Supreme Court Affirms: High Level of Proof Needed to Invalidate A Patent

Posted by Stephanie Fischer on June 10, 2011 at 3:29pm EDT on BIOtech Now

The U.S. Supreme Court issued a favorable decision yesterday in the critical case of Microsoft v. i4i, in which Microsoft challenged the “clear and convincing evidence” standard traditionally used by courts in determining whether to invalidate an issued U.S. patent.   Microsoft argued for a lower “preponderance of the evidence” standard, under which patents could be invalidated by a mere “more likely than not” determination by a court or jury.  In a joint amicus brief with CropLife International and the Association of University Technology Managers (AUTM),  BIO argued that there are strong legal and policy justifications for a heightened standard in terms of investment in and reliance on patents to fuel R&D and innovation.

BIO also joined 260 other stakeholders representing U.S. innovation in all 50 states and the District of Columbia to express concerns about potentially negative consequences for domestic innovation, job growth and our nation’s technology leadership internationally in a letter to the Attorney General and Acting Solicitor General which likely helped persuade the U.S. Solicitor General to file a strongly supportive and influential brief.

The Court ruled 8-0 (with Chief Justice Roberts recusing himself) against Microsoft, holding that the standard for invalidating a patent in the courts remains “clear and convincing evidence,” regardless of whether the precise prior art cited to support invalidation was considered by the PTO or not.

This decision is a huge relief for the biotechnology industry, which relies heavily on the presumed validity of patents to generate investment and a reasonable return thereon.

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BIO’s Amicus Brief: Microsoft v. i4i

The Biotechnology Industry Organization, along with AUTM and CropLife International, filed an amicus brief in the Microsoft v. i4i Supreme Court case.

This case is widely viewed as one of the most fundamental and important patent cases to reach the Supreme Court in probably a decade. Most basically, this case is about the level of certainty a jury or judge must have before finding a patent invalid in litigation. Historically, the law has required a high level of proof, “clear and convincing evidence,” before a patent that has been examined and issued by the US Patent and Trademark Office can be declared invalid by a court. In the Microsoft v. i4i case, the Supreme Court is now being asked to adopt a lower burden of proof, under which patents can more easily be found invalid by a lower “preponderance of the evidence.”

In our joint brief, BIO, AUTM and CLI explain that the current high burden of proof has deep historic roots in Supreme Court law, and has been consistently applied by the lower courts for many decades. Under the current standard, issued patents benefit from a clear and meaningful presumption of validity that cannot be easily overcome. In this way, patents play their intended role as enduring legal instruments that confer real rights, and that developers and investors can rely on for investment and product development decisions. The importance of being able to rely on patent rights is illustrated very clearly in the biotech industry, which would not be able to make large investments over very long development times without assurances that the fruits of their investments are protected by robust patent rights. Lowering the standard for patent validity would frustrate decades of investment-backed reliance interests and would negatively impact biotechnology innovation going forward. Our brief explains that the existing high burden of proof to invalidate a patent is entirely consistent with other instances where the law imposes high burdens of proof to protect the public’s reliance on existing property rights.

In our brief, we also point out that Congress permits patents to be invalidated on a lower burden of proof only by the expert Patent Office, and then only on certain kinds of reliable evidence. Litigants who prefer to argue to a lay jury or generalist judge, or who want to use less reliable evidence, can do so only under a higher burden of proof. Any change to this carefully-crafted balance would have to be made by Congress, not the courts.

The United States’ brief in this case forcefully argues against changing the current standard of patent validity.

President Obama stresses the importance of Intellectual Property with President Hu of China

Here are some quotes on intellectual property from yesterday’s press conference with President Obama and President Hu of China.

I did also stress to President Hu that there has to be a level playing field for American companies competing in China, that trade has to be fair.  So I welcomed his commitment that American companies will not be discriminated against when they compete for Chinese government procurement contracts.  And I appreciate his willingness to take new steps to combat the theft of intellectual property.

  

Some of it has to do with intellectual property protection. So we were just in a meeting with business leaders, and Steve Ballmer of Microsoft pointed out that their estimate is that only one customer in every 10 of their products is actually paying for it in China.  And so can we get better enforcement, since that is an area where America excels — intellectual property and high-value added products and services.

And the Chinese government has, to its credit, taken steps to better enforce intellectual property.  We’ve got further agreement as a consequence of this state visit.  And I think President Hu would acknowledge that more needs to be done.  

Full Press Conference

BIO Joins 261 Business, Research Institutions and Organizations to Urge Caution in Microsoft v. i4i Case*

*UPDATE – 90 more organizations have decided to add their names to the letter sent to the Department of Justice.  Please find the new letter.

Please find attached an open letter to Attorney General Holder and Acting Solicitor General Katyal, signed by 171 businesses, research institutions and organizations of all sizes, representing U.S. innovation in all 50 states and the District of Columbia. The signatories include leading innovators in agriculture, biotechnology, consumer products, electrical, mechanical  and chemical engineering, green energy, manufacturing, pharmaceuticals, semiconductors, software, telecommunication and other sectors.

In signing this letter, BIO calls on the U.S. Department of Justice to proceed cautiously in developing the U.S. Government’s position in the ongoing high-profile patent litigation between Microsoft and i4i, a small software company. This case has recently been accepted for review by the United States Supreme Court and is being closely watched by domestic and foreign businesses from every technology sector, including biotechnology.

 

In this case, the Supreme Court is being asked to reconsider a longstanding rule of patent law, according to which those who challenge a patent before a lay jury or judge must carry a heightened burden of proof.  Under the current law, infringers who seek to overturn a patent must prove the facts of their case to a high degree of probability, by “clear and convincing evidence.” The rule ensures that patents that have been examined and issued by the U.S. Patent and Trademark Office (USPTO), and that have been relied on by patentees and the public, can only be overturned on strong, reliable, and convincing evidence.

In Microsoft v. i4i, the U.S. Supreme Court is now being asked to lower this burden of proof. As now proposed, patents could be invalidated more easily in district court litigation by using evidence that was not noted in the USPTO’s patent examination file. Effectively, patents that are challenged on such evidence would carry only the weakest possible presumption of validity – a “preponderance” standard according to which courts could overturn patents even if the facts of the case are established only to a 51% likelihood. This would be a big change in longstanding law that could make it significantly more difficult to rely on strong patent rights for licensing, partnering, investment, and product development decisions in all industry sectors.

We believe this case to be of critical importance to U.S. innovation policy, and are greatly concerned about its potentially negative consequences for domestic innovation, job growth, and U.S. technological leadership internationally. Because the U.S. Government’s position is likely to be very influential in this Supreme Court case, we ask that the Department of Justice weigh these implications carefully, and arrive at any official position only after consulting a broad range of stakeholders whose perspectives differ from those of a narrow group of big companies who would benefit from such a shift in the law.

A comprehensive collection of documents in this case can be found at http://www.scotusblog.com/case-files/cases/microsoft-v-i4i-limited-partnership/ and http://www.i4ilp.com/papers.php .