Some Thoughts About the Upcoming Oral Argument in Microsoft v. i4i

On April 18, the Supreme Court will hear oral argument in Microsoft v. i4i.  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).

i4i filed its opposition brief on March 11, and a number of amicus briefs supporting i4i were filed the following week.  i4i has helpfully prepared a web page linking to all the briefs -- thanks, i4i!

The amicus briefs supporting i4i -- and the higher standard of proof -- can be grouped into several categories:

• As expected, several large biotechnology companies or organizations supported i4i, such as Genentech and Bayer.
• Certain "non-practicing entities," such as Intellectual Ventures.
• Several bar associations, such as the San Diego IPLA.
• The United States, represented by the Solictor General's office, filed a brief that argued that the higher standard was justified as a way of showing deference to the PTO, a governmental agency.  (Discussions about the USA's brief are here and here.)
• A mix of several other organizations, individuals, and companies, such as a group of former PTO Commissioners.

Now that the briefs are all in, here are some points to watch out for during the oral argument.  (A transcript of the oral argument will be available within a day or two after April 18.)

1.  The patent statute in question, 35 U.S.C. §282, says that the party challenging validity (usually the defendant) has the burden of proving invalidity.  However, specifying which side has to prove an issue isn’t the same thing as quantifying the quantum of proof (standard of proof) on the issue.  Normally in a civil case, the plaintiff has to prove all the elements of its claims.  So but for §282, a patent plaintiff would otherwise have to prove ownership of the patent, validity, infringement, and damages.

Because Congress felt that the PTO’s issuance of a patent is entitled to at least some degree of deference, §282 reverses the ordinary allocation of proof and requires the defendant to prove invalidity.   But that allocation alone (1) shows deference to the PTO, and (2) doesn’t by its wording mean that the deference has to be by clear and convincing evidence.  A presumption that a patent is valid doesn’t necessarily require that the proof to invalidate the patent must be clear and convincing.  In this case, §282 is silent on the standard of proof.

The Internet Retailers’ brief contained a 40-page appendix of federal statutes that explicitly require “clear and convincing” proof.  Since §282 doesn’t contain such a standard, the plain inference is that Congress didn’t intend §282 to require clear and convincing evidence.  i4i counters with its own list of statutes that specify a preponderance standard, see i4i Brief at 1a-7a.  At most, that means we should look to ordinary rules of statutory interpretation to figure out §282’s standard of proof.

2.  The ordinary rules for deciding standards of proof are set out in two Supreme Court non-patent cases called Grogan and Huddleston. (In past situations where the Court has reviewed a patent case, it has applied its ordinary rules of law, something the Federal Circuit hasn't always done.)  If you hear some of the Justices asking about Grogan and Huddleston, that means they are interested in applying that law in this case.  Interestingly, although briefs of Microsoft and its amici discussed those cases at length, i4i's brief hardly did at all.  Only one of i4i's amici, the Pharma Research brief, did so in detail. 

There is probably a good reason why Microsft and its amici discussed Grogan and Huddleston, and i4i and its amici probably didn't:  the cases strongly favor Microsoft.  The cases say that the usual rule is that the burden of proof in a civil case is preponderance of the evidence, and the clear-and-convincing standard only applies where "particularly important" interests are involved. These are usually things like proceedings to terminate parental rights or involuntary commitments.  This wouldn't seem to apply to patent cases.

i4i did argue that promoting innovation is "particularly important," so patents should enjoy a strong presumption of validity.  The problem with this argument is that promoting innovation isn't the end of the story with the grant of patents.  The patent system reflects a balance between promoting innovation and avoiding monopolies that stifle innovation.  Improperly granted patents that are invalid can harm innovation by removing existing knowledge from the public's use.  i4i relied on part of a Supreme Court case called Bonito Boats for the proposition that patents promote innovation -- but i4i ignores Bonito Boats’ point about balancing innovation against the harm to competition caused by improperly-granted monopolies.  Bonito Boats has language about a “carefully crafted bargain” in the patent system that i4i partially quotes in its brief -- but after i4i quotes the part it likes, Bonito Boats then goes on to explain what that “bargain” means:

“The attractiveness of such a bargain, and its effectiveness in inducing creative effort and disclosure of the results of that effort, depend almost entirely on a backdrop of free competition in the exploitation of unpatented designs and innovations.  The novelty and nonobviousness requirements of patentability embody a congressional understanding, implicit in the Patent Clause itself, that free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.”  489 U.S. at 151 (italics added).

If you hear the Justices asking about Grogan, Huddleston and Bonito Boats at the oral argument, that's a good sign for Microsoft, and a bad sign for i4i.

3.  i4i and its amici are left to argue that court precedent has always set a "uniform" rule of clear-and-convincing proof, so all §282 did was codify that uniform rule.  i4i relies on a case called RCA, or Radio Corp., that supposedly established clear-and-convincing proof as the standard in all cases.  There is a big debate in the briefs over whether RCA really established an absolute rule in all circumstances.  (See, for example, EFF's brief at 30-31.)  If the Justices discuss RCA, listen carefully to what they think it means.

4.  In any event, it's doubtful that RCA either established a "uniform" rule, or even a clear rule that the Courts of Appeals understood to be uniform.  Both before and after the 1952 Patent Act, and before the Federal Circuit was created in 1982, many other Courts of Appeals didn't hold that the standard of proof was always clear-and-convincing.  Rather, many such courts held that if the prior art asserted in the lawsuit hadn't been considered by the PTO, the presumption of validity was weakened, or lowered to just a preponderance of the evidence. 

Click here for a list of such cases. 

5.  i4i and its amici argue that the existing standard of proof should be kept because of "settled expectations" by the public.  Given the large number of pre-Federal Circuit courts that didn't rely on the clear and convincing standard -- at least where the PTO had not considered the prior art -- it's not clear how "settled" those expectations should have been.  In any event, that same argument was made and rejected in the 2007 case of KSR v. Teleflex, where the Supreme Court made it easier to find a patent obvious, overturning two decades of Federal Circuit precedent in the process.

I'll post a link to the transcript of oral argument as soon as it is available.