Supreme Court Maintains Status Quo for the Standard of Proof to Challenge Patent Validity

The United States Supreme Court affirmed the application of the clear and convincing standard for proving a patent invalid, holding that the standard of proof applies regardless of whether the US Patent and Trademark Office considered the relevant evidence during prosecution of the patent.  The decision in Microsoft Corp. v. i4i Limited Partnership has a broad reach in patent litigation, where prior art validity challenges are virtually always made. 

Section 282 of the Patent Act states that a “patent shall be presumed valid” and the “burden of establishing invalidity of a patent . . . shall rest on the party asserting such invalidity.” The Federal Circuit has long read the Patent Act to require a party seeking to overcome a patent’s presumption of validity to prove its case by clear and convincing evidence.

Microsoft’s challenge sought to lower Section 282’s standard to a preponderance of the evidence.  Microsoft argued that the statutory presumption of validity should not apply when an issued patent’s validity is challenged, especially when the challenge is based on prior art that was not disclosed to the PTO during the examination period. The underlying theory for this argument is that the presumption of validity – premised on the notion that a government agency is presumed to perform its function – is faulty where the PTO did not actually consider the allegedly invalidating material in deciding to allow an invention to issue as a patent.

The Supreme Court was unconvinced.  The Court explained that in asserting an invalidity defense, the accused infringer “must contend with the first paragraph of Section 282, which provides that ‘[a] patent shall be presumed valid’ and ‘[t]he burden of establishing invalidity . . . rest[s] on the party asserting such invalidity.’” Congress, in choosing Section 282’s phrase “presumed valid,” used a term with a settled meaning.  According to that meaning, a defendant raising an invalidity defense bears a heavy burden of persuasion, requiring proof of the defense by clear and convincing evidence.  The Court also noted that courts have interpreted Section 282 the same way for decades and that “during this period, Congress has often amended the patent law, but apparently never considered any proposal to lower the standard of proof.” 

Although the Court recognized that courts of appeals have “observed that the presumption of validity is ‘weakened’ or ‘dissipated’ in the circumstance that the evidence in an infringement action was never considered by the PTO,” it rejected the notion that such cases indicated a lowered standard of proof.  Instead the Court interpreted such statements as indicating how newly considered evidence may carry more weight.  Thus, while it may be easier for a patent challenger to meet its burden of proof with newly considered evidence, the height of its burden remains the same.

Had the Court sided with Microsoft, the lower standard of proof could have created uncertainty as to the stability of patent rights and caused a significant shift in patent-infringement litigation.  In the end, the Court preserved the status quo.