Supreme Court Upholds the Clear and Convincing Standard for Invalidity Defense to Patent Infringement

In Near Unanimous Decision, Supreme Court Confirms Established rule    

In Microsoft Corp. v. i4i LTD. Partnership, 179 L. Ed. 2d 770; 79 U.S.L.W. 3567 (2011), i4i owns a patent for an improved method for editing computer documents.  i4i brought suit against Microsoft for willful infringement of that patent. Microsoft counterclaimed and sought a declaration of invalidity under 35 U.S.C. §102(b), claiming that the “invention” had been on sale in the United States for greater than one year prior to the filing of the patent.

Specifically, the parties agreed that a program known as S4 was sold by i4i in the Untied States for greater than a year prior to filing of the patent in question. The parties however, disagree that S4 embodied the invention claimed in i4i’s patent.  Moreover, since the source code for S4 was destroyed, Microsoft could only rely on testimony to prove what S4 embodied.  At the conclusion of trial, Microsoft objected to i4i’s proposed jury instruction that Microsoft was required to show that the S4 program anticipated the claimed invention by clear and convincing evidence, and relied upon the fact that the S4 program was never before the United States Patent and Trademark Office (USPTO) while the application was pending.   The District Court overruled Microsoft’s objection, and the jury found both infringement and willful infringement of the i4i patent.  The Federal Circuit affirmed the District Court’s decision relying on established case law.

Subsequently, Microsoft petitioned for certiorari to the Supreme Court, which was granted.

Question on Certiorari

Whether the court of appeals erred in holding that Microsoft’s invalidity defense must be proved by clear and convincing evidence.

Supreme Court Decision

Delivering the opinion for the Court, Justice Sotomayor began the analysis with 35 U.S.C. §282, which reads in part, “a patent shall be presumed valid” and “the burden of establishing the invalidity … shall rest on the party asserting.” The Federal Circuit, in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F. 2d 1350 (CA Fed. 1984), read this to require the defendant to overcome the presumption to persuade the factfinder of its validity defense by clear and convincing evidence, and noted that this merely codified the existing state of the law at the time 35 U.S.C. §282 was enacted.

The Supreme Court noted that Microsoft claimed that defendants in an infringement action need only to persuade the jury of an invalidity defense by a preponderance of the evidence. In the alternative, Microsoft claimed that the preponderance of the evidence standard must apply at least when the invalidity defense rests on evidence that was never considered by the USPTO during examination.  However, the Supreme Court rejected these arguments.

Specifically, the Court acknowledged that the first paragraph of 35 U.S.C. §282 expresses the presumption of validity and the burden of proof, but is silent on the standard of proof required to prevail on an invalidity defense. The Supreme Court in

their analysis of the statute concluded that the Congress had adopted the common law term and had adopted the common law meaning. Specifically, the Court held that Congress did not intend to drop the heightened standard of proof from the presumption simply because 35 U.S.C. §282 failed to reiterate it expressly which had existed at the time.

Microsoft claimed that the pre-1952 case law applied clear-and-convincing standard only in limited circumstances. The heightened standard should only be used, according to Microsoft, if the case involves oral testimony of the prior invention, to account for the unreliability for such testimony, or where the invalidity challenges are based on the priority of the invention and have been litigated between the parties in USPTO proceedings.

The Court failed to identify the qualifications in the pre-1952 case law as asserted by Microsoft. Specifically, the Supreme Court noted that, as early as 1874, the burden of proving prior inventorship or use “rests upon [the defendant], and every reasonable doubt should be resolved against him,” with out tying this rule to the vagaries and manipulability of oral testimony. Quoting Coffin v. Ogden, 18 Wall. 120, 124 (1874).

In its more limited argument, Microsoft asserted in the alternative that the preponderance of the evidence standard must apply when the evidence before the factfinder was not before the USPTO examiner during the examination process. The court recognized the rationale of the argument and its basis, in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), the court held that under such circumstances “the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems diminished.” Although that rationale is sound, the Court found other rationales that bolster the presumption under the same circumstances. In The Barbed Wire Patent, 143 U.S. 275, 292 (1892), the court explained that the patentee “first published his device; put it upon the record; made use of it for practical purpose; and gave it to the public… doubts… concerning the actual inventor…should be resolved in the favor of the patentee.” The Court also found that the reliance interests of the patentee diminish the relevance of the administrative correctness. The heightened standard of proof serves to protect the interests of the patentee in disclosing the invention to the public.

The Supreme Court, in holding that the standard of proof for invalidity remains clear and convincing evidence, acknowledged that, if the USPTO did not have all material facts before it, its considered judgment may lose significant force. This may ease the burden of proof, but does not change it. As such, “if the PTO did not have all material facts before it, its considered judgment may lose significant force.”  Thus, a jury instruction to the effect of new evidence, not reviewed by the USPTO before granting the patent, or where there is a difference between the evidence presented to the jury and evaluated by the USPTO, should be given when appropriate and requested. The jury may be instructed to consider whether the evidence is materially new and consider that fact when determining whether the invalidity defense has been proved by clear and convincing evidence. 

However, as Microsoft never requested this type of instruction, it was not reversible error if the instruction was not given.  As such, the Supreme Court upheld the clear and convincing standard as being applicable when a defendant is attempting to invalidate a patent.

Significance for Patent Owners and Applicants

After the Supreme Court’s decisions in KSR and Bilski where the Supreme Court has attempted to refine and redefine the nature of patentable inventions to the detriment of patent holders, there was concern in the patent community that the Supreme Court would again weaken patent rights by weakening the strong presumption of validity normally afforded issued patents.  By affirming the existing rule, patents retain their procedural advantage of the presumption of validity, thereby making showing invalidity using testimony more difficult than under the standards proposed by Microsoft.


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