U.S. Gov’t Supports Clear & Convincing Standard

Patent Reexamination Cited in Government Brief to Supreme CourtAs noted last week, the amicus briefing in support of respondent i4i was due last Friday at Supreme Court (Microsoft v. i4i). In i4i’s brief, it was emphasized that by providing the patent reexamination statutes, Congress has tacitly acknowledged the clear and convincing standard. In other words, by providing an alternative USPTO forum in which the clear and convincing standard does not apply, the standard used by the district courts was well understood by Congress.This theme was also emphasized in the amicus briefing, however some briefs seem to struggle with the standard to be used for evidence that may not be considered via patent reexamination  Having failed in their patent reexamination efforts, this category of evidence is at the heart of the Microsoft dispute.The government brief (here) explained the Congressional intent argument as follows:Rather than altering the evidentiary standard that governs validity challenges raised in infringement suits, Congress has created and expanded PTO reexamination procedures, which address validity concerns based on published prior art while minimizing the impact on patent holders’ reliance interests. The potential for the expert agency to reconsider its own decision may diminish to some degree the value of an issued patent by increasing the likelihood that the patent will later be found invalid, but it does not create the same uncertainty as would the potential for a lay jury’s invalidation based on a bare preponderance of the evidence. In addition, reexamination gives the patent holder an opportunity to respond to new evidence of invalidity by amending his claims. Unlike an invalidity challenge in litigation, which may completely and permanently extinguish a patent’s value, reexamination provides a more nuanced mechanism that takes reliance interests into account. . . .When the defendant in an infringement suit asserts invalidity based on evidence that was not before the examiner who issued the patent, but that could have been made the basis for a reexamination proceeding, the clear-and-convincing evidence standard furthers Congress’s intent to channel such challenges to the expert agency. Where it is available, use of the reexamination procedure is consistent with the principle that an agency should have the opportunity to reconsider its prior decisions in light of new evidence. (emphasis added)With respect to evidence that could not be considered in patent reexamination (such as the on-sale bar/admission theory of Microsoft in their dispute with i4i), the government also supported the clear and convincing standard, explaining:When an invalidity challenge rests solely on evidence that was not before the PTO and that could not have been the subject of administrative reexamination, the appropriate standard of proof for determining invalidity is less obvious. Ordinarily, when a court reviewing agency action concludes that the agency’s decision was based on incomplete evidence, the proper course is to remand to the agency. . . .. In an infringement suit, however, that option is not available, and both of the options before the court are in some tension with usual administrative-law principles. Applying the preponderance standard that petitioner advocates would permit the jury to determine for itself what the PTO would or should have done had it considered the new evidence, while the clear-and-convincing evidence standard has the practical effect of according deference to an agency decision that did not consider potentially material facts.As between those alternatives, applying the clear-and-convincing-evidence standard across the board reflects the better reading of Section 282 in light of that provision’s text, history, and purposes. Most importantly, the text of Section 282 does not suggest that the standard of proof governing questions of patent validity varies depending on the nature of the evidence that a challenger introduces. Such a variable-proof regime, moreover, would reflect a substantial departure from the way in which evidentiary burdens typically operate. Although juries routinely give different weight to different types of evidence, petitioner identifies no statute under which the standard of proof governing a particular determination depends on the type of evidence that the parties introduce. The Federal Circuit’s longstanding approach to the question presented here, under which evidence that was not before the PTO “may * * * carry more weight and go further toward sustaining the attacker’s unchanging burden” . . .In the Genentech amicus brief (here) the clear and convincing standard is advanced as appropriate for all evidence save that which is inappropriate for patent reexamination (page 26). Under the Genentech scheme, such evidence would be considered under the more liberal preponderance of the evidence standard.Under the Genentech scheme, Microsoft may win the battle but lose the war. That is to say, at stake in this appeal is Microsoft’s opportunity to weaken the patent system across the board. A relatively narrow exception to the clear and convincing standard may be relevant in the i4i dispute, but far short of the radical change sought by Microso

As noted last week, the amicus briefing in support of respondent i4i was due last Friday at Supreme Court (Microsoft v. i4i). In i4i’s brief, it was emphasized that by providing the patent reexamination statutes, Congress has tacitly acknowledged the clear and convincing standard. In other words, by providing an alternative USPTO forum in which the clear and convincing standard does not apply, the standard used by the district courts was well understood by Congress.

This theme was also emphasized in the amicus briefing, however some briefs seem to struggle with the standard to be used for evidence that may not be considered via patent reexamination  Having failed in their patent reexamination efforts, this category of evidence is at the heart of the Microsoft dispute.

The government brief (here) explained the Congressional intent argument as follows:

Rather than altering the evidentiary standard that governs validity challenges raised in infringement suits, Congress has created and expanded PTO reexamination procedures, which address validity concerns based on published prior art while minimizing the impact on patent holders’ reliance interests. The potential for the expert agency to reconsider its own decision may diminish to some degree the value of an issued patent by increasing the likelihood that the patent will later be found invalid, but it does not create the same uncertainty as would the potential for a lay jury’s invalidation based on a bare preponderance of the evidence. In addition, reexamination gives the patent holder an opportunity to respond to new evidence of invalidity by amending his claims. Unlike an invalidity challenge in litigation, which may completely and permanently extinguish a patent’s value, reexamination provides a more nuanced mechanism that takes reliance interests into account. . . .

When the defendant in an infringement suit asserts invalidity based on evidence that was not before the examiner who issued the patent, but that could have been made the basis for a reexamination proceeding, the clear-and-convincing evidence standard furthers Congress’s intent to channel such challenges to the expert agency. Where it is available, use of the reexamination procedure is consistent with the principle that an agency should have the opportunity to reconsider its prior decisions in light of new evidence. (emphasis added)

With respect to evidence that could not be considered in patent reexamination (such as the on-sale bar/admission theory of Microsoft in their dispute with i4i), the government also supported the clear and convincing standard, explaining:

When an invalidity challenge rests solely on evidence that was not before the PTO and that could not have been the subject of administrative reexamination, the appropriate standard of proof for determining invalidity is less obvious. Ordinarily, when a court reviewing agency action concludes that the agency’s decision was based on incomplete evidence, the proper course is to remand to the agency. . . .. In an infringement suit, however, that option is not available, and both of the options before the court are in some tension with usual administrative-law principles. Applying the preponderance standard that petitioner advocates would permit the jury to determine for itself what the PTO would or should have done had it considered the new evidence, while the clear-and-convincing evidence standard has the practical effect of according deference to an agency decision that did not consider potentially material facts.

As between those alternatives, applying the clear-and-convincing-evidence standard across the board reflects the better reading of Section 282 in light of that provision’s text, history, and purposes. Most importantly, the text of Section 282 does not suggest that the standard of proof governing questions of patent validity varies depending on the nature of the evidence that a challenger introduces. Such a variable-proof regime, moreover, would reflect a substantial departure from the way in which evidentiary burdens typically operate. Although juries routinely give different weight to different types of evidence, petitioner identifies no statute under which the standard of proof governing a particular determination depends on the type of evidence that the parties introduce. The Federal Circuit’s longstanding approach to the question presented here, under which evidence that was not before the PTO “may * * * carry more weight and go further toward sustaining the attacker’s unchanging burden” . . .

In the Genentech amicus brief (here) the clear and convincing standard is advanced as appropriate for all evidence save that which is inappropriate for patent reexamination (page 26). Under the Genentech scheme, such evidence would be considered under the more liberal preponderance of the evidence standard.

Under the Genentech scheme, Microsoft may win the battle but lose the war. That is to say, at stake in this appeal is Microsoft’s opportunity to weaken the patent system across the board. A relatively narrow exception to the clear and convincing standard may be relevant in the i4i dispute, but far short of the radical change sought by Microsoft.