On 29 November 2010 the U.S. Supreme Court granted
Microsoft's petition for certiorari in the patent infringement
case i4i L.P v. Microsoft Corp., the outcome of which case
could potentially affect the strength and value of all issued U.S.
patents. Affirming the trial court decision, the Court of Appeals
for the Federal Circuit (CAFC) upheld the established standard of
proof for invalidity challenges and denied a rehearing en
banc.
At trial Microsoft sought a jury instruction that the burden of
proof for invalidity based on prior art that the Patent and
Trademark Office (PTO) examiner had not reviewed, was "by a
preponderance of the evidence." The court denied
Microsoft's request and instructed that the required standard
of proof was "by clear and convincing evidence."
Following the Texas jury's verdict in favor of i4i that awarded
$200 million in damages, the trial judge awarded an additional $40
million for willful infringement and entered a permanent injunction
against Microsoft.
In its petition for writ of certiorari to the Supreme Court,
Microsoft framed the question presented as "whether the court
of appeals erred in holding that Microsoft's invalidity defense
must be proved by clear and convincing evidence," when the
invalidity argument is based upon evidence that was not
specifically considered by the PTO. Microsoft urged the Supreme
Court to grant the petition for certiorari for three major
reasons:
1. The CAFC's decision disregards the Supreme Court's
decision in KSR Int'l Co. v. Teleflex Inc. and
conflicts with decisions in all twelve regional circuits.
In its decision in KSR in 2007 the Supreme Court had noted that the
rationale for the presumption of patent validity "seems much
diminished" when an invalidity defense rests on evidence that
the PTO never considered. But, in KSR, the Court did not directly
address the required standard of proof. Microsoft contends that the
heightened standard of proof, required by the CAFC since 1982,
conflicts with pre-1982 decisions in all twelve regional courts of
appeal. According to Microsoft, each of the regional courts of
appeal had rejected the heightened standard of proof for invalidity
based on prior art that was not before the PTO.
2. The selection of an appropriate standard of proof for invalidity
is essential to avoid distorting the patent system.
Microsoft contends that invalid patents stifle, rather than
promote, the progress of useful arts and that the PTO is
overburdened with the inevitable result that it makes an
increasingly large number of mistakes. Thus, because too many
dubious patents are granted, accused infringers must prove
invalidity by clear and convincing evidence, the standard hinders
rather than promotes, progress.
3. The standard of proof issue is clearly presented and is ripe for
review in this case.
Microsoft urges that the issue will not benefit from further
percolation in the circuits because the regional courts of appeal
do not hear patent cases since the establishment of the CAFC.
i4i, opposing the petition for certiorari, asserts that a
"weakened" presumption of validity based upon prior art
that was not considered by the PTO is already a part of the
CAFC's jurisprudence and points out that Congress has had 26
years to reject the heightened standard imposed by the CAFC, but
has not done so.
Eleven amicus briefs were filed by parties (some by multiple
parties) supporting Microsoft's petition for certiorari,
including a number by leading computer and software companies. The
number of amicus briefs filed is just one indication of the
interest generated by this case. Companies both large and small
that assert patents, or defend against them, will watch with great
interest to see if the Supreme Court makes it easier to invalidate
a U.S. patent.
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