Earlier this month, the U.S. Supreme Court issued a decision in Microsoft Corp. v. i4i L.P., 589 F.3d 1246 (Fed. Cir. 2009), upholding a Federal Circuit Court of Appeals decision affirming an award of close to $300 million in damages to software developer i4i for willful patent infringement. Download Microsoft Corp. v. i4i L.P.
Microsoft argued that i4i’s patent, for programming language used in Microsoft Word, was invalid because during prosecution of the patent application resulting in the patent at issue, i4i did not disclose to the Patent Office Examiner that it had sold a similar system (S4) more than a year before its application was filed. Since the alleged invalidating prior art was never considered by the Patent Office Examiner during prosecution of the patent at issue, Microsoft claimed it only needed to prove invalidity by a preponderance of the evidence, not the traditional standard of “clear and convincing” evidence.
Attorneys for i4i responded that Microsoft should be held to the higher standard; in other words, Microsoft was required to prove invalidity by "clear and convincing" evidence even if the Patent Examiner had not considered S4.
Ruling in Microsoft’s favor could have given a considerable boost to defendants in future patent litigation cases as it would have made it easier to invalidate patents. The Supreme Court, however, ruled in i4i's favor and upheld the requirement that invalidity must be proven by clear and convincing evidence––even for prior art not considered by the Patent Office Examiner.
It’s no great surprise that the Supreme Court ruled this way. However, the Supreme Court did make clear that ordinarily the jury should be instructed to consider in its deliberations of patent invalidity whether new prior art evidence presented at trial is material, and to consider that fact when determining whether an invalidity defense has been proven by clear and convincing evidence.