Thoughts on Microsoft v. i4i

On Monday, the Supreme Court heard oral argument in Microsoft v. i4i regarding the appropriate burden of proof for challenging issued patents.  A transcript of the argument is available here.  I have previously summarized the issues in the case.  Many others have already posted summaries and impressions of the argument.  I simply seek to add some of my thoughts on the issues here.

Many groups and individuals, such as UCLA Law Professor Doug Litchman in a New York Times editorial, suggest that the issues are very simple.  Patent examiners cannot rightfully be characterized as experts because they are overworked and under-informed.  Way too many bad patents are being issued.  All bad patent stifle innovation and the economy.  Thus, there should be no deference accorded to the work of patent examiners.

Although I’m not sure that Professor Litchman has the experience to provide an expert opinion on what exactly happens during patent prosecution, that is beside the point.  The issue is clearly more complex than he presents.

During argument at the Supreme Court, Justice Breyer seemed to want to focus almost exclusively on the issue of bad patents and the harm they cause.  He seemed to dismiss concerns on the opposite side raised by Seth Waxman, arguing for i4i, about legitimate patents that have been granted by the PTO being improperly invalidated by lay juries.

Other members of the Court seemed to take a more nuanced approach to the issues in the case.  One of the issues is the intent of Congress when it enacted the relevant statutory provision 35 U.S.C. § 282:

A patent shall be presumed valid. . . . The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.

The legislative history of this section seems to indicate that Congress sought to codify existing Supreme Court standards of proof when it enacted this law in 1952.  Supreme Court precedent before, and lower court precedent after, 1952 were anything but crystal clear.  Only once the Federal Circuit took over reviewing patent decisions did it standardize the burden of proof to clear and convincing evidence.

During argument in i4i, there was a great deal discussion about Justice Cardozo’s 1934 opinion in RCA v. Radio Engineering Labs.  In that case, Justice Cardozo appears to have set forth a high burden for invalidating a patent (“a heavy burden of persuasion”).  Microsoft’s attorney, Thomas Hungar, tried to distinguish that case, but the Court seemed to give it a great deal of weight.

Another issue in the case, initially alluded to by the Court in dicta in KSR, is that there doesn’t seem to be any justification for a heightened burden when using evidence that was not previously considered by the administrative agency.  This could create a dual-burden regime where invalidity must be proven by clear and convincing evidence when evidence was considered by the PTO and by a preponderence of the evidence when it was not.

The government, arguing in support of i4i’s position, suggested that this approach would be unworkable.  First, it would require the jury to make an initial finding as to whether the evidence was previously considered by the PTO and, if not, whether it is more pertinent to prior art that was considered.  Then, it would need to apply two different standards of proof to various evidence presented in the case.  When multiple prior art references are considered, the jury may need to apply different evidentiary standards to each.  Neither party was aware of any other area of administrative law having multiple burdens of proof.

The Federal Circuit’s current approach is much more workable and errs in favor of deference to the expertise of the Patent Office.  All challenges to issued patents must be proven by clear and convincing evidence.  If some particular evidence was not previously considered by the PTO, this evidence could be weighed more heavily than evidence that was reviewed by the agency.

Justice Breyer did cite positively to the AIPLA’s brief where it noted that the burdens of proof apply to facts and not to the underlying decision.  Under current law, to prove invalidity, facts supporting such a finding must be proven by clear and convincing evidence.  The ultimate conclusion of invalidity is a legal determination made by the court.  Although this is a legitmate distinction that has been countenanced by the courts, in practice, juries are usually simply asked whether the patent claim is invalid under one or more provisions of the Patent Act.

The Chief Justice has recused himself from this case.  A decision by the Court is expected by the end of the current term in June.