Supreme Court Refuses to Lower Bar to Invalidate Patents
Synopsis: Under U.S. law, a patent issued by the United States Patent and Trademark Office ("USPTO") is presumed to be valid. A party contesting validity has the burden of proving the patent is invalid. Generally, the higher a standard juries are told to apply, the harder it is for the asserting party to prove invalidity of a patent. In a recent unanimous decision, the United States Supreme Court (the "Court") in Microsoft Corp. v. i4i Ltd. Partn., 564 U.S. ___ (2011) ("Microsoft v. i4i") rejected Microsoft's request to lower the burden of proof. Rejecting Microsoft's arguments, the Court held and affirmed that, in litigation, a patent can only be invalidated if it is shown by clear and convincing evidence that a patent should not have been issued. Basically, the presumption of validity for patents issued by the USPTO remains strong and there is a steep hill to climb to succeed in an invalidity defense during patent litigation.
Case Discussion: What makes this case particularly interesting are the players, and the fact that a small hi-tech, patent-owning company such as i4i Limited Partnership ("i4i") succeeded in a massive patent infringement lawsuit against a Goliath corporation such as Microsoft Corp. ("Microsoft"). i4i sued Microsoft in 2007 for infringement of i4i's U.S. Patent No. 5,787,449 ("the '449 patent"), which claimed an improved method for editing computer documents. i4i accused Microsoft of infringing the '449 patent by using XML editing technology in certain Microsoft Word products. Microsoft argued that the '449 patent was invalid because a similar product, S4, had been sold by i4i years before.
After Microsoft was found at trial to infringe the '449 patent and then lost again at the appellate court, Microsoft appealed the case to the Supreme Court. Microsoft argued that the jury should have been told to use a lower preponderance of the evidence standard, at least when deciding whether the '449 patent was invalidated by the prior art S4 product, because patent examiner had not been told about the S4 product.
The Court unanimously and resoundingly rejected Microsoft's arguments and affirmed the previous ruling of infringement. It also affirmed an award of over $280 million for i4i. The Court did acknowledge that, if an Examiner does not have all material facts before him during prosecution, the considered judgment of the USPTO to allow a patent may lose much of its force.
Practice Points: The impact of Microsoft v. i4i remains to be seen. The decision maintains the high burden of proof standard for providing patent invalidity. So, in many ways, the status quo has been maintained. Patents which are granted, after consideration of the closest prior art, are difficult to overturn. Patent owners will want to ensure all known relevant prior art is provided to the Examiner. That reduces the possibility that an opponent can remind the jury that a particular piece of evidence was not considered by the USPTO. Further, patent practitioners are advised to review the patent application file to confirm that the Examiner has made a record that he reviewed all disclosed art. Additionally, defendants who are attacking a patent's validity in litigation will want to continue to search for prior art that has not been considered by the USPTO during prosecution of the patent(s)-at-issue.
For more information regarding this Legal Update, please contact Ann Schoen, Steven Goldstein, or any other attorney in Frost Brown Todd's Intellectual Property Law and Litigation Practice Group.