Keep Calm and Carry On

Microsoft Corp . v. i4i Limited Partnership

Combatants on patent law's frontlines can stand down. The Supreme Court has issued its long awaited opinion in Microsoft Corp. v. i4i Limited Partnership and, despite wide-spread speculation that the Court might torpedo patent litigation's standards of proof, the rules of engagement remain the same. Rejecting the campaign waged by Microsoft, a unanimous Court held that the presumption of validity enacted in §282 of the Patent Act of 1952 requires that an invalidity defense be proved by clear and convincing evidence. For Microsoft, the Court's decision means it most likely will have to reach into its war coffers and pay the $250+ million judgment for infringement entered against it. For other patent warriors, life continues SNAPU (situation normal, asserted patent-proof-standards unchanged).

The patent at issue in i4i-the ‘449 patent-covered an improved method for editing computer documents. Microsoft challenged the patent's validity after i4i brought suit against it for willful infringement. Microsoft claimed on-sale bar as the basis of its invalidity defense, arguing that a different software program i4i sold a year before filing the ‘449 patent application substantially embodied the ‘449 patent's claimed invention. Microsoft argued its invalidity defense should be subject to a different standard of review because the PTO did not consider the previous software program during the ‘449 application process. Microsoft requested a jury instruction directing that invalidity be determined by a preponderance of the evidence because of the presence of the new evidence not considered by PTO.

Rejecting Microsoft's request, the district court instructed the jury under the   established clear and convincing standard. Microsoft objected to the instruction but didn't offer an alternative one that asked the jury to consider the materiality of its new evidence under the clear and convincing standard. After a full trial, the jury found the ‘449 patent valid and willfully infringed and the district court entered judgment on the jury's verdict. Following Microsoft's appeal, the Federal Circuit affirmed the district court's decision, refusing to depart from its settled interpretation of §282 as requiring clear and convincing evidence of invalidity.

On writ of certiorari to the Supreme Court, Microsoft again sought to establish preponderance of the evidence as the correct standard of proof for an invalidity defense. But the Court rejected each of the alternative arguments Microsoft offered. Microsoft failed to persuade the Court that §282 only requires proof by a preponderance of the evidence to challenge a patent's validity. Looking back to its decision in Radio Corp. of America v. Radio Engineering Laboratories, Inc., the Court said that the 1952 Patent Act represents a codification of the decision's common law standard requiring "clear and cogent evidence" to overturn an issued patent. The Court specifically noted that Congress has never changed the standard despite having had ample opportunity to do so.

Congressional intent also served as the basis for the Court's rejection of Microsoft's alternative argument that a separate standard of proof should apply to evidence of invalidity not before the PTO during the examination process. But the Court did acknowledge that new evidence of invalidity likely carries more weight than evidence that had been previously considered and rejected by the PTO. Going forward, a jury may be instructed to evaluate the materiality of evidence not considered by the PTO and consider its materiality when determining whether an invalidity defense has been adequately proven under the clear and convincing standard-though Microsoft's failure to request a jury instruction on its new evidence meant the Court refused to consider the question in their case.

Despite its affirmation of the clear and convincing standard, i4i does not mean that invalidity armistice has arrived. Instead, validity's latest battlefront will focus on the materiality of new evidence not considered by the PTO. Accused infringers are sure to take advantage of the ammunition offered by the Court's comments that the existence of new evidence can make it easier for patent challengers to sustain the clear and convincing standard of proof-and that "a jury instruction on the effect of new evidence can, and when requested, most often should be given." Accused infringers will also look to the armaments offered in the opinion's concurrence written by Justice Breyer and signed by Justices Scalia and Alito. There, Justice Breyer indicated that the clear and convincing standard applies only to questions of fact and not to the ultimate questions of law-potentially creating another way for accused infringers to outflank an infringement attack. The result? Under i4i, patent litigation remains a conflict requiring both the ability to engage in occasional hand-to-hand combat and to maintain a stiff upper lip.

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