US patents remain hard to overturn

The US Supreme Court has recently affirmed the standard of proof necessary to invalidate a patent in the US courts, by upholding a $290 million damages award against Microsoft Corporation for infringement of a patent owned by i4i Limited Partnership. Had the Supreme Court ruled the other way, the potential implications for all applicants for or holders of US patents would have been serious.

i4i’s patent, US5787449, relates to Extensible Markup Language (XML), software used in electronic documents. i4i claimed that Microsoft had used their invention in certain versions of Microsoft Word and, in 2007, filed a patent infringement action.

Microsoft counterclaimed for invalidity, on the basis of a piece of prior art which was not considered by the examiner during prosecution. This was an earlier piece of software created by i4i, but of which all copies of the source code had been destroyed prior to prosecution of the contested patent by the USPTO.

The trial judge ruled in favour of i4i, a decision which was upheld by the Circuit Court of Appeals and the US Court of Appeals for the Federal Circuit. Finally, Microsoft appealed to the Supreme Court.

In 35 USC §282, US patent law refers to the requirements for establishing invalidity:

A patent shall be presumed valid... The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity...

According to current practice, this dictates that “clear and convincing” evidence is needed in order to invalidate a patent. During the Supreme Court trial Malcolm L Stewart, representing the USA and the USPTO, explained this: a high requirement of proof is part and parcel of the presumption of validity, in the same way that the requirement of proof beyond reasonable doubt is part and parcel of the presumption of innocence in criminal cases.

However, Microsoft argued that the evidential standard for invalidation should be the lower standard of a preponderance of evidence, and should be so particularly in cases where the evidence had not been before the USPTO during prosecution. In view of the time and resource limitations of the USPTO, it is inevitable that some invalid patents are issued, and a one-size-fits-all presumption of validity is not appropriate. This argument was considered but ultimately rejected by the court which held that, though the rationale behind the presumption of validity is weakened in such cases, it still remains that the law specifies the applicable standard of proof. There is nothing to suggest that this should be altered in these circumstances.

i4i responded to Microsoft by arguing that the existing evidential standard is part of US law, and case law shows that this high standard of proof has been applied to cases dealing with prior-use invalidity claims. They stated that maintaining a high standard is necessary in order to promote strong patent rights and protect incentives for innovation and investment. A lower standard would have the counter effect, as well as undermining the judgement of the USPTO.

Many amicus briefs were filed in support of both sides, with Microsoft supported by the likes of Google, Timex and Apple, and i4i’s supporters including the US Solicitor General, Proctor and Gambel, 3M and Dolby Laboratories.

Finally, and in a unanimous decision, the Supreme Court ruled that patent invalidity must be proved with clear and convincing evidence, and that a preponderance of evidence was not sufficient.

They reasoned that the higher standard for proving invalidity has been codified by Congress in 35 USC §282. Though it is not stated explicitly, the phrase “presumed valid”, supported by substantial case law, means that the presumption that a patent is valid should not be overthrown except by clear and convincing evidence. Further, as the required standard of proof is a matter of law, it would be the job of Congress rather than of the courts to change it.

Had Microsoft won, this would have represented a dramatic shift in US patent practice, resulting in potentially widespread litigation challenging the validity of patents under a lower standard of proof, and with implications for all current and potential holders of US patents or those seeking to invalidate such a patent. However, the US Supreme Court’s decision maintains the status quo, confirming that “clear and convincing” evidence is required in order to prove invalidity in the US.

A lesson to be drawn from this case is that the task of overturning a US patent remains a very onerous one. Only in exceptional circumstances is it possible to predict with confidence that a defence to an allegation of infringement of a US patent based on invalidity of the patent is likely to succeed.


27 June 2011