Supreme Court Affirms Clear and Convincing Standard for Patent Invalidity Defenses
By Samantha Kuhn – Edited by Esther Kang
Microsoft Corp. v. i4i Ltd. P’ship, No. 10–290 (U.S. June 9, 2011)
Slip Opinion (via supremecourt.gov)
On June 9, the Supreme Court affirmed a district court’s jury instructions requiring that the evidence of patent invalidity be “clear and convincing” for the invalidity defense against infringement to be successful.
In a unanimous decision, the Supreme Court held that the presumption of validity in Section 282 of the Patent Act requires that a defendant must present “clear and convincing” evidence that a patent is invalid in order to succeed on an invalidity defense. The main issue in the case was whether a lesser standard should be applied to evidence that had not been previously presented to the PTO during examination. The Court rejected Microsoft’s proposal of a “preponderance of the evidence” standard in such cases.
PatentlyO provides a summary of the case and concurring opinions. IP Watchdog gives a summary of the case and opines about its implications on patent law. The Digest previously covered both the district court’s decision and the oral arguments before the Supreme Court.
Microsoft’s main defense against infringement focused on the on-sale bar (35 U.S.C. §102(b)), which Microsoft argued was triggered by i4i’s sale of a software program called S4, more than a year before filing the patent at issue. The S4 software was not originally presented to the PTO during examination of the patent. Microsoft sought jury instructions that would allow a finding of invalidity based on a “preponderance of the evidence” because the prior art was not included in the initial examination process. The district court rejected these instructions and advised the jury to consider the patent valid absent clear and convincing evidence of invalidity. The Federal Circuit affirmed this decision and upheld the rejection of Microsoft’s post-trial motions concerning the allegedly “improper” jury instructions.
The Supreme Court found that the decisive question was whether Congress had already determined the applicable standard of proof for invalidity defenses. In analyzing 35 U.S.C. §282, the Court stated that the common law meaning of the terms used in the statute prevails. Citing its previous opinion in Radio Corp. of Am. v. Radio Eng’g Lab., Inc., 293 U.S. 1 (1934) (“RCA”), the Court determined that the phrase “presumed valid” in the statute requires a showing of clear and convincing evidence to warrant overthrowing the presumption. The Court also noted that there was no indication that the clear and convincing standard only applied in two circumstances: where only oral testimony, rather than documentary evidence, was offered, and where priority was at issue but was already litigated before the PTO. The Court also saw no statutory or common law basis for a fluctuating standard where the evidence had not been presented to the PTO, but it acknowledged that because the clear and convincing standard was a lower burden to meet, jury instructions should be given to that effect. As for the policy considerations, the Court found itself in no position to judge the weight of the opposing contentions.
In his concurrence, Justice Breyer made a point to distinguish factual from legal questions with regard to the application of this strict standard. He emphasized the importance and necessity of separating questions of fact from questions of law in order to ensure that the proper standard of proof is used. Justice Thomas concurred with the Court’s holding based on the precedent set in RCA, but he wrote a separate opinion to voice his view that Congress did not codify a standard of proof and that the language in Section 282 did not support a finding to that effect.
This opinion is significant because it sets a clear precedent with regard to the standard of proof that a party must meet to succeed on a challenge to a patent’s validity. Regardless of whether a patent was issued without consideration of all prior art or even in a imprudent manner, the statutory language and precedent require a clear and convincing evidentiary standard to overcome the validity presumption stated in Section 282.