The United States Supreme Court recently heard oral arguments in Microsoft’s challenge to the Federal Circuit’s requirement of “clear and convincing evidence” of a patent’s invalidity in a defence to infringement. It was on this basis that the Federal Circuit upheld a landmark $240 million damages award to Toronto-based i4i against Microsoft. Microsoft argues that the standard of proof should be lower, particularly where the United States Patent and Trademark Office (USPTO) did not consider the prior art raised in issuing the patent.
The Federal Circuit has consistently applied the heightened “clear and convincing evidence” standard of proof for invalidity. As a result, if the Supreme Court agrees with Microsoft, it will call into question virtually the entire body of the Federal Circuit’s case law on the issue.
The Justices quickly focused on the parties’ contrasting interpretations of the often cited 1934 Supreme Court RCA decision1. In this decision, Justice Cardozo stated that a challenger to a patent’s validity “bears a heavy burden of persuasion” and cannot overcome the presumption of a patent’s validity without “clear and cogent evidence.” The U.S. government and i4i both argued that Congress intended to codify this heightened standard as a natural part of the presumption of validity. Microsoft argued that the Justices’ statements were directed to an entirely different issue and were therefore not relevant. Justices Ginsberg, Scalia and Kagan disagreed. The Justices’ language was too broad to limit its relevance in this manner. As a result, the statements were relevant.
Several Justices raised the issue of special jury instructions as an alternative to lowering the standard of proof. Justices Sotomayor, Breyer and Ginsberg suggested instructing the jury to give more weight to prior art not considered by the USPTO when determining whether the defendant had provided clear and convincing evidence of invalidity. When asked why it had not requested such instructions, Microsoft stated that they would not have addressed the problem of incorrectly applying a higher standard of proof and that instructions regarding the appropriate weights for evidence would be too confusing for a jury. The jury should have been instructed to apply the lower standard for prior art not considered by the USPTO. According to Justice Scalia, both instructions were problematic since they would require litigating the issue of whether the USPTO had even considered the prior art, something “that would better be avoided.”
The value of re-examination by the USPTO to deal with incorrectly granted patents and technical principles of statutory interpretation were also discussed during the hearing.
The Supreme Court is expected to issue its decision at the end of June 2011. Chief Justice Roberts recused himself, reportedly for previously owning Microsoft stock.