Burden of Proof for Patent Challenges

On April 18, the Supreme Court will hear arguments in Microsoft v. i4i regarding the proper burden of proof for challenging the validity of an issued patent.  I previously covered the issues in this case, including the meaning of the various standards of proof discussed below.

Last week, the US Government filed an amicus brief where it, somewhat surprisingly, sided with the respondent that the burden to challenge a patent should be clear and convincing evidence, regardless of whether the prior art had been previously considered by the patent examiner.

United States Brief

The Solicitor began the brief by arguing that § 282′s presumption of validity merely codified Supreme Court precedent prior to enactment of the 1952 Patent Act that required a higher standard of proof than a preponderance to overturn an issued patent.  The prior Supreme Court decisions cited in the brief refer to the challenge of a patent as a collateral attack on the agency’s decision to grant the patent.  Thus, principles of administrative deference require a heightened standard of proof.

The next argument is that permitting a lay jury de novo review of the PTO’s decision to grant the patent is inconsistent with administrative law principles.  The patent examiner, having expertise in the field of the invention, conducts fact-finding pursuant to the PTO’s statutory authority.  The heightened standard to challenge the issued patent supports the theory of the PTO’s expertise, which the lay jury clearly does not possess.

The Solicitor then rebuts the petitioner’s argument of PTO bias in the examination process in favor of patent applicants.  To take this argument to the extreme, why have a PTO examination process at all?  Why not simply issue all patent applications and let challengers fight them in court?  Congress has made the determination that ex parte patent application proceedings strike the proper balance between agency resources and protection of the public interest.

Patents create property interests on which patent owners and the public rely.  Many parties invest significant money on innovation and the patenting process.  In return for the inventor’s disclosure of the invention, he may be granted a patent if the PTO determines that the application meets the statutory standards.  To permit a jury, whose decision is granted deference on appeal, the ability to overturn the agency decision on a mere preponderance of the evidence, would disrupt this reliance and perhaps cause less investment in and disclosure of inventions.  The agency’s decision should only be overturned if it is clearly erroneous.

When a party challenges the validity of a patent, it has the choice to present the evidence of invalidity in a court proceeding or in a reexamination proceeding before the PTO.  Courts, unlike the PTO during a reexamination proceeding, do not have the ability to permit amendments or narrowing of a patent claim.  Thus, there is the lower burden of establishing invalidity in a reexamination proceeding that requests the agency to reconsider its own decision.  This justifies the higher burden of proof for challenging the patent in court even when the prior art had not been previously considered by the PTO. 

Reexamination proceedings should be encouraged as an alternative to litigation.  The lower burden of proof is one way Congress has chosen to do so.

Furthermore, having different burdens of proof for evidence that was considered by the patent examiner and that which was not puts the jury in a position to second-guess the PTO.  Difficult questions may arise as to whether the evidence is actually different or is merely cumulative of what the examiner did consider.  It also requires the jury to determine what the examiner would have or should have done when confronted with the evidence.

Any changes to the settled standards of proof for patent challenges should be made by Congress and not by the Court.

The Court’s Options

It is generally accepted that the Supreme Court has three options for this case. 

First, it could affirm the Federal Circuit and continue to require all challenges to issued patents to be by clear and convincing evidence.  This seems unlikely.

Second, it could change the standard to permit all challenges to be proven by a preponderance of the evidence.  If it goes this route, what does the statutory presumption of validity mean? 

Third, it could take a hybrid approach.  For prior art that was considered by the patent examiner, the burden would remain clear and convincing evidence.  For all “new” evidence, the standard would only be a preponderance of the evidence.

While this third option seems like the fairest and most logical approach, it is also the one that has the greatest unintended consequences.  Under US law, patent applicants have no requirement of performing a search of the prior art before or during the patenting process.  If the applicant, patent attorney, or others that are substantively involved in the prosecution have knowledge of prior art or other evidence that is material to the patentability of a pending claim, they have the duty to disclose this evidence to the PTO.  There is an exception, however, if the evidence is cumulative to evidence already of record.

What do you think will happen if the Supreme Court chooses this hybrid burden approach?  Patent applicants will obviously have an incentive to flood the patent examiner with prior art references, whether or not the applicant believes them to be relevant to patentability.  This will significantly increase the burden on an examination process that is already time-crunched.  It will also place the burden on juries to determine whether the evidence was not considered because it is cumulative.

A Fourth Approach

A group of law, business, and economics professors has suggested yet another approach.  They recognize that the hybrid burden suggested above would cause a flood of submissions to the PTO.  Thus, they suggest that the clear and convincing standard should only apply to “prior art or arguments actually discussed in writing by a patent examiner in an office action.”  Their brief does suggest that applicants can also discuss specific references on the record at their own behest to get the higher burden of proof.  In effect, a small percentage of references considered by the examiner during prosecution actually reach the level of discussion on the record or use in a rejection.  Thus, the proposal seeks to limit the higher burden to those few instances.

This proposal, unfortunately, does not live in the real world.  First, it basically renders irrelevant any prior art that applicants must now submit to fulfill their duty of disclosure to the PTO.  Why should applicants bother to or be required to submit references to the PTO if we assume that the references are ignored by the patent examiner?  Why not just do what a number of countries, including the EPO, do and not require any applicant submissions?

Next, the proposal seeks to encourage applicants to discuss references on the record that are not raised by the patent examiner.  This is actually a good suggestion provided that we eliminate most of the Federal Circuit’s jurisprudence on the issue.  The risk of estoppel, inequitable conduct, unintended claim construction, and frankly malpractice is simply too great to take this suggestion seriously.

There is no question that patent examination could be conducted in a better and more efficient and focused manner if applicants felt free to have frank discussions on the record with the patent examiner.  The Federal Circuit has done too much, however, to discourage this type of free exchange.  It simply won’t happen.

The professors even want their proposal enacted retroactively.  They suggest that applicants who relied on the current regime to obtain their patents and now desire the higher burden for challenging their patents could simply file reissue applications or requests for reexamination of their patents. 

This argument is a red herring.  Under the law, a reissue application can only be filed to correct an error in a patent.  An applicant should argue that the error in his patent is that he didn’t discuss references on the record that the patent examiner didn’t consider to be relevant enough to the patent to use to reject the claims in an office action?  Reexamination requires a substantial new question related to patentability.  If the prior art is already of record, the applicant must now argue that it does constitute a new question?  Are you serious?  This would be suicide for the patent.

Conclusion

Because the PTO has, justifiably or not, been getting a lot of bad press for issuing “bad” patents, the Supreme Court will probably feel obligated to change the burden of proof for challenging an issued patent.  And naturally, they would not have agreed to hear the case if they didn’t intend some change.  The question is, what will it be?

I sympathize with the difficulty in challenging patents and see merit in the view that the examiner’s expertise should not warrant the higher standard for prior art not considered during prosecution (by considered, I mean submitted or found by the examiner, not that the art had to be actually discussed on the record).  The consequences of this change, however, will significantly alter the patent process, both during prosecution and during later litigation.

The Chief Justice has recused himself from this case, so it will be heard by the other 8 justices.  A decision is expected by the end of the Court’s term in June.  i4i has collected the various briefs and other documents in the case here.

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4 Responses to “Burden of Proof for Patent Challenges”

  1. Trademark Litigation Says:

    Here is a similar story

    The U.S. Supreme Court is about to reconsider the burden of proof on a party seeking to invalidate a patent. Under Section 282 of the Patent Act, 35 U.S.C. § 282, “the burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.”

    The Federal Circuit has long interpreted the presumption of validity codified in the Patent Act to require proof of the factual predicate of invalidity by clear and convincing evidence, even when the prior art evidence on which the invalidity defense rests was never considered by the U.S. Patent and Trademark Office.

  2. Online Global Week in Review 25 March 2011 from IP Think Tank Says:

    [...] an issued patent should require clear and convincing evidence: Microsoft v. i4i (Patently-O) (Inventive Step) [...]

  3. Thoughts on Microsoft v. i4i « INVENTIVE STEP Says:

    [...] of proof for challenging issued patents.  A transcript of the argument is available here.  I have previously summarized the issues in the case.  Many others have already posted summaries and impressions of the argument.  I simply seek to [...]

  4. Career Country forum Says:

    Career Country forum…

    [...]Burden of Proof for Patent Challenges « INVENTIVE STEP[...]…

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