In a unanimous decision in Microsoft Corp. v. i4i Limited Partnership, the US Supreme Court held on June 9, 2011 that a patent defendant must meet a clear and convincing standard of proof to invalidate a US patent in district court. The Court’s decision affirms a standard of proof for patent validity endorsed by the Federal Circuit for the past 30 years.
Section 282 of the US Patent Laws states that “[a] patent shall be presumed valid.” The Court noted that, while Section 282 does indeed establish a presumption of validity for a patent, there was no “express articulation of the standard of proof” in the statute (Slip Op. at 6). The statutory words “presumed valid” were then construed based on a “settled meaning” in the common law as expressed by Justice Cardoza in Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U.S. 1 (1934) (Slip Op. at 8). The Court found that “presumed valid” under the statute means that “a defendant raising an invalidity defense bore ‘a heavy burden of persuasion,’ requiring proof of the defense by clear and convincing evidence.” Id.
Having construed the statute as requiring a clear and convincing standard of proof for patent invalidity, the Court next responded to petitioner Microsoft Corp.’s argument, in the alternative, that a preponderance of the evidence standard should at least apply whenever a fact finder is presented with evidence of invalidity that was not considered by the PTO during examination. (Slip Op. at 14). To support this position, Microsoft referred the Court to a recent statement by the Court, which expressed the view that when prior art evidence was not before a PTO examiner, “the rationale under-lying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished.” Id. (quoting KSR Int’l Co. v. Teleflex Inc., 550 U. S. 398 at 426 (2007) (KSR)).
Responding to Microsoft’s argument, the Court found that the case law preceding enactment of Section 282 never endorsed, even in dicta, a standard of proof that would depend on whether the evidence had been previously considered by a PTO examiner. (Slip Op. at 15). Additionally, the Court assumed that if Congress “intended to drop the heightened standard of proof where the evidence before the jury varied from that before the PTO – and thus to take the unusual and impractical step of enacting a variable standard of proof that must itself be adjudicated in each case, . . . [it] would have said so expressly.” (Slip Op. at 16).
The Court then addressed the matter of jury instructions in patent validity disputes. With reference to its statement in KSR, the Court concluded that “if the PTO did not have all material facts before it, its considered judgment may lose significant force . . . And, concomitantly, the challenger’s burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain.” (Slip Op. at 17). Along these lines, the Court then noted that, while it did not wish to “endorse any particular formulation” for jury instructions, “a jury instruction on the effect of new evidence can, and when requested, most often should be given.” Id. And if the parties dispute whether the evidence is different from what was considered by the PTO, “the jury may be instructed to consider that question.” (Slip Op. at 16-17). In either case, “the jury may be instructed to evaluate whether the evidence before it is materially new, and if so, to consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence.” (Slip Op. at 18). Although the clear and convincing standard remains in force, patentees must be mindful of the prior art that was not considered by the PTO. When it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, such standard may become easier to prove.