Microsoft petitions for lower burden of proof on patent invalidity

Intellectual Property and Technology News

Is it time for a change in the burden of proof required to invalidate an issued US patent? Microsoft thinks so, and it filed for en banc review by the Federal Circuit of the jury instruction requiring “clear and convincing” evidence.


Microsoft’s petition asserts that the Supreme Court’s KSR decision calls into question the Federal Circuit precedent requiring clear and convincing evidence to prove invalidity. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). In one of its earliest decisions, the Federal Circuit confirmed that to overcome the §282 presumption of validity even for art not cited, the standard of proof does not change, “it must be by clear and convincing evidence or its equivalent.” American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1360 (Fed. Cir. 1984). Microsoft would like the standard to be changed, at least with respect to prior art that was not considered during examination.


Lucent v. Microsoft


Microsoft filed the petition for en banc review in its ongoing battle with Lucent. At the district court level, Lucent had obtained a verdict of infringement and a damages award of $357 million. Microsoft lost on its defense of invalidity based on a prior art reference that was not considered by the United States Patent and Trademark Office (USPTO) after the jury was instructed that invalidity must be proven by clear and convincing evidence. To preserve its right to appeal, Microsoft proposed a “preponderance of the evidence” jury instruction to the district court, pointing to a comment by the United States Supreme Court in KSR. The district court rejected the proposed jury instruction, indicating it was the incorrect standard.


In the ensuing appeal, Microsoft succeeded in overturning the $357 million damages award, and therefore a new damages trial will be required. But the damages award was not the only issue Microsoft appealed. Microsoft pressed the Federal Circuit for a change in the burden of proof required to invalidate the asserted patent. Agreeing with the district court that Microsoft had not carried the clear and convincing burden, the three-judge panel rejected Microsoft’s argument. Microsoft lost again on its invalidity defense. Microsoft then asked for en banc review to overrule prior Federal Circuit decisions on the burden required for invalidity.


Evolution of the clear and convincing standard


The “clear and convincing” standard dates back far earlier than the American Hoist & Derrick decision of the Federal Circuit. In its very first decision, the Federal Circuit adopted as binding the prior decisions of the United States Court of Claims and the United States Court of Customs and Patent Appeals (CCPA). South Corp. v. United States, 690 F.2d 1368, 1369 (Fed. Cir. 1982). The CCPA had discussed the presumption of validity of 35 U.S.C. § 282 in Solder Removal Co. v. U.S. International Trade Commission, 582 F.2d 628, 632-33 (C.C.P.A. 1978). In that case, the CCPA acknowledged prior “court opinions indicating that no presumption exists when prior art not considered by the PTO is cited to the court.”1 Rejecting those opinions, the CCPA held that “the burden of persuasion is and remains always upon the party asserting invalidity, whether the most pertinent prior art was or was not considered by the examiner.”2


The CCPA identified several Ninth Circuit and Sixth Circuit decisions concerning patents in which a clear and convincing evidence standard was applied. The standard dates back at least to the Supreme Court’s decision in The Barbed Wire Patent, 143 U.S. 275 (1892), concerning the sufficiency of testimony about another product offered to invalidate a patent. The Supreme Court wrote that “courts have not only imposed upon defendants the burden of proving such devices, but have required that the proof shall be clear, satisfactory, and beyond a reasonable doubt.”3 Subsequent decisions in the early 1900s relied on The Barbed Wire Patent decision, thus shaping the clear and convincing evidence standard. The Supreme Court’s decisions are also binding on the Federal Circuit. The petition for an en banc review, therefore, may be a prelude to an inevitable Supreme Court appeal.


An uphill battle


Microsoft’s petition does not contend that the clear and convincing evidence standard should be rejected with respect to prior art considered by the USPTO. Rather, it suggests that the burden should be lower only for prior art that was not considered. Microsoft points out that the statutory presumption of validity is premised on this assumption that, in examining the patent, the USPTO did its job properly and completely. Microsoft argues that assumption should not apply where the USPTO did not consider the prior art offered by the party challenging the patent’s validity. That point, however, was specifically addressed, and rejected, in Solder Removal and by the Federal Circuit in Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1549 (Fed. Cir. 1983). In Solder Removal, the court noted that the “failure to cite certain prior art does not necessarily mean it was not considered by the examiner, who may have considered it unworthy of citation.”4


In view of the history of the invalidity standard, Microsoft faces a substantial uphill battle in its quest to change the evidentiary burden. For support, Microsoft cites to a comment by the Supreme Court in KSR, that it was “appropriate to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here.”5


Microsoft’s willingness to fight for a substantial change in the law may benefit all companies accused of infringement. However, a Microsoft victory could also introduce considerable complications. For example, who would have the burden as to prior art not identified in the prosecution history because the Examiner considered it unworthy of citation? Shortly before publication, the Federal Circuit denied en banc review, setting the stage for Microsoft to proceed to the Supreme Court. Assuming Supreme Court reversal and the adoption of a dual standard, questions would still remain as to what types of proof would be required to invalidate a patent.




1. Solder Removal Co., 582 F.2d at 633.

2. Id.

3. The Barbed Wire Patent, 143 U.S. at 284.

4. Solder Removal, 582 F.2d at 633 n.9.

5. KSR, 550 U.S. at 42