were to be discarded, that might lead to a dramatic reduction of the number of patents, maybe by 90%, which the lower courts will fight against and possibly even SCOTUS doesn't really want. It is unclear what would replace them and how a middle ground could be found that would still keep the patent industry in business.