Proving A Patent Invalid: The Burden is on the Challenger

In a 2011 court case, Microsoft v. i4i Limited Partnership, the Supreme Court addressed the issue of when a patent could be proved to be invalid. Two software technologies for editing computer documents were at issue. i4i Limited Partnership patented its customized software and later sued Microsoft, alleging that Microsoft’s competing Microsoft Word program violated i4i’s patent. Microsoft argued that i4i’s patent was invalid, and that Microsoft therefore could not have violated it. Originally, Microsoft lost its case and appealed. The Federal Circuit enjoined sales of Microsoft Word and affirmed a damage award of $290 million to i4i. The Supreme Court Justices affirmed the Federal Circuit’s decision and were unanimous in their 8-0 decision in which they rejected Microsoft’s challenge to the Federal Circuit precedent and held that “an alleged infringer must show by clear and convincing evidence that the patent it is accused of infringing is invalid.”

At issue in the Microsoft v. i4i Limited Partnership case was whether the invalidity defense provided for in the Patent Act of 1952 must be proved by “clear and convincing evidence.” As Lisa McElroy explains on SCOTUSblog, the significant question in the Microsoft v. i4i Limited Partnership case was what type of burden of proof applies when a party claims a patent is invalid. Deputy Solicitor General Tom Hungar, advocating for Microsoft, claimed broadly that the preponderance standard applies for all challenges to patent validity. He also suggested that the Court should interpret the Patent Act statute in accordance with its plain meaning. Malcolm Stewart, advocating in support of i4i, asserted that the similarities between the language of the Patent Act and the Court’s decisions practically requires the adoption of the clear and convincing evidence standard. In short, Microsoft argued that the burden should be a relatively low “by a preponderance of the evidence” standard while i4i argued that Microsoft should have to meet a much higher burden by offering “clear and convincing evidence” that a patent is invalid.

The reason the type of burden of proof was in dispute was because the Supreme Court had to determine Congress’s intent in the Patent Act of 1952. Section 282 of the Patent Act states that a “patent shall be presumed valid.” When an individual or company challenges the validity of a patent, “the burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” In other words, the challenger bears the burden of demonstrating that the patent is invalid—the individual or company holding the patent need not show that the patent is valid. However, the text of the statute is silent on the precise nature of the challenger’s burden.

Microsoft argued that the standard for proving a patent invalid should be by a preponderance of the evidence because the PTO did not consider the software in question when it issued the patent. According to Microsoft, the patent on which i4i relies is invalid because of prior art using the technology before the application was filed with the Patent and Trademark Office (PTO). Microsoft questioned why the “clear and convincing evidence” standard should apply even for issues that the Patent and Trademark Office (PTO) did consider. Furthermore, Microsoft argued that the “clear and convincing evidence” standard is an unjust creation of the Federal Circuit.

i4i Limited Partnership maintained that Microsoft had infringed on a patent i4i received in 1998, US Patent No. 5,787,449. This patent makes clear that i4i claimed a particular “method and system for querying a structured document stored in its native format in a database, where the structured document includes a plurality of nodes that form a hierarchical node tree…” While the language may appear inscrutable to a layman, essentially i4i maintained that the XML-editing features in Microsoft Word infringed on i4i’s patent. In response to Microsoft’s argument, i4i argued that it did not sell a product which served as prior art and that only the product’s source code could meet the “clear and convincing evidence” standard. Since the source code was no longer available, this was a convenient interpretation for i4i. In addition, i4i strongly argued that the Court should use the “clear and convincing evidence” standard instead of the “by a preponderance of the evidence” standard supported by Microsoft.

There were a large number of amicus briefs filed in the case. A coalition of companies including Google, Wal-Mart, and the New York Times filed a brief siding with Microsoft. The Obama administration sided with i4i and noted that defendants can always pursue re-examination of a patent by the Patent and Trademark Office if new evidence of prior art is discovered. Additionally, the American Intellectual Property Law Association and firms that greatly depend upon patent protection (such as 3M) urged the Court to use the “clear and convincing evidence” standard.

The Court acknowledged that the text of the statute itself, the Patent Act of 1952, establishes no particular standard of proof. However, the Court focused on Radio Corporation of America (RCA) v. Radio Engineering Laboratories. The RCA case featured a dispute among various inventors about who had first invented a particular technology. Justice Benjamin Cardozo wrote that patents had a “presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” The Court decided to follow Justice Cardozo’s opinion in the 1934 RCA case to adopt the “clear and convincing evidence” standard and decided that the Patent Act’s enactment in 1952 should be interpreted as implicitly incorporating that standard. In this case, Microsoft v. i4i Limited Partnership, the Court unanimously decided that Congress intended to utilize the higher “clear and convincing evidence” standard when it enacted the Patent Act.

Besides linking the “clear and convincing evidence” standard to the text of the Patent Act of 1952, the Court also affirmed the Federal Circuit’s findings in general. The Federal Circuit found that “as for the finding of validity, Microsoft fails to establish that plaintiff’s invention would have been obvious to one of skill in the art, and there was sufficient evidence for a reasonable jury to find that it was not anticipated by another software program.” Pertaining to the finding of infringement, “there was sufficient evidence to support either of plaintiff’s independently sufficient legal theories, contributory infringement or induced infringement.” The Federal Circuit also found that the jury’s finding of willfulness was reasonable and the “plaintiff presented sufficient evidence at trial to prove each prong of the Seagate standard for willfulness.” Finally, the Federal Circuit concluded that “given the information Microsoft had about plaintiff’s software and the patent at issue, Microsoft knew or should have known that there was an objectively high risk of infringement.”

Since Microsoft has redesigned Microsoft Word to avoid infringing upon i4i’s patent, the result of the case did not threaten the availability of Word to consumers— it simply meant that Microsoft had to pay a sum of over nine figures to i4i.