On June 9, 2011, the U.S. Supreme Court unanimously affirmed the Federal Circuit’s decision in the closely watched Microsoft Corporation v. i4i Limited Partnership case, thus upholding the long-standing, clear and convincing evidence standard for overcoming the presumption of patent validity.  A federal district court had found Microsoft guilty of infringing i4i’s patent and ordered Microsoft to pay almost $300 million in damages.  Microsoft argued that the district court should have found i4i’s patent invalid by applying the lower preponderance of the evidence standard.

Microsoft made two basic arguments, both of which were rejected by the Court.  Microsoft first argued that invalidity in any patent case need only be shown by preponderance of the evidence, rather than by clear and convincing evidence.  Second, Microsoft argued that the lower preponderance of the evidence standard must at least apply where the evidence before the fact finder was not before the U.S. Patent and Trademark Office (PTO) during the examination proceedings. 

The Court rejected Microsoft’s first argument by relying on the language of Section 282 of the Patent Act, specifically, the provision that a patent is “presumed valid.”  The Court observed that Section 282 does not explicitly articulate a standard of proof.  However, it held that the general rule must be applied that where a common law term is used, it is presumed to have been accorded its common law meaning.  Accordingly, the Court held that because Congress used the common-law term “presumed valid,” Congress meant for that term to be accorded its common law meaning of “not to be overthrown except by clear and cogent evidence,” as was articulated in RCA v. Radio Engineering Labs, 293 U.S. 1 (1934).

As to Microsoft’s second argument, the Court acknowledged that the rationale underlying the argument was sound, but insisted that it contradicted the express language of Section 282.  It explained that, had Congress wanted to draw the distinction put forth by Microsoft as to new prior art, it needed to do so expressly.  The Court also concluded that pre-1952 case law had not implied a varying standard, as was argued by Microsoft. 

Instead of changing the standard of proof, the Court praised the “commonsense principle that the Federal Circuit has recognized – namely, that new evidence supporting an invalidity defense ‘may carry more weight’ in an infringement action than evidence previously considered by the PTO.”  The Court went on to encourage courts to adopt jury instructions that embrace that concept, stating, “although we have no occasion to endorse any particular formulation, we note that a jury instruction on the effect of new evidence can, and when requested, most often should be given.”

The Court acknowledged the extensive policy arguments offered by Microsoft and i4i and the many interested third parties that submitted amicus briefs.  However, it quite simply responded that it was “in no position to judge the comparative force of these policy arguments” because Congress specified the applicable standard of proof in 1952 and since then has allowed the Federal Circuit’s interpretation to stand despite making numerous other amendments.  The Court concluded by emphasizing that “[a]ny recalibration of the standard of proof remains in [Congress’] hands.”

By letting the current standard stand, the Court has maintained the deference accorded decisions of the PTO, meaning that patent owners may continue to rely on a relatively strong presumption of validity.  At the same time, the Court has sanctioned the Federal Circuit’s view that prior art not previously before the PTO may be given a certain amount of additional weight, and through its opinion it encourages lower courts to adopt jury instructions to that effect.  This confirms that patent applicants should be thorough in their submission of known prior art to the PTO during examination.  By making all prior art known to the examiner, there is a lower likelihood of new prior art later appearing and being given any additional weight during litigation. 

The opinion can be downloaded from the Supreme Court website here