On June 9, 2011, the U.S. Supreme Court held that a defendant accused of patent infringement must prove invalidity by clear and convincing evidence, rejecting the argument that a lower standard of proof, such as "preponderance of the evidence," could suffice. The Court did acknowledge, however, that "new" prior art should be given greater weight in the invalidity analysis than prior art previously considered by the U.S. Patent and Trademark Office (USPTO), and further sanctioned the use of jury instructions addressing this issue.
Background of the i4i decision
Under the Patent Act, a patent is presumed valid.1 Thus, a party asserting invalidity of a patent bears the burden of proof.2 The Patent Act does not articulate the applicable standard of proof, but lower courts (and in particular the Federal Circuit) have interpreted it as requiring clear and convincing evidence.
In the case at bar, i4i had sued Microsoft for infringement of a patent relating to an improved method for editing computer documents.3 Microsoft claimed that the patent was invalid under 35 U.S.C. § 102(b) due to i4i's prior sale of its "S4" software.4 Microsoft argued at the district court and the Federal Circuit that, because "S4" was not considered by the USPTO during prosecution of the patent, Microsoft need not prove invalidity by clear and convincing evidence — rather, a lower standard of a preponderance of the evidence should suffice.5 Both the district court and the Federal Circuit rejected Microsoft's argument.6
The U.S. Supreme Court, affirming the lower courts, responded as follows.
The Patent Act requires invalidity to be proved by clear and convincing evidence
The Supreme Court ruled, unequivocally, that 35 U.S.C. § 282 requires that invalidity be proved by clear and convincing evidence.7 In affirming the lower courts, the Court looked to the history of invalidity and § 282. The Court determined that, by including a presumption of validity in § 282, Congress had intended to codify existing common law.8 And, by the time of § 282's enactment, the presumption of validity at common law carried with it a heightened standard of proof — specifically, validity was "not to be overthrown except by clear and cogent evidence."9 The Court acknowledged that § 282 did not expressly articulate this standard of proof, but stated that the general rule is that "a common-law term comes with its common-meaning."10 Correspondingly, the Court stated that it could not conclude that Congress "intended to 'drop' the heightened standard of proof simply because § 282 [failed] to reiterate it expressly."11
The Court did acknowledge, however, that "new" prior art likely carries more weight in the invalidity analysis than prior art that has been previously considered and rejected by the USPTO. Indeed, the Court expressly stated that a "challenger's burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain" where the relevant prior art was not considered by the USPTO.12
Looking forward after i4i
The Court's reticence to modify the heightened standard of clear and convincing evidence is somewhat notable. Although standards of proof may be esoteric from a jury's perspective, having a lower standard for "new" prior art could have been helpful for a party asserting invalidity. For example, when presenting "new" prior art, a defendant could have reinforced that its burden was notably lower by comparatively emphasizing the different standards of proof (e.g., preponderance of the evidence vs. clear and convincing evidence).
That being said, the Court's decision may nonetheless prove to be beneficial to defendants, as the Court expressly acknowledged that "new" prior art should be given greater weight than prior art previously considered by the USPTO. As mentioned above, the Court suggested that "new" prior art may make it easier to sustain a showing of clear and convincing evidence of invalidity. The Court also suggested that the additional weight that should be afforded "new" prior art can be addressed through jury instructions and verdict forms. Indeed, one of the more interesting — and perhaps beneficial — aspects of the Court's decision is that it arguably sanctions jury instructions that (1) inform jurors that certain prior art was not considered by the USPTO and (2) instruct the jurors to consider this fact in determining whether invalidity has been proved by clear and convincing evidence.13 This should make it easier for defendants to obtain jury instructions such as these, particularly in jurisdictions that do not routinely permit them.
One other notable aspect of the Court's decision is Justice Breyer's concurrence, wherein he emphasizes that the clear-and-convincing standard applies only to questions of fact. This is particularly apropos in the patent context, since obviousness, although it depends on factual inquiries, is ultimately a question of law. Justice Breyer suggests that, by properly confining the heightened clear-and-convincing standard to factual inquiries, "courts can increase the likelihood that discoveries or inventions will not receive legal protection where none is due."14 Similar to the majority, he suggests that jury instructions and verdict forms can be used to separate out "factual and legal aspects of an invalidity claim."15