Litigating Invalidity Defenses after Microsoft v. i4I---

In Microsoft Corp. v. i4I Limited Partnership, the Supreme Court re-affirmed the principle that the defense of invalidity of a patent must be proven by the defendant by "clear and convincing evidence." Microsoft had asked the Court to re-visit the standard of proof, since, although the relevant statute 35 U.S. § 282 creates a presumption of validity for an issued patent and places the burden of proving invalidity on the defendant, the statutory language itself does not require the heightened "clear and convincing" standard of proof. Microsoft’s argument, though, failed, in light of the fact that in 1934 the court had held that the standard was "clear and convincing," which the 1952 Patent Act adopted by implication (or, in Justice Thomas' concurring view, left undisturbed).

Microsoft's fallback argument, that the standard should be proof by a preponderance of the evidence, where the evidence before the finder of fact was not before the PTO's patent examiner, was also rejected. The argument was based on a stray remark in KSR v. Teleflex that "the rationale underlying the presumption [of validity] -- that the PTO, in its expertise, has approved the claim -- seems much diminished." KSR, 530 U.S. at 426. The Court in Microsoft v. i4I declined the invitation to adopt the dicta in KSR and found no basis in precedent for a "fluctuating standard of proof" (slip op. at 15).

Nevertheless, it was not a complete loss for patent defendants. The Court's concluding remarks on jury instructions (the case was postured as an appeal from the district court's refusal to give a jury instruction on the standard of proof) suggest promising arguments in some cases. The court noted, on the subject of jury instructions, that "if the PTO did not have all material facts before it, its considered judgment may lose significant force. . . . And, concomitantly, the challenger's burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain." Slip op. at 17. [A jury instruction on the effect of new evidence can, and when requested, most often should be given. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO had no opportunity to evaluate before granting the patent." Id. In sum, "the jury may be instructed to evaluate whether the evidence before it is materially new [in comparison to what was before the PTO] and if so, to consider the fact when determining whether an invalidity defense has been proved by clear and convincing evidence." Id. at 18.

Some ramifications of the remarks for patent litigation are as follows. With the incentive of obtaining a jury instruction that invites the jury to give greater weight to "new" evidence, Defendants should be willing to spend more money for in-depth prior art searches. Controversy over whether prior art is fairly "new" compared to arguably identical or similar art considered by the examiner will increase the importance of expert testimony interpreting the differences and similarities of various of items of prior art. The battle of the experts on this subject, of course, will not be merely a subject under Rule 26 of testimony of trial but will need to be built into expert reports (and summary judgment briefing relying on expert discovery).

With the decision only a few weeks old, it is too early to tell how broadly the concept of "new evidence" will be treated by the courts. A possible use of the "new evidence" jury instruction could be in the situation where the PTO's examiner clearly did not have before him or her the patentee's arguments as to the scope of the claim as asserted in litigation. The patent examination process as presently constituted is a purely ex parte proceeding. The adversary process and the need to prove infringement of a specific accused device will invite creative interpretations of claims that the examiner could not have imagined at the time the patent was prosecuted. (This point is not a criticism of the PTO's patent examination staff but rather simply recognition of the power of the adversary process to sharpen arguments and to encourage zealous advocacy of the available facts.) The defendant in that situation should be able to argue that, if the Plaintiff's interpretation would have been made to the patent office, the examiner could surely have rejected the claims as anticipated by prior art. Should the defendant also be able to get a jury instruction that the jury should consider that the plaintiff is advancing a "new" interpretation? Possibly, under the logic of Microsoft v. i4I.

That argument also suggests the need for a patent lawyer expert whose role is simply to tell the story of what happened in the prosecution of the patent, since the prosecution history is not an easy read for the judge and jury, and the patentee and the attorney who prosecuted the patent will be hostile and uncooperative witnesses.

While these points are potentially useful for defendants, clients on the other side, who are asserting patent claims, can still be advised that "clear and convincing" remains the standard applied to defendants’ invalidity arguments), and that that standard is extremely difficult to meet when moving for summary judgment (see the Federal Circuit’s recent opinion in Crown Packaging reversing summary judgment on anticipation) or trying to overturn a jury verdict upholding validity (see the Federal Circuit’s decision in Spectralytics finding support in jury verdict for a conclusion of non-obviousness).

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Don Burton | Faruki Attorney