Maintaining the clear and convincing evidence standard for patent invalidity challenges in Microsoft Corp. v. i4i Limited Partnership.

Author:Oberman, Irina
Position:Thirtieth Annual Federalist Society National Student Symposium

The term "burden of proof" is one of the "slipperiest members of the family of legal terms," and the correct standard of proof when challenging the validity of a patent is no exception. (l) Section 282 of the Patent Act states that "[a] patent shall be presumed valid" and that "[t]he burden of establishing invalidity of a patent ... shall rest on the party asserting such invalidity." (2) Eighteen years before the Act's codification in 1952, the Supreme Court held that the presumption of validity must be overcome by clear and convincing evidence. (3) In the years following the Patent Act's enactment, the Federal Circuit similarly interpreted Section 282 to require a defendant seeking to overcome this presumption to prove invalidity by clear and convincing evidence. (4) The clear and convincing evidentiary standard is higher than the "preponderance of the evidence" standard commonly used in civil cases, but lower than the "beyond a reasonable doubt" standard for criminal cases. (5) The main rationale for requiring a higher evidentiary standard to prove the invalidity of patents is deference to the decision of the United States Patent and Trademark Office (PTO) to grant the patent in the first place after considering any relevant "prior art." (6) Prior art is defined as the knowledge of, usage of, patent on, or description relating to an invention already in existence before the invention described in the patent application. (7) As part of its duties, the PTO must search for any relevant prior art and consider any prior art relating to the subject matter of the claimed invention before granting a patent. (8)

Last Term, in Microsoft Corp. v. i4i Limited Partnership, the Supreme Court held that the clear and convincing evidence standard applies to all invalidity challenges to patents--even when the patent's prior art has not been considered by the PTO. (9) Purporting to defer to Congress's intent as expressed in the Patent Act, the Court found that because the presumption of patent validity articulated in Section 282 of the Patent Act already had a common law meaning at the time the Act was passed, Congress intended the clear and convincing standard to apply to all challenges based on a patent's invalidity. (10) In so doing, however, the Court ignored the fundamental logic behind the presumption, thereby setting the standard for proving patent invalidity higher than Congress actually intended for patents whose prior art was never reviewed by the PTO. Although this mistaken decision might decrease uncertainty about the burden of proof for invalidity defenses, the Court's opinion clears the way for holders of bad patents to stifle innovation and business growth.

i4i Limited Partnership (i4i) was a software consulting company that created customized software for its clients. (11) "In June 1994, i4i applied for a patent concerning a method for processing and storing information about the structure of electronic documents." (12) The PTO granted the application in 1998 and issued the patent. (13) In 2007, i4i brought suit against Microsoft for willful infringement, alleging that Microsoft infringed claims of the patent by "making, using, selling, offering to sell, and/or importing Word products capable of processing or editing custom XML." (14) Microsoft counterclaimed and sought a declaration that i4i's patent was invalid and unenforceable. (15) At trial, Microsoft alleged that i4i's patent was invalid under the on-sale bar of Patent Act Section 102(b), which states that an invention is not patentable if it was patented or described in a printed publication or in public use or on sale in the United States more than one year prior to the date of the application. (16) More than one year before filing the application, i4i's predecessor developed and sold a software program known as S4 in the United States. (17) Because the S4 software was never submitted to the PTO examiner, Microsoft challenged i4i's proposed jury instruction that Microsoft was required to prove invalidity by clear and convincing evidence. (18) Basing its challenge on dicta in both KSR International Co. v. Teleflex, Inc. (19) and American Hoist & Derrick Co. v. Sowa & Soils, Inc., (20) Microsoft instead requested that its burden of proof should be by a preponderance of the evidence. (21) The district court rejected Microsoft's proposal for a varying standard of proof and instructed the jury that Microsoft had the burden of proving invalidity by clear and convincing evidence. (22)

In 2010, the Federal Circuit affirmed. (23) According to the court, Federal Circuit precedent and the Supreme Court's decision in KSR did not change the burden of proving invalidity by clear and convincing evidence. (24)

The Supreme Court affirmed. (25) Justice Sotomayor's opinion purported to defer to Congress's intent based on the text of the Patent Act. Although Congress had not expressly articulated a burden of proof in the statute, the Court began its analysis with "the assumption that the ordinary meaning of the language chosen by Congress accurately expresses the legislative purpose." (26) Where Congress used a common-law term, however, the Court assumed that Congress used the term according to its common-law meaning, "absent anything pointing another way," (27) and adopted "the cluster of ideas" attached to the borrowed term. (28) Importantly, the Court found that by the time Congress enacted Section 282, the clear and convincing evidentiary standard for proving invalidity "had long been a fixture of the common law." (29) Relying heavily on Justice Cardozo's decision in RCA, the Court pointed to language in RCA articulating a "clear and cogent" standard for the party asserting the invalidity defense, which the Court equated with the clear and convincing standard. (30)

The Court rejected Microsoft's contention that the cases decided before Congress passed Section 282 had not uniformly applied the clear and convincing standard of proof for invalidity challenges and, therefore, that the presumption had no settled meaning at common law. (31) Justice Sotomayor concluded that RCA and the Court's decisions following it did not allow for a varying standard of proof depending on whether the patent's prior art had been considered by the PTO. (32)

Although the Court acknowledged that numerous courts of appeal before 1952 stated that the presumption of validity was "weakened" where the PTO never considered the evidence in an infringement action, the Court nevertheless declined to impute to Congress the intention of establishing a lower burden of proof in Section 282 where a failure to consider prior art weakened the presumption of validity. (33) Rather, the Court understood such cases to reflect the "commonsense principle" that new evidence never considered by the PTO supporting an invalidity defense would "carry more weight" in an infringement action but would not change the burden of proof. (34) Purporting to defer to the intent of the legislature, the Court found itself "in no position to judge the comparative force of [the] policy arguments" for and against maintaining the clear and convincing standard of proof, holding that "[a]ny re-calibration of the standard of proof remains in [Congress's] hands." (35) Although Congress had amended Section 282, because it had not specifically enacted a standard of proof contrary to RCA's and the Federal Circuit's interpretation that challengers must prove invalidity by clear and convincing evidence, the Court refused to infer that Congress had implicitly created a variable standard of proof for invalidity defenses. (36)

Justice Breyer (37) concurred in the opinion but wrote separately to emphasize that the evidentiary standard of proof applies to questions of fact and not to questions of law. (38) Justice Breyer's concurrence, therefore, left open the question of what evidentiary standard should apply to questions of law, such as whether the product was previously "in public use," (39) or whether the invention was novel (40) or non-obvious. (41) In such cases, the concurring Justices concluded only that the "strict standard of proof has no application." (42)

Justice Thomas concurred in the judgment only. (43) In contrast to the majority opinion, Justice Thomas was "not persuaded that Congress codified a standard of proof when it stated in the Patent Act of 1952 that '[a] patent shall be presumed valid.'" (44) Focusing on the appellate court split before 1952 about the effect of the presumption of validity, Justice Thomas expressed his doubt that the presumption of validity constituted a term of art in 1952 or even that Congress's use of a word that was "similar to a term of art" codified it as a term of art. (45) Faced with Section 282's silence as to the standard of proof, however, Justice Thomas concluded that Section 282 did not alter the common-law rule. (46) Because RCA predated the Act and had never been overruled by the Court or Congress, Justice...

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