i4i sued Microsoft Corp. for willful infringement of a software patent. The Patent Act provides patentees with a presumption of validity under 35 U.S.C. 282. Since 1984, the Federal Circuit has read §282 to require a defendant seeking to overcome the presumption to persuade the fact finder of its invalidity defense by clear and convincing evidence.
Microsoft sought to change the presumption of validity. Instead of a “clear and convincing” standard, Microsoft proposed instead using a “preponderance of the evidence” standard. This would have, in effect, weakened or reduced the value of all issued U.S. patents.
More particularly, more than a year before filing its patent application, i4i had sold a software program known as S4 in the United States, but they disagreed over whether that software embodied the invention claimed in i4i’s software patent and therefore invalidated the patent. Relying on the undisputed fact that the S4 software was never presented to the Patent and Trademark Office (PTO) during its examination of the software patent application, Microsoft objected to i4i’s proposed jury instruction that the invalidity defense must be proved by clear and convincing evidence. The District Court nevertheless gave that instruction and rejected Microsoft’s alternative instruction proposing a preponderance of the evidence standard. The jury found that Microsoft willfully infringed the i4i software patent and had failed to prove the patent’s invalidity. The Federal Circuit affirmed, relying on its settled interpretation of §282.
The Supreme Court rejected Microsoft’s contention that a defendant need only persuade the jury of a patent invalidity defense by a preponderance of the evidence. The Supreme Court stated that where Congress has prescribed the governing standard of proof, its choice generally controls. They went on to reason that while §282 includes no express articulation of the standard of proof, where Congress uses a common-law term in a statute, the Court assumes the “term . . . comes with a common law meaning.” Safeco Ins. Co. of America v. Burr, 551 U. S. 47, 58. Here, by stating that a patent is “presumed valid,” §282, Congress used a term with a settled common-law meaning.
The Supreme Court also rejected Microsoft’s argument that a preponderance standard must at least apply where the evidence before the factfinder was not before the PTO during the examination process. The Court stated that it is true enough that, in these circumstances, “the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished,” KSR Int’l Co. v. Teleflex Inc., 550 U. S. 398, 426, though other rationales may still animate the presumption. But the question remains whether Congress has specified the applicable standard of proof. As established, Congress did just that by codifying the common-law presumption of patent validity and, implicitly, the heightened standard of proof attached to it.
There is a good reason for the strong presumption of validity that the “clear and convincing” standard provides. When an inventor files a software patent application, they give up trade secret rights before ever knowing if they will obtain patent rights. This is a good result for patent holders and a bad result for infringers and alleged infringers.