Microsoft v. i4i SCOTUS arguments

April 26, 2011 – Blog Post

The Supreme Court heard oral argument in Microsoft v. i4i on Monday, April 18. This case concerns the presumption of patent validity in 35 U.S.C. § 282 and its implications on the burden of proof for asserting invalidity defenses in infringement litigation. Respondent i4i, the plaintiff and patentee in this case, asked the court to uphold the requirement of clear and convincing evidence to show invalidity. Petitioner Microsoft, the defendant asserting invalidity as a defense, asked the court to require only a preponderance of the evidence for invalidity findings. A preponderance of the evidence would mean only that a patent is more likely than not invalid, but clear and convincing evidence would require a higher level of proof.

Microsoft’s argument began with several questions from the court regarding judicial precedent, especially Justice Cardozo’s opinion in Radio Corp. of America v. Radio Engineering Laboratories, Inc. (“RCA”), 293 U.S. 1 (U.S. 1934) and Judge Rich’s opinion in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350 (Fed. Cir. 1984). The court challenged Microsoft’s arguments in light of these seemingly contradictory precedents. Microsoft disputed the applicability of RCA, stating that it only applied to oral testimony in issues of priority and that it could not speak to the meaning of the recodified patent statutes of 1952 (when § 282 first appeared in the statute) because it was a 1934 case. Microsoft disagreed with Judge Rich’s holding in American Hoist while emphasizing that the opinion in that case noted a wide variety of previous decisions on the issue. Justice Ginsburg then asked whether Congress has acquiesced to the Federal Circuit’s clear and convincing standard, and Microsoft replied that if Congress had acquiesced to anything, it was to an absence of a heightened standard that occurred in the decades between the 1952 recodification and the establishment of the Federal Circuit. Microsoft characterized the present use of the clear and convincing evidentiary standard as a “fundamental problem,” using this statement in response to an alternative jury instructions question from Justice Sotomayor and a question distinguishing “brute facts” from more legal conclusions from Justice Breyer. Justice Breyer also pursued a line of questioning regarding the position of reexamination and other post-grant USPTO proceedings in the patent validity scheme (and which the Patents Post Grant Blog discusses). Microsoft countered that reexamination and other post-grant procedures are limited in scope and were not established until 1980, far too late to serve as evidence of Congress’s intentions in codifying the presumption of validity in 1952.

i4i then argued for the clear and convincing evidentiary standard on grounds of statutory interpretation, stare decisis, and first principles. Former Solicitor General and counsel for i4i Seth Waxman brought forth the court’s humor with his phrase “active acquiescence” before using that phrase to argue that Congress has consciously allowed the clear and convincing standard to apply for patent invalidity. Justice Alito then asked about the language of § 282, which does not explicitly set forth the clear and convincing standard, and i4i replied that the legislative history of the section indirectly referred to the RCA decision supporting a heightened burden for showing invalidity. In response to questions about jury instructions for invalidity determinations from Justices Ginsburg, Sotomayor, and Scalia, i4i proposed that the most correct and least confusing standard for a jury would involve requiring clear and convincing evidence and optionally stating that references that the USPTO did not consider could more easily satisfy that requirement. i4i then attempted to plant its arguments in four major principles: that validity challenges attack government decisions to grant property rights, that harm from erroneously finding invalidity is “hugely asymmetrical,” that patentees relied on patent rights when disclosing their inventions to the public, and that respect for the USPTO demands a heightened validity standard.

The Solicitor General filed a an amicus brief before the court supporting i4i in this case (as we previously reported) and Deputy Solicitor General Malcolm Stewart argued before the court. The Deputy Solicitor General argued that the dicta in RCA, discounted by Microsoft, actually recited long-standing doctrine regarding a heightened standard as an understood part of the presumption of patent validity. In response to a question from Justice Sotomayor about § 282 placing the burden of showing invalidity on the defendant, the Deputy Solicitor General argued that the statute takes a “belt and suspenders” approach, essentially covering the same concept twice in different ways. The Deputy Solicitor General further noted bills currently before Congress (some of which we discussed previously) that could reflect Congressional preference for the USPTO and not courts to review the validity of granted patents.

In its rebuttal, Microsoft argued that there is no reason to apply a heightened standard for invalidity when courts only require a preponderance of the evidence for other questions in civil suits generally. Justice Breyer asked whether the defendants to infringement suits should not have a heightened burden for invalidity, either because the USPTO considered the issue in reexamination or because the defendant had not requested reexamination. Microsoft replied that reexamination is not an adequate substitute for invalidity defenses because reexamination may not be available for all types of validity questions, reexamination can be a lengthy process, and plaintiffs generally oppose staying infringement litigation for reexamination.

If the Supreme Court affirms the Federal Circuit and rules in favor of i4i, courts will continue to require clear and convincing evidence to support an affirmative defense or declaratory judgment for patent invalidity. Otherwise, a Supreme Court ruling in favor of Microsoft might lower the requirement to a mere preponderance of the evidence for invalidity. Such a ruling could apply narrowly to evidence that did not appear before the USPTO during examination or more broadly to any evidence before the USPTO in support of invalidity. Lowering the evidentiary standard would likely encourage and facilitate validity challenges, decreasing patent holders’ certainty in their rights under their patents.