Last week the United States Supreme Court issued its decision in a closely-watched case in which Microsoft Corporation sought to overturn a significant jury verdict of patent infringement against it by challenging the high threshold the district court, following years of common law precedent, had applied to Microsoft's claims that the patent in suit was invalid. Microsoft Corp. v. i4i Limited Partnership, ___ U.S. ___, (2011) (slip op. available here). The Court rejected Microsoft's appeal and upheld the United States Court of Appeals for the Federal Circuit's reliance on decades of precedent holding that a statutory provision that renders patents presumptively valid supported a requirement that challengers to patent validity must prove their defense by a heightened "clear and convincing evidence" standard.


i4i Limited Partnership holds a patent to software methods relating to editing computer documents. i4i sued Microsoft in the U.S. District Court for the Eastern District of Texas, alleging that certain custom XML functions within Microsoft Word infringed the i4i patent. At trial i4i prevailed, despite Microsoft's presenting an invalidity defense that it felt was compelling, based on i4i's sale, more than a year before its patent application, of a software product that Microsoft alleged embodied the patent claims. Such a sale would potentially invalidate the claims under the "on sale bar" of 35 U.S.C. Section 102. At trial, Microsoft had argued that — because the U.S. Patent Office had been unaware of the alleged on-sale event — Microsoft's burden of proving that the on-sale event invalidated the claims should not be set at a high level. The district court rejected this argument, and instructed the jury that Microsoft must prove the on-sale invalidity defense, and all other invalidity defenses, by "clear and convincing evidence."

35 U.S.C. Section 282 provides that "[a] patent shall be presumed valid" and that "[t]he burden of establishing invalidity of a patent . . . shall rest on the party asserting such invalidity." The Federal Circuit and other courts have consistently interpreted this provision as imposing a requirement that invalidity be proven by clear and convincing evidence. In its petition for certiorari, Microsoft argued that nothing in the statute sets a specific heightened quantum of proof, and contended that the case law that did so went beyond a statutory provision merely intended to shift a burden of production, not stack the deck against defendants by greatly increasing the amount and quality of evidence they must thus produce. Microsoft thus argued that a defendant who did produce some substantial evidence of invalidity would meet the statutory requirement for challenging invalidity as long as its evidence showed invalidity by a preponderance of the evidence (and not by the higher clear and convincing evidence standard).

Microsoft argued in the alternative that at a minimum, the lower "preponderance of the evidence" standard must apply when the evidence supporting invalidity had never been considered by the Patent Office. Microsoft pointed out that the presumption of validity rested in part on the notion that the skilled Examiners of the Patent Office had thoroughly considered the patent application and prior art, and that their allowance of the claims deserved deference. Such a notion, Microsoft argued, failed entirely when, as in its case, the Examiners had never had an opportunity to consider the specific prior art in question.


The Supreme Court was unpersuaded. Justice Sotomayor, writing for a unanimous Court (minus Chief Justice Roberts, who did not participate), stated the Court's clear holding that extensive precedent supported equating a legal "presumption" of validity with a requirement to submit clear and convincing evidence to rebut the presumption. The Court relied not only on Federal Circuit law on invalidity, but on over a century of consistent Supreme Court jurisprudence, culminating in the Supreme Court's decision in Radio Corp. of America v. Radio Engineering Labs., Inc., 293 U.S. 1 (1934) (Cardozo, J.). The Court held, accordingly, that by the time of the enactment of Section 282 (in 1952), "the presumption [of validity] encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof." Slip op. at 8.

As to Microsoft's narrower alternative argument that a preponderance of the evidence standard should, at a minimum, apply when a defendant invoked prior art not considered by the Patent Office, the Court's conclusion did not differ. It found that the consistent precedent in favor of a clear and convincing evidence standard for any invalidity challenges did not support such an alternative standard based on the nature of the prior art relied upon. The Court noted instead that instructions to the jurors permitting them to give significantly greater weight to prior art references not considered by the Patent Office "can, and when requested, most often should be given." Slip op. at 17. The Court went on to note that it had not disregarded Microsoft's policy arguments about the possibly bad side effects of a high presumption of patent validity in an era of concern over nonmeritorious patent assertions, but that the common law and legislative history made clear that such policy arguments needed to be addressed, if at all, by Congress, not the Courts.

Two concurring opinions, by Justices Breyer and Thomas, did not materially question the opinion of the Court.