By statute (35 U.S.C. § 282), patents are presumed valid, based, in part, on the deference shown to the Patent Office in examining patents. In the underlying case, Microsoft challenged the validity of the patent using a reference never considered by the Patent Office when examining the patent. Microsoft argued that the presumption of validity did not mean that it needed to prove invalidity by clear and convincing evidence, especially in these circumstances. Both the district court and the Federal Circuit disagreed, finding under long-established precedent that those challenging the validity of a patent must prove invalidity by clear and convincing evidence in all circumstances.
Microsoft’s Arguments For a Preponderance of the Evidence standard
At the Supreme Court, Microsoft argued that the Court should adopt one of two standards, either (1) accused infringers need only prove invalidity by a preponderance of evidence or (2) a hybrid approach where accused infringers need to prove invalidity by clear and convincing evidence for those references considered by the Patent Office but only by a preponderance of the evidence for anything else. The Supreme Court strongly rejected both approaches and affirmed the clear and convincing standard in all circumstances.
The Supreme Court’s Analysis
Tracing the history of patent law in the United States, the Court noted that it had previously considered the standard of proof in its decision in Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U.S. 1 (1934). In that decision, Justice Cardozo stated that “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” This common-law understanding was well-rooted by the time that Congress enacted § 282, which declared that patents are presumed valid.
The Court also found persuasive how Congress reacted to the courts on this point. In 1984, the Federal Circuit recognized the clear and convincing standard of proof in its decision in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350 (Fed. Cir. 1984), and, in the nearly thirty years since that decision, consistently reaffirmed this standard of proof. Despite amending the patent act numerous times since the American Hoist decision, Congress never expressed disapproval with the Federal Circuit’s decisions, which indicated to the Court that Congress agreed with this standard.
The Court Rejects the Hybrid Approach
The Court also rejected Microsoft’s hybrid approach to the standard of proof, finding no support in the statute or case law for such an approach. The Court noted that there was nothing to suggest that Congress intended to adopt such an unusual and impractical approach, which would likely require additional, collateral litigation on issues such as what the patent examiner actually considered during prosecution.
References Not Considered by the PTO Can Be Given More Weight
The Court did approve of the notion that references not considered by a patent examiner during prosecution may carry more weight with the finder of fact, but it rejected the idea that this additional weight should have any effect on the standard of proof. It did not endorse any particular instruction that a jury should be given with respect to this, but noted that the jury could be instructed when the patent office did not consider a particular reference.
What Does This Mean Going Forward?
In today’s decision, the Supreme Court left the patent world pretty much as it found it. Prior to this case, there was very little confusion about the standard of proof for invalidity. The Federal Circuit had consistently held that a party challenging the validity of a patent must prove invalidity by clear and convincing evidence. Courts frequently noted that it may be easier to meet this burden when the references at issue had not been considered by the Patent Office. The Supreme Court unanimously affirmed these principles and did not craft a new or differing standard.
Had the Supreme Court decided differently, patent owners may have faced considerably more uncertainty about the validity and value of their patents. But, by rejecting both the complete preponderance and the hybrid preponderance standards suggested by Microsoft, the Supreme Court has firmly confirmed that patents can only be invalidated by clear and convincing evidence.