April 19, 2011
On April 18, 2011, the U.S. Supreme Court heard oral arguments in the much-anticipated appeal of Microsoft Corp. v. i4i Limited Partnership. Microsoft is challenging long-standing precedent that provides that a challenger to patent validity must establish invalidity by clear and convincing evidence, even when the challenge is attacked based on prior art that was not of record before the U.S. Patent and Trademark Office (USPTO) during prosecution.
By way of background, under 35 U.S.C. § 282, an issued patent is presumed valid and the burden of establishing invalidity of a patent lies with the party asserting invalidity. Section 282 does not specify the burden of proof required for an invalidity challenge. Current case law holds that the clear and convincing evidence standard applies. Microsoft contends that the heightened burden of proof should not apply in validity challenges premised on prior art that the USPTO had not considered when examining the patent.
In Microsoft Corp. v. i4i Limited Partnership, i4i sued Microsoft in the Eastern District of Texas for patent infringement. Microsoft argued that i4i’s patent was invalid because the disclosed invention had been embodied in a software product sold in the United States more than one year before the patent application was filed, thus rendering the invention unpatentable under the “on-sale bar” of 35 U.S.C. § 102(b). Microsoft argued that the alleged “on sale” software product constituted prior art that was not considered by the USPTO before issuance of the asserted i4i patent. The jury, having been instructed to consider this evidence under the clear and convincing standard, rejected Microsoft’s argument. Ultimately, the jury awarded $200 million in damages to i4i.
Microsoft raised several challenges on appeal. The Federal Circuit affirmed, reaffirming that it was for the alleged infringer to prove invalidity under 35 U.S.C. § 102(b) by clear and convincing evidence. The Supreme Court then granted Microsoft’s petition for certiorari on the issue of burden of proof.
Microsoft argued before the Supreme Court that although 35 U.S.C. § 282 assigns the burden of proving invalidity to the challenger, it does not on its face impose a heightened standard for carrying that burden, and that the traditional “preponderance of the evidence” standard should apply. Microsoft also argued that the USPTO’s decision to issue a patent does not warrant any deference or a clear and convincing evidentiary standard at the trial stage. Microsoft further argued that even if deference in the form of a heightened standard of proof at trial were appropriate in invalidity challenges based on cited prior art, there is no justification for applying the same heightened standard to invalidity contentions or prior art that the USPTO never considered during prosecution.
In response, i4i relied on the long history of cases wherein the presumption of patent validity imposed a heightened standard of proof on challengers in litigation.
Alongside counsel for Microsoft and for i4i, the U.S. Deputy Solicitor General participated in oral argument as amicus curiae in support of i4i. The Justices’ questions focused primarily on the broader issue of whether the "clear and convincing evidence" or the “preponderance of the evidence” standard should apply to patent validity challenges. The Justices asked all three counsel about the language of § 282 and its construction. Several of the Justices seemed receptive to i4i’s argument that RCA v. Radio Eng’g Labs., Inc., established a clear and convincing rule under all circumstances. There was also a considerable amount of discussion about a potential alternative to lowering the standard of proof, namely a jury instruction stating that the defendant could more easily meet the clear and convincing standard using evidence that was not before the USPTO. Microsoft pointed out that when it asked for a similar instruction in a different, earlier case, the Federal Circuit rejected the instruction because it could confuse the jury. Some Justices commented that such an instruction would require the jury to decide what prior art had or had not been considered by the USPTO.
The Court is expected to decide the case before the end of June 2011, and Fitch Even will report on the decision once issued. In the meantime, please contact Fitch Even attorney Christine Pompa, the author of this alert, with any questions.