Supreme Court Agrees to Decide Whether to Make it Easier to Invalidate Patents

A previous post discussed how Microsoft was asking the U.S. Supreme Court to make it easier to invalidate patents.  Today the Supreme Court granted certiorari in the case, Microsoft v. i4i (see page 4 of the order list).

Microsoft had asked the Court to review the Federal Circuit's standard of proof that a defendant trying to prove a patent invalid must do so by “clear and convincing” evidence.  Microsoft is arguing that a defendant need only prove invalidity by a preponderance of the evidence.  I was one of the authors of an amicus brief supporting Microsoft's cert petition, filed on behalf of the Electronic Frontier Foundation, Public Knowledge, the Computer & Communications Industry Association and the Apache Software Foundation.

If Microsoft is successful on the merits, this will make it easier to invalidate a patent than it is under existing law.  Details are in the previous post.  If the Supreme Court rules in Microsoft's favor, that will greatly change the landscape of patent enforcement and litigation, especially compared with the situation five years ago.  In a 2006 case, eBay v. MercExchange, the Supreme Court reversed the Federal Circuit's rule that if a patent owner wins at trial, an injunction would almost always be granted.  The Federal Circuit's "automatic injunction" rule permitted non-practicing entities to obtain injunctions against companies that actually made a product.  A notable example was the "Blackberry" patent case, NTP v. Research in Motion, where a trial judge enjoined RIM's Blackberry wireless device.  (eBay was decided two months after the settlement of NTP v. RIM, too late to help RIM.)  In practice, a non-practicing entity would use the "automatic" injunction just to leverage a larger settlement after the trial -- or the NPE would simply use the threat of such an injunction to obtain better settlement terms before trial.

In a 2007 case, KSR v. Teleflex, the Court made it easier to invalidate a patent because the claimed invention was obvious.  The Federal Circuit had a rule that usually required a "teaching, suggestion, or motivation" in the prior art to find a patent obvious.  This rule also greatly favored patent owners, since it was often difficult for an accused infringer to find such a "teaching, suggestion, or motivation" to prove obviousness.  The Supreme Court reversed the Federal Circuit in that case, and adopted a flexible rule making it easier to prove obviousness.  (My analysis of KSR, posted on SCOTUSblog, is here.)

While KSR made it easier to prove a patent was obvious, the accused infringer still had to do so by clear and convincing evidence.  If Microsoft v. i4i allows proof of invalidity by just a preponderance of the evidence, it will be even easier to prove that a patent is obvious (and invalid on other grounds as well).  And with "automatic" injunctions eliminated by eBay, patent owners will have nowhere near the leverage in negotiations and in litigation that they had five years ago.

UPDATE: Patently-O's analysis is here.  EFF's web post is here.  (Techdirt quotes the EFF post.)  A posting at SCOTUSblog on today's cert grants is here.  Joe Mullin's post is here.