Microsoft Corp. v. i4i Ltd. P’ship: Microsoft argues for a lower burden of proof for patent invalidity where prior art wasn't before the PTO

Microsoft Corp. v. i4i Ltd. P’ship, No. 10-290 (U.S. 2011) Transcript of Oral Arguments

On April 18, 2011, the Supreme Court heard oral arguments in Microsoft Corp. v. i4i Ltd. P’ship, a case involving a dispute over the evidentiary standard that must be met by a patent challenger in order to overcome the presumption of patent validity codified in 35 U.S.C. § 282. Microsoft’s position is that the standard should be reduced from one requiring clear and convincing evidence to one requiring a preponderance of the evidence, in the case where the evidence before the court is a prior art reference that was not considered by the PTO during patent prosecution. For further background on the case, see the Digest’s previous coverage of the proceedings at the Eastern District of Texas and the Federal Circuit.

Summaries and commentary on the oral arguments can be found at IPWatchdog and PatentlyO.

Justice Scalia presided over the Court, sitting in for the recused Chief Justice Roberts. Thomas Hungar argued first, on behalf of Microsoft, petitioner in the case. Hungar started off by contending that it “makes no sense” to require a heightened standard of proof when the prior art evidence at issue was never considered by the PTO. Justices Ginsburg and Scalia asked Hungar whether he was contradicting Justice Cardozo’s opinion in Radio Corp. of Am. v. Radio Eng’g Labs, Inc., 293 U.S. 1 (1934), a case in which Cardozo repeatedly referred to the heightened standard of proof required to invalidate patent claims. Hungar distinguished the case on the grounds that Cardozo was discussing a heightened standard in the limited context of priority inventions. Justice Kagan voiced her disagreement with the limits Hungar placed on the holding in Radio Corp., maintaining that “the language of that opinion is extremely broad.”

The argument then turned away from Supreme Court precedent to the 1952 Patent Act and judicial application of the standard of proof in past cases. Hungar referenced over 200 cases “recognizing that the presumption of validity was weakened or eliminated when the prior art evidence was not considered by the Patent Office.” Justice Sotomayor pushed back on this claim by pointing out that the weakening of the clear and convincing standard in those cases had taken the form of instructions for the jury to take into account the fact that the PTO had not considered certain prior art evidence. Justice Breyer echoed Justice Sotomayor’s skepticism, asking Hungar why invalid patents could not be eliminated by re-examination proceedings or jury instructions rather than a lower standard of proof. Hungar responded that re-examination is too limited in scope and that it would be “extremely difficult or impossible” for a judge to properly instruct a jury at the requisite level of specificity. In the final minutes of Hungar’s argument, the discussion returned to the 1952 Patent Act, and Hungar concluded by reiterating that the law does not require a heightened standard of proof across the board.

Next to argue before the Court was former Solicitor General Seth Waxman on behalf of i4i Limited Partnership, respondents in the case. Waxman began by noting that Congress has been very active in the patent field, but has done nothing to make any changes to the clear and convincing evidentiary standard. Justice Alito then expressed his concerns with i4i’s position based on his interpretation of Section 282. Waxman responded by citing legislative history that indicated a congressional intent to codify the existing presumption of patent validity, which had been described in the Radio Corp. case as a presumption not to be overthrown except by “clear and cogent evidence.” After a brief discussion about jury instructions, Justice Ginsburg asked Waxman why the clear and convincing standard should apply to evidence not considered by the PTO. Waxman responded with four justifications: 1) an infringer’s validity challenge is a collateral attack on a government decision to bestow property rights; 2) the harm from an erroneous determination of invalidity is highly asymmetrical; 3) the granting of a patent induces reliance on property rights; and 4) changing the long-standing clear and convincing standard would marginalize the PTO.

Malcolm Stewart argued next on behalf of the United States as amicus curiae for the respondents, i4i. After a brief discussion about the appropriate interpretation of Section 282, Justice Alito expressed skepticism that the clear and convincing standard should apply to a prior art reference never considered by the PTO. Echoing Waxman’s justifications, Stewart responded that a patent represents a quid pro quo between the inventor and the government, and an inventor should be reasonably confident that his patent won’t be overturned unless the evidence clearly suggests it is invalid. Stewart conceded that re-examination proceedings are limited in scope and cannot catch all invalid patents, but he noted that Congress is on the verge of amending the patent laws to allow for more robust post-grant review.

Following a rebuttal by Hungar, the case was submitted. The decision should come down this term, which ends in June. If the Federal Circuit’s decision is upheld and i4i prevails, Microsoft will owe the largest patent infringement damages ever affirmed on appeal.

Abby is a 2L at Harvard Law School