On April 18, 2011, the U.S. Supreme Court heard oral arguments in Microsoft v. i4i Limited Partnership, a patent case I previously addressed in this blog. The central issue before the Court involved the standard of proof used to determine the validity of a patent in patent infringement litigation. The court below had held that a party sued for patent infringement who raises invalidity of the patent as a defense must prove invalidity by clear and convincing evidence. Microsoft, the petitioner, argued that because Section 282 of the Patent Act, 35 U.S.C. § 282 – which provides a presumption of validity for a patent – does not specify a heightened standard, the standard should be a preponderance of the evidence, thereby making it easier to challenge the validity of a patent. i4i argued that the clear and convincing evidence standard, which has been followed for decades, should continue to apply. Chief Justice Roberts has recused himself from the case because of investments he holds in Microsoft.
Early in the argument, Justice Kagan noted that the early cases addressing the subject contained broad language suggesting a heavy burden of persuasion. Justice Ginsberg further noted the absence of any attempt by Congress to clarify the standard in the Act. Absent statutory language to the contrary, Justice Kagan suggested simply following precedent and applying the clear and convincing evidence standard.
Justice Breyer acknowledged that the Supreme Court could make a change to the procedural way this issue is resolved. He framed the problem as an economic one, a need to achieve balance between providing legal protection for inventions that warrant it and preventing undeserving inventions from taking advantage of the protections of patent law. One approach to the central issue in the case, he suggested, would be to ask the Patent Office for reconsideration. Another would be to let the jury apply the clear and convincing standard to the “brute facts,” then allow the judge to make the ultimate decision about validity.
Much of the questioning involved Microsoft’s argument that a clear and convincing standard is not appropriate in a case in which the PTO did not previously consider the prior art evidence introduced by the defendant in the infringement litigation. The justices considered whether accepting that argument would mean that two different standards should apply, depending on whether the evidence had been considered by the PTO. i4i countered with several justifications for applying the clear and convincing standard across the board. One point was the unfairness of a lower standard, which would make it easier for a single non-expert jury to invalidate a patent when so many parties (inventor, investors, licensees) relied upon the patent at the time it was issued. Along this vein, another approach considered by the Court during the argument was to instruct the jury to apply the clear and convincing evidence standard, but include a further instruction that the jury could consider, in appropriate circumstances, that the PTO had not considered the prior art.
The variety of suggestions discussed in the oral arguments make prediction of the ultimate result difficult. It is still possible that the Court will find a clear answer in the language of Section 282. Firms with patents on nanotechnology applications could be disappointed to find that the Court rejects an across-the-board use of the clear and convincing evidence standard. If that happens, infringers will have an advantage over original inventors, and more patents will be held invalid in court. The effect could be significant, perhaps having a chilling effect on advances in science and on investment in original inventions.
The transcript of the oral argument may be found at
http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-290.pdf
