Dennis Crouch reports on Patently-O that the U.S. Supreme Court, in a unanimous ruling in Microsoft Corp. v. i4i Limited Partnership, has affirmed that patents are “presumed valid,” as indicated in the patent act. In the case, Microsoft challenged the strength of that presumption, arguing that a low “preponderance” standard for proving invalidity should be sufficient rather than the higher “clear and convincing” standard required by the Court of Appeals for the Federal Circuit. Justice Sotomayor writes for the Supreme Court, “We consider whether §282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.” Microsoft likely will be forced to pay the $250+ million judgment for infringing i4i’s patents, according to Crouch.

The Court’s opinion rests largely on its 1934 Radio Corp. of America v. Radio Engineering Laboratories, Inc. (RCA) opinion that required “clear and cogent evidence” to overturn an issued patent and a conclusion that the 1952 patent act intended to codify the common law holding of RCA, stating, “We cannot conclude that Congress intended to ‘drop’ the heightened standard proof from the presumption simply because §282 fails to reiterate it expressly.” The Supreme Court similarly rejected Microsoft’s alternative proposal that the presumption of validity be weakened for validity challenges that were not considered by the USPTO during prosecution of the application.

However, the Court did agree with Judge Rich’s opinion in American Hoist & Derrick Co. v. Sowa & Sons, Inc. that “new evidence” of invalidity likely carries more weight than evidence that had been previously considered and rejected by the Patent Office. In what may become the most litigated aspect of the decision, Sotomayor writes for the Court, “Simply put, 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. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO had no opportunity to evaluate before granting the patent. When it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, the jury may be instructed to consider that question. 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.”

In its opinion, the court acknowledged policy arguments both for and against a strong presumption of validity but in the end decided that it was bound to follow Congress and the common law precedent, Crouch concludes.

Writing on Patent Docs, Donald Zuhn adds that in its third patent decision in little more than a week, the Court roundly rejects Microsoft’s argument that the Court had applied a clear-and-convincing standard of proof in only two limited circumstances in its pre-1952 cases. As Sotomayor writes, “Squint as we may, we fail to see the qualifications that Microsoft purports to identify in our cases. They certainly make no appearance in RCA‘s explanation of the presumption of patent validity. . . .  Nor do they appear in any of our cases as express limitations on the application of the heightened standard of proof.” Justice Sotomayor adds, “Our pre-1952 cases never adopted or endorsed the kind of fluctuating standard of proof that Microsoft envisions.”

San Diego-based CONNECT and the San Diego Intellectual Property Lawyer’s Association, which filed a joint amicus brief arguing that innovation and innovation-related investment would be harmed by lowering the “clear and convincing” standard of patent validity, applauded the ruling. “Sometimes judges in courtrooms far removed from the cutting edge of innovation don’t appreciate the importance of intellectual property to America’s innovation economy,” according to Timothy Tardibono, policy director for CONNECT, and Douglas Olson, counsel of record for the SDIPLA on the amicus brief. “Our amicus brief helped inform the Court of the negative consequences of adopting a standard that would upset the delicate and fragile innovation ecosystem. It is encouraging that the decision was unanimous. The Court clearly understood the pro-innovation arguments.”

Sources: Patently-O, Patent Docs, and Connect

Posted June 15th, 2011 under Tech Transfer

Write a comment