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Another Day, Another Patent Decision

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06/09/2011

The US Supreme Court unanimously reaffirmed a higher standard of proof for proving “patent invalidity” today, rejecting a challenge by Microsoft to a jury verdict that the company infringed a patent held by i4i Limited Partnership and Infrastruc- tures for Information Inc. i4i said Microsoft’s Word application infringed an i4i patent related to “an improved method for editing computer documents.”

At trial, Microsoft claimed the patent was invalid and unenforceable. The trial judge instructed the jury to use a “clear and convincing evidence” standard — and not the lower “preponderance of the evidence” standard requested by Microsoft — in deciding whether the patent was invalid. The Federal Circuit Court of Appeals, and now the Supreme Court, agreed with that standard.

Federal patent statutes specify no standard of proof. Congress merely declared that a “patent shall be presumed valid” and that anyone challenging its validity will have the burden of establishing as much. The Court said there is a “common law” presumption, however, that the presumption of patent validity carries with it a “clear and convincing” standard of proof.

Justice Sonia Sotomayor, speaking for the Court, acknowledged, without taking a side, the underlying policy debate over the impact of patents:

The parties and their amici have presented opposing views as to the wisdom of the clear-and-convincingevidence standard that Congress adopted. Microsoft and its amici contend that the heightened standard of proofdampens innovation by unduly insulating “bad” patents from invalidity challenges. They point to the high invalidation rate as evidence that the PTO grants patent protection to too many undeserving “inventions.” They claimthat inter partes reexamination proceedings before the PTO cannot fix the problem, as some grounds for invalidation (like the on-sale bar at issue here) cannot be raised in such proceedings. They question the deference that the PTO’s expert determinations warrant, in light of the agency’s resources and procedures, which they deem inadequate. And, they insist that the heightened standard of proof essentially causes juries to abdicate their role in reviewing invalidity claims raised in infringement actions.

For their part, i4i and its amici, including the United States, contend that the heightened standard of proof properly limits the circumstances in which a lay jury overturns the considered judgment of an expert agency. They claim that the heightened standard of proof is an essential component of the patent “bargain,” see Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 150–151 (1989), and the incentives for inventors to disclose their innovations to the public in exchange for patent protection. They disagree with the notion that the patent issuance rate is above the optimal level. They explain that limits on the reexamination process reflect a judgment by Congress as to the appropriate degree of interference withpatentees’ reliance interests. Finally, they maintain that juries that are properly instructed as to the application of the clear-and-convincing-evidence standard can, and often do, find an invalidity defense established.

In a concurring opinion, Justice Stephen Breyer, speaking for himself and Justices Antonin Scalia and Samuel Alito, noted that the “clear and convincing” standard applies only to questions of fact, not law:

Many claims of invalidity rest, however, not upon factual disputes, but upon how the law applies to facts as given. Do the given facts show that the product was previously “in public use”? Do they show that the invention was “nove[l]” and that it was “non-obvious”? Do they show that the patent applicant described his claims properly? Where the ultimate question of patent validity turns on the correct answer to legal questions—what these subsidiary legal standards mean or how they apply to the facts as given—today’s strict standard of proof has no application.

Courts can help to keep the application of today’s “clear and convincing” standard within its proper legal bounds by separating factual and legal aspects of an invalidity claim, say, by using instructions based on case-specific circumstances that help the jury make the distinction or by using interrogatories and special verdicts to make clear which specific factual findings underlie the jury’s conclusions. By isolating the facts (determined with help of the “clear and convincing” standard), courts can thereby assure the proper interpretation or application of the correct legal standard (without use of the “clear and convincing” standard). By preventing the “clear and convincing” standard from roaming outside its fact-related reservation, courts can increase the likelihood that discoveries or inventions will not receive legal protection where none is due. [Citations omitted]

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