A unanimous U.S. Supreme Court in Microsoft v. i4i Limited Partnership (10-290, June 9, 2011) confirmed that parties challenging a patent's validity in litigation must prove the patent is invalid by "clear and convincing" evidence. Importantly, this requirement applies even if the Patent Office did not consider the evidence and arguments made in litigation when deciding to grant the patent.
i4i sued Microsoft for infringing its patent. Microsoft's defense was that i4i's patent was invalid because i4i sold the invention more than one year before applying for the patent. The Patent Office does not consider such sales when deciding to grant the patent. Accordingly, Microsoft had argued that it was only necessary to show patent invalidity by a preponderance of the evidence. The Federal Circuit disagree with Microsoft stating that "clear and convincing" evidence was required. The Supreme Court agreed with the Federal Circuit.
Under 35 U.S.C. Section. 282, a patent is presumed valid and the burden of establishing invalidity rests with the party asserting such invalidity. Although the statute itself didn't articulate the standard of proof, the Supreme Court held that it codified the "clear and convincing" standard.
Importantly however, the Court referred to the "common sense principle" that new evidence of invalidity may carry more weight than evidence previously considered by the Patent Office. Therefore, the Court noted that a patent challenger may be more able to meet the "clear and convincing" standard when the Patent Office did not actually already consider the evidence of invalidity from the litigation.
Also, the Court recognized that a jury instruction on the effect of the new evidence should be given. In other words, the jury may be told that they are hearing evidence that the Patent Office had no opportunity to evaluate before granting the patent. (This is a change from a previous Federal Circuit holding that district courts may refuse such instructions on the grounds that they may confuse the jury as to the "clear and convincing" standard).
Finally, Justices Breyer, Scalia and Alito also emphasized that the "clear and convincing" standard applies only to questions of fact, not law, and encouraged the use of special verdict forms to juries to ensure that fact findings and ultimate legal conclusions are separated.
This decision is a relief to patent owners, and a disappointment to those challenging patents.
Please click here to read the decision.