Presumption of Validity Affirmed by Supreme Court

Today, the Supreme Court issued a unanimous decision in the closely watched case of Microsoft v. i4i . As discussed at length previously, Microsoft sought Supreme Court review of the following issue:

Whether the court of appeals erred in holding that Microsoft’s invalidity defense (which rested on prior art never considered by the USPTO) must be proved by clear and convincing evidence.

Today the Supreme Court affirmed the CAFC’s earlier decision upholding the clear and convincing standard, much to the relief of stakeholders everywhere. (save Microsoft of course)

The holding (here) explained that although 35 U.S.C. § 282 does not provide for a specific standard of proof, the statute’s use of the terminology “presumed valid” connotes such a meaning based on common law doctrines. Further, the court noted that Congress has not acted to alter this well established practice despite decades of notice. Finally, the court agreed with my earlier position that the patent reexamination statutes were clear evidence of Congressional intent in this regard.

The court summarized the parties positions as follows:

The parties and their amici have presented opposing views as to the wisdom of the clear-and-convincing evidence standard that Congress adopted. Microsoft and its amici contend that the heightened standard of proof dampens innovation by unduly insulating “bad” patents from invalidity challenges. They point to the high invalidation rate as evidence that the PTO grants patent protection to too many undeserving “inventions.” They claim that inter partes reexamination proceedings before the PTO cannot fix the problem, as some grounds for invalidation (like the on-sale bar at issue here) cannot be raised in such proceedings. They question the deference that the PTO’s expert determinations warrant, in light of the agency’s resources and procedures, which they deem inadequate. And, they insist that the heightened standard of proof essentially causes juries to abdicate their role in reviewing invalidity claims raised in infringement actions.

 .           .           .           .           .

 For their part, i4i and its amici, including the United States, contend that the heightened standard of proof properly limits the circumstances in which a lay jury overturns the considered judgment of an expert agency. They claim that the heightened standard of proof is an essential component of the patent “bargain,” see Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 150–151 (1989), and the incentives for inventors to disclose their innovations to the public in exchange for patent protection. They disagree with the notion that the patent issuance rate is above the optimal level. They explain that limits on the reexamination process reflect a judgment by Congress as to the appropriate degree of interference with patentees’ reliance interests. (emphasis added)

The court explained their affirmance, reasoning:

We find ourselves in no position to judge the comparative force of these policy arguments. For nearly 30 years, the Federal Circuit has interpreted §282 as we do today. During this period, Congress has often amended §282, see, e.g., Pub. L. 104–141, §2, 109 Stat. 352; Pub. L. 98–417, §203, 98 Stat. 1603; not once, so far as we (and Microsoft) are aware, has it even considered a proposal to lower the standard of proof, see Tr. Oral Arg. 10. Moreover, Congress has amended the patent laws to account for concerns about “bad” patents, including by expanding the reexamination process to provide for inter partes proceedings. See Optional Inter Partes Reexamination Procedure Act of 1999, 113 Stat. 1501A–567, codified at 35 U. S. C. §311 et seq. Through it all, the evidentiary standard adopted in § 282 has gone untouched. (emphasis added)

It will be interesting to see if this decision in any way impacts the patent reform debate going forward. To quote today’s opinion “Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity. Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands.”