Microsoft Corp. v. I4I Limited Partnership (on petition for writ of certiorari 2010)
In 2009, an Eastern District of Texas jury awarded $200 million + interest to i4i after finding that Microsoft willfully infringed the Canadian company’s patent. Judge Davis subsequently added-on $40 million for willful infringement. The judge also issued an injunction ordering Microsoft to stop selling Word Products with the capability of using “custom XML.” That injunction was stayed by the Federal Circuit pending appeal. On appeal, the Federal Circuit affirmed the lower court’s findings of validity, willful infringement, enhanced damages, and permanent injunctive relief. In the meantime, the USPTO has concluded its reexamination of the i4i patent — confirming that the claims at issue are patentable. In addition, Microsoft apparently patched its software to prevent someone from using custom XML in Word.
Microsoft has now moved-on to the Supreme Court — asking the high court to reject the “clear and convincing” evidence standard for proving a patent invalid. As Microsoft writes in its petition for writ of certiorari, the question is “Whether the court of appeals erred in holding that Microsoft’s invalidity defense must be proved by clear and convincing evidence” even when the prior-art was not considered by the USPTO. This is essentially the same question that Microsoft raised in its 2008 petition in z4. That petition was withdrawn after the parties settled.
The patent statute (35 U.S.C. § 282) indicates that an issued patent is “presumed valid” and that the “burden of establishing invalidity” rests with the party asserting invalidity. The Federal Circuit has held that the presumption of validity is properly realized by a clear and convincing standard. The Supreme Court has not directly ruled on the issue. However, in KSR v. Teleflex, the Supreme Court did note that the “the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished” in cases where the patentee “fail[ed] to disclose” the key prior art to the PTO.
By Dennis Crouch
File Attachment: Microsoft.I4I.CertPetition.pdf (172 KB)
The KSR ruling makes less sense in the light of new studies showing that examiners largely tend to ignore patentees’ prior art references. I look forward to presentation of such data in a future patent enforcement action.
Cowboy–
Your post is inarticulate at best.
Disappointing.
If you are trying to prove that the subject matter of a claim would have been obvious to one of ordinary skill in the art and therefore that the claim is invalid, you need to submit evidence of prior art by clear and convincing evidence and then argue to the judge (or jury if the judge asks them to rule first) that the facts established by C+C indicate obviousness. The court is also to consider secondary considerations evidence, if there is any, and is subject to de novo review on appeal, so you should be thinking about the record that will be reviewed on appeal as well as trying to convince the District Court.
Cowboy–
Yes, obviousness is a conclusion of law, which is equivalent to saying that it is the finding of a legal fact.
You state your belief that the C&C standard applies to the questions of fact underlying the determination of obviousness, but not to that determination itself.
Since you later acknowledge that the determination can be argued directly at trial, what do you believe the standard of proof is at trial, on the determination of obviousness, if not C&C?
nah, I gots better pokin to do.
Hello ping. Apart from querying “another”, “benefit” and “uniform”, I’m stuck for something to write. But I feel I should write something, so here goes.
The EPO Enlarged Board of Appeal has the last word on patent eligibility, and patentability and validity. Its word goes, for 38 independent sovereign States. I agree Europe has no single jurisdiction of 360 million people who can be enjoined by one court, but there are 600 million under the EBA on validity. When validity and claim construction is done, the issue “Infringing Y/N” often falls out easily enough for a District Court to cope with. You know, Presumption of Validity and all that stuff.
But I’m sure you’ll beg to differ, no?
Maxie,
Another benefit of the US patent. Rather than the “Europe’s “patchwork quilt” “, you have the uniform Federal blanket.
IANAE, you asked me:
“Incidentally, how much deference is given to the English and German Patents Courts?”
and I would flippantly answer that the degree of deference given is in proportion to that which is merited. The English court finds the facts with witness evidence in adversarial proceedings, but the German court (being in a civil law jurisdiction) will likely appoint its own technical expert. Both courts think they “do” validity, in their different ways, far far better than the EPO.
In Europe’s “patchwork quilt”, you choose your jurisdiction to suit the characteristics of your case (unless of course the other side beats you to it).
“much like the right to bear arms.”
Ya losing it IANAE.
Man I ha_te seeing that happen. And doncha know, it happens when you try to back a loser position.
Cowboy: “a preponderance of witnesses”
There you go, moving the goalposts again.
I’m not going to discuss the particularities of the land registry system because land has its own set of rules for its own reasons.
However, in general if you could come up with credible evidence that you owned some chattel in my possession, the court would probably give it to you. There are several causes of action along those lines.
6: “Yes, but a proceeding judged by the people working at Mcdonalds, Macy’s, and your bank? Really?”
No, not really. Jury trials are obsolete, much like the right to bear arms. The only reason they still exist is because it’s politically impossible to amend the Constitution to remove a civil right.
Not to mention that the jurors are completely unqualified to make the important decisions, and they’re not fond of the process either. It’s lose-lose, except for the litigant who thinks he can improve his odds by misleading twelve random people off the street. The only hope for the process, assuming you’re sufficiently idealistic, is that someone else is arguing the other side of the case.
“How much do we really trust the examiner to do his job?”
Considerin that we pay him, Iza say that he better be doin his job!
“precisely as much deference as the statute gives” – kinda funny, I musta missed that. Help me out IANAE and get me a cite for that.
“A right enforceable against other private parties deserves a proper adversarial proceeding”
smells like policy to me – unless ya got a cite for this one too.
And please – stop whinin about how the examiner is so limited – amazing how that subject never seems to be the one making headlines or being pushed in Congress…If ya don’t like it – call your Congressman, don’t bttch to me.
I would like to add that I would like to be able to outsource my job to the judiciary. They seem happy to dictate from on high quite hautily, let them handle the tough calls.
“Do the F’n job right the first time – ya’ll see how many problems go away.”
Did you notice what he said the cause of this “effective outsourcing” was?
Production. And lack of relevant expertise.
Maybe you should stop putting your foot in your mouth. Don’t blame the examiners, we’ve been saying the same for years and those factors have nothing to do with us “doing the job right the first time”, they have to do with management’s mandates and hiring practices.
link to larrydownes.com
Not to mention how much of the problem he lays at your feet pingerdoodle.
‘A right enforceable against other private parties deserves a proper adversarial proceeding between those two parties on an equal footing when the validity of that right is in question.”
Yes, but a proceeding judged by the people working at Mcdonalds, Macy’s, and your bank? Really?
So you have only a presumption that you have good title to your house, deed notwithstanding. If I can come up with a preponderance of witnesses saying it is mine, I get your house, right?
“add the considered opinion of the United States Patent and Trademark Office examiner,”
Okay, so we’re back to our original question. How much do we really trust the examiner to do his job?
Considering that the examiner has only a few hours per count to examine the application, and litigators have multimillion-dollar budgets to pick it apart, I wouldn’t say the examiner’s opinion adds very much to the judicial analysis. At best, it would barely tip the balance in a close case, which is precisely as much deference as the statute gives – a bare presumption with no heightened evidentiary standard.
Even if the examiner had all the time in the world, he still wouldn’t really have an interest in rejecting the patent. Certain snarky comments on this board notwithstanding, the examiner’s job is to reject the bad claims and allow the good ones – not to find any way possible to reject them all. A right enforceable against other private parties deserves a proper adversarial proceeding between those two parties on an equal footing when the validity of that right is in question.
Ping makes a good point. Ianae, to your hypothetical of two dueling experts, add the considered opinion of the United States Patent and Trademark Office examiner, who makes his or her living day after day, looking at the art in question and considering what is novel and what is obvious. That tends the put a few thumbs on the patent validity side of the scale. And if you think it shouldn’t, the issue to address is any failings in the PTO.
Larry Downes, through Techdirt:
“it’s the USPTO outsourcing the patent review process to unskilled juries:
The result has been the creation of a shadow patent examination process through litigation. The grant of a patent is no longer the final step, in other words. The de facto examination really takes place when the holder tries to enforce the patent against an alleged infringer, and the defendant claims invalidity of the patent as a defense. When such cases go to trial, which they rarely do, a jury of laymen are then tasked with doing the work avoided by the patent examiner.
In effect, the patent office has outsourced its job to the judiciary and in particular to a jury of non-experts. If nothing else, that is a feature of the modern system that absolutely no one is happy with, or in any event that no one can justify. ”
Do the F’n job right the first time – ya’ll see how many problems go away.
Cepts for one very important thing – the courts and their differenc to the administrative agency who are supposed to be the experts (never mind your high-falutin experts you dragged in for court – they be just paid monkees anyways).
Some choice – that’s a feature, not a bug.
“It’s that way if even Ianae would say the claim is valid, isn’t it?”
Well, yes, but at least then the claim is valid. Nothing wrong with making people pay when they’ve infringed a valid claim. That’s the very foundation of the patent system.
Imagine you were arrested for violating an unconstitutional law. Sure, you had a choice not to break the law, but shouldn’t you also have a fair chance to challenge the validity of the claim against you? Not just for yourself, but for the benefit of the entire public that is subject to the improper restriction on its conduct.
That’s “your money or your life”, right? It’s that way if even Ianae would say the claim is valid, isn’t it?
“He has the choice of not infringing.”
So… he can stop doing what he can prove he should have every right to do, or he can pay off the patentee through a license or through litigation.
That’s “your money or your life”, right? Some choice.
What chance does the infringer have, against a patent more likely than not to be invalid?
He has the choice of not infringing.
“It is not an inexorable result of what happens with the underlying facts.”
Sure it is, once the facts are decided.
The real question is how confident you can be in the legal conclusion of obviousness, which depends on how confident you are in the findings of fact.
Suppose plaintiff’s expert and defendant’s expert disagree on whether a particular claim limitation is taught in the art or known to a person skilled in the art. Let’s assume neither expert is an obvious liar or crackpot. The entire finding of invalidity depends on that one fact. You can side with the expert you think is most credible (balance of probabilities), or ignore them both and side with the patentee (clear and convincing).
Now, suppose those same two experts disagree on two claim limitations. You find one expert clearly and convincingly more credible for each limitation individually, but taken together you really only have a balance of probabilities-level confidence on the question of invalidity. Even a 75% confidence level on each of two questions only gives you a 56% confidence level that you’ve got them both right, after all. Clear and convincing standard? Ignore both experts and side with the patentee.
What chance does the infringer have, against a patent more likely than not to be invalid?
Punchy, there is no such thing as “the “legal fact” of obviousness.” Obviousness is not a fact; it is a conclusion of law. It is not an inexorable result of what happens with the underlying facts. As to whether it is argued directly at trial, yes it is, at a bench trial or a jury trial where the judge decides to let the jury have a crack at it. But it is still a question of law that the judge can overrule the jury on the judge thinks the jury made a mistake. And review on appeal is plenary, de novo and without deference to the trial judge. See link to law.unh.edu
“What to do?”
There’s probably more than one way to skin this cat.
We could give the PTO exclusive original jurisdiction on all questions of validity over the sort of prior art they’re equipped to deal with. That’s fine, provided there’s meaningful inter partes participation by at least anyone who would have DJ standing. Of course, it would raise jurisdictional arguments over whether it’s the right sort of prior art. And you might want to have some sort of standing requirement for validity challenges, even if it’s as simple as “one per person”. And there’s always the backlog issue, and the issue of how to treat counterclaims in infringement litigation.
Or we could go the other way. Create an opposition procedure, streamline it so it doesn’t unduly delay infringement litigation (and/or up the infringement damages for any opponent), and once the delay for opposition has passed any recourse to the PTO (including re-exam) is functus officio.
Incidentally, how much deference is given to the English and German Patents Courts?
Indeed so, IANAE. Same problem, in Europe, at the EPO. I was not suggesting that Punches had his finger on the solution. Rather, that he had made a good point to keep the thread running.
What to do?
The English Court of Appeal (Robin Jacob)suggests that opposition at the EPO is a coarse filter of validity, while the forensic fact-finding at the specialist English common law adversarial Patents Court is there for serious cases (like innovative pharma vs the generics boys). In Germany, the Federal Patents Court thinks that Robin’s thinking is on the right lines. Well, they would, wouldn’t they?
What is interesting is the degree of deference given to i) decisions of the English Patents Court and ii) those of the German Patents Court.
Max: “Punches makes a great point, that any new assault on validity should be handled by the PTO, not the court.”
It’s tempting, but there’s also the issue that the PTO is poorly-equipped to deal with non-patent prior art like on-sale events, and not ideally suited to adversarial proceedings.
againagain
Punches makes a great point, that any new assault on validity should be handled by the PTO, not the court.
With infringement courts all over the 37 Member States of the EPO, and only a very few specialist patents judges outside Germany, Holland and England, there is also in Europe a suggestion that while local courts might be competent to do infringement, only the experts should touch validity.
But then, I would say that, wouldn’t I, being as how I’m an EPO man myself.
testtest
Cowboy, are you suggesting that C&C is the standard of proof of an underlying fact, and that the “legal fact” of obviousness is an inexorable result of what happens with the underlying facts, and is not argued directly at trial?
Can you present any evidence to support any such belief?
If it were inevitable, the right of appeal on the QoL of obviousness would be vitiated.
ianae, as stated in Graham v. John Deere Co., 383 U.S. 1, 148 USPQ 459 (1966). Obviousness is a question of law based on underlying factual inquiries.
The factual inquiries enunciated by the Court are as follows:
(1) the scope and content of the prior art;
(2) the level of ordinary skill in the art;
(3) the differences between the claimed invention and the prior art;
(4) objective evidence of non-obviousness; and (5) secondary considerations (i.e., commercial success, long-felt but unsolved needs, and failure of others).
C+C applies to those, not the ultimate conclusion of obviousness.
Paul F. Morgan quotes the CAFC:
“the burden of showing, by clear and convincing evidence, the invalidity of [patent claims]” . . “is especially difficult when the prior art was before the PTO during the prosecution of the application.”
This was yet another inarticulation by the CAFC.
It is NOT the INVALIDATING EVIDENCE that must be C&C, it is the PROOF OF INVALIDITY that must be C&C.
Evidence is material or immaterial, relevant or irrelevant, and has potentially probative and prejudicial qualities that must be assessed. Evidence is always assessed in relation to a proof or a proposition, or a fact that is essential to said proof or proposition.
Evidence both in support of, and not in support of, a proposition, must be considered.
In short, one does not “show the invalidity of patents claims by C&C evidence”, but instead one “argues for the invalidity of a patent claim by presenting a proof of invalidity, and employs material and relevant evidence to support said proof”.
The C&C standard currently applies WHETHER OR NOT THE PRIOR ART WAS CONSIDERED BY THE PTO, it is just harder to achieve if the PA was considered.
If the prior art appears on the list of PA considered, the presumption is that the PTO has assessed the evidence contained within the PA, and that any evidence that the PA contained, when combined with any other evidence before the PTO, was insufficient to establish invalidity to the standard required of the PTO.
Importantly, the fact that a piece of PA was considered by the PTO says nothing specific about its evidentiary content, unless the PA was used in a rejection–in which case limited statements of its evidentiary content are made by the PTO, which limited statements are not exhaustive of all the relevant evidence contained within a piece of PA.
Also importantly, the PTO’s job is to make a prima facie case of invalidity. Personally, what I think that means is that only evidence tending to prove invalidity is considered by the PTO, as the applicant is entitled to a patent unless…
Therefore, evidence that is contained in a piece of PA considered by the PTO, and that tends to prove validity, is not considered by the PTO–that is up to the applicant in the response to the rejection.
The term “presumption of validity” is IMPRECISE: the real term should be “presumption of lack of invalidity”, or “no presumption of invalidity”.
The whole thing is bass-ackwards. One could argue that because “an applicant is entitled to a patent unless…”, there is effectively a presumption of validity of a patent application. However, in showing a prima facie case of invalidity, the PTO does not consider evidence tending to prove validity, unless it is submitted by an applicant in response to a rejection.
So, would a standard of proof of invalidity at trial, as an affirmative defense, be workable if it was required to be sufficient only to establish a prima facie case? A “substantial evidence” standard, or a “some evidence” standard, for instance?
This gets us into the re-exam territory, a “substantial new question of patentability”, which is effectively amounts to the submission of not-previously-considered evidence that is substantially sufficient to establish a prima facie case of invalidity in view of that evidence only.
Should the standards be different in trial and re-exam? Yes, as the procedures are different. Invalidity arguments at trial should be based SOLELY UPON EVIDENCE CONSIDERED DURING PROSECUTION. Any new submission of evidence should be considered only by the PTO.
Then the C&C standard would then make sense–on the totality of the evidence in the prosecution record, the trial defendant would have to prove to a clear and convincing standard the invalidity of a disputed claim.
If the trial defendant wants to submit evidence for consideration in the first instance, the trial proceedings should be stayed while re-exam is performed by the PTO.
Just some thoughts, trying to bring rationality and articulation to bear, something that the CAFC has thus far been unable to do.
You could indeed IANAE. Where can I find this system of yours? I want to see if it is any better than the one I practise in currently.
Max, in that case can I interest you in a system where you win when yours is the more convincing evidence and lose when yours is the less convincing evidence?
IANAE, no thanks. You see, the other half of my time is spent helping those blocked by invalid patent claims grudgingly issued by those sceptical Examiners in their Ivory Tower at the EPO.
In opposition, my client is relying on me to get it across to those cautious Examiners that the claim they wrongly issued ought now to be revoked. The last thing I want is for the Owner to be jumping up and down all the while shouting:
“Examiners, remember to be properly sceptical of the evidence. Don’t you dare touch my duly issued claim. That mischief-making Opponent is nowhere near a “Beyond Reasonable Doubt” standard”
“Usually, it is a dispute about the legal question of obviousness, not a question of fact.”
When have you ever seen a legal determination of obviousness that didn’t involve facts?
Sure, some (e.g. summary judgment) don’t involve disputed facts, but then the evidentiary standard doesn’t matter at all.
Ianae, I have read a couple of patent cases, thank you. The ones that deal with whether the invention would or would not have been obvious to one of ordinary skill in the art do not often turn on evidentiary considerations. Usually, it is a dispute about the legal question of obviousness, not a question of fact.
Cowboy: “C+C is applicable as to whether something is prior art or is not prior art. In most cases, once it is shown to be prior art, there is clear and convincing evidence of its teachings”
Is that what you really think? The big disputes of fact are about whether or not a reference is prior art (its date and such), and once its prior art status is established it’s clear-cut whether it teaches the claimed invention?
Have you ever read a single patent case?
Max: “So, as a prosecutor, I shout ‘Keep your Hands off C+C. It is my livelihood you are tinkering with here’.”
Can I interest you in some “beyond a reasonable doubt”?
IANAE,
I thought you liked simplicity – Anon did a nice job of simply cutting out all the crrp.
Your secondary argument about patents being on the same plane (sic) as Gitmo (a bit over the top on the drama side) has a fatal flaw – the government already has a mechanism for covering gettin rid of invalid ones (sure invalidity is also a defense – but there be an affirmative mechanism).
I want to be helpful here. We prosecutors are keen on things that lift the value of what we do. Switching to a “Registration Only” system would destroy that value. What really lifts our value sky-high is the Presumption of Validity. When it comes to what claims we can get to issue, the more intimidatory power they pack the higher their value to their owners and, therefore, the more we can ask those owners to pay us for our prosecution services to them.
So, as a prosecutor, I shout “Keep your Hands off C+C. It is my livelihood you are tinkering with here”.
On another patent prosecution issue, has any reader noticed the somewhat entertaining “tea bag” thread on the Patent Prospector. It’s up to 50 comments already.
Paul Morgan makes this observation: The CAFC had held in Hewlett-Packard co. v. Bausch & Lomb Inc., 15 USPQ2d 1526, 1527 (Fed. Cir. 1990) that “the burden of showing, by clear and convincing evidence, the invalidity of [patent claims]” . . “is especially difficult when the prior art was before the PTO during the prosecution of the application.”
Actually, the clear and convincing evidence standard would not have much influence here, in my estimation. Going back to my earlier post, C+C is applicable as to whether something is prior art or is not prior art. In most cases, once it is shown to be prior art, there is clear and convincing evidence of its teachings (i.e. what patent says is what is says — there is no distinction between C+C and preponderance.)
So, if the concern is that patents are being upheld over previously unconsidered prior art patents or other printed publications, the C+C requirement does not affect the outcome. If the invalidity argument is anticipation, it is hard to see how C+C vs preponderance makes a difference. If the argument is obviousness, that is a question of law, and C+C vs preponderance is irrelevant.
The only time C+C becomes really pertinent is when there is a dispute about dates or a dispute about what happened prior to the date of invention or the critical date. Such dates may be a dozen years or more before the testimony about them is given, and often by a party with a dog in the fight, so skepticism is warranted.
Anon: “It’s that simple.”
It’s really, really not.
Gitmo is an example of a strong criminal justice system, but it’s not the kind you’d want to have in your country because it lacks procedural fairness for its “residents”. It’s easy to see how one can oppose arbitrary imprisonment and still be in favor of a strong criminal justice system.
Same goes for patents. They need to be strong, but also fair. We want all the valid ones to stand up in court, but it’s just as important for the invalid ones to fall – preferably without costing some poor defendant millions of dollars. A strong patent, or a strong patent system, doesn’t mean upholding invalid patents.
At the end of the day, the positions taken on this thread boil down to those who want a strong US patent (the current legally established version with recognized clear and convincing standard) against those who want a weaker US patent.
It’s that simple.
Reading between the lines from Obama on wanting a strong protection stance for US intellectual property, I do not see the Court going in the direction of weakening patents.
As to Paul F. Morgan’s observation “MS is carefully limiting its attack on the CAFC’s invalidity evidence burden to prior art not ever considered by the PTO.“, this too shall fail. If you think certain IDS practice is bad now, if this MS view were to succeed, I can easily see a massive increase in IDS submissions. “Better safe than sorry” will be the introductory phrase accompanying the submission of literal IDS books.
Anon- I think it was fully intended that the hearsay testimony of Young was intended to prove that the S4 product embodied the invention disclosed and claimed. This is fundamentally unsound evidence even under the “preponderance” standard.
I’ve heard Bill Gates, in person, say “There is no such thing as a patent troll.”
I hope he’ll let us know if he changes his mind.
Ned,
“That S4 practiced the invention of the ’449 Patent was also confirmed by a former employee of both SEMI and i4i, Scott Young. Young testified that Vulpe told him the ’449 Patent application was filed to cover the S4 program. C.A. J.A. 1977-81.”
Is this hearsay? “Hearsay is an out of court statement offered to prove the truth of the matter asserted.” Was Microsoft using this testimony to prove that the ‘449 Patent application was filed to cover the S4 program?
I don’t think it was. It was using this as circumstantial evidence that the S4 program practiced the invention (not that the patent was filed to cover the program). Maybe not a big distinction though, but that analysis would say it wasn’t hearsay. I don’t have time to completely think it through, but just thinking Microsoft’s attorneys had a reason to include it.
MS is carefully limiting its attack on the CAFC’s invalidity evidence burden to prior art not ever considered by the PTO.
The CAFC had held in Hewlett-Packard co. v. Bausch & Lomb Inc., 15 USPQ2d 1526, 1527 (Fed. Cir. 1990) that “the burden of showing, by clear and convincing evidence, the invalidity of [patent claims]” . . “is especially difficult when the prior art was before the PTO during the prosecution of the application.”
But I am not aware of any other CAFC decision as to the reverse situation. That is, the CAFC does not seem make any burden distinction even when the most relevant prior art was never considered by the PTO, even if that prior art was in the form of patents or publications of uncontested prior dates, contents and relevance.
The problem here is that there are apparently unappealing facts which do do not set up THAT issue, and for which whether or not the burden is changed might well not even affect the outcome.
[One can even cynically wonder if those burden words, as part of a long jury instruction, really make that much difference as compared to waving the Government blue ribbon and seal on the patent?]
It never hurts to ask.
IANAE–
I know it’s not the standard across agencies, I just vomited out the post in the hope that someone with more time could address the issue from a broad perspective, as will the SC.
IBP: “Is that not the standard across administrative agencies?”
It’s not even standard at the PTO. It’s a sui generis standard for patents only. Including the “patents” that don’t really get examined, but not including the trademarks that do.
Is it not the administrative presumption of regularity that dictates the clear and convincing evidentiary standard? Is that not the standard across administrative agencies? If it is, there is no way the SC will carve out an exception for the PTO.
If Mike can’t fix it, maybe the Mechanics can.
Oh I guess that might have been Mike that broke it.
C’mom IANAE. You broke it. You fix it.
So much itallics. So little time.
Mike: “Why should the PTO (the administrative body in charge of examining patents) give heightened deference to itself.”
Because the patent has already issued. Why should the PTO take a second look at all? Either a patent once issued is entitled to strong deference or it is not. The mere existence of a re-exam procedure without any deference or standing requirement suggests that there’s a strong public policy in favor of culling patents that are invalid.
Mike: “Also, trademarks actually have a form of deference that is even higher than this for incontestable marks (those that have been used for over 5 years and have not been challenged as invalid).”
That’s different, though. They don’t get that deference from the mere fact of administrative examination delegated by Congress. They get that deference because the scope of a trademark changes over time, and five years of continuous actual use strengthens a trademark considerably. You probably wouldn’t be able to reasonably invalidate such a mark anyway, unless it has become generic or abandoned (those defenses are still permitted).
Also, trademarks do have an opposition procedure. If you have a problem with a trademark that the PTO has seen fit to allow, that’s your big chance to speak up. And many do, because unlike patents someone else’s trademark registration can affect the scope of your own trademarks.
From the article:
“Microsoft has now moved-on to the Supreme Court — asking the high court to reject the ‘clear and convincing’ evidence standard for proving a patent valid.”
I think you meant:
“Microsoft has now moved-on to the Supreme Court — asking the high court to reject the ‘clear and convincing’ evidence standard for proving a patent invalid.”
Actually Microsoft petition borders on the grotesque. As we know, the requirements for clear convincing evidence relate primarily relate to the quality of evidence needed to overturn the patent. This grew out of cases related to proofs of prior invention and proofs of prior public use where the evidence submitted wasn’t entirely reliable – being based upon recollections of witnesses long after the direct evidence of what happened and when it happened is no longer available – which appear to be the facts in this case.
In arguing its point, though Microsoft relies on cases involving the “presumption of validity” which relates to the presumption that the patent office has just done its job properly. Now there are cases from the other circuits prior to 1982 which say that the presumption of validity should be weakened when material references not before the patent office are considered in court. But none of these cases go to the point of the quality of proof necessary to prove prior invention or prior public use – the very kind of prior art that is NOT considered by the patent office during ex parte prosecution.
Thus Microsoft is intentionally conflating two independent legal doctrines to allow it to prove prior public use (and on sale bar) using unreliable testimony.
Outrageous!
What happens if Microsoft wins this point on appeal, the judgment gets reversed and the case is remanded? Would a new trial be on the issue of validity only using the new standard of proof, or would infringement and damages be retried as well?
Ned, I read your post, but I don’t know how that shows that I am wrong and you are right. I don’t know how you can say with certainty that Congress put the presumption of validity into the statute as a deference to the PTO. I also don’t know how you can be sure that deference to the administrative body charged with examining patents isn’t a factor in the higher standard of proof. It is for other, non-patent, cases where courts require higher burdens of proof to invalidate administrative action.
IANAE: “Yes, in a sense, but we should also consider that (1) the same level of deference is not applied in re-exam or in trademark proceedings, and (2) Congress didn’t provide for a higher level of deference, other than a bare presumption.”
Of course the same level of deference is not applied in a reexam. The PTO is doing the reexam as well. Why should the PTO (the administrative body in charge of examining patents) give heightened deference to itself.
Also, trademarks actually have a form of deference that is even higher than this for incontestable marks (those that have been used for over 5 years and have not been challenged as invalid). For those trademarks, subject to a few limited defenses, the mark is considered incontestably valid (e.g. the infringer can’t claim the mark is “merely descriptive” and possibly can’t even argue the mark is generic).
Mike: “A higher standard of prove doesn’t change the access to a legitimate defense.”
A higher standard of proof turns a legitimate defense into an insufficient defense. That’s the whole point.
Mike: “the danger of hindsight bias”
Right. That’s why we don’t allow hindsight in the validity analysis. We have a whole other rule for that. We don’t need a rule that allows hindsight as long as it’s clear and convincing.
Ned: “Why was this evidence even allowed into evidence in the first place?”
It’s hearsay as to the scope of the ‘449 patent, but that doesn’t matter anyway since the scope of the ‘449 patent is a question of law. However, it’s direct evidence (non-hearsay) as to Vulpe’s belief that the ‘449 patent was intended to cover the S4 program. Was Vulpe’s state of mind relevant to Microsoft’s case at all?
Mike: But can you be sure the accused infringer proved this on a balance of probabilities when (1) non-technical judges or juries who don’t really understand the art are involved; and (2) hindsight bias is nearly unavoidable?
(1) It’s good enough for every other civil trial. Don’t forget, this is an adversarial system. Both parties have the opportunity to present evidence and explain things to the judge/jury. Even the jury is optional. Balance of probabilities is the legal equivalent of “may the best man win”.
(2) Clear and convincing is not the answer to hindsight bias. It only requires that the hindsight bias be more convincing. What we need are judges with brains who reject arguments based on hindsight. The jury shouldn’t hear them at all.
Mike, you are wrong. Read my post supra.
IANAE: “Let’s ask that question another way. What is the harm of enjoining a defendant from selling something that he can prove on a balance of probabilities was old or obvious at the time the patentee filed his patent application?”
But can you be sure the accused infringer proved this on a balance of probabilities when (1) non-technical judges or juries who don’t really understand the art are involved; and (2) hindsight bias is nearly unavoidable?
Speaking of hearsay, Microsoft said this is petition,
“That S4 practiced the invention of the ’449 Patent was also confirmed by a former employee of both SEMI and i4i, Scott Young. Young testified that
Vulpe told him the ’449 Patent application was filed
to cover the S4 program. C.A. J.A. 1977-81.”
Why was this evidence even allowed into evidence in the first place? I find it amazing that Microsoft actually relies on it is petition to the Supreme Court saying that this is the kind of evidence they should say can be used overturned a patent.
Borders on the ludicrous, does it not?
IANAE “That’s true, but on the other hand we want the infringement defendant to have access to all legitimate defenses.”
A higher standard of prove doesn’t change the access to a legitimate defense. That’s why it’s a standard of proof. If this were a heightened standard of admissibility (if there is such a thing) before allowing the accused infringer to even attempt to use the newly-found prior art reference, you could argue the accused has been limited in his access to legitimate defenses. But, Microsoft was in no way limited in its ability to argue this defense… it was just required to prove it to a higher standard.
IANAE ” ‘The higher clear and convincing standard does nothing to prevent an accused infringer of proving invalidity, it just requires the infringer to have a better case.’ (quoting me)
Ummm… you might want to re-read that statement…”
Umm, you may want to look up the definition of “burden of proof.” A burden of proof does not *prevent* a party from offering a defense or theory. It is just an administrative tool that, for varying reasons, is put up by the court system.
IANAE “Maybe, but don’t act like the defendant will get a free ride. He still has to convince a judge (or three, on do-over) that the patent is more likely to be invalid than it is to be valid. That standard is good enough for the rest of the world’s patents, and for the rest of the country’s civil litigation.”
I never said an accused infringer would be getting a “free ride” with a lowered standard of proof… but, due to the danger of hindsight bias, it is certainly *much* easier for the accused infringer to convince a lay judge or a lay jury that something is obvious, particularly when the average person typically looks at a patent claim and says “I could have thought of that!” when the real question is “Would a person of ordinary skill in the art have had an apparent reason to make the claimed invention at the time the particular invention was made.” It’s easy to think something is obvious in 2010 when a particular invention has been on the market for five years. But, if it was invented in 2000, it may not have been obvious at all. The heightened standard of proof helps protect against this.
Mike: in essence, the PTO is standing in for Congress in granting the patent such that, on a high level, you can consider that it is Congress that is granting the patent rights to the patentee.
Yes, in a sense, but we should also consider that (1) the same level of deference is not applied in re-exam or in trademark proceedings, and (2) Congress didn’t provide for a higher level of deference, other than a bare presumption.
Cowboy: We turn over most other legal issues to a court and allow it do its thing and when done, a court judgement is virtually unassailable, unlike the PTO work product.
Yes, a court judgment is virtually unassailable. After it has been duly contested by the party against which it is enforceable. If we allowed post-grant opposition, I would be first in line to support not letting the opponent challenge validity in court at all.
Cowboy: What is the harm of enjoining a defendant from selling something that he cannot find clear and convincing evidence was old or obvious at the time the patentee filed his patent application?
Let’s ask that question another way. What is the harm of enjoining a defendant from selling something that he can prove on a balance of probabilities was old or obvious at the time the patentee filed his patent application?
“That’s true, but on the other hand we want the infringement defendant to have access to all legitimate defenses. The administrative body effectively granted someone else a prospective injunction against him, and he wasn’t even a party to the proceedings. It’s his first kick at the can, so why is his case weakened by someone else’s decision in a situation where no imaginable form of estoppel would ordinarily apply?”
Cause the law says so?
I be seeing lots of policy-type opinions here, very little law and fact driven ones. Smells like a “but we want it different” fest.
Mike, “The purpose of the clear and convincing standard is deference to the administrative body that is charged with examining patents, e.g. the PTO.”
Mike, I believe you’re wrong. It is the “presumption of validity” which gives deference to the administrative determination of the PTO. The “purpose” of the “clear convincing evidence standard” is to assure that the evidence that will overturn a patent is both clear and convincing as summarized above by Mr. Daily. This standard of proof is historically related to establishing dates of prior invention and dates of prior public uses and requires corroboration and reliable testimony by witnesses who do not have an interest in the outcome. It is not primarily related to US patents which by their very nature establish certain facts without substantial question.
>>suddenly finds examiners to be experts
Nothing sudden about this. This is the same argument as to why the examiner must weed out the IDS and not the agent or attorney. Don’t fight it. Understand the way the patent system was set up and it all makes sense. We need J. Rich here to yell at you people.
What is the harm of enjoining a defendant from selling something that he cannot find clear and convincing evidence was old or obvious at the time the patentee filed his patent application? There is the marking requirement as a safeguard against his having to pay damages. He has to stop doing something he started doing after the patentee invented or filed his application. So what?
ianae says that since we have laws that allow challenges to validity in court or the PTO, we should allow them to succeed without clear and convincing evidence.
Our society has turned over the examination of patents to the PTO, which it has organized and equipped itself to do the job — not perfectly, but better than anybody else I can think of, on a mass production basis.
We turn over most other legal issues to a court and allow it do its thing and when done, a court judgement is virtually unassailable, unlike the PTO work product. The fact that patent validity is subject to challenge at all reflects the fact that we sacrifice the policies of res judicata because we recognize PTO imperfection. But it is not so imperfect that its governmental imprimatur is worth naught.
IANAE: “Usually, the reason for a balance of probabilities standard is that we want the party who is probably right to win. The best reason for a higher standard is that we think some principle of justice is important enough that it’s okay for the party who is probably right to lose a few cases. One such principle is that we don’t like imprisoning people unless we’re really really sure.”
Another reason, and I suspect a primary reason that this particular C and C standard was implemented, is deference to the administrative body that was given the power to make the initial decision by Congress (and in turn, a deference to Congress itself). I haven’t researched this, so I may be wrong, but in essence, the PTO is standing in for Congress in granting the patent such that, on a high level, you can consider that it is Congress that is granting the patent rights to the patentee. In this way, the grant of a patent is similar to a short-term, limited effect statute that has been passed by Congress (really more like a substantive rule enacted by the PTO in furtherance of the duties it was granted by Congress). Since both statutes and substantive rules are presumed valid and (typically) given a clear and convincing standard to prove them invalid, it makes sense to also give the granted patent the same heightened standard.
In a largely administrative system, such as ours, where Congress has given administrative agencies like the PTO the power to make decisions, a heightened burden of proof is the courts’ way of (a) preserving, to the extent possible, the system that was set up by Congress (whom the courts rightly should give deference); and (b) preventing an overburdening of the courts to make decisions that they are not intended to make.
It may not be a perfect system (far from it), but it is the system we have decided works best for us.
Mike M.: We set up the administrative system precisely because we don’t want the courts to be the primary decision maker on these issues.
That’s true, but on the other hand we want the infringement defendant to have access to all legitimate defenses. The administrative body effectively granted someone else a prospective injunction against him, and he wasn’t even a party to the proceedings. It’s his first kick at the can, so why is his case weakened by someone else’s decision in a situation where no imaginable form of estoppel would ordinarily apply?
Mike M.: The higher clear and convincing standard does nothing to prevent an accused infringer of proving invalidity, it just requires the infringer to have a better case.
Ummm… you might want to re-read that statement…
Mike M.: Finally, lowering the standard, in all practicality, would eliminate the standard all together.
Maybe, but don’t act like the defendant will get a free ride. He still has to convince a judge (or three, on do-over) that the patent is more likely to be invalid than it is to be valid. That standard is good enough for the rest of the world’s patents, and for the rest of the country’s civil litigation.
I find it hilarious that NWPA suddenly finds examiners to be experts.
Interestingly, the EPO has the same hand-wringing anguish about revoking a patent on evidence of prior use. Its solution is to require the petitioner for revocation to prove the prior use “up to the hilt”.
But don’t run away with the idea that, in general, the EPO will decline to revoke a claim until it has been furnished with “clear and convincing” evidence of invalidity. For the EPO, “balance of probability” is standard (for the very good public policy reasons set out above). Since opposition at the EPO is the last chance to extinguish the issued patent in all 38 Member States simultaneously, in one action, and since the Opponent needs only a preponderance of evidence, one might suppose that the EPO would be over-run with oppositions. Not so. Perhaps that’s because an opposition that fails is one that crowns the issued european patent with a meaningful Presumption of Validity.
Max: When a manifestly unfit claim stands, because the Defendant cannot clearly and convincingly persuade a jury that the claim must be pronounced invalid, all sorts of other ways are found, by creative judging, to get to a just result, with the consequence that public respect for the patent system suffers.
That’s exactly my point, too. When you impose a high standard of proof, you’re telling one party that they’re not going to win some of the cases where they’ve proven they should probably win. That party isn’t going to have much faith in the system unless there’s a compelling reason for the institutional unfairness.
A back-door method for introducing weaker evidence of invalidity, such as inequitable conduct, cheapens both validity and inequitable conduct proceedings, and isn’t reliably available to the infringement defendant in all cases where the “just result” can’t be reached under the law.
Doesn’t it make sense to align the law with what we perceive to be the just result of these cases?
One other thing. Shouldn’t this be considered a moot issue? According to the original post, “the USPTO has concluded its reexamination of the i4i patent — confirming that the claims at issue are patentable.” Therefore, even if a lower standard is appropriate when the prior art at issue was not before the PTO (which is an argument that I strongly disagree with), wasn’t this particular prior art already before the PTO in the reexamination… so Microsoft would still have to meet the higher clear-and-convincing standard, which the District Court and Circuit Court concur it did not do?
I believe that Microsoft should lose here (I’m not saying they will, but that they should). The purpose of the clear and convincing standard is deference to the administrative body that is charged with examining patents, e.g. the PTO. Whether the administrative body actually looks at a particular piece of prior art is irrellevant… the point is, the PTO has given its stamp of approval, and a court should not override that finding without clear and convincing evidence. Lowering the standard completely eliminates the deference system that is necessary for the efficient application of law in a largely administrative state. It also effectively eliminates the PTO as the presumptive decider of patent validity, and instead puts the question into the hands of a few District Court judges (mostly in the ED Tex., ND Cal, and the W.D. Wisc.). We set up the administrative system precisely because we don’t want the courts to be the primary decision maker on these issues.
If a reference is a true patent killer (either clear anticipation or clear obviousness), then reaching the clear and convincing standard should not be that difficult. If it is a close call, then I have no problem requiring a defendant to prove its case to a higher standard. As others have said above, we are talking about the standard of proof, and that is all. The higher clear and convincing standard does nothing to prevent an accused infringer of proving invalidity, it just requires the infringer to have a better case.
Finally, lowering the standard, in all practicality, would eliminate the standard all together. Honestly, in what percentage of patent litigation is the validity being challenged solely on prior art that was of record before the PTO? 1%? Less?
I believe the “presumption of validity” and “clear convincing evidence standard” were developed precisely for situations such as we find here
Given its history of trying to lower the standard, I suspect Microsoft would be happy with the Supreme Court announcing a rule that C&C remains the standard in cases like these but that preponderance is the default rule. It would be a loss for Microsoft in the instant case but a strategic victory in the long run.
Thanks IANAE. And for “balance” what about imposing on the patent owner a C+C standard for proving infringement? For me, that’s a case of doubling the injustice and the assymmetry, not curing it.
My thesis is the paradox, that the C+C standard for proving that the claim is not fit to be enforced is something that weakens the US patent system, rather than making it a “strong” one. When a manifestly unfit claim stands, because the Defendant cannot clearly and convincingly persuade a jury that the claim must be pronounced invalid, all sorts of other ways are found, by creative judging, to get to a just result, with the consequence that public respect for the patent system suffers. As a patent attorney, I have an interest in maintaining that public respect high.