European Court Of Justice Ruling Limits Ability To Obtain Stem Cell Patents

October 18th, 2011 by spyros lazaris

In an important and potentially far-reaching ruling for the biotechnology and pharmaceutical industries, the European Court of Justice ruled today that stem cell processes which require the use and prior destruction of human embryos are not patentable. The ruling is expected to have substantial impact on stem cell research in Europe and on patent filing strategies for companies interested in obtaining patents for processes and methods related to stem cell research.

The opinion in Oliver Brüstle v. Greenpeace e.V. results from an appeal brought by a German stem cell researcher. Brüstle first obtained a patent in 1997 on a process using precursor cells obtained from human embryo stem cells to treat certain neurological diseases. Greenpeace later succeeded in annulling the Brüstle patent in a German court. On appeal, the German federal court of justice asked the ECJ to consider whether uses of human embryos for industrial or commercial purposes is within the legal protection available to biotechnological inventions.

The ECJ’s ruling means that under EU law, stem cell processes resulting from human embryo research, and the use of human embryos for the purposes of scientific research, are generally not patentable. It is not yet clear, however, what impact the decision will have on biotechnology patent practice across Europe. While European Patent Office practice also mandates that human embryonic stem cell inventions are not patentable, the EPO is effectively an independent body not bound by EU law – and many EPO member countries are not EU member states. It also remains to be seen how national patent offices will interpret the ECJ decision.

One reason for that is that the ECJ declined to be specific – and significantly, the ECJ did not rule that Brüstle’s patent was invalid. The ECJ left open the issue of whether stem cells obtained at a particular stage were included within the concept of a human embryo, since the description of the stem cell process in the Brüstle patent does not specifically refer to the use of human embryos. Therefore, it remains for each national patent office to interpret the ECJ decision and decide how it should be followed. The ECJ decision can also be interpreted narrowly to limit the prohibition on patentability to processes resulting from the destruction of human embryos – meaning that it is not clear what, if any, the ruling will have on stem cell research within the EU, since alternative methods for obtaining stem cells without the use or destruction of human embryos would not be affected by the ECJ decision.

Regardless, the biotechnology and pharmaceutical industries are likely to feel a wide impact. It will now be much more difficult to obtain patents on processes for, and by extension therapeutics from, stem cell research from human embryos in the European Union.  And the ruling may significantly alter international intellectual property protection strategies, as patent applicants consider how to maximize patent protection to obtain a return on research investment.  Applicants should therefore carefully analyze patentability in each European country and consider filing in each jurisdiction directly, outside of the EPO filing framework, while national patent laws interpret the specific impact of the ruling on EU law.

Samsung, Apple Experience Highs And Lows As Patent War Continues Across The Globe

October 17th, 2011 by spyros lazaris

Last week saw several interesting developments in the worldwide patent war being fought by technology giants Samsung and Apple. The two companies are doing battle on multiple fronts across the globe, each asserting patents against the other covering various aspects of their respective mobile devices.  Events of this week show that although it’s still too early to gauge who will emerge victorious as momentum swings back and forth for each side, it may be that Apple is slowly gaining the upper hand.

 The week began in Australia, with the Federal Court granting an injunction banning sales of certain Samsung tablets accused of infringing Apple’s Australian patents. Apple initiated the Australian suit against Samsung earlier this year, and the request for injunction followed with arguments completed in early October. The injunction means that Samsung’s devices won’t be available to Australian customers until it resolves its patent infringement claims with Apple, and will be a significant blow to Samsung’s attempt to establish a share of the Australian market. Samsung has fired back however, filing its own claims of patent infringement in September and asserting that Apple has violated Samsung’s intellectual property rights in seven Australian patents.

The middle of the week saw the United States courts taking center stage. A San Francisco federal district court heard arguments on Apple’s injunction request – and although no ruling has yet been issued, the court’s comments indicate that it may throw Samsung a lifeline. Samsung argued that to get the injunction, Apple must show that Samsung infringes the patents in question and that the patents are valid – and the court commented that although there was a likelihood of infringement, it thought that Apple would have difficult establishing the patents’ validity.

Finally, the two parties’ dispute in the Netherlands saw an important advantage going back to Apple. Apple had obtained an injunction against Samsung in August, and Samsung fired back with its own claims of infringement and request for an injunction. The Dutch court hearing the dispute turned down Samsung’s injunction request on certain Apple products, and rejected claims that they infringe on Samsung’s patents.

While developments intensify in these countries, other fronts have recently been opened as the global fight widens and as new products are brought to market. Samsung recently sued Apple in France and Italy, attempting to ban sales of Apple’s latest mobile device, the iPhone 4S, in those countries.  Apple also filed a lawsuit against Samsung in Japan in September, and cases in the United Kingdom and other countries are still pending.

The growing volume of patent litigation therefore shows no signs of subsiding. As mobile devices such as smartphones and tablet computers proliferate, and the fight for market share for those products intensifies, so is the fight for control in the courts based on the parties’ intellectual property rights.  The dispute between Samsung and Apple, and several others between various entities in the mobile device marketplace for both hardware and operating system technology, highlights the importance that investment in intellectual property rights can have as a tool to establish, defend, and improve a market position.  And it also highlights what may be a bigger battle looming – between providers of operating systems running these mobile devices, instead of just the devices themselves.

US Senate Passes Landmark Patent Reform Legislation

September 9th, 2011 by spyros lazaris

A bipartisan United States Senate has passed the America Invents Act of 2011 by a vote of 89-9. The legislation is now poised to become law and includes a major overhaul that will result in the most substantial changes to United States patent law in more than half a century. President Obama is expected to sign the legislation as early as next week.

The legislation, which passed the House of Representatives as H.R. 1249 and is also known as the Leahy-Smith America Invents Act, has been promoted as improving job growth, encouraging American innovation, and increasing the efficiency of the United States Patent & Trademark Office (USPTO). However, none of this is certain, and it has not been made clear how any of these objectives will be achieved. A closer look at the statute indicates that it may only serve special interests instead of promoting the progress of science and useful arts as required by the U.S. constitution.

Provisions of the new law include a transitional program that allows the USPTO to review the validity of patents covering financial services methods. No such program exists today and requires completely new procedures that are intended for specific types of patents only. Also included in the new law is a provision extending the deadline for filing for patent term extensions that is intended to benefit one specific drug patent – and could result in hundreds of millions of dollars in further sales. The new law further includes a substantial expansion of the amount of prior art that may be used to invalidate a patent, making it harder to get patents and easier to invalidate them in litigation.

Regardless, patent applicants should immediately take note of timing provisions when considering filing strategies under the new law. That’s because certain provisions are intended to take effect immediately upon enactment, while others will take effect much later. For example, the implementation of new rules that make the United States a first-to-file jurisdiction with absolute novelty will not take effect until 18 months following enactment of the legislation, which will be in March 2013. Patent applicants who file their patent applications before then will get the benefit of the prior art provisions under current U.S. patent law. Conversely, the new law will take immediate effect with regard to the USPTO’s expanded authority to sets its own fees. Patent applicants should therefore consider that U.S. filing fees may substantially increase – although in practice any increases will likely take some time to be decided on and implemented.

As Patent Reform Looms, U.S. Gears Up To Adopt First-To-File, Absolute Novelty Patent System

September 3rd, 2011 by spyros lazaris

On the eve of a Congressional vote that could see passage of the most comprehensive change to United States patent law in more than 50 years, patent lawyers and applicants around the world are preparing for revisions that will profoundly change U.S. patent practice. When it becomes law, the draft legislation will move the U.S. to a system in which patent ownership is awarded to the first inventor to file a patent application, and will introduce absolute novelty to bar any patent application where the invention has been disclosed before the application is filed.

Current U.S. law awards patent ownership to the first inventor to invent the concepts claimed in a patent. The change to a first-to-file system, which harmonizes U.S. patent law with the rest of the world’s countries, requires a complete overhaul of statutory provisions that will dramatically increase the amount of prior art available to bar inventions from patent protection. The resulting changes to Section 102 and Section 103 will almost certainly change the filing strategies of countless patent applicants.

The proposed law, known as H.R. 1249 and more commonly as the America Invents Act of 2011, has drawn considerable attention for its myriad of changes to U.S. patent practice. Among the many other changes are revisions to the way the US Patent & Trademark Office sets and collects fees, and the introduction of a completely new Patent Office procedure that operates as a post-grant proceeding for review of the validity of certain financial services patents that some believe is a “bank bailout” to help banks dealing with expensive patent litigation. But the primary focus, at least initially, will for patent applicants be the timing for when the new rules on patent ownership and prior art take effect.   

That’s because the new law provides that applicants will have a grace period of 18 months in which the old prior art rules will still apply. That means that patent applicants who file their patent applications before March or April 2013 will still get the benefit of the current and more favorable versions of Sections 102 and 103. The grace period will likely produce an avalanche of patent applications filed to beat the 18-month deadline, and raises the prospect of substantially increasing the workload of already-overworked U.S. patent examiners – exactly the opposite of one of the intended benefits of patent reform.  

There are also several important exceptions to the new prior art rules that inventors and patent applicants should be aware of. To act as an automatic bar to a patent application, a disclosure prior to the filing date must be by someone other than the applicant. Where the applicant discloses the invention prior to the filing date, he or she will still have one year to file a patent application. The new law will also make the absolute novelty concept global, so that a disclosure anywhere in the world is enough to deal a fatal blow to the ability to obtain patent rights.   

Intellectual property considerations already dominate c-level executives’ agendas, but this legislation will make decisions about investing in patent protection much more urgent. The substantive changes to U.S. patent law will require inventors and companies to act quickly and force decisions about patent application preparation and filing must faster than before, since sitting on ideas and delaying filing will now put potentially valuable business assets at substantial risk.

Still No European Patent As Spain, Italy Contest ECJ Decision On Unitary Patent Protection

August 31st, 2011 by spyros lazaris

Efforts to create a single patent valid across all of Europe are nothing new, yet patent protection is presently only available by validating a patent granted by the European Patent Office (EPO) in each individual member country. Proposals to change this have been gathering steam, but court cases brought by two different countries may threaten any recent momentum.

Italy and Spain applied to the European Court of Justice (ECJ) to rescind a March 2011 decision that would make it easier to create a single mechanism for granting unitary patent protection by specifically authorizing enhanced cooperation among EU member countries. The ECJ decision, known as Council Decision 2011/167/EU, is notable for its approach to further prospects for this purpose. The Council Decision follows provisions under the EU’s Lisbon Treaty that provide for “enhanced cooperation” as a workaround to a failure to reach consensus during member state negotiations. The Council Decision results from frustration of certain EU member states at not being able to reach unanimity regarding EU-wide patent protection and reflects their desire to establish rules between themselves on the basis of existing proposals they support.

Recent attempts to make headway on the unitary patent protection issue were derailed by a lack of agreement on language and translation arrangements. Previous negotiations aimed to have patent procedures conducted in one of three languages (French, German, and English), which would considerably reduce the costs of obtaining patent protection in Europe. This, however, excludes all other languages among the EU member countries. Several countries objected, concluding that it would be give German and French competitors competitive advantages.

Spain and Italy brought their ECJ actions to object to the Council Decision as unlawful and likely to distort competition within the European Union. Both countries asserted that the conditions for invoking the Lisbon Treaty’s “enhanced cooperation” provisions were not fully met. Spain further argued that the Council Decision was merely a mechanism to avoid negotiating with member states instead of promoting integration of all member states, and therefore a misuse of powers. Deadlines for observations to the ECJ on the issues presented will pass in September, after which the ECJ will conduct hearings on the two cases.

Officials have long sought to implement unified mechanisms that make it easier to both obtain patent protection and enforce patent rights in multiple countries. Among the many suggested benefits of such proposals are reductions in costs to patent applicants. Present law allows applicants to pursue patent protection either in each country individually or through a validation procedure at the EPO. Applicants using the EPO must still ultimately register their validations in each country. Regardless of which of those two options are chosen, patent applicants must pay registration fees in each desired country, and often must pay for translations of patents into local languages.

A separate framework for an EU-wide dispute mechanism for enforcement of patent rights also presents problems, since patent rights holders must initiate and prosecute infringement actions in each country where a patent is registered. The result is an uneven approach that requires court cases in each country – and which is subject to local procedural rules and the potential for inconsistent decisions across multiple jurisdictions.

The cases filed by Italy and Spain highlight that obstacles remain to any significant progress towards unitary patent protection. The ECJ’s attempt to circumvent the language and translation concerns of some countries will likely further crystallize member state positions, rather than lead to any real consensus on the issues. Instead, the ECJ cases may only serve to further frustrate patent applicants hopeful for improvements that make it easier to patent their inventions in Europe.

Global IP Strategy Considerations In The Spotlight As Mobile Patent, Trademark Battles Rage In Europe

August 30th, 2011 by spyros lazaris

In the global explosion in intellectual property litigation over mobile device technology, attention has turned to disputes between Apple and Samsung over their respective mobile product lines.  In their worldwide IP clash, the two companies have lawsuits pending against each other in jurisdictions around the world. The resulting international battles highlight the importance of a global intellectual property protection strategy around products expected to have significant cross-border appeal. Recent activity shows that a careful consideration of domestic and international IP laws may generate significant advantages depending on the country where enforcement is sought.

For example, Apple’s European litigation strategy seems to be focused in part on a clever plan for enforcing IP rights in the European Union based on a trademark-related Community design registration (No. 000181607-0001) it obtained in February 2010. A Community design registration is granted by the EU’s Office of Harmonization for the Internal Market, and confers rights across the whole of the European Union with a single registration. That means that a court decision, including an injunction, in one EU country regarding a violation of a design registration should apply in all EU countries. This is an inexpensive way to gain a huge advantage with one decision applying in many different markets – contrast this with patents in Europe, which must be conferred by and enforced in each individual country. Therefore, while attempts have made to unify patent grant and enforcement procedures across Europe, the Community design registration presents a much more attractive enforcement paradigm.

This has played itself out with injunctions in both the Netherlands and in Düsseldorf, Germany, both of which are new fronts recently opened in the firms’ global IP clash. The Düsseldorf lawsuit, filed by Apple on August 4, centered primarily on design registration No. 000181607-0001 and resulted in an injunction issued shortly thereafter. The injunction ordered a stop to the sale of certain tablet computers, and applied across the entire European Union. In the Netherlands, meanwhile, Apple succeeded in getting an injunction against the sale of certain mobile phones based on a separate lawsuit that sought damages for infringement of patents, copyrights, and the same community design registration.

Because a Community design registration can be obtained quickly and without much substantive validity analysis, Apple gained the upper hand in its European litigation by taking advantage of court procedures in countries that easily grant injunctions based on presumed validity. Despite the initial success achieved by Apple, however, subsequent decisions in both the Netherlands and Germany may indicate that more scrutiny will be given to whether the Community design registration can be used for such far-reaching results as an EU-wide injunction. Significantly, Samsung later succeeded in modifying the Düsseldorf injunction to apply only to tablet devices in Germany, and the court will revisit the issue in a hearing on September 9. Furthermore, the injunction in the Netherlands applies only to the possible infringement of an Apple operating system-related patent, and therefore, to sales only in the Netherlands, meaning that EU-wide sales of Samsung mobile phones are not directly prohibited. The Netherlands injunction also applies only to certain mobile phones.

Regardless of how the various injunctions are ultimately applied and how the litigation is resolved, the Apple/Samsung dispute shows the importance of considering all domestic and international IP protection possibilities. While Samsung appears to have tilted the momentum slightly back in its direction, Apple’s use of the Community design registration generated a significant initial litigation advantage and allowed it to stretch the mobile device IP war across the globe, substantially raising the stakes for competitors.

USPTO Fees Deal Clears Way For U.S. House Of Representatives To Debate Proposed Patent Reform Legislation

June 22nd, 2011 by spyros lazaris

After an agreement reached between committees of the United States House of Representatives regarding fees collected by the United States Patent & Trademark Office (USPTO), the House version of the American Invents Act of 2011 is set to be debated by the full Congressional chamber. If passed, H.R. 1249 could eventually progress to the President for either a veto or his signature approving the passage of the bill into law.

The U.S. House’s Judiciary and Appropriations Committees have been debating what to do with USPTO fees – an issue that is but one among many important issues in legislation that would dramatically change U.S. patent law. For years, fees collected by the USPTO have been diverted for other uses. The two committees have now agreed on language for H.R. 1249 to end this fee diversion and give the USPTO the ability to set its own fees. The agreement provides that any fees collected over budget will be held in a fund to be used for the USPTO itself. Crucially, however, any disbursements from that fund would require congressional approval.

The bill is the latest attempt in a long history of proposed changes to United States patent law, which has not been significantly revised since 1952. This year, however, has seen perhaps the most notable progress in recent memory. In March, the Senate’s version of the bill, S. 23, sailed through passage, and the Obama administration has already suggested its support for this instance of patent reform legislation. With the committee deal, H.R. 1249, as it is officially known in the U.S. House of Representatives, has passed its last hurdle prior to being debate on the House floor.

One reason for the lack of clarity is uncertainty over the numerous changes the legislation proposes to make to U.S. patent law. One major change garnering significant attention is the switch from a system in which patent ownership is awarded to the first to invent to a first-to-file system. Other major changes are the allowance of third-party submissions and participation in the prosecution process, and other revisions designed to reduce the huge current backlog of pending patent applications. Another controversial issue is the section called the “bank bailout” clause that specifically relates to banks and financial institutions facing patent infringement litigation that would, if enacted, establish a transitional post-grant review proceeding for review of the validity of patents that claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”

Despite the agreement, it is unclear whether it improves the chances the legislation will survive a full House debate and vote. Notwithstanding the significant overhaul to U.S. law that it represents, which itself will draw plenty of scrutiny, many commentators and lawmakers are sure to question whether congressional oversight of any USPTO fund injects an unnecessary and uncertain political role into the question of what to do with the significant fees collected by the agency.

Does H.R. 1249 Include Language To Help Banks Faced With Business Method Patent Infringement?

June 11th, 2011 by spyros lazaris

As momentum builds toward the passage of legislation that will bring the most comprehensive revisions to United States patent law in more than 50 years, more and more attention is being given to what impact that may have on the U.S. patent system.  The Senate has already passed its version of the America Invents Act of 2011 (S. 23) and now the House of Representatives is poised to pass H.R. 1249, for which President Obama has already indicated his support. Although certainly not a new concept, patent reform stands its best chance of becoming law in quite some time.

One portion of H.R. 1249 that is drawing significant interest is Section 18 of H.R. 1249, which many commentators have dubbed a “bank bailout.” While most of H.R. 1249 deals with substantive changes to patent law such as the movement to a first-to-file system to harmonize U.S. law with most of the rest of world, other language has many worried about the true impact the legislation may have.

For several years now, patent holding companies and other non-practicing entities have been very active in asserting patents against a wide array of targets in courts around the country. Banks and other financial services institutions have frequently been among these targets, forced to deal with expensive and uncertain patent infringement lawsuits. In many cases, rather than risk potentially huge judgments, many of these banks and financial institutions have paid millions in patent licensing fees. Others have taken their cases to trial, and many others are currently being litigated, with no end in sight. With this in mind, it is understandable for the industry to seek innovative ways to deal with issues raised by these types of plaintiffs and the patents they own, and H.R. 1249 may include just such a way to combat this threat.

Section 18 is titled “Transitional Program For Covered Business Method Patents” and at first glance appears to be another attempt to deal with the patentability of business method patents. But a closer look reveals that this language is specifically for banks and financial institutions facing patent infringement litigation. Section 18 establishes a transitional post-grant review proceeding for review of the validity of “covered business method patents.” These are specifically defined as patents claiming “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”

Section 18 further provides that the post-grant review process can only be invoked by someone who has been sued for or charged with infringement of such a patent. There is also a venue clause which specifies that the presence of an automated teller machine shall not be deemed to be a physical facility for determining whether a case can be brought in a particular judicial district.

Section 18 appears designed to provide a specific post-grant review process for patents that can be asserted against banks and financial institutions. Current U.S. patent law provides no post-grant review mechanism at all – the addition of this alone is an enormous change to the patent system. True patent reform has always proven very difficult to enact, but the presence of language like that of Section 18 is sure to draw, and indeed has already drawn, attention to exactly what changes to U.S. law are contemplated, and why.  Despite the limited scope of Section 18, the apparent special-interest benefit may ultimately provide enough ammunition for opponents of the legislation to once again derail passage of the entire legislation.

Federal Circuit Overturns BPAI § 103 Decision, Provides Much-Needed Obviousness Guidance For Patent Applicants

June 10th, 2011 by spyros lazaris

In what will likely be a helpful decision for patent applicants, the United States Court of Appeals for the Federal Circuit has clarified the test for what references may be considered by the United States Patent & Trademark Office (USPTO) when rejecting a patent claim under 35 U.S.C.  § 103. The court’s ruling in In re Klein (Fed. Cir. 2011) is a significant development following the U.S. Supreme Court’s confusing KSR Int’l Co. v. Teleflex Inc. decision. The ruling should assist both patent applicants and examiners in determining what may be considered analogous and non-analogous prior art.

The patent applicant, Arnold Klein, filed a United States patent application titled “Convenience Nectar Mixing and Storage Devices” that concerns a mixing device for use in preparation of sugar-water nectar for bird feeders. The USPTO rejected the claims under § 103, citing five different patent references. Klein appealed to the Board of Patent Appeals and Interferences (BPAI), which affirmed the rejections. Klein appealed the BPAI decision to the Federal Circuit.

The court began its analysis by noting that a reference qualifies as prior art for an obviousness determination under § 103 only when it is analogous to the claimed invention. There are two tests for determining what is and what is not analogous. A reference is analogous when the art is from the same field of endeavor, regardless of the problem addressed. If the reference is not from the same field, it may still be analogous if reasonably pertinent to the particular problem with which the inventor is involved. A reference may be reasonably pertinent if “it is one which logically would have commended itself to an inventor’s attention in considering his problem.”

Klein argued that none of the references cited by the USPTO were pertinent, because they sought to solve a different problem than the one his invention was intended to solve. Klein’s argument was that the invention was designed for mixing a container’s contents, and three of the five cited references related to separating contents.  Klein further argued that none of these references instead related to mixing contents that were liquid in form. The court concluded that someone else would not have been motivated to consider any of these references when making Klein’s invention, since they solved different problems than the one Klein intended to solve. Since the references were for a different purpose, someone else would “have had less motivation or occasion to consider” them. Regarding the other two references, Klein successfully argued that someone would not have been motivated to consider them since neither showed a movable divider or the ability to prepare different ratios, which were key elements of the claims.

The ruling helps patent applicants because it provides significant support for arguments that different problems to be solved result in a reference falling outside of what is reasonably pertinent to the claimed invention, and therefore, outside of analogous art. Patent examiners often cite references from a wide array of fields for different elements within the same claim to find a basis for a § 103 rejection. A non-analogous reference cannot be considered in the obviousness analysis, providing applicants more ammunition in overcoming such rejections.  Examiners may also be far less willing to make tenuous § 103 rejections going forward.

One potential limiting issue is the court’s language that “[i]f a reference disclosure has the same purpose as the claimed invention, the reference relates to the same problem, and that fact supports use of that reference in an obviousness rejection.” Both Klein and the USPTO argued for different purposes of the invention, but the court adopted Klein’s much narrower scope, because the USPTO attempted to assert its broader purpose for the first time on appeal.  Klein’s narrow scope of the purpose of the invention supported his arguments of non-obviousness, but it remains unclear whether the USPTO’s broader purpose would have mattered to the Court’s analysis.

U.S. Supreme Court Upholds High Burden For Proving Patent Invalidity

June 9th, 2011 by spyros lazaris

In a much-anticipated ruling, the United States Supreme Court has affirmed a lower court decision that the presumption of patent validity may be overcome only by clear and convincing evidence. In Microsoft Corp. v. i4i Limited Partnership, the justices agreed that there is no justification for altering the statutory intent and precedent by lowering the evidentiary standard when determining whether or not a patent is invalid.

The case centers on a challenge to the presumption of patent validity under 35 U.S.C. § 282, which requires that a United States patent be presumed valid. The issue was raised by Microsoft after it was found liable for willful patent infringement in litigation brought by i4i. At trial, Microsoft failed in its attempt to invalidate the patents asserted by arguing, in part, that i4i never presented evidence of a potential “on-sale” bar under 35 U.S.C. § 102(b) to the United States Patent & Trademark Office (USPTO). This evidence was found insufficient to rebut the presumption of validity under § 282, and Microsoft appealed to determine whether the evidentiary standard for overcoming the presumption of validity under 35 U.S.C. § 282 was too high. The Federal Circuit upheld the standard and trial court’s judgment, and the Supreme Court agreed to hear the issue on appeal from Microsoft.

The Court’s analysis of the issue revolved around whether the intent of the 1952 U.S. patent statute, and the Court’s common law jurisprudence, offered any basis for lowering the evidentiary standard. Microsoft argued that a revised, lower standard of a preponderance of the evidence was more appropriate, but the Court disagreed, giving substantial deference to the specific language § 282 and its common law meaning. The Court stated that “[w]here Congress has prescribed the governing standard of proof, its choice generally controls” and that by stating that a patent is presumed valid, Congress used a term with a settled common-law meaning.  The Court concluded by saying that “[w]hile § 282 includes no express articulation of the standard of proof, where Congress uses a common-law term in a statute, the Court assumes the ‘term . . . comes with a common law meaning.’”  Therefore, the general rule affirmed by the Court is that a party seeking to establish patent invalidity must do so with clear and convincing evidence.

One key issue left unclear relates to Microsoft’s assertion that a preponderance standard must apply where evidence was not before the USPTO during the examination process. The Court agreed that where the USPTO did not have all material facts before it, its decision “may lose significant force,” quoting much-cited language from its KSR Int’l Co. v. Teleflex Inc., decision that “the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished” in such situations.

The Court found a way of out deciding whether the standard could be lowered in such circumstances on a procedural shortcoming. At trial, Microsoft failed to request a jury instruction to consider that it has heard evidence that the USPTO had no opportunity to evaluate, to consider whether the evidence is materially new, and if so, to evaluate that when determining whether an invalidity defense has been proved by clear and convincing evidence. The Court refused to consider whether this would impact the standard. Even though it further noted that “nothing in §282’s text suggests that Congress meant to establish a standard of proof that would rise and fall with the facts of each case,” it leaves it open for future potential challenges to the general evidentiary standard to succeed when material evidence was not presented to the USPTO.

The ruling also comes on the heels of at least two other recent Supreme Court opinions involving patents. The Court decided in favor of Roche in a dispute with Stanford University regarding patent ownership issues, and changed the standard for determining infringement by inducement under 35 U.S.C. § 271(b). The Microsoft v. i4i ruling therefore continues a significant trend of Supreme Court involvement in the world of intellectual property and in determining the scope of patent rights.



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