Source: http://www.chisum.com/cplrg-guides/0069-2
Timestamp: 2019-04-22 22:50:44+00:00

Document:
COMMENTS: The Court, in a well-crafted opinion by Justice Sotomayor, confirms the Federal Circuit’s position, consistently maintained for almost 30 years, that one challenging the validity of a patent claim bears a proof burden of clear and convincing evidence and not the general civil burden of a preponderance of the evidence. This heightened standard is not lowered even when the challenger relies on “new” evidence, that is, evidence that was not presented to or considered by the PTO during examination of the claim. However, the Court, like the Federal Circuit, cautioned that a challenger may more easily carry the heightened burden by relying on new evidence. And the Court directed that a cautionary instruction to a jury on new evidence will be proper.
Cross References: For a discussion of the proof burden, as applied to obviousness invalidity defenses, see Chisum on Patents § 5.06. See also Chisum on Patents § 19.02. For cases on the presumption of validity, see Chisum Patent Law Digest § 1562, § 5663.
For a summary of the Court’s decision, see below.
1. CLARIFYING TERMINOLOGY: BURDEN OF PERSUASION, NOT PRODUCTION OF EVIDENCE. In a helpful footnote, the Court clarified terminology. It noted that the term “burden of proof” encompasses two separate burdens: (1) a burden of persuasion, which specifies “which party loses if the evidence is balanced”, and (2) a burden of production, which specifies “which party must come forward with evidence at various stages of litigation.” At issue here is the burden of persuasion or “standard of proof,” which refers “to the degree of certainty by which the factfinder must be persuaded of a factual conclusion to find in favor of the party bearing the burden of persuasion.” The parties dispute whether the standard for an invalidity defense should be “preponderance of the evidence” or a heightened standard of “clear and convincing evidence.” The accused infringer, Microsoft, argues that burden should be a preponderance either generally or, alternatively, when a validity defense relies on evidence not considered by the Patent and Trademark Office (PTO). The Court rejected both arguments, holding that he standard of proof on invalidity is clear and convincing evidence. However, when an accused infringer does rely on new evidence to support an invalidity defense, a court should, on request, give a cautionary instruction to a jury.
2. CODIFYING COMMON LAW PRESUMPTION AND HEIGHTENED PROOF STANDARD. Prior to the 1952 Act, the courts, as a matter of common law, applied a heightened standard of proof for invalidity defenses.
In enacting Section 282, which, for the first time, stated a presumption of validity but which did not explicitly define the standard of proof, Congress used the common-law phrase “presumed validity” and must be assumed to have intended that it embody the common-law heightened proof standard.
Under the common and proper understanding of a presumption, the presumption does not, alone, establish a standard of proof. See J. Thayer, Preliminary Treatise on Evidence at the Common Law 336-337 (1898); Fed. Rules of Evidence Rule 301. However, courts have often used “presumption” “when another term might be more accurate,” and Congress cannot be faulted for similarly using the phrase “presumed valid” in an imprecise way.
The accused infringer Microsoft argues that pre-1952 cases applied the heightened standard to only two categories of cases: those involving oral testimony of prior invention and those involving invention priority issues previously litigated by the parties in the PTO. To the contrary, the pre-1952 cases identified no such limitations. See Smith v. Hall, 301 U.S. 216, 233 (1937); Coffin v. Ogden, 85 U.S. 120, 124 (1874).
The Court noted: “For those of us for whom it is relevant,” Section 282’s legislative history supports the conclusion that “Congress meant to codify the judge-made presumption of validity” and not to establish a new presumption.
In KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398(2007), the Court stated that, as to evidence on validity not considered by the PTO: “the rationale underlying the presumption–that the PTO, in its expertise, has approved the claim–seems much diminished.” The statement “is true enough, although other rationales may animate the presumption in such circumstances,” such as the reliance interest of a patent owner, who has disclosed an invention in order to obtain a patent. See The Barbed Wire Patent, 143 U.S. 275, 292 (1892).
A fluctuating standard would involve “impracticalities” and “collateral litigation,” such as the difficulty in determining “whether a PTO examiner considered a particular references.” The PTO only requires examiners to cite the “best” reference, not all the references considered.
The patent’s owner, i4i, sued an accused infringer, Microsoft, alleging that Microsoft’s “Word” software product infringed the patent’s claims.
The accused infringer alleged that the asserted claims were invalid because of an “on sale” bar.
The inventors named in the patent had sold a software product (“S4”) more than a year before applying for the patent. The S4 product had not been disclosed to or considered by the PTO during examination of the patent. The source code for S4 had been destroyed. At trial to a jury, the inventors testified that the S4 software did not embody the claimed invention because it did not provide the separate metacode storage.
For cases on jury trials on obviousness, see Chisum Patent Law Digest § 1565. See also Chisum on Patents § 5.04.
7. Justice Thomas also wrote a concurring opinion, which argued that Section 282 did not codify the common-law rule. It is silent on the standard of proof. Nevertheless, the majority result is correct because the heightened standard set forth in RCA (1934) remains the law.

References: § 5
 § 19
 § 1562
 § 5663
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 § 1565
 § 5