Oral Argument in Microsoft v. i4i

Today the Supreme Court heard oral argument in Microsoft v. i4i.  The transcript is available here.  As I explained in previous posts on the subject, this cases involves the standard of proof for the difficulty of invalidating a patent.  Microsoft is asking the Court to lower the standard of proof from clear and convincing evidence to a preponderance of the evidence -- at least when the prior art was not considered by the Patent Office (PTO).  In particular, see my most recent post containing some thoughts about the oral argument.  i4i has a case page linking to all of the briefs except for Microsoft's reply brief, which is here.  In addition to counsel for Microsoft and i4i, a deputy Solicitor General argued in support of i4i.

The oral argument did not clearly favor either side.  (This is in contrast, for example, to the oral argument in KSR v. Teleflex, which seemed to predict, correctly, that the Court would overrule the Federal Circuit's standard for proving obviousness.)  Some thoughts:

• The Justices asked all three counsel about the wording of the statute and its construction, which has two separate sentences about proving invalidity, but which does not specify that the standard of proof is clear and convincing evidence.
• Several Justices seemed at least somewhat sympathetic to i4i's argument that the RCA case established a clear and convincing rule in all circumstances.
• The Justices did not ask either i4i's counsel or the deputy SG about either the Grogan or Huddleston cases.  My most recent post observed that if the Justices did ask about those cases, it would have been a good sign for Microsoft.
• There was a fair amount of discussion about an alternative to lowering the standard of proof: a jury instruction saying that the defendant could more easily meet the clear and convincing standard using evidence that was not before the Patent Office.  i4i's counsel described the instruction as follows:

 But you could -- certainly could say that the defendant contends that the patent is invalid because the law presumes that a patent issued by the PTO is valid, the defendant bears the burden of proving invalidity by clear and convincing evidence, and in deciding whether the defendant has met that burden, you may find it more easily met with evidence that you conclude the Patent Office did not consider in evaluating patentability.

         i4i probably likes that idea because Microsoft didn't ask for such an instruction in this case.  Microsoft's counsel pointed out that Microsoft did ask for such an instruction in an earlier case, and that the Federal Circuit rejected the instruction as potentially confusing.  Some Justices commented that even such an instruction would require the jury to decide what prior art had or not been considered byt the PTO.

• Only Justice Breyer expressed concerned about the harm in erroneously granting invalid patents:

JUSTICE BREYER: All those first principles are along the lines of how important patents are and what a disaster is it is to the person once they're invalidated. Okay. I think the other side will say: In today's world, where nobody really understands this technology very well, a worse disaster for the country is to have protection given to things that don't deserve it because they act as a block on trade, they act as monopolies, and they will tie the country up in individual monopolies that will raise prices to consumers, et cetera. You can imagine my spelling out this argument.

A decision is expected by June.  UPDATE:  Here are discussions by SCOTUSblog and Patently-O.