35 U.S.C. 103 Conditions for patentability; non-obvious subject matter.
(a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if 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 the invention was made to a person having ordinary skill in the art to which said subject matter pertains.

§103 is commonly called the "obviousness" clause. The core contention centers on what "a person having ordinary skill in the art" would have considered "obvious at the time the invention was made".

Hindsight is 20-20, and it almost always creeps in regard to §103. How to keep it out?

The courts have ruled that the best way to avoid impermissible hindsight is documentation: some evidence in the prior art record that at least hints at obviousness of the patented incremental improvement (often a combination of previously known elements for use in a new way).

A recent Federal Circuit Court of Appeals (CAFC) case provides a good historical primer - Teleflex v. KSR International (CAFC 04-1152), which is still ongoing in appeals:

While obviousness is ultimately a legal determination, it is based on several underlying issues of fact, namely: (1) the scope and content of the prior art; (2) the level of skill of a person of ordinary skill in the art; (3) the differences between the claimed invention and the teachings of the prior art; and (4) the extent of any objective indicia of non-obviousness. See Graham, 383 U.S. at 17-18 [Graham v. John Deere Co., 383 U.S. 1, 14, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966)]. When obviousness is based on the teachings of multiple prior art references, the movant must also establish some “suggestion, teaching, or motivation” that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed. See Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353, 1359-60 (Fed. Cir. 1999); Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1572 (Fed. Cir. 1996). The nonmovant may rebut a prima facie showing of obviousness with evidence refuting the movant’s case or with other objective evidence of nonobviousness. See WMS Gaming, Inc. v. Int’l Game Tech., 184 F.3d 1339, 1359 (Fed. Cir. 1999).

“The reason, suggestion, or motivation to combine [prior art references] may be found explicitly or implicitly: 1) in the prior art references themselves; 2) in the knowledge of those of ordinary skill in the art that certain references, or disclosures in those references, are of special interest or importance in the field; or 3) from the nature of the problem to be solved, ‘leading inventors to look to references relating to possible solutions to that problem.’” Ruiz v. A.B. Chance Co., 234 F.3d 654, 665 (Fed. Cir. 2000) (quoting Pro-Mold, 75 F.3d at 1572). “Our case law makes clear that the best defense against the subtle but powerful attraction of a hindsight-based obviousness analysis is rigorous application of the requirement for a showing of the teaching or motivation to combine prior art references.” Dembiczak, 175 F.3d at 999; see also Ruiz, 234 F.3d at 665 (explaining that the temptation to engage in impermissible hindsight is especially strong with seemingly simple mechanical inventions). This is because “[c]ombining prior art references without evidence of such a suggestion, teaching, or motivation simply takes the inventor’s disclosure as a blueprint for piecing together the prior art to defeat patentability—the essence of hindsight.” Dembiczak, 175 F.3d at 999. Therefore, we have consistently held that a person of ordinary skill in the art must not only have had some motivation to combine the prior art teachings, but some motivation to combine the prior art teachings in the particular manner claimed. See, e.g., In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000) (“Particular findings must be made as to the reason the skilled artisan, with no knowledge of the claimed invention, would have selected these components for combination in the manner claimed.”); In re Rouffet, 149 F.3d 1350, 1357 (Fed. Cir. 1998) (“In other words, the examiner must show reasons that the skilled artisan, confronted with the same problems as the inventor and with no knowledge of the claimed invention, would select the elements from the cited prior art references for combination in the manner claimed.”).

This rather straight-forward interpretation of the law is a lightening rod of controversy. Why?

In the case of corporations (filed brief), particularly large corporations who make mountains of money from product sales, are often too big to be flinging their patents at smaller fry (fearing bad publicity and possibly antitrust scrutiny; e.g. Microsoft), don't market their own patents well, and would like free rein to make products while worrying less about patent infringement.

As to patent "freedom fighters", The Progress & Freedom Foundation (P&FF) has filed a brief in the Teleflex v. KDR, as have 24 law professors (Dennis Crouch thinks them "impressive"; I'm not as impressed with credentials as I am with applied brain wattage). I wonder how many patents these folks have, and how much experience in patent prosecution. If you haven't played the game, your griping about the rules isn't reality based. Further, I'm leery of sanctimoniously named "foundations". People advertise what they aren't, and the P&FF rings true in this case.

If you bother to read what the whiners say, you realize that it's nothing more than whining - no substantive proposal is made that would afford the courts an objective standard of evaluation of obviousness. Without a useful alternative to the historical rule of evidentiary support, staying with the "documented evidence" standard of obviousness is, well, obvious.