Challenging the Clear and Convincing Standard of Proof for Invalidating Patents in Court

Microsoft Corp. v. i4i Limited Partnership (on petition for certiorari 2010)

By Dennis Crouch

In 2009, an Eastern District of Texas jury awarded $200 million to i4i after finding that Microsoft willfully infringed the Canadian company’s patent. Judge Davis subsequently added-on $40 million of punitive damages 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. Despite the injunction, Microsoft continues to sell its software based on a “patch” that apparently prevents the use of custom XML in Word.

Meanwhile, the USPTO conducted a reexamination of the i4i patent and confirmed that the claims at issue were properly patentable.   However, the reexamination did not consider what Microsoft's (now) argues is its key invalidity argument.  That invalidity argument is based on a prior offer-for-sale, and offers-for-sale are excluded from consideration during reexaminations.  The prior offer-for-sale was likewise not considered during the original prosecution of the i4i patent.

This summer, Microsoft petitioned the Supreme Court to take a fresh look at the case —  specifically asking the Court to reject the Federal Circuit's requirement that invalidity be proven with “clear and convincing evidence” when the invalidity argument is one that was not specifically considered by the Patent Office when granting the patent.  Microsoft raised the following  question:

The Patent Act provides that “[a] patent shall be presumed valid” and that “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” 35 U.S.C. § 282.The Federal Circuit held below that Microsoft was required to prove its defense of invalidity under 35 U.S.C. § 102(b) by “clear and convincing evidence,” even though the prior art on which the invalidity defense rests was not considered by the Patent and Trademark Office prior to the issuance of the asserted patent. The question presented is:

Whether the court of appeals erred in holding that Microsoft’s invalidity defense must be proved by clear and convincing evidence.

This petition is one similar to that raised by Microsoft in z4. That petition was withdrawn when the parties settled

Eleven parties have filed amicus briefs supporting the petition for certiorari.  Microsoft's counsel makes the point that the companies signing in their own name “employ more than three million people and the publicly-traded companies have a combined market capitalization of more than $1.2 trillion.”  Briefs opposing the petition as well as i4i's opposition appear to be due on October 29, 2010.

Chief Judge Roberts has recused himself from the case.

A review of the briefs follow.  Many of the briefs cover similar material and I have attempted to point out some of the differences. Of course, all of these briefs listed argue that the current evidentiary standard is too-high.

* * * * *

Briefs in support of the Petition:

36 Professors led by Mark Lemley:  The professors suggest that the clear and convincing standard does not make sense based on the known bureaucratic difficulties of the USPTO and the result that many issued patents would not survive a serious Section 103(a) analysis. The professors also write that the Supreme Court offered a signal in KSR that the Federal Circuit should reconsider its standard, but that the Federal Circuit has refused to do so.

Brief by Acushnet, SAP, and Others: James Dabney and John Duffy collaborated to examine the history of invalidity defenses. The brief does an especially good job of spelling out different aspects of an invalidity argument that may need a higher standard of proof.  Thus, Acushnet seemingly argues that uncorroborated oral testimony should still be excluded even if the general standard of proof was lowered.  This is one of the more nuanced briefs.

Teva, Cisco, and the Generic Pharma Association: The current standard creates an incentive for patent applicants to conceal material information from the USPTO. An issued patent is valuable — even if it would eventually be found invalid. The cost of invalidating a patent is so high that a patentee can usually obtain significant settlements even for a patent that should have never issued.

Google, Verizon, Dell, HP, Wal-Mart: A preponderance-of-the-evidence is the default burden of proof in civil cases.  The Federal Circuit has no legal justification for its clear-and-convincing standard that unduly burdens accused infringers.  The USPTO normal examination of patents is insufficient to warrant a high level of deference.

Yahoo!: “In requiring clear and convincing proof of facts bearing on patent invalidity, the Federal Circuit’s rule conflicts with this Court’s teaching that a heightened evidentiary standard should not apply where a statute does not prescribe the heightened standard.”

Intel: We have “a thicket of invalid patents that stifles competition and impedes further innovation.”

Securities Industry and Financial Markets Association:  “The Federal Circuit’s stance is contrary to the guidance of this Court as well as to the standards applied by the regional circuits before 1982.”  The flood of bad patents is especially troublesome in the area of business methods and financial software. New transparency laws make it more likely that these patents will be enforced.

Facebook, Netflix, et al.: An important goal of the patent system is to encourage innovation without disrupting other-innovation through mistaken government “grants of monopolies.” To harmonize with the reexamination statute, court's should at least lower the threshold for proving invalidity once a substantial new question of patentability is established.  (I wonder if Facebook's loose use of the “monopoly” term here will come back to haunt them.).

EFF et al.: Giving value to illegitimate patents creates perverse incentives.  These problems are particularly concerning in the software and internet realms for several reasons, including that they impede alternative innovation models such as FOSS.  In addition, the clear and convincing standard is a non-statutory extension of the law.

Apple: Apple argues that the current system makes it too difficult and costly to obtain a judicial decision that a patent is invalid. “”The clear and convincing standard shields a growing number of poor quality patents from the truthseeking function of our adversarial system.”

CTIA –  The Wireless Association: The clear and convincing standard makes a difference in litigation — making it much more likely that a patent will survive validity attacks.  This reality has created practical problems in dealing with holders of low-quality patents who seek large damage awards.

Documents:

Links


 

93 thoughts on “Challenging the Clear and Convincing Standard of Proof for Invalidating Patents in Court

  1. Talk about theft. Has any tried IE 9 Beta. It copies wholesale many innovations of Google Chrome. I can only hope that Google filed some patent apps. But their allignment with the pirate in chief on this issue is puzzling for that reason.

  2. facebook is a joke. its does NOT innovate. all facebook does is steal ideas from other people and call it their own.

    by the way, most of the arguments are baseless. Intel’s argument is particularly amusing -

    We have “a thicket of invalid patents that stifles competition and impedes further innovation.”

    Mr Intel, which large company actually innovate these days?? dont they just steal??

  3. @ Malcomlm Mooney,

    I dont understand your comment. please clarify.

    perhaps you are thinking that most software patents are obvious? but large companies have the money & resources to patent obvious things, don’t they??

    if you say that something is really obvious, could that something be so obvious that its obviousness cannot be proven beyond reasonable doubt??

  4. large corporations need patents and inventions of small inventors but are too proud to license their inventions so the obvious solution is to call the patents invalid, or in this case, to lower the standard so that they can screw the little guys….

    Yes except that all the large corporations, with the obvious and telling exception of the generic drug makers, are heavily invested in the software/computer industry.

    Did you notice that Big Pharma is not joining in? Perhaps there is a difference between the “little guys” in the pharma field and the “little guys” in the software field. I’ll leave it to you to figure out what that difference is and why it matters.

  5. large corporations need patents and inventions of small inventors but are too proud to license their inventions so the obvious solution is to call the patents invalid, or in this case, to lower the standard so that they can screw the little guys….

    a patent is a property or an asset that deserves strong legal protection. you would put someone in jail for stealing your money but not your patent or IP which could worth many times more than your house???

  6. So none of the briefs (except for the “nuance” of the Acushnet brief) are in favor of keeping the clear and convincing standard. Troubling.

  7. Haven’t you ever wondered why He was not an atty. for 10 years from 1995? (hint) a crime that nets up to ten years in jail. But he didn’t go to Jail, He stayed out an hid the fact that I was the inventor and harassed me instead.
    Did you ever wonder why he was in Hull moored at the coast guard station with his boat the So Sue Me while I was there?
    Did you ever wonder why My paperwork was stolen while I visiting my Father in Hull?
    Do you honestly think they didn’t know he was there.
    Did you ever get in touch with the woman that owned the Nantasket Print Shop in Hull? It was a Three stooges moment when a woman came in asking for what I had copied while I was standing there. They never told her what I looked like.
    Do you think they really did their Job in finding out who really invented My Fenders?
    Or do you think it was well he can do a better job of marketing… Maybe?
    Well maybe if he paid me for it like he said he would, instead of just stealing it. It would have been over and done with. And this 15 year nightmare would never have happened.
    I have loads more stories to share with you. Also why (although we can all go where we choose) was his Boss also holding an address in Massachusetts at the same time?
    They are trying to hide the Pi@@ poor job of claiming I was not the Inventor, either because they didn’t even bother, or they didn’t want it to be me. Either way. I am the inventor. And the Lawyer in Tennessee that they know about can also verify some of the models. Just like the model spoke of on the (3rd) Application I was sent. Faxed on October 19, 1995. After my Idea was given to them on July 18, 1995.
    I don’t expect you to allow this on the thread but even if you don’t I have plenty more where that came from, PLENTY!
    Oh and if I didn’t invent it, then why has all this gone on for 15 Years?
    Because I am the INVENTOR!

  8. pl,

    Ya just don’t get it do ya?

    Ya really think that Microsoft wants patents, much less strong patents?

    W A K E U P

  9. I never expected to see a day when the EFF would argue in court on Microsoft’s behalf. Patent litigation certainly makes for strange bedfellows. I’m not sure the Court will go for it, though. The entire patent system is weighted in favor of encouraging the issuance of patents — which the “clear and convincing” standard is meant to facilitate, and which the EFF obviously wants to debilitate by replacing it with a “preponderance” standard. Odds are that, if Microsoft did win this round, it would later regret it, as soon as it became a plaintiff in some other big-ticket patent enforcement suit.

  10. Jon, we disagree on the holdings of the Supreme Court. They were strongly put off if a model of the prior use were not available for inspection. See, esp., Cantrell v. Wallick. Whether such a model at one time existed is not the point. Whether the model embodied the invention is the point.

    You have in this case reliable evidence that of the inventor’s own adverse statements. But the mere fact that such evedince is reliable does not change the nature and amount of evidence that has to be produced when a model is not available.

  11. Quizzically enough, what an inventor thinks he has invented is not as dispositive as one might surmise.

    I do not recall the case names, but do recall cases wherein inventor testimony cannot over ride the written record (the written record being the actual application). I believe this may have been explored on a thread dealing with applicants’ attorneys being considered as co-inventors, but the take-away is pertinent here – what the inventor himself admits is not conclusive after the fact.

  12. “What is remarkable about these Supreme Court cases is that the level of proof of prior use when a model or example is not produced is “beyond a reasonable doubt.”

    No, that is when uncorroborated oral testimony is used to attempt to invalidate a patent without any documentary evidence. In this case, there is written evidence in which the inventor himself admitted the patent was practiced in the product, which is no longer available because it was discarded by the inventor. It is cases like these where it makes MOST sense to shift the standard of proof clear and convincing to preponderance (even moreso than a typical case of prior art not considered before the PTO).

  13. The statutory burden of proof only allocates the burden of production to the defendant/infringer. The allocation of a burden does not define the quantum of proof required and what “level” the proof is. You need to remember the burden of persuasion and the burden of production.

  14. Hey everyone, can we agree on some terms?

    BURDEN of proof describes which party bears the responsibility of performing some affirmative act.

    STANDARD of proof describes the minimum quality of proof that must be offered in support of a proposition in order for that proposition to be considered acceptable.

    On the invalidity issue, the defendant has the BURDEN of proving invalidity, and the clear and convincing degree to which it must be proved is the STANDARD of proof that must be met.

    Common usage of the terms conflates the two, even in some of the briefs.

  15. What is remarkable about these Supreme Court cases is that the level of proof of prior use when a model or example is not produced is “beyond a reasonable doubt.”

    Perhaps the wrong burden of proof was used in this case. Perhaps it should have been “beyond a reasonable doubt” and not just “clear and convincing.”

  16. Actually, the Acushnet brief illustrates the problem of “gray area” that I discussed above. First, the brief notes the Supreme Court rule that invalidity based upon “oral testimony” has to be established “beyond a reasonable doubt,” and then argues that this case does not involve invalidity based upon “oral testimony” assuming that is sufficient to end the inquiry. However, critical testimony establishing that the sold product actually embodies the invention is based on conclusory “statements” made in documents that are corroborated by hearsay testimony of an ex employee. As far as I know, there is no documentary evidence that demonstrates the critical features were present in the products sold. Futhermore, the conclusory statements do not clearly show that the novel features of the claimed invention were in the sold product.

    The Supreme Court jurisprudence does not solely depend upon whether the testimony is “oral.” It appears that what is more critical is that examples of the prior use products are not available.

    As in the Supreme Court cases, here the critical aspect of whether the sold product embodied the claimed invention is established solely based on statements and not based upon any example or any “model of it.”

    From pages 12-13 of the brief:
    “[T]he Court has articulated a special rule
    of evidence in cases where a defense of invalidity isgrounded in “oral testimony . . . in the absence of models, drawings or kindred evidence . . . .” T.H.
    Symington Co. v. Nat’l Malleable Castings Co., 250
    U.S. 383, 386 (1919). Such evidence has been held
    “open to grave suspicion; particularly if the testimony
    be taken after a lapse of years from the time of
    the alleged invention.” Id. This special rule for oral
    testimony also has no application to the defense of
    invalidity raised by Petitioner here, which is
    grounded in dated documentary evidence and an actual
    commercial product that admittedly was sold by
    the Respondents themselves. Cf. Pfaff, 525 U.S. at
    68-69 (invalidating patent based on invention being
    “on sale” more than one year before application for
    patent was filed).”

    “The Court’s different treatment of invalidity defenses
    based on oral, as distinguished from documentary,
    evidence is well-illustrated by The Barbed Wire
    Patent, 143 U.S. 275 (1892). In that case, the Court
    first considered whether the claimed subject matter
    constituted a patentable invention in view of prior
    art patents disclosing pre-existing forms of barbed
    wire. Id. at 277-84. On that branch of the case, the
    Court considered the skill level in the art and other
    factual matters without mentioning any elevated
    burden of proof. The Court then proceeded to consider
    whether the asserted claims were rendered
    invalid by oral testimony that purported to describe
    barbed wire fencing that purportedly antedated the
    plaintiff’s claimed invention. It was only in the context
    of this second branch of the case, involving uncorroborated
    oral testimony concerning allegedly preexisting
    subject matter, that the Court held that
    “every reasonable doubt should be resolved against”
    such evidence. Id. at 285 (quoting Coffin v. Ogden,
    85 U.S. (18 Wall.) 120, 124 (1874)). See also Cantrell
    v. Wallick, 117 U.S. 689, 696 (1886) (applying the
    heightened burden where “proof of prior use in this
    case depends on the testimony of [two witnesses]”
    and “[t]he contrivance to which the testimony of
    these witnesses refers is not produced, nor any model
    of it”).”

  17. Clearly Mooney, if he went to law school at all, was sleeping through Admin law, when he should have learned that agency determinations are entitled to deference and should only be set aside based on clear and convincing evidence where important rights are at stake.

    So now a teabxgger is lecturing us on the deference that should be given to the determinations of administrative agencies. That’s a bit odd.

    I’m curious about this term you mentioned, Mr. Smith: “important rights”. Which are the “important rights”?

  18. IF the USPTO is in place to Grant patents that are “VALID”, then why do they have their own Court that decides what should have been from the get go? Granting Patents and Trademarks isn’t that their Job? Let the Courts do the deciding. Let the USPTO make them strong.
    Face it. It’s people like me that make the gadgets, the widgets, the games, the toys. We are the Christmas list.
    And NAL I like you just the way you are.

  19. What irks me about this and the inequitable conduct debate is that it’s largely based on the idea that the PTO sucks and can’t do it’s job properly, therefore we must lower standards for invalidity and unenforceablilty.

    Isn’t it a better solution to attack issues of institutional competence at that institution?

  20. As for my credibility, it’s hard to attack my credibility when the link was to a direct quote from Bill himself.

    Oh yeah, I’d almost forgotten about that quote where Bill admitted his secret ambitions to bump off 10-15% of the world’s inhabitants. Clearly, MS needs to win this case so that Bill G. can continue funding death-ray killer vaccines and mind-control satellites in low-earth orbit. I wonder if there any slip-ups in the Microsoft briefs that inadvertently expose this hidden agenda?

  21. Natty,

    Other than extreme wishful thinking, what are you basing your prediction on (keeping in mind that so far at each stage of litigation there have been similar such wishful thinking predictions)?

    To Darrell’s other brother Darrell: Lemley don’t care. At its core, the patent system offends his view of how things should be.

  22. Prediction: Microsoft will win outright on this one in the Supreme Court. Federal Circuit will attempt to ignore it *again*. Next patent case, the Supreme Court will find some way to remove all patent cases from the Federal Circuit.

  23. The courts have already done a fine job of eviscerating the economic benefits available through patenting of inventions. Professor Lemley et al needs to take a broader look at what effect further weakening the patent system will have on the US economy.

  24. ” see. So as long as the government inspected something, it requires clear and convincing evidence to prove that the inspection was inadequate.”

    Clearly Mooney, if he went to law school at all, was sleeping through Admin law, when he should have learned that agency determinations are entitled to deference and should only be set aside based on clear and convincing evidence where important rights are at stake. No one can argue that a statutory grant of an exclusive right is not an important right.

    As for my credibility, it’s hard to attack my credibility when the link was to a direct quote from Bill himself.

  25. Jon, C & C for evidence such as prior use, prior invention and the like has long existed based on the inherent unreliability of such evidence. It has never been linked, as far as I know, to it presumption based upon administrative correctness ex parte prosecution where, typically, only printed publications are at issue.

    I think the problem we have here is that the Federal Circuit may have decided that the presumption of validity requires use of the clear and convincing evidence standard based upon a presumption of administrative correctness. What they really should have decided was that there was one standard of proof for all evidence of invalidity. Linking the C & C standard to the presumption of validity based upon presumed administrative correctness is obviously suspect where the prior art has not been considered.

    So if the Supreme Court takes this case, hopefully it will clarify that the clear and convincing evidence standard is a standard to be used with respect to evidence of invalidity and that it has nothing to do with the presumption of validity which only shifts the burden of proof to the defendant.

  26. But this is par for the course, as we’ve discussed many times before.

    Yeah, tell me sunshine which art unit had the worst record as shown by the Big D on quality application writing…

    Ya know, the one you are in. And since you proclaimed your excellence, that only means the rest of the lot in your art group really svck.

  27. Wow! Mr. Mooney is comfortable with calling someone he knows nothing about incompetent. Impressive ego, by golly. Unfortunately, not much behind that ego in terms of substance.

  28. “C & C is the Supreme Court standard. It does not depend on whether the prior art was considered by the PTO at all. That is a red herring.”

    Ned, here is a quote from the unanimous KSR Supreme Court opinion:

    “We need not reach the question whether the failure to disclose Asano during the prosecution of Engelgau voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished here.”

    So while the Supreme Court has not officially changed the burden to a preponderance standard for cases like these, they certainly hinted that they might be open to doing so in a future case. This is a potential case the Court could use (or not).

    The whole point of this case is to CHANGE the law, so I don’t see how your (accurate) statement of current law makes an attempt to change current law a “red herring.”

  29. “I see. So as long as the government inspected something, it requires clear and convincing evidence to prove that the inspection was inadequate.”

    Malcolm, I am simply citing the justification for why “clear and convincing” evidence is the standard today, and why it does not apply to prior art not considered by the PTO.

  30. That’s not true. For example, we can be pretty certain that an examiner wouldn’t consider prior art like the dissertation at the University of Freiburg cited in In re Hall.

    That would be art we know the examiner didn’t find in his search, similar to undisclosed prior public use or sale by the applicant. Most validity challenges at trial, in my experience, rely on printed publications in the U.S. and/or U.S. patents. It’s already common practice to argue to the jury that the PTO did not consider art that is not cited, even though there’s no evidence at all for that for much of the prior art used. If we move to some double standard for considered vs non-considered prior art, examiners should have to cite every piece of art returned on their search queries. If we cannot rely on examiners to search through these types of publications, we may as well do away with the examiner corps and go to a pure registration system.

    I’m not sure how much a change to the evidentiary standard would matter at trial, though. Juries are essentially choosing between the parties’ invalidity experts, and having the patentee’s expert say that something may seem invalidating but is not clearly and convincingly invalidating doesn’t do much for his credibility. Invalidity seems to collapse into two inquiries: whether something is prior art, which seems to be decided by preponderance if in doubt, and whether various pieces of prior art meet claim limitations, which also seems to be decided by preponderance. As much as we argue about the difference between the standards, I’m not sure the standard matters once deliberations begin.

  31. We have no way of knowing what prior art an examiner found during his searches but decided not to cite.

    That’s not true. For example, we can be pretty certain that an examiner wouldn’t consider prior art like the dissertation at the University of Freiburg cited in In re Hall. Virtually anything available only in hard copy in a location outside the US would qualify, I think, unless the PTO has field agents wandering the stacks of libraries around the world.

    Anyway, part of the reason for giving deference to the PTO is that we believe the expert agency is likely to have gotten it right the first time. This is believable when the examiner explicitly considers a piece of prior art, crafts a rejection, the applicant responds, and the examiner is satisfied. Given all the written record of the file wrapper we can be confident that the examiner did a good job.

    But when art isn’t cited, we have no well-developed record. We have no argumentation back and forth. We have, at most, a bare assumption that the examiner saw the reference, comprehended it, and dismissed it for reasons unknown to us. It’s a lot harder to be confident enough in all of those assumptions to mandate an increased standard of proof.

  32. I personally think the presumption of validity was only intended to shift the burden of proof to the defendant. Contrast standing. There is no presumption that the plaintiff has standing through ownership. That has to be alleged and proved.

    The origins of the C & C standard of proof was the Supreme Court itself considering evidence of kind we have here in the i4i case. The only real question is whether we should have one standard of proof for such evidence and a separate, but lower, standard for evidence such as prior patents that are inherently reliable.

    My point about the criminal trials is to suggest that chaos would result if there were two standards of proof depending on the evidence, with the inevitable grey areas that would make the administration of a patent case almost impossible. C & C is the Supreme Court standard. It does not depend on whether the prior art was considered by the PTO at all. That is a red herring.

    Again, MS is trying to convert this case into a referendum on trolls when i4i is not a troll and where MS is an adjudged monopolist who, in this case, was held to have willfully infringed and who knowingly drove i4i out of business.

    MS certainly knows how to divert attention.

  33. For prior art not considered before the PTO

    There’s a big problem with this kind of classification. We have no way of knowing what prior art an examiner found during his searches but decided not to cite. That evidence was considered by the examiner, but we have no record of it. The only prior art we know the patent office did not examine was the sort that MS alleges here — public use or sale by the inventor prior to the on-sale bar. Even with the clear and convincing standard, invalidating patents at trial is relatively easy. I’ve seen at least one patent family invalidated based on evidence weaker than what MS advanced in this case.

  34. Malcolm, will you please stick your hand back up IANAE’s bxtt and post under that sockpuppetnym? for some reason, you seem to be a little more polite when you do that.

  35. But in the patent case, the justification for having a higher-than-preponderance standard of proof is because of the PTO’s work.

    I see. So as long as the government inspected something, it requires clear and convincing evidence to prove that the inspection was inadequate.

    Does this apply across the board? Or only to patents (because the PTO has such incredible expertise in, e.g., bladder control on airplanes)?

  36. which governing body do you propose we accept in the future as the arbiter of these things?

    The PTO is as fine as any. They just need to improve the manner in which they examine software patents dramatically. Even if i4i invented something, their claims are possibly the most pathetic attempt to describe that invention that could be imagined. But this is par for the course, as we’ve discussed many times before. Shall I pull more examples from this past Tuesday?

  37. I would guess that Mr. Mooney has not seen my office actions over the last 4-5 years and has not dealt with the same people I deal with.

    You’re unlucky or incompetent or both. As I said, the written description and enablement requirements for biotech have not noticeably changed in years, nor has application of those requirements by Examiners. If anything, in the past few years they have become more relaxed in certain respects (certain uncompelling arguments that were routinely raised to reject certain inventions have been dropped altogether).

  38. Or, to put it another way, it would be like raising the burden in all civil trials to clear and convincing, just because we already have that burden for patent validity.

  39. Ned, I don’t think the criminal analogy works well. In a criminal setting, there is very good reason why the burden is beyond a reasonable doubt.

    But in the patent case, the justification for having a higher-than-preponderance standard of proof is because of the PTO’s work. For prior art not considered before the PTO, there is literally no justification for having a higher-than-preponderance standard (other than to be consistent with the burden for a wholly different class of evidence).

  40. One more point: a lot of the amicus briefs appear to emphasize the troll problem, which implicitly is defined as NPEs that have patents of dubious validity who use the clear and convincing standard of proof to unfairly tax commerce. Even if this were a real problem, i4i is not a troll and that issue is not directly involved in this case. MS is a willful infringer who deliberately and with malice destroyed i4i’s business by deliberately infringing. It smacks of extreme bait and switch dishonesty to try to smear i4i with the stink of the troll phenomena.

  41. I stand corrected. My comment about enablement and written description getting more difficult was an generalization that was too broad. That is true only for the Examiners I deal with. I envy Mr. Mooney’s good fortune to work in such a stable environment. Congratulations to you.

    By the way, Mr. Mooney’s comment “It hasn’t noticeably changed in years” was just as wrong as mine and for the same reason. I would guess that Mr. Mooney has not seen my office actions over the last 4-5 years and has not dealt with the same people I deal with.

  42. Mr. Mooney – you state:

    the USPTO conducted a reexamination of the i4i patent and confirmed that the claims at issue were properly patentable.

    Is anyone on earth impressed by this?

    i4i beat MSFT’s multimillion dollar attack in both the Court and the PTO

    what’s not impressive about that?

    or, more to the point, which governing body do you propose we accept in the future as the arbiter of these things?

  43. Another thing I’m sure the SCOTUS will (subconsciously) weigh is the fact that MSFT has only themselves to blame for much of the result. They botched the post trial by failing to file a JMOL, an act that surely will result in a major malpractice claim I’m sure once the case is finalized. They don’t have a very sympathetic case.

  44. They already did that with design patents.

    Granted it seems like a registration system, but Iza pretty sure that the C&C presumption is still there for design patents and that it is not the case that the burden is on the patentee for court validity.

  45. Things seem to be getting progressively more difficult on the written description and enablement fronts, at least for biology/chemistry.

    It hasn’t noticeably changed in years.

  46. Why not completely do away with examination, move (back) to a registration regime, and handle all validity issues in court, with the burden on the patentee?

    They already did that with design patents.

  47. So if it’s permissible to have different standards for shifting the burden of proof in the case of art and argumants not considered by the PTO during prosecution, why not just raise the standard to “reasonable doubt” for art and arguments considered by the PTO, and leave the stard at “clear and convincing” for the other stuff?

    I mean, the chief complaint people have seems to be that it makes no sense to have the same standard for both. But what’s the reason for lowering the standard to “preponderance” in the case of art not considered, instead of raising it for art and arguments considered?

    I think a lot of people just want weaker patents, and they’ll push for anything they can get that makes patents weaker.

    News flash: Patents are already practically worthless now, thanks to Festo, KSR, Lizardtech, and friends.

  48. If the standard of evidence needed to kill a patent is dropped to a preponderance for every new argument (or for old arguments that passed the PTO), then I would imagine that about 80-90% of issued patents will fall and stay down. We are in an era of permissible hindsight obviousness thanks to KSR, which among other things, effectively obliterated the “patentability shall shall not be negatived” part of 103(a). Things seem to be getting progressively more difficult on the written description and enablement fronts, at least for biology/chemistry. The courts have already obliterated much of the presumption of validity.

    Where does all of this dislike of patents lead? It looks to me like we are pretty much willing to give away our technology to our competitors and live with the consequences.

    Anyway, if the presumption of validity goes down, I would like to see the PTO’s fees drop by 50-60%. Since their product isn’t worth a reasonable presumption of validity, then why should we pay like it is? I want my money’s worth.

  49. Why not completely do away with examination, move (back) to a registration regime, and handle all validity issues in court, with the burden on the patentee?

    Maybe in the next Patent Reform Act . . .

  50. So what do people predict will happen? I sincerely think there won’t be 4 justices to grant cert. on this, even in spite of all the amicus briefs.

    I don’t think there are four justices who flat out believe that the presumption of validity as required under the Patent Act means anything less than “clear and convincing evidence,” and thus the Federal Circuit judgment here was sound and in no need of judicial review by the SCOTUS. With Roberts recused from the cert vote, you need half of the remaining justices to vote for cert. Which four will do it? I don’t think you’ll get more than one or two, tops.

  51. Can you imagine a regime where certain kinds of invalidity evidence had one standard of proof, and other kinds did not? What about grey areas? How does one instruct a jury in such cases? How does one police the verdict?

    I think this is one of the reasons why the Feds held that all evidence must be clear and convincing regardless of whether it was considered by the PTO.

    Hearsay testimony is inherently unreliable. Forensic evidence much better. But, in criminal trials, all the evidence is given to the jury under a uniform standard of proof. We cannot parse the standard of proof by the types of evidence.

    I can hardly think the Supremes will lower the standard of proof for invalidity evidence involving witness testimony that was developed by the Supreme Court itself and which has been with us for a very long time. When is the last time the Supremes overruled one of their own patent cases?

  52. TINLA IANYL and Anon–

    My Law Review Note (generally favoring the status quo) addressed this topic. You might be interested in reviewing the historical section (Part II). link to cardozolawreview.com

    For further reading, please see my empirical analysis on the effects of the C&C standard, which Dennis graciously published in the Patently-O Patent Law Journal. link to patentlyo.com

  53. Despite the injunction, Microsoft continues to sell its software based on a “patch” that apparently prevents the use of custom XML in Word.

    Resulting in a huge drop in sales!!!!!

    Or not.

  54. 6 is awfully quiet on this issue, I wonder why?

    Posted by: Malcolm Mooney

    Namestealer. Probably the usual one.

    Dennis, please ban.

  55. The historical context is interesting and actually points out that the CAFC is a red herring.

    The earliest Supreme Court references I have come across clearly support a Clear and Convincing standard (1920′s). It wasn’t until the vehemently anti-patent 1940′s that the Supreme Court reversed direction.

    Clearly, this is a politically driven issue.

  56. Ned, with respect to your comment re MS’s “flimsy case”, haven’t you ever heard the first rule of Civ Pro? When you can’t argue the facts, argue the law. So that’s what they’re doing.

    And then there’s the closely related patents corallary: When neither the facts nor the law are on your side, yell “TROLL!”

  57. TINLA IANYL: none of the briefs ask the court to do away with the presumption of validity, just to reduce the level of evidence required to overcome the burden.

    And unlike 35 USC 273(b)(4) that specifically indicates the “burden of establishing the defense by clear and convincing evidence,” the statute you cite does not specify what level of proof should should be used. So there is the reason for applying a higher standard than normal is not required by the law.

    In fact, the application of the C&C standard for 282 seems to be an anamoly. And, if the briefs are correct–as I haven’t done my own research on the matter–it was not even the burden applied in every district until the creation of the Federal Circuit.

  58. Cy Nical, I see why you couldn’t cut it as a patent prosecutor. Lemly’s critique is based on the operations, efficiency, and accuracy of prosecution. So, he essentially has no basis for his assertions and his entire point is therefore useless. That’s the point.

  59. “the companies signing in their own name “employ more than three million people…”

    So what. The size of the infringer should have no bearing on infringement. Sounds to me like they should after trial be dragged through antitrust. They are too big to fail and thereby an endangerment to society.

  60. The Patent Act provides that “[a] patent shall be presumed valid” and that “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” 35 U.S.C. § 282.

    Where in this statute does it say that the Courts should discard the presumption of validity for some arguments? What part of the statute even implies that the Curt is permitted to do so? Why are they asking the Court to address this issue instead of Congress?

  61. Not making the connection -

    If

    because those records could have been destroyed long before litigation was contemplated.

    Then

    could easily be overcome (if not true) by the patent owner who is the party with best access to the information.

    does not follow.

  62. I don’t think that there’s a spoliation argument, in part, because those records could have been destroyed long before litigation was contemplated.

    But as I said, it seems like a good situation in which a C&C standard is not met–there is no silver bullet–but that a preponderance is met and could easily be overcome (if not true) by the patent owner who is the party with best access to the information.

    In this case, if the i4i can’t show that the earlier product didn’t have the patented features and MS has evidence that it did, I fail to see how MS should be responsible for that failing. Does anyone really disagree with that?

  63. mmm:
    “Also, as to the flimsiness of MS’s evidence, I don’t see it as all that flimsy. MS has written records that seem to indicate that they should have been barred from filing a patent application together with testimony to back it up. The only thing stopping this from working: the patent owner’s loss/destruction of its own internal prior art. This seems like a classic situation in which to “shift the burden back.” That is, shift the burden back to the party who can best prove (or disprove) it: the patent owner.”

    I thought the same thing. Strikes me as a case of spoliation of evidence. More experienced practitioners might enlighten us as to “normal” procedures that are (or should be) followed as to maintaining records. Seems like C&C provides an incentive to destroy such records.

  64. I don’t believe the Court will hesitate to lower the standard of proof, even if it is not clear that the evidence in this particular case would meet the lower standard. The Court could easily kick that decision back to the lower courts, as it did in eBay:

    “Because we conclude that neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief, we vacate the judgment of the Court of Appeals, so that the District Court may apply that framework in the first instance. In doing so, we take no position on whether permanent injunctive relief should or should not issue in this particular case, or indeed in any
    number of other disputes arising under the Patent Act.”

  65. “The People are very, very disappointed … This should be very troubling for the judges.”

    Hardly. This is why federal judges have life tenures, to protect them from mob rule. But feel free to e-mail or call your Congressperson about your disappointment. But odds are they will be much more disappointed than you in November.

  66. There are so few things in civil litigation that require a “clear and convincing” standard of evidence. I’m not sure why invalidity is one of those things and particularly when the challenge is to validity based on evidence that was not before the PTO.

    If the defendant is able to put up evidence that the patent is more likely invalid than valid, then burden should shift. This is the case in so much else of civil litigation that patent law again seems to be the backwater of the legal field.

    Also, as to the flimsiness of MS’s evidence, I don’t see it as all that flimsy. MS has written records that seem to indicate that they should have been barred from filing a patent application together with testimony to back it up. The only thing stopping this from working: the patent owner’s loss/destruction of its own internal prior art. This seems like a classic situation in which to “shift the burden back.” That is, shift the burden back to the party who can best prove (or disprove) it: the patent owner.

    Another thing that makes MS’s position somewhat “equitable” (*ick*) is the fact that a prior sale of their own product more than a year before the patent probably should have been disclosed to the patent office. The fact that it wasn’t means that the party in the best position, again, to nix this whole line of evidence failed to do so at a time it would have been easy to do so.

  67. “what bothers me most is that MS has a flimsy case at best, yet it makes a broad attack on the presumption of validity and the clear and convincing standard that exists for reliable evidence, such as patents, that could be brought before the USPTO in the first place.”

    Ned,

    Your point on this is very well taken. The problem is what does SCOTUS mean by “evidence” which “much diminishes” the presumption of validity. Does that mean all “evidence” (including testimony of a potential “on sale” bar as in this case) or only certain “evidence” (written documents such as patents, patent applications and printed publications)? Unfortunately, this is another instance where SCOTUS has carelessly thrown out a statement containing a phrase (“evidence”) that they aren’t clear on.

    I’m with you that testimony (not written documents) of a potential “on sale” bar should still be judged by a “clear and convincing” standard. We’re not talking here about “evidence” (like in a written document) that is clear about what’s in it, but what someone recalls many years in the past. There’s a big difference between that sort of “evidence” and “evidence” in the form of a written document.

    If we’re taking about a written document (which this case isn’t) which wasn’t considered by the USPTO during prosecution, I’m receptive to adjusting the presumptiion of validity if that document is truly “relevant” and more than just “cumulative” to the art that was considered by the USPTO. But what “standard of proof” do you use to evaluate whether that unconsidered document is “relevant” and no simply “cumulative”? That’s a major weakness in Lemley’s amicus brief: it offers no “standard” as far as I can tell for that evaluation. And leaving that “standard” up in the air for SCOTUS to figure out is extremely ill-advised in my opinion, given that they failed to even define what they meant by “evidence” in KSR International.

  68. Adam, you were doing fine with your criticism of Mooney. But linking it to a paranoid rant about how Bill Gates is trying to kill (10-15% of) us with slow-acting death vaccines? Way to bolster your credibility!

  69. No points at all if your post is authored by anyone named Malcolm Mooney, crack punk, or angry steam grate bum.

    Meanwhile Bill and Melinda would genuinely like to see the herd culled by about 10 to 15%…

    link to naturalnews.com

  70. And even more importantly, those vocal people who want weaker patents.

    What was the Federal Circuit thinking? Trying to make a stronger more uniform system – don’t they know that this should be an arcane and seldom used tool? The founding fathers didn’t really want it to be used by so many people.

  71. Well it certainly is clear. The People are very, very disappointed with the Federal Circuit. Applicants, the patent bar and academia. This should be very troubling for the judges.

  72. the USPTO conducted a reexamination of the i4i patent and confirmed that the claims at issue were properly patentable.

    Is anyone on earth impressed by this?

  73. If the inventor were telling the truth back then, I’m not sure it is in dispute that the patent would be invalid. (I really don’t know whether that’s in dispute — I haven’t seen the full letter to investors, application, etc.)

    My only guess as to why it might not be in dispute (and again, just a guess), is that the inventor admitted on the stand that he lied in the letter (not that he meant something else in the letter that wouldn’t invalidate the patent).

  74. Well, Jon, I would still like some evidence that the novel feature actually was implemented in the S4 code. I don’t know what “initial implementation” means.

    Now, the firm that handled the patent application is Cushman Darby and Cushman. Perhaps they have records regarding their contacts with the inventors, such as when they were first approached. If it was contemporaneous to the date the S4 product was first sold and not the date of filing where there was more than enough time to cut in improvements and bug fixes, I might be a bit more convinced. Firms such a Cushman would also be expected to ask about whether the invention is in a product and whether it was sold. Such matters are routine. The mere fact that Cushman filed the patent application almost convinces me that the S4 product sold before the critical date did not have the novel feature.

    Still, even assuming a lower standard of proof, MS would still have the burden of showing that S4 had all the elements of the claims, including the novel metacode, and that they were in the S4 product that was sold into the US before the critical date. Even in our discussions here, no one has given me enough to believe that MS should win.

  75. Ned,

    My bad — the discussion about whether the investor lied was in the district court opinion (not the Fed circuit opinion).

    “First, in 1994, after the ’449 patent application was filed and two years after S4 was delivered, Mr. Vulpe sought funding from the Canadian Government and submitted an application to that effect. He submitted a proposal that, in part, spoke of the ’449 patent application and represented that “[t]he initial implementation is embedded into [i4i's] S4 product.” DX 2395.001. Further, Mr. Vulpe submitted a letter to potential investors that stated “[t]he basis of the patent and preliminary work on the validation precedes [i4i].” DX 2051; TT 5/20/09 a.m. at 170:19-171:11. Mr. Vulpe admitted on the stand that he lied to investors about the creation date of the ’449 patent.”

    link to groklaw.net

    I don’t see how this evidence is “inherently unreliable,” given that it comes from the inventor, in writing, at the time of the invention. While I don’t think it’s an absolute slam dunk case on a preponderance standard (and I’m not familiar with all the evidence/arguments presented in the case), it certainly seems like the facts have to do with the alleged issue on appeal.

  76. Could someone give a case where this standard actually matters, first for 102 and then for 103. Would Microsoft actually win if this standard is overturned?

    102 seems pretty black and white, either all the elements are in the prior art or they are not. What set of facts in a novelty decision would cause all the elements to only be there by a preponderance of the evidence and not clear and convincing?

    Now 103 obviously (no pun intended) has more shades of gray. what set of facts would cause a patent to be invalidated under 103 in the preponderance standard but not the C&C standard?

  77. A thousand trees have died in Intel, Apple, etc., pleadings all arguing that THEIR patents could not be invalidated without “clear and convincing” evidence.

    And yet they are willing to give it all now.

    I find that interesting because most of these companies are still “innovating” on a large scale, if one judges innovation by the number of applications filed and/or patents granted.

    I note that Big Pharma is not joining the party, except for some Generics association (surprise, surprise). That is interesting, too … for the same reason.

  78. what bothers me most is that MS has a flimsy case at best, yet it makes a broad attack on the presumption of validity and the clear and convincing standard that exists for reliable evidence, such as patents, that could be brought before the USPTO in the first place.

    LOL. Sort of like what Bilski did.

    I expect things will turn out better for Microsoft.

  79. Jon, but what bothers me most is that MS has a flimsy case at best, yet it makes a broad attack on the presumption of validity and the clear and convincing standard that exists for reliable evidence, such as patents, that could be brought before the USPTO in the first place. Even if the presumption should fall for reliable, non cumulative evidence that was not before the PTO, it still needs to be maintained for unreliable evidence as we have here.

    The clear and convincing standard of proof, regardless of the presumption of validity, needs to be retained when the evidence is inherently unreliable, being based on statements and witness memories years and years after the fact. The Supremes need to reject this appeal because the facts have little or nothing to do with the alleged issue on appeal.

  80. Jon, help me with the opinion that said what you just said. I cannot find it in the opinion discussing validity.

    So, the facts are the inventors sell a product alleged to include the novel meta-code. More than a year later, they file a patent application. Some time later they state in investor materials that the earlier software was the subject of a patent application. During trial, they opine that their prior statements were not true.

    From the Fed.’s opinion itself, it seems the inventors were consultants who worked for hire. They had a series of products for different customers. I can see how they could have been loose about just when they invented the novel metacode and which products included it.

    I don’t see the testimony as being all that convincing regardless. But it is clearly tainted by the presence of hearsay that contaminates everything. But MS introduced this testimony, and should not be able to now get a new trial because of it.

  81. What’s Lemley’s prosecution background again?

    Yeah, because only people who have a proven ability to calculate response deadlines under the 2-month rule are qualified to discuss the legal and public policy implications of the standards of proof in patent ligitation.

    Grow up.

  82. Ned Heller, when I said “statements by inventors at the time,” I am not talking about a disgruntled, fired, ex employee. I am talking about the inventor himself, who at the time told investors in writing that the product did practice the patent, and on the stand claimed he lied at the time about whether the product practiced the patent (according to the Fed Circuit panel opinion’s summary).

    Microsoft is arguing in its cert petition that if you combine that with the evidence from the software manual, a lower burden (that wouldn’t require the destroyed source code of a product) could change the outcome.

  83. Jon, we discussed this in another thread. MS’s evidence is hearsay: (IIRC) a so an so disgruntled, fired, ex employee who has no axe to grind whatsoever, we are assured, said that he was told by an officer that the patent application covered the sold software.

    Such is the “reliable” evidence at issue here.

    Now, if such evidence would not be generally admissible let alone of the kind and nature that could invalidate a patent, are we not talking about academic cases here? Is there a real controversy here, one upon which the outcome of the case depends?

    I think not.

    Microsoft should be roundly condemned by any fair-minded person for wasting the Supreme Court’s attention on this issue. This is frivolous litigation at its best.

  84. JNG, from my understanding, the original examination and re-examination did not involve the prior art that i4i made and sold before the patent was issued. Microsoft apparently tried to prove at trial that i4i’s product practiced the patent using the product’s software manual and statements from the inventors at the time, but i4i argued that anything short of the source code could not meet the clear and convincing bar to invalidate the patent (and i4i destroyed the source code for their previous product, so it was not available to confirm or deny what their software manual said and what the inventors said at the time).

    So this does seem to be a case where the presumption may make a difference.

  85. I don’t think anyone is arguing the standard should be higher.

    I think people are arguing it should stay the way it is, you know, the way it is practiced in most civil cases in which a presumption applies, and the way that Intel, Cisco, MSFT and the rest of the usual cast of whiners has been using it for the past 30+ years until now when it fails to serve their needs as well. A thousand trees have died in Intel, Apple, etc., pleadings all arguing that THEIR patents could not be invalidated without “clear and convincing” evidence. But now that other unfriendlies have patents, well, of course all that self-serving blather should be …forgotten.

    MSFT’s whining is particularly amusing since they LOST at the PTO as well on this same patent using the most liberal standard they could ever hope for (no presumption at all). Yet, somehow, the Court’s non-adoption of a stricter standard deprived MSFT of a victory? RIGHT

  86. I can hardly wait to hear the trolls’ arguments for why the standard should be higher.

    Bonus points if they use the terms “ordinary inventor”, “basement” or “garage.”

    Super bonus points if they refer to “the Founders,” “freedom” or “job creation.”

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