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Supreme Court Maintains Status Quo for Patent Invalidity Standard

By Natasha A. Saggar, Litigation News Associate Editor – August 26, 2011

The U.S. Supreme Court recently put to rest hope for a more relaxed standard of proof in patent cases. In Microsoft Corp. v. i4i Ltd. Partnership [PDF], the Court held a defendant must demonstrate a patent invalidity defense by clear and convincing evidence.


Microsoft Unable to Dislodge Depression Era Precedent
Defendant Microsoft contended it needed to demonstrate the invalidity of a patent under Section 282 of the Patent Act by only a preponderance of the evidence. The Court reached back to the Great Depression, citing to Radio Corp. of America v. Radio Engineering Laboratories, Inc.(RCA) to reject this argument.


In RCA, Justice Cardozo wrote that patents carry “a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” The Court further noted the influential Federal Circuit cited to the RCA decision with approval in American Hoist & Derrick Co. v. Sowa & Sons, Inc. (1984), and that it has not wavered in this interpretation of Section 282 in nearly 30 years.


From an equitable perspective, Microsoft argued that a preponderance of the evidence standard must at least apply where a patent invalidity defense rests on evidence that was not before the PTO during the examination process. The Supreme Court rejected this contention as well, finding no support in case law or the text of Section 282 for a fluctuating standard of proof.


Court’s Ruling Cold Comfort for Microsoft
The Court did acknowledge that new evidence in support of a patent invalidity defense not previously considered by the PTO might carry more weight in an infringement action. This would, in the Court’s view, make a challenger’s burden of proof easier to sustain. In that respect, a jury instruction on the “effect of [this] new evidence” is appropriate if requested. This was cold comfort to Microsoft, as it did not request such an instruction and raising the question in its reply brief came “too late, and [the court] refuse[d] to consider it.”


The Court outlined the various policy arguments both for and against a strong presumption in favor of patent validity, but ultimately left it to Congress to lower the applicable standard of proof if it deemed it necessary.


In a concurring opinion, Justice Breyer offered some limitations. He emphasized that the clear and convincing evidentiary standard of proof applies only to questions of fact and not to questions of law. “Where the ultimate question of patent validity turns on the correct answer to legal questions . . . today’s strict standard of proof has no application,” Breyer said.


Reaction from Advocates
Court watchers familiar with patent litigation thought the Court’s acceptance of certiorari in this case signaled a sea change in the field of patent litigation. Consequently, the Court’s decision moderately surprised and disappointed these observers.


“Although [the Court] got it right legally . . . I think [it] had room to create sort of a dual standard with respect to prior art asserted to invalidate a patent that was before the PTO examiner in contrast to prior art, which the examiner did not have the opportunity to review,” says Joseph M. Drayton, New York City, cochair of the ABA Section of Litigation’s Intellectual Property Litigation Committee. “I was a little surprised that they didn’t take that route, especially in the face of an overburdened PTO, in the face of changing technologies, [and] in the face of advocates for a relaxed standard.”


Strategies for Patent Litigation Going Forward
Aside from making clear that Congressional action will be required to bring about a lesser standard of proof in a challenge to a patent’s validity, the Microsoft decision does not seem likely to change how patent litigators practice. A creative and aggressive litigator “could look to the Breyer decision and attempt to separate out the factual matters from the legal matters,” suggests Robert M. Asher, Boston, cochair of the Patent Subcommittee of the Section of Litigation’s Intellectual Property Litigation Committee. Asher believes such separation may be difficult to achieve.


The jury instruction discussed by the Court is a tool that was in use prior to the Microsoft decision. Although this instruction remains a useful tool for the advocate who is seeking to invalidate a patent, defendants clearly feel a change in the burden of proof is necessary to insure that patents in suit did not “slide by” the patent examiner on an incomplete record.


Ultimately, “if one wants to get a lower standard of proof in a challenge to a patent,” says Asher, “one should seek reexamination [in the PTO], or at least consider reexamination as a strategic alternative.” On reexamination, the PTO will look at new prior art as well as prior art that it had previously considered and apply a preponderance of the evidence standard, he adds. If granted, however, reexamination, can take years to reach a final decision.


Keywords: litigation, Supreme Court, intellectual property, patent invalidity


 
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