In Sciele Pharma Inc. v. Andrx Corp., the Federal Circuit added some needed clarity to the concept of the “presumption of validity” in patent law, and did so in a way that may be helpful to accused infringers who are arguing that the prior art (technology already disclosed in a patent or in the public domain) renders a patent invalid.
The presumption of validity of a patent places the burden of proving invalidity, which the Supreme Court in Microsoft v. i4i recently defined succinctly as proving “that the patent never should have issued in the first place,” on the accused infringer. By the time a patent is in litigation, the validity of the patent’s claims has already been upheld by a patent examiner at the U.S. Patent & Trademark Office (the PTO). As the Supreme Court noted in Microsoft, the basis for the presumption, and for the shifting of the burden of proof — and for the heightened standard of proof imposed on the accused infringer (“clear and convincing”) by caselaw — is “the basic proposition that a government agency such as the [PTO] was presumed to do its job.”
In Sciele, though, the Federal Circuit faced a factual scenario in which the PTO had clearly messed up: the PTO issued the patent with patent claims that the examiner had rejected, rather than issuing the amended claims that had actually received the examiner’s notice of allowance. The accused infringer argued that, due to the PTO’s mistake, the presumption of validity should not apply to the issued claims. The patent owner not only disagreed, but doubled down on the PTO, arguing that the presumption should have actually been heightened as to the patent, because the prior art references cited by the accused infringer had already been considered by the PTO’s patent examiner when the patent was allowed.
The Federal Circuit flatly declared that “[b]oth parties are wrong.” As to Defendant’s argument, the mistake (which the court called “quirks in the prosecution history”) could not change the statutory presumption. “The presumption of validity attaches to all issued patents and the clear and convincing evidence burden applies to all issued patents.” As to Plaintiff’s argument, the court stated that “[t]he burden does not suddenly change to something higher – ‘extremely clear and convincing evidence’ or ‘crystal clear and convincing evidence’ — simply because the prior art references were considered by the PTO. In short, there is no heightened or added burden that applies to invalidity defenses that are based upon references that were before the Patent Office. The burden is always the same, clear and convincing evidence.”
The court was absolutely correct in rejecting both sides’ arguments. As to Defendant’s argument, the presumption of validity does not work like a common-law presumption, which can be rebutted by producing evidence to the contrary, at which point the presumption is said to disappear, and the trier of fact simply decides what really happened based on the totality of the evidence. In contrast, the statutory presumption of validity in patent cases never changes and is never rebutted. The accused infringer always has the burden of persuasion, and always has to persuade by clear and convincing proof. That proof consists of evidence on the merits, e.g., that the patent is rendered “obvious” by the prior art. You can’t directly attack the statutory presumption by arguing that the usual policy of deference is inapplicable to a specific patent, even where, as in Sciele, the patent issued only because of a blatant administrative error by the PTO.
As to the rejection of Plaintiff’s argument for a heightened standard when a reference was already considered by the PTO, what is noteworthy is the way Sciele referred not only to prior art considered by the examiner but also to the applicant’s arguments regarding the prior art considered by the examiner. Sciele could thus change courts’ typical approach to invalidity arguments.
District court judges, at the urging of plaintiffs, have tended to treat the argument that the prior art cited by the defendant was the same art considered by the examiner as an almost insurmountable barrier to an invalidity finding. This tendency can strike defense counsel as particularly unfair where the patent owner has presented a “creative” interpretation of the claim language that, if adopted, would make the claims broader than the examiner likely could have imagined when weighing the differences between the claims and the prior art. This point is not a criticism of the PTO’s patent examination staff, but rather merely a recognition of the power of the adversary process to sharpen arguments and to encourage zealous interpretations of the available facts. The need to prove infringement of a specific accused device will invite creative interpretations of claims that the examiner could not have foreseen at the time the patent was prosecuted on an ex parte basis. The defendant in that situation should be able to argue that, if Plaintiff’s (ridiculously broad) interpretation of the patent in litigation had been conveyed to the PTO, which it wasn’t, the examiner would have rejected the claims as anticipated by prior art.
The Federal Circuit, at least according Sciele, agrees with me: “it could be reasonable to give more weight to new arguments or references that were not explicitly considered by the PTO . . . . Conversely, it may be harder to meet the clear and convincing burden when the invalidity contention is based upon the same argument on the same reference that the PTO has already considered.” In other words, defense counsel’s response to Plaintiff’s dismissive point that “that art was already considered by the examiner” can be that the PTO’s examiner did not consider whether the prior art invalidated the patent’s claims if those claims are as truly broad as Plaintiff only now argues they are in the litigation; if the examiner had been aware of that broad interpretation at the time of prosecution, the examiner would have found that the claims encompassed by the prior art.
Sciele could therefore be very useful to defendants, since novel and extremely broad claim interpretations are often advocated by patent plaintiffs, especially in regard to vaguely-written software or business method patents.