SUPREME COURT RULES AGAINST MICROSOFT IN MICROSOFT v i4i CASE

Patents Still Presumed Valid;

Clear and Convincing Evidence Required to Invalidate

Finally, A Pro-Patent Supreme Court Decision

In many areas of the law, the pendulum of justice swings back and forth, as courts and government attempt to balance competing interests in society.  Courts hand down decisions that seem harsh to one segment of society and favorable to another, but later change course.  Patent law is no exception.

For the past several years, the Supreme Court of the United States (SCOTUS) has handed down a number of decisions that were widely viewed as “anti-patent.”  For example, the KSR v. Teleflex decision in 2007 made it easier to invalidate patents on grounds of obviousness, and the Bilski v. Kappos decision in 2010 made it more difficult to obtain a process patent – and expressed great skepticism about business method patents.  Recently, the SCOTUS handed down a pro-patent decision. The anti-patent momentum of the patent law pendulum may thus have eased a bit – at least for now.

On June 9, 2011, the Supreme Court handed down its decision of Microsoft Corporation v. i4i Limited Partnership et al., Case No. 10-290.  A link to that decision can be found here.

In this decision, the Supreme Court maintained a long-standing principle that a party asserting the invalidity of a patent must have “clear and convincing” evidence that the patent is invalid on some grounds.  This standard of proof follows from the patent law’s requirement that a patent is presumed valid, and can only be invalidated by clear and convincing evidence.

Microsoft had defended a charge of patent infringement by i4i on the grounds that the patent (which related to an improved method for editing computer document) was invalid because a software program known as S4 been sold more than a year before i4i filed its patent application.   Information about the S4 product was not considered by the U.S. Patent and Trademark Office (USPTO) during examination of i4i’s patent.  Microsoft thus urged that the jury need only find that the product was sold by a preponderance of the evidence, not by clear and convincing evidence, since the USPTO did not consider the on-sale issue during examination of the i4i patent application.

Microsoft had sought a declaration that the patent was invalid under the U.S. patent law’s on-sale bar (35 U.S.C. §102(b)), which precludes patent protection for any “invention” that was “on sale in this country” more than one year prior to the filing of a patent application.

The jury did not find that the product was on sale by clear and convincing evidence, and found that Microsoft had willfully infringed the i4i patent and failed to prove the patent’s invalidity.  Microsoft appealed to the Court of Appeals for the Federal Circuit, which affirmed, and then appealed to SCOTUS.  The Supreme Court affirmed.

Section §282 U.S. Patent law states that  “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity . . . shall rest on the party asserting” it. For many decades, the courts have required a defendant seeking to overcome the presumption of validity of a patent to persuade the fact-finder (a judge or jury) of its invalidity defense by clear and convincing evidence.  The Supreme Court apparently found no reason to change this long-standing principle.

Justice Sotomayor wrote the majority opinion.  The Supreme Court noted that both sides devoted much of their argument to various policy issues.  For example, does the PTO grant too many undeserving patents?  Is deference to the USPTO and its findings in examination unwarranted?  Are juries abdicating their fact-finder role in determining patent validity?  Without addressing these questions, Justice Sotomayor pointed out that Congress has addressed the problem of “bad patents” on many occasions without addressing the standard of proof.  Justice Sotomayor also wrote that “Any re-calibration of the standard of proof remains in [Congress’s] hands.”

This decision means that patents will be more difficult to invalidate.  Any changes to the patent system should come from Congress, as suggested by Justice Sotomayor.  As a result, it is likely that more patents will be considered valid.  Businesses that are in patent-intensive industries and subject to risk of patent infringement must now be more careful to avoid infringing patents – because it will be harder to defend a patent litigation on the ground that a patent is invalid.

It is noted that there are no proposed changes to standards of proof, patentable subject matter, or many other patent system problems in the patent reform legislation now before Congress.  Thus, it is not likely that Congress can or will “fix” a number of problems in the patent system any time soon – even if the patent reform bill passes Congress.

For further information on these or other patent issues, contact the author or any other IP attorney at the firm.

By  John R. Harris

This information is presented for educational purposes and is not intended to constitute legal advice. Opinions expressed are those of the author and not of Morris, Manning & Martin, LLP; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Contact John Harris for more information at jharris@mmmlaw.com