U.S. Supreme Court Agrees to Hear Challenge to the Burden of Proof Standard for Invalidity

December 07, 2010, 06:20 PM

In what several commentators believe may be a further effort by the U.S. Supreme Court to reshape patent infringement litigation, the Court has recently accepted an appeal challenging the high burden of proof required to invalidate a patent. Under current law, patents granted by the United States Patent and Trademark Office (PTO) enjoy a presumption of validity and enforceability. Any potential infringer who challenges the validity of a patentin essence, arguing that that the patent should not have been granted for a variety of reasons, including that the claimed invention was already disclosed or was obvious in light of other patents, publications or the like (collectively, called Prior Art)must prove the invalidity claim or defense under a very demanding by clear and convincing evidence burden of proof. This demanding burden of proof applies even if the PTO did not consider the Prior Art when it granted the challenged patent. This was the case in i4i Limited Partnership and Infrastructures for Information Inc., v. Microsoft Corporation, 598 F.3d 831 ( Fed. Cir. 2010), where the United States Court of Appeals for the Federal Circuit (the appeals court that hears patent appeals) affirmed this principle of law. At trial, i4i obtained a record-breaking $290 million jury verdict against Microsoft for infringing a patent held by the small Canadian software firm. As part of its defense to the claim, Microsoft had argued that the software patent was invalid because of prior art software that was not considered by the PTO. Microsoft had requested a jury instruction with a lower burden of proof standardpreponderance of the evidence–that the trial court rejected. When the trial court and jury ruled against it, Microsoft appealed its claim to the Federal Circuit arguing, in part, that the trial court had applied the wrong burden of proof to the invalidity claim because the prior art had not been previously considered by the PTO.

When the Federal Circuit affirmed the jury award, Microsoft appealed the ruling to the U. S. Supreme Court arguing, in part, that the Federal Circuit had erred in holding that Microsoft’s defense
that the patent was invalid — must be proved by clear and convincing evidence. In particular, Microsoft argued that the Federal Circuit erred when it held that Microsoft was required to prove its defense of invalidity by “clear and convincing evidence,” even though the prior art on which the invalidity defense rests was not considered by the PTO prior to the issuance of the asserted patent. Lowering the burden of proof standard would allow defendants to more easily challenge the validity of a patent asserted in this circumstance.

In seeking review by the U.S. Supreme Court, Microsoft contended that a lower burden of proof standard should have been used, arguing that the issue is important to the effective functioning of the U.S. patent system and that the higher standard may be leaning too far in favor of those who establish questionable patents. Google Inc, Yahoo Inc, and trade groups such as the Computer & Communications Industry Association and 36 law, business and economics professors all supported Microsoft’s appeal. Commentators expect a decision within a year and believe the case may herald a watershed change in patent law. Stephen E. Noona is the head of Kaufman & Canoles Trial Section and Co-chair of its Intellectual Property Law and Franchising Practice Group. He has been counsel in over sixty (60) patent cases in the Eastern District, is Fellow in the American College of Trial Lawyers and has appeared before the judges in all four Divisions of the Eastern District on patent matters. —Stephen E. Noona