Background as to the patent law in the U.S.
Justice Clark, writing for the majority, first briefly explained the history and policy behind U.S. patent law, beginning with the Patent Act of 1790. He explained that U.S. patent law was originated by Thomas Jefferson, who based his ideas on patent law on the utilitarian economic concern of promoting technological innovation rather than protecting inventors’ moral rights to their discoveries. This was largely because Jefferson was quite suspicious of monopolies. This legal theory was embodied in the words of the Constitution itself, in the words of the Patents and Copyright Clause (Art. I, § 8, cl. 8). Thus, Jefferson intended that the limited monopoly granted by a patent was only to be permitted in order to "promote the progress of science", rather than for small details and obvious improvements.
The Patent Act of 1952
Prior to the Patent Act of 1952, the Congress required only novelty and utility for issuance of patent, and never created any statutory requirement of nonobviousness. However, the U.S. Supreme Court, in the case of Hotchkiss v. Greenwood,[7] invalidated a patent on the grounds that it involved only a substitution of materials rather than any real innovation. The Hotchkiss court effectively added the requirement of nonobviousness, and it had been left to the judiciary to determine whether the patent involved non-obvious invention. Following that case, the Supreme Court issued myriad decisions with an evolving and unpredictable standard for obviousness. It was not until the Congress enacted the Patent Act of 1952 that the test was to be given with some degree of predictability.
The Patent Act of 1952 added 35 U.S.C. § 103,[2] which effectively codified nonobviousness as a requirement to show that an idea is suitable for patent protection. The section essentially requires a comparison of the subject matter sought to be patented and the prior art, to determine whether or not the subject matter of the patent as a whole would have been obvious, at the time of the invention, to a person having ordinary skill in the art. Clark held that the Congress, in passing the Act, intended to codify and clarify the common law surrounding the Patent Act by making explicit the requirement of nonobviousness.
Application of the law to the facts
Clark then examined the prosecution history and prior art of both sets of patents involved in the case. In the Graham case, the '798 patent was originally rejected by the patent examiner as being insufficiently distinguished from the previous '811 patent. The only two claims which differed between the two patents were (1) the stirrup and the bolted connection of the shank to the hinge plate do not appear in '811; and (2) the position of the shank is reversed, being placed in patent '811 above the hinge plate, sandwiched between it and the upper plate. One argument which Graham raised before the court, but had not raised before the USPTO, was that in the new '798 design, the flexing of the plow shank was limited to the points between the spring clamp and the tip of the plow shank, absorbing the shock of hard objects on the ground more efficiently. The court rejected this argument and invalidated the '798 patent for two reasons: first, Graham had not raised this "flexing" argument before the USPTO, and second, the parts in the '798 patent served the same purposes as those in the prior art.[8]
In the matters concerning Cook Chemical, Scoggin, a corporate officer at Cook, had originally based his design on Calmar's previous unpatented design, but later claimed that the integration of the sprayer and container solved the problem of external leakage during assembly and shipping of insecticide products. The district court held that Scoggin's sprayer was not obvious because even though its individual elements were not novel, nothing in the prior art would have suggested the combination of elements. After the initial rejection of his patent, Scoggin drafted claims more carefully to distinguish the prior art, limiting new claims to the use of a rib seal, rather than a washer or gasket, to maintain a seal, as well as the existence of a small space between the overcap and the sprayer. Clark held that because Scoggin narrowed his claims to meet the limitations requested by the patent examiner, Cook Chemical could not now claim broader subject matter (see Prosecution history estoppel). Clark further held that the differences between Scoggin's design and the prior art were simply too minor and non-technical to maintain the validity of Cook's patent.
A companion case, United States v. Adams, was argued the same day and—in contrast to the holding in Graham v. Deere—held that non-obviousness was satisfied.
Graham establish practical criteria of determining of what patent claims are non-obvious. Another SCOTUS case, that followed in 2007, KSR International Co. v. Teleflex Inc., clarified what is obvious.