The Supreme Court affirmed a Federal Circuit Court of Appeal ruling in Microsoft v. i4i, which is significant for two things: Microsoft was hit with $240 million in damages for infringing a patent which covered the XML editing capability of its Microsoft Word program. More importantly, the Court turned back a strong challenge to the presumption of validity of patents, a bedrock patent principle.
Patents are presumed valid under Section 282 of the patent act. A defendant must prove otherwise, and do so by submission of “clear and convincing evidence.” This is a high burden, and a well-accepted rule, underscored by a century of case law. The reason for this is because patents undergo a rigorous scrutiny by a patent examiner in the US Patent and Trademark Office (USPTO) before the patent can issue.
Microsoft’s argument was intriguing. Its main thrust was that there was an exception to the rule in this case. The evidence upon which it relied was prior art which had not been considered by the patent examiner. Since it had not been considered, the presumption should not apply, Microsoft argued, and a less onerous evidentiary standard of “preponderance of the evidence” should apply.
By an 8-0 vote, the Supreme Court rejected this. A jury must find invalidity by clear and convincing evidence, regardless of any determination of what the USPTO considered in originally issuing the patent. This was a legislative policy decision by Congress, and the Supreme Court would not interfere. Thus, as in the Stanford v. Roche case, also decided in June, 2011, the Supreme Court upheld commercial expectations and long-established practices