On June 9, 2011, the U.S. Supreme Court unanimously affirmed the
Federal Circuit's decision in the closely watched Microsoft
Corporation v. i4i Limited Partnership case, thus upholding
the long-standing, clear and convincing evidence standard for
overcoming the presumption of patent validity. A federal
district court had found Microsoft guilty of infringing i4i's
patent and ordered Microsoft to pay almost $300 million in
damages. Microsoft argued that the district court should have
found i4i's patent invalid by applying the lower preponderance
of the evidence standard.
Microsoft made two basic arguments, both of which were rejected by
the Court. Microsoft first argued that invalidity in any
patent case need only be shown by preponderance of the evidence,
rather than by clear and convincing evidence. Second,
Microsoft argued that the lower preponderance of the evidence
standard must at least apply where the evidence before the fact
finder was not before the U.S. Patent and Trademark Office (PTO)
during the examination proceedings.
The Court rejected Microsoft's first argument by relying on the
language of Section 282 of the Patent Act, specifically, the
provision that a patent is "presumed valid." The
Court observed that Section 282 does not explicitly articulate a
standard of proof. However, it held that the general rule
must be applied that where a common law term is used, it is
presumed to have been accorded its common law meaning.
Accordingly, the Court held that because Congress used the
common-law term "presumed valid," Congress meant for that
term to be accorded its common law meaning of "not to be
overthrown except by clear and cogent evidence," as was
articulated in RCA v. Radio Engineering Labs, 293 U.S. 1
(1934).
As to Microsoft's second argument, the Court acknowledged that
the rationale underlying the argument was sound, but insisted that
it contradicted the express language of Section 282. It
explained that, had Congress wanted to draw the distinction put
forth by Microsoft as to new prior art, it needed to do so
expressly. The Court also concluded that pre-1952 case law
had not implied a varying standard, as was argued by
Microsoft.
Instead of changing the standard of proof, the Court praised the
"commonsense principle that the Federal Circuit has recognized
– namely, that new evidence supporting an invalidity
defense 'may carry more weight' in an infringement action
than evidence previously considered by the PTO." The
Court went on to encourage courts to adopt jury instructions that
embrace that concept, stating, "although we have no occasion
to endorse any particular formulation, we note that a jury
instruction on the effect of new evidence can, and when requested,
most often should be given."
The Court acknowledged the extensive policy arguments offered by
Microsoft and i4i and the many interested third parties that
submitted amicus briefs. However, it quite simply
responded that it was "in no position to judge the comparative
force of these policy arguments" because Congress specified
the applicable standard of proof in 1952 and since then has allowed
the Federal Circuit's interpretation to stand despite making
numerous other amendments. The Court concluded by emphasizing
that "[a]ny recalibration of the standard of proof remains in
[Congress'] hands."
By letting the current standard stand, the Court has maintained the
deference accorded decisions of the PTO, meaning that patent owners
may continue to rely on a relatively strong presumption of
validity. At the same time, the Court has sanctioned the
Federal Circuit's view that prior art not previously before the
PTO may be given a certain amount of additional weight, and through
its opinion it encourages lower courts to adopt jury instructions
to that effect. This confirms that patent applicants should
be thorough in their submission of known prior art to the PTO
during examination. By making all prior art known to the
examiner, there is a lower likelihood of new prior art later
appearing and being given any additional weight during
litigation.
The opinion can be downloaded from the Supreme Court website here.
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