Microsoft has filed a petition for rehearing en banc in Lucent Technologies, Inc. v. Gateway, Inc., where it argues that the presumption of validity does not apply to prior art that was not considered by the examiner during prosecution. Although the original panel opinion largely focused on the calculation of damages, Microsoft argues in its petition that the burden of proof for establishing invalidity in such a case should be a preponderance of the evidence (more likely than not) instead of clear and convincing evidence (a difficult to define standard that is higher than a preponderance, meaning substantially certain).
The presumption of validity of patent claims is based on 35 U.S.C. § 282: “A patent shall be presumed valid.” This statutory provision has been interpreted by courts to require the clear and convincing evidence standard be used to invalidate patents in litigation. During reexamination, the PTO is not constricted by this standard, but instead uses the preponderance of the evidence standard. Thus, it is easier to invalidate a patent at the PTO than in litigation.
In this case, a jury, using the clear and convincing evidence standard, had found the patent to be not invalid based on a prior art reference. In reexamination, the PTO had invalidated the patent based on the same reference. Microsoft argued in its petition that the difference was the lower burden of proof required at the PTO.
Microsoft argues that the Supreme Court’s KSR decision noted that the rationale for the presumption of validity is diminished when the prior art was not considered by the PTO. Deference should only be accorded to the agency for matters that it actually considered. This deference hardly seems warranted for prior art that was not considered, given that patent examiners have a limited amount of time to examine applications and do so on an ex parte basis.
Microsoft also notes that the higher burden of proof for prior art not considered by the examiner would require the Federal Circuit to overrule a number of its cases, but aruges that the Federal Circuit created this rule in the first place. Prior to the Federal Circuit’s creation, many of the regional circuits had taken Microsoft’s position on this issue.
It is difficult to predict if the Federal Circuit will agree to hear this case en banc to overrule a number of its precedents. This does seem to be a case where it would be nice to have a conflict in the law to warrant the Supreme Court’s attention to review this legal issue. The petition may be the first step toward preparing the case for Supreme Court review.
As noted, the purpose of requiring a higher standard of proof is to accord deference to the PTO and its work. This deference does seem less warranted for work that the PTO did not actually do. It would be another step to make it easier to invalidate so called “junk patents,” but shouldn’t have a great effect on strong patents. This may be another step towards patent reform by the judiciary.