Supreme Court Unanimously Reaffirms Clear And Convincing Evidence Standard For Patent Invalidity

In its decision in Microsoft Corp. v. i4i Limited Partnership, No. 10-290 (June 9, 2011), the U.S. Supreme Court unanimously affirmed the Federal Circuit's long-established precedent that in all patent infringement cases, an accused infringer must prove patent invalidity by clear and convincing evidence (http://tinyurl.com/44ga9b8). The Court rejected Microsoft's argument that the heightened burden was particularly inappropriate in cases where validity is challenged based on prior art not considered by the USPTO. In so doing, the Court interpreted the statutory presumption of patent validity codified in 1952 as 35 U.S.C. § 282 in view of its common-law precedent, most significantly Justice Cardozo's 1935 decision in Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U.S. 1 (RCA).

The Court's decision is viewed by many as a clear victory for patent holders and maintains the status quo, as juries will continue to be instructed on the heightened evidentiary burden faced by accused infringers. Beyond this, while the Court declined to dictate the specifics of jury instructions in cases where the accused infringer asserts that the art relied on was not considered by the USPTO, it provided some guidance. However, this leaves considerable discretion to the lower courts to craft appropriate jury instructions to account for such situations.

Case Background

Microsoft's challenge to the evidentiary burden associated with the defense of patent invalidity arose from a jury verdict for infringement against Microsoft in 2009 that was affirmed by the Federal Circuit.

i4i sued Microsoft in 2007 for infringement of U.S. Patent No. 5,787,449 in the Eastern District of Texas. The patent relates to markup languages technology, and i4i alleged that Microsoft Word's XML editor infringed the patent. Microsoft argued at trial that the patent was invalid under 35 U.S.C. § 102(b) due to on-sale bar because the invention was embodied in software sold in the United States by i4i more than a year before the application for the patent was filed. Microsoft argued that because the USPTO had not considered the prior sale of software, Microsoft's burden of proving invalidity should be only a preponderance of the evidence. Microsoft's proposed jury instruction was rejected based on the settled law requiring that invalidity be established by clear and convincing evidence. The jury found for i4i, awarding $200 million in damages, and the district court...