Putting to rest the recent debate about the standard for proving invalidity, on June 9, 2011, the U.S. Supreme Court unanimously affirmed longstanding Federal Circuit precedent requiring that the invalidity defense provided in the Patent Act, 35 U.S.C. § 282, be proven by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. __ (June 9, 2011) (No. 10-290). The Court’s decision issued from Microsoft’s appeal of a Federal Circuit decision upholding a $290 million verdict after a jury found that Microsoft had infringed a patent owned by i4i and that the patent was not invalid (as Microsoft asserted). Id.  For a discussion of the background of the case and the Federal Circuit’s decision,see our Legal Alert dated April 17, 2010.

Relying on the Patent Act’s silence in specifying a heightened standard of proof for invalidity, in its appeal, Microsoft argued that courts should only require a preponderance of the evidence to establish invalidity. Id. (slip op., at 5-6). Microsoft’s arguments were supported in large part by technology companies such as Google and Apple as well as open-source advocacy group Electronic Frontier Foundation. i4i garnered support from major pharmaceutical and manufacturing companies, including Genentech, Bayer, Caterpillar and 3M in arguing that the clear and convincing evidentiary standard was implicit in the Patent Act because case law, when the statute was enacted, already imposed the clear and convincing standard. Id. (slip op., at 7-12).

The Court agreed with i4i and held that the clear and convincing standard of proof was implicit in the statute. Id. The Court was also persuaded by Congress’ inaction in clarifying the standard of proof required for an invalidity defense, despite 25 years of Federal Circuit precedent applying that standard.  Id. (slip op., at 19-20).

Microsoft argued alternatively that, when evidence of invalidity was not before the Patent and Trademark Office (PTO) during prosecution, a heightened standard of evidence should not apply. Id. (slip op., at 6). The Court also rejected this argument, finding the statute did not distinguish the source of the art forming the basis for the invalidity defense. Importantly, the Court noted that if the PTO did not have critical art before it during prosecution, then the clear and convincing threshold should be easier to meet as the PTO’s “considered judgment may lose significant force” in such cases. Id. (slip op., at 17). For parties raising an invalidity defense relying on such evidence, the Court offered important guidance, stating that “we note that a jury instruction on the effect of new evidence [not considered by the PTO] can, and when requested, most often should be given.”Id.

The clear and convincing standard of proof required to establish invalidity correlates with jurors’ perception of the PTO’s expertise in deciding to issue a patent and the weight they afford to a patent as a result of this perception. Employing jury instructions as described by the Supreme Court may mitigate what some perceive as the nearly insurmountable task of establishing invalidity by clear and convincing evidence.