Supreme Court Confirms Invalidating a Patent Requires Clear and Convincing Evidence

June 13, 2011

After a string of Supreme Court decisions generally viewed as unfavorable to patent owners and critical of the Federal Circuit Court of Appeals, on June 9 the high court sided with patentees and affirmed the Federal Circuit for the second time in a year. Microsoft Corp. v. i4i Limited Partnership et al., No. 10-290 (June 9, 2011). All eight justices participating in the case agreed that clear and convincing evidence is required to invalidate a patent. (Chief Justice Roberts recused himself.)

Factual and Procedural Background

Patent owners i4i Limited Partnership and Infrastructures for Information Inc (collectively, “i4i”) sued Microsoft in the Eastern District of Texas in 2007 for infringing i4i’s patent on an improved method for editing computer documents. Microsoft contended the patent was invalid under the on-sale bar of 35 U.S.C.§ 102(b). It pointed to i4i’s prior sale of a software program known as S4, which it contended contained the invention. Because the S4 software source code had been destroyed years before the lawsuit, whether or not S4 contained the patented invention turned largely on the testimony of S4’s two creators, who were also inventors of the patent. They testified it did not.

The trial court rejected Microsoft’s proposed jury instruction that because the S4 software had not been presented to the Patent Office, the invalidity of the patent could be proved by a preponderance of evidence. Instead, the District Court instructed the jury that invalidity must be proved by clear and convincing evidence. The jury found the patent not invalid and returned a verdict of $290 million against Microsoft. In denying Microsoft’s post-trial motions, the District Court rejected Microsoft’s argument that the court improperly instructed the jury on the standard of proof. The Federal Circuit affirmed.

The Patent Act of 1952 Incorporated the Common Law Understanding of “Presumed Valid”

Section 282 of the Patent Act of 1952 states “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” Justice Sotomayor’s majority opinion, in which six other justices joined, held that when Congress enacted that section in the 1952 Patent Act, it adopted the trappings of the existing common law presumption of validity, which included a well-established requirement that invalidity be proved by clear and convincing evidence. In Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U.S. 1 (1934), Justice Cardozo wrote that “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” Id. at 2. Justice Sotomayor noted that the presumption of patent validity had long been a fixture of the common law by the time Congress had enacted § 282. That Congress chose not to reference the standard of proof within the language of the statute made no difference: “Under the general rule that a common-law term comes with its common-law meaning, we cannot conclude that Congress intended to ‘drop’ the heightened standard [of] proof from the presumption simply because § 282 fails to reiterate it expressly.” Justice Thomas, concurring in the judgment, disagreed that the statutory presumption of validity incorporated the common law’s clear and convincing standard of proof, but agreed that because the statute was silent on the burden of proof, the established common-law standard continued.

The Court also rejected Microsoft’s argument that the Federal Circuit’s interpretation of § 282’s statement that “[a] patent shall be presumed valid” rendered superfluous the statute’s additional statement that “[t]he burden of establishing invalidity of a patent . . . shall rest on the party asserting such invalidity.” All interpretations of § 282, including those advanced by Microsoft, included excess language. The Court held that “[t]he kind of excess language that Microsoft identifies in §282 is hardly unusual in comparison to other statutes that set forth a presumption, a burden of persuasion, and a standard of proof.”

Section 282 Does Not Allow a Lower Standard of Proof Where Certain Evidence Was Not Presented to the PTO

In the alternative, Microsoft presented the more limited argument that a preponderance standard must apply at least where the evidence before the factfinder was not before the PTO during the examination process. Four years ago, in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Supreme Court noted that where the invalidity evidence offered to the jury had not been before the Patent Office when it issued a patent, “the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished.” Id. at 426. However, the Court in i4i rejected Microsoft’s argument that the standard of proof should be lower in such cases, remarking that while there might be other rationales for a clear and convincing standard of proof, there was no support for such an exception in the words of the statute or in the pre-1952 cases stating the common law rule on which it was based. And it found itself in no position to judge the comparative force of the competing policy arguments the parties and amici curiae offered about the wisdom of the standard Congress adopted.

The Court did offer some practical observations that may comfort defendants. The majority acknowledged that where evidence has not been before the Patent Office, it may carry more weight and go further toward sustaining the attacker’s unchanging burden, and that a jury should be instructed on that point if requested (Microsoft had failed to ask for such an instruction). In addition, Justice Breyer’s concurring opinion emphasized that the heightened burden applies only to issues of fact, not issues of law, such as whether the invention was “in public use” or “novel” or "nonobvious,” and that courts have a duty to prevent the standard “from roaming outside its fact-related reservation.”

The i4i opinion is significant in that it lays to rest a much-discussed disagreement about the proper standard of proof for patent invalidity, and clarifies the impact of evidence that was not before the PTO during patent prosecution. In addition, the Supreme Court's rejection of a variable standard, depending on whether prior art was before the Patent Office, in favor of a bright line rule, avoids adding further complication and expense to already complicated and expensive patent litigation.


For more information on this alert, please contact any of the lawyers listed below:

Robert C. Bertin, Partner, Intellectual Property Group

This article was originally published by Bingham McCutchen LLP.