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

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.