Author Archives: Henry Sneath

Posted by Henry M. Sneath, a principal, shareholder and IP Group Chair, and  Robert Wagner, an intellectual property attorney, both at Picadio Sneath Miller & Norton, P.C.  in Pittsburgh, Pennsylvania.

All of a sudden, the burden of proof in patent invalidity claims is under review. Where did that come from? i4i beat Microsoft in an infringement case in Texas and now Microsoft wants to change the battlefield rules. They have appealed to the Supreme Court, which will hear argument this  Monday April 18, 2011, that the burden of proof on patent validity challenges should be lowered from “clear and convincing” to “preponderance of the evidence.” Clear and convincing means that the proof must be “substantially more likely than not, that the evidence is true.” This is less than “beyond a reasonable doubt” employed in criminal cases, but more stringent than “preponderance” which means simply “more likely than not.” Judges will frequently tell the jury that this inquiry is best visualized like the ‘scales of justice’, and if the evidence tips ever so slightly in favor of one party, then the burden of “preponderance” is met. “Clear and convincing” is a much steeper burden than preponderance – at least according to the law. Microsoft believes that it is much too steep for patent invalidation evidence.

The issue arose at trial in Texas when Microsoft wanted to introduce the prior art of i4i’s own previously designed and used software, which Microsoft claimed invalidated the i4i patent in suit (on sale bar). By the time the lawsuit was filed, the original source code for this prior work was lost, so Microsoft had to rely on circumstantial evidence about what the prior art did. Ultimately, they did not win before the jury or the Courts, and they argued that this was because of the high burden of proof (clear and convincing).

Originally, Microsoft contended that there should be a lower burden of proof (preponderance) only for items not considered by the PTO. It did not attempt to lower the bar for everything. The case has now morphed into an overall attack on the burden of proof in all cases, not just where the PTO has not considered the prior art in question. Microsoft proposes that everything should be preponderance, and, only as a fallback, that things not considered by the PTO need only be proved by a preponderance.

We think the arguments are fairly compelling that the standard needs to apply to everything equally, whatever that standard may be. A hybrid approach where invalidity based on some items need only be proved by a preponderance, while other items would require clear and convincing will simply be unworkable.

Among the problems we see (and the numerous amicus briefers saw) with the hybrid approach are:

1. What counts as being considered by the PTO? If it was disclosed? If it was specifically mentioned by the examiner?

a. If it is everything disclosed in the record, patentees will absolute deluge the PTO with references, which will make the examiner’s job more difficult and will result in references being buried and examinations taking longer.

b. If it is only things discussed by the examiners, that will be unfair to patentees. Examiners are not required to address every reference. They only have to discuss the most relevant ones. Thus, a duplicative reference that still is important may not be mentioned, even though it contains material that the examiner thought highly relevant. Now that reference will be evaluated under a lower burden.

c. Also, examiners frequently look at a number of references in their searches that are never identified in the record. Do these count? How would you find out what was looked at?

2. What do you do with invalidity positions that involve some references that were considered and some that were not?

3. What do you do with a reference that was considered for one basis (anticipation), but not another (obviousness)?

We  think it likely that the Supreme Court will adopt a blanket approach, either preponderance or clear and convincing. If it maintains the status quo, which we think is the better argument, nothing will change in the patent world. As far as we know, this has not been a pressing or disputed issue for years. If they do change to a preponderance standard, we expect that there will be a significant shift in Courts granting summary judgment motions for invalidity. We’re not sure that juries really pay much attention to preponderance or clear and convincing, although it might make a difference in a few cases.

We think that the major corporations siding with Microsoft hope that a change will make it easier to beat back troll (NPE) cases. In particular, larger corporations are likely to be able to afford to draft better patents with more prior art searching that the individual inventors cannot do or afford. We think that they are banking on their own patents’ strength not being affected too much, but with the perhaps underfunded trolls taking a hit. Overall, a shift to preponderance will only weaken patents and their enforceability. It will likely also encourage competitors to take more risks in creating products that arguably infringe; knowing that their burden of proof for invalidity has gone down significantly. We think it is hard to say whether companies will stop applying for patents. In the end, for some products the only thing you can do to protect them is to get a patent. There really aren’t many alternatives for products that are easily reverse engineered.

For ongong coverage of this Supreme Court argument, please check back with us regularly. You may also want to follow a great source for Microsoft news at the Nick Eaton’s Microsoft Blog from Seattle PI: http://blog.seattlepi.com/microsoft/2011/04/14/microsoft-i4i-at-supreme-court-patent-law-at-a-crossroads/

Henry Sneath                  Robert Wagner