MICROSOFT v. I4I LIMITED PARTNERSHIP
The owner of a patent for a computer language, i4i Limited Partnership brought suit against Microsoft Corp., alleging that the custom XML editor in certain versions of Microsoft Word, Microsoft's word-processing software, infringed i4i's patent. The jury found Microsoft liable for willful infringement, rejecting the company's argument that the patent was invalid, and awarded $200 million in damages to i4i.
The U.S. District Court for the Eastern District of Texas denied Microsoft's motions for a new trial. And the U.S. Court of Appeals for the Federal Circuit upheld the district court order, finding that Microsoft needed to offer "clear and convincing evidence" to overcome the traditional presumption that patents approved by the U.S. Patent and Trademark Office are valid.
- Brief for Petitioner
- Brief of Genentech, Inc., California Healthcare Institute, Roche Diagnostics Operations, Inc. And Roche Molecular Systems, Inc. as Amici Curiae In Support of Respondents
- Brief for 3m Company, Caterpillar Inc., Johnson & Johnson, Procter & Gamble, General Electric Company, Eli Lilly And Co., Bp, E.i. Du Pont De Nemours And Company, Ecolab Inc., Dolby Laboratories Boston Scientific Corporation, And the Valspar Corporation a
- Brief of Amicus Curiae San Diego Intellectual Property Law Association And Connect In Support of Respondents
Must a challenge to a patent's validity offer clear and convincing evidence as proof
Legal provision: Patent invalidity
Yes. The Supreme Court affirmed the lower court order in a unanimous opinion by Justice Sonia Sotomayor. "Section 282 requires an invalidity defense to be proved by clear and convincing evidence," Sotomayor wrote. Justice Stephen Breyer wrote a concurring opinion joined by Justices Antonin Scalia and Samuel Alito, in which he "join[s] the Court's opinion in full" but added that "I write separately because, given the technical but important nature of the invalidity question, I believe it worth emphasizing that in this area of law as in others the evidentiary standard of proof applies to questions of fact and not to questions of law."
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
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notify the Reporter of Decisions, Supreme Court of the United States, Wash-
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SUPREME COURT OF THE UNITED STATES
MICROSOFT CORPORATION, PETITIONER v. i4i
LIMITED PARTNERSHIP ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 9, 2011]
JUSTICE SOTOMAYOR delivered the opinion of the Court.
Under §282 of the Patent Act of 1952, “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” 35 U. S. C. §282. We consider whether §282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.
Pursuant to its authority under the Patent Clause, U. S. Const., Art. I, §8, cl. 8, Congress has charged the United States Patent and Trademark Office (PTO) with the task of examining patent applications, 35 U. S. C. §2(a)(1), and issuing patents if “it appears that the applicant is entitled to a patent under the law,” §131. Congress has set forth the prerequisites for issuance of a patent, which the PTO must evaluate in the examination process. To receive patent protection a claimed invention must, among other things, fall within one of the express categories of patentable subject matter, §101, and be novel, §102, and nonobvious, §103. Most relevant here, the on-sale bar of §102(b) precludes patent protection for any “invention” that was “on sale in this country” more than one year prior to the filing of a patent application. See generally Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67–68 (1998). In evaluating whether these and other statutory conditions have been met, PTO examiners must make various factual determinations—for instance, the state of the prior art in the field and the nature of the advancement embodied in the invention. See Dickinson v. Zurko, 527 U. S. 150, 153 (1999).
Once issued, a patent grants certain exclusive rights to its holder, including the exclusive right to use the invention during the patent’s duration. To enforce that right, a patentee can bring a civil action for infringement if another person “without authority makes, uses, offers to sell, or sells any patented invention, within the United States.” §271(a); see also §281.
Among other defenses under §282 of the Patent Act of 1952 (1952 Act), an alleged infringer may assert the invalidity of the patent—that is, he may attempt to prove that the patent never should have issued in the first place. See §§282(2), (3). A defendant may argue, for instance, that the claimed invention was obvious at the time and thus that one of the conditions of patentability was lacking. See §282(2); see also §103. “While the ultimate question of patent validity is one of law,” Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 17 (1966) (citing Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U. S. 147, 155 (1950) (Douglas, J., concurring)); see post, at 1 (BREYER, J., concurring), the same factual questions underlying the PTO’s original examination of a patent application will also bear on an invalidity defense in an infringement action. See, e.g., 383 U. S., at 17 (describing the “basic factual inquiries” that form the “background” for evaluating obviousness); Pfaff, 525 U. S., at 67–69 (same, as to the on-sale bar).
In asserting an invalidity defense, an alleged infringer must contend with the first paragraph of §282, which provides that “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity . . . rest[s] on the party asserting such invalidity.”1 Under the Federal Circuit’s reading of §282, a defendant seeking to overcome this presumption must persuade the factfinder of its invalidity defense by clear and convincing evidence. Judge Rich, a principal drafter of the 1952 Act, articulated this view for the court in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F. 2d 1350 (CA Fed. 1984). There, the Federal Circuit held that §282 codified “the existing presumption of validity of patents,” id., at 1359 (internal quotation marks omitted)—what, until that point, had been a common-law presumption based on “the basic proposition that a government agency such as the [PTO] was presumed to do its job,” ibid. Relying on this Court’s pre-1952 precedent as to the “force of the presumption,” ibid. (citing Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1 (1934) (RCA)), Judge Rich concluded: “[Section] 282 creates a presumption that a patent is valid and imposes the burden of proving invalidity on the attacker. That burden is constant and never changes and is to convince the court of invalidity by clear evidence.” 725 F. 2d, at 1360. In the nearly 30 years since American Hoist, the Federal Circuit has never wavered in this interpretation of §282. See, e.g., Greenwood v. Hattori Seiko Co., 900 F. 2d 238, 240–241 (CA Fed. 1990); Ultra-Tex Surfaces, Inc. v. Hill Bros. Chemical Co., 204 F. 3d 1360, 1367 (CA Fed. 2000); ALZA Corp. v. Andrx Pharmaceuticals, LLC, 603 F. 3d 935, 940 (CA Fed. 2010).
Respondents i4i Limited Partnership and Infrastructures for Information Inc. (collectively, i4i) hold the patent at issue in this suit. The i4i patent claims an improved method for editing computer documents, which stores a document’s content separately from the metacodes associated with the document’s structure. In 2007, i4i sued petitioner Microsoft Corporation for willful infringement, claiming that Microsoft’s manufacture and sale of certain Microsoft Word products infringed i4i’s patent. In addition to denying infringement, Microsoft counterclaimed and sought a declaration that i4i’s patent was invalid and unenforceable.
Specifically and as relevant here, Microsoft claimed that the on-sale bar of §102(b) rendered the patent invalid, pointing to i4i’s prior sale of a software program known as S4. The parties agreed that, more than one year prior to the filing of the i4i patent application, i4i had sold S4 in the United States. They presented opposing arguments to the jury, however, as to whether that software embodied the invention claimed in i4i’s patent. Because the software’s source code had been destroyed years before the commencement of this litigation, the factual dispute turned largely on trial testimony by S4’s two inventors— also the named inventors on the i4i patent—both of whom testified that S4 did not practice the key invention disclosed in the patent.
Relying on the undisputed fact that the S4 software was never presented to the PTO examiner, Microsoft objected to i4i’s proposed instruction that it was required to prove its invalidity defense by clear and convincing evidence. Instead, “if an instruction on the ‘clear and convincing’ burden were [to be] given,” App. 124a, n. 8, Microsoft requested the following: “ ‘Microsoft’s burden of proving invalidity and unenforceability is by clear and convincing evidence. However, Microsoft’s burden of proof with regard to its defense of invalidity based on prior art that the examiner did not review during the prosecution of the patent-in-suit is by preponderance of the evidence.’ ” Ibid. Rejecting the hybrid standard of proof that Microsoft advocated, the District Court instructed the jury that “Microsoft has the burden of proving invalidity by clear and convincing evidence.” App. to Pet. for Cert. 195a.
The jury found that Microsoft willfully infringed the i4i patent and that Microsoft failed to prove invalidity due to the on-sale bar or otherwise. Denying Microsoft’s posttrial motions, the District Court rejected Microsoft’s contention that the court improperly instructed the jury on the standard of proof. The Court of Appeals for the Federal Circuit affirmed.2 598 F. 3d 831, 848 (2010). Relying on its settled interpretation of §282, the court explained that it could “discern [no] error” in the jury instruction requiring Microsoft to prove its invalidity defense by clear and convincing evidence. Ibid. We granted certiorari. 562 U. S. ___ (2010).
According to Microsoft, a defendant in an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence. In the alternative, Microsoft insists that a preponderance standard must apply at least when an invalidity defense rests on evidence that was never considered by the PTO in the examination process. We reject both contentions.3
Where Congress has prescribed the governing standard of proof, its choice controls absent “countervailing constitutional constraints.” Steadman v. SEC, 450 U. S. 91, 95 (1981). The question, then, is whether Congress has made such a choice here.
As stated, the first paragraph of §282 provides that “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” Thus, by its express terms, §282 establishes a presumption of patent validity, and it provides that a challenger must overcome that presumption to prevail on an invalidity defense. But, while the statute explicitly specifies the burden of proof, it includes no express articulation of the standard of proof.4 Our statutory inquiry, however, cannot simply end there. We begin, of course, with “the assumption that the ordinary meaning of the language” chosen by Congress “accurately expresses the legislative purpose.” Engine Mfrs. Assn. v. South Coast Air Quality Management Dist., 541 U. S. 246, 252 (2004) (internal quotation marks omitted). But where Congress uses a common-law term in a statute, we assume the “term . . . comes with a common law meaning, absent anything pointing another way.” Safeco Ins. Co. of America v. Burr, 551 U. S. 47, 58 (2007) (citing Beck v. Prupis, 529 U. S. 494, 500–501 (2000)). Here, by stating that a patent is “presumed valid,” §282, Congress used a term with a settled meaning in the common law.
Our decision in RCA, 293 U. S. 1, is authoritative. There, tracing nearly a century of case law from this Court and others, Justice Cardozo wrote for a unanimous Court that “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” Id., at 2. Although the “force” of the presumption found “varying expression” in this Court and elsewhere, id., at 7, Justice Cardozo explained, one “common core of thought and truth” unified the decisions: “[O]ne otherwise an infringer who assails the validity of a patent fair upon its face bears a heavy burden of persuasion, and fails unless his evidence has more than a dubious preponderance. If that is true where the assailant connects himself in some way with the title of the true inventor, it is so a fortiori where he is a stranger to the invention, without claim of title of his own. If it is true where the assailant launches his attack with evidence different, at least in form, from any theretofore produced in opposition to the patent, it is so a bit more clearly where the evidence is even verbally the same.” Id., at 8 (internal citation omitted).5 The common-law presumption, in other words, reflected the universal understanding that a preponderance standard of proof was too “dubious” a basis to deem a patent invalid. Ibid.; see also id., at 7 (“[A] patent . . . is presumed to be valid until the presumption has been overcome by convincing evidence of error”).
Thus, by the time Congress enacted §282 and declared that a patent is “presumed valid,” the presumption of patent validity had long been a fixture of the common law. According to its settled meaning, a defendant raising an invalidity defense bore “a heavy burden of persuasion,” requiring proof of the defense by clear and convincing evidence. Id., at 8. That is, the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof. Under the general rule that a common-law term comes with its common-law meaning, we cannot conclude that Congress intended to “drop” the heightened standard proof from the presumption simply because §282 fails to reiterate it expressly. Neder v. United States, 527 U. S. 1, 23 (1999); see also id., at 21 (“ ‘Where Congress uses terms that have accumulated settled meaning under . . . the common law, [we] must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of those terms.’ ” (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318, 322 (1992))); Standard Oil Co. of N. J. v. United Sates, 221 U. S. 1, 59 (1911) (“[W]here words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country they are presumed to have been used in that sense . . .”). “On the contrary, we must presume that Congress intended to incorporate” the heightened standard of proof, “unless the statute otherwise dictates.” Neder, 527 U. S., at 23 (internal quotation marks omitted).
We recognize that it may be unusual to treat a presumption as alone establishing the governing standard of proof. See, e.g., J. Thayer, Preliminary Treatise on Evidence at the Common Law 336–337 (1898) (hereinafter Thayer) (“When . . . we read that the contrary of any particular presumption must be proved beyond a reasonable doubt, . . . it is to be recognized that we have something superadded to the rule of presumption, namely, another rule as to the amount of evidence which is needed to overcome the presumption”). But given how judges, including Justice Cardozo, repeatedly understood and explained the presumption of patent validity, we cannot accept Microsoft’s argument that Congress used the words “presumed valid” to adopt only a procedural device for “shifting the burden of production,” or for “shifting both the burden of production and the burden of persuasion.” Brief for Petitioner 21–22 (emphasis deleted). Whatever the significance of a presumption in the abstract, basic principles of statutory construction require us to assume that Congress meant to incorporate “the cluster of ideas” attached to the commonlaw term it adopted. Beck, 529 U. S., at 501 (internal quotation marks omitted). And RCA leaves no doubt that attached to the common-law presumption of patent validity was an expression as to its “force,” 293 U. S., at 7—that is, the standard of proof required to overcome it.6
Resisting the conclusion that Congress adopted the heightened standard of proof reflected in our pre-1952 cases, Microsoft contends that those cases applied a clearand-convincing standard of proof only in two limited circumstances, not in every case involving an invalidity defense. First, according to Microsoft, the heightened standard of proof applied in cases “involving oral testimony of prior invention,” simply to account for the unreliability of such testimony. Brief for Petitioner 25. Second, Microsoft tells us, the heightened standard of proof applied to “invalidity challenges based on priority of invention,” where that issue had previously been litigated between the parties in PTO proceedings. Id., at 28.
Squint as we may, we fail to see the qualifications that Microsoft purports to identify in our cases. They certainly make no appearance in RCA’s explanation of the presumption of patent validity. RCA simply said, without qualification, “that one otherwise an infringer who assails the validity of a patent fair upon its face bears a heavy burden of persuasion, and fails unless his evidence has more than a dubious preponderance.” 293 U. S., at 8; see also id., at 7 (“A patent regularly issued, and even more obviously a patent issued after a hearing of all the rival claimants, is presumed to be valid until the presumption has been overcome by convincing evidence of error” (emphasis added)). Nor do they appear in any of our cases as express limitations on the application of the heightened standard of proof. Cf., e.g., Smith v. Hall, 301 U. S. 216, 233 (1937) (citing RCA for the proposition that a “heavy burden of persuasion . . . rests upon one who seeks to negative novelty in a patent by showing prior use”); Mumm v. Jacob E. Decker & Sons, 301 U. S. 168, 171 (1937) (“Not only is the burden to make good this defense upon the party setting it up, but his burden is a heavy one, as it has been held that every reasonable doubt should be resolved against him” (internal quotation marks omitted)). In fact, Microsoft itself admits that our cases “could be read as announcing a heightened standard applicable to all invalidity assertions.” Brief for Petitioner 30 (emphasis deleted).
Furthermore, we cannot agree that Microsoft’s proposed limitations are inherent—even if unexpressed—in our pre-1952 cases. As early as 1874 we explained that the burden of proving prior inventorship “rests upon [the defendant], and every reasonable doubt should be resolved against him,” without tying that rule to the vagaries and manipulability of oral testimony. Coffin v. Ogden, 18 Wall. 120, 124 (1874). And, more than 60 years later, we applied that rule where the evidence in support of a prioruse defense included documentary proof—not just oral testimony—in a case presenting no priority issues at all. See Smith, 301 U. S., at 221, 233. Thus, even if Congress searched for some unstated limitations on the heightened standard of proof in our cases, it would have found none.7
Microsoft also argues that the Federal Circuit’s interpretation of §282’s statement that “[a] patent shall be presumed valid” must fail because it renders superfluous the statute’s additional statement that “[t]he burden of establishing invalidity of a patent . . . shall rest on the party asserting such invalidity.” We agree that if the presumption imposes a heightened standard of proof on the patent challenger, then it alone suffices to establish that the defendant bears the burden of persuasion. Cf. Director, Office of Workers’ Compensation Programs v. Greenwich Collieries, 512 U. S. 267, 278 (1994) (“A standard of proof . . . can apply only to a burden of persuasion”). Indeed, the Federal Circuit essentially recognized as much in American Hoist. See 725 F. 3d, at 1359.
But the canon against superfluity assists only where a competing interpretation gives effect “ ‘to every clause and word of a statute.’ ” Duncan v. Walker, 533 U. S. 167, 174 (2001) (quoting United States v. Menasche, 348 U. S. 528, 538–539 (1955)); see Bruesewitz v. Wyeth LLC, 562 U. S. ___, ___ (2011) (slip op., at 12). Here, no interpretation of §282—including the two alternatives advanced by Microsoft—avoids excess language. That is, if the presumption only “allocates the burden of production,” Brief for Petitioner 21, or if it instead “shift[s] both the burden of production and the burden of persuasion,” id., at 22 (emphasis deleted), then it would be unnecessary in light of §282’s statement that the challenger bears the “burden of establishing invalidity.” See 21B Fed. Practice §5122, at 401 (“[T]he same party who has the burden of persuasion also starts out with the burden of producing evidence”). “There are times when Congress enacts provisions that are superfluous,” Corley v. United States, 556 U. S. ___, ___ (2009) (ALITO, J., dissenting) (slip op., at 3), and the kind of excess language that Microsoft identifies in §282 is hardly unusual in comparison to other statutes that set forth a presumption, a burden of persuasion, and a standard of proof. Cf., e.g., 28 U. S. C. §2254(e)(1).8 B
Reprising the more limited argument that it pressed below, Microsoft argues in the alternative that a preponderance standard must at least apply where the evidence before the factfinder was not before the PTO during the examination process. In particular, it relies on KSR Int’l Co. v. Teleflex Inc., 550 U. S. 398 (2007), where we observed that, in these circumstances, “the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished.” Id., at 426.
That statement is true enough, although other rationales may animate the presumption in such circumstances. See The Barbed Wire Patent, 143 U. S. 275, 292 (1892) (explaining that because the patentee “first published this device; put it upon record; made use of it for a practical purpose; and gave it to the public . . . . doubts . . . concerning the actual inventor . . . should be resolved in favor of the patentee”); cf. Brief for United States as Amicus Curiae 33 (arguing that even when the administrative correctness rationale has no relevance, the heightened standard of proof “serves to protect the patent holder’s reliance interests” in disclosing an invention to the public in exchange for patent protection). The question remains, however, 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.
Our pre-1952 cases never adopted or endorsed the kind of fluctuating standard of proof that Microsoft envisions. And they do not indicate, even in dicta, that anything less than a clear-and-convincing standard would ever apply to an invalidity defense raised in an infringement action. To the contrary, the Court spoke on this issue directly in RCA, stating that because the heightened standard of proof applied where the evidence before the court was “different” from that considered by the PTO, it applied even more clearly where the evidence was identical. 293 U. S., at 8. Likewise, the Court’s statement that a “dubious preponderance” will never suffice to sustain an invalidity defense, ibid., admitted of no apparent exceptions. Finally, this Court often applied the heightened standard of proof without any mention of whether the relevant prior-art evidence had been before the PTO examiner, in circumstances strongly suggesting it had not. See, e.g., Smith, 301 U. S., at 227, 233.9
Nothing in §282’s text suggests that Congress meant to depart from that understanding to enact a standard of proof that would rise and fall with the facts of each case. Indeed, had Congress intended to drop the heightened standard of proof where the evidence before the jury varied from that before the PTO—and thus to take the unusual and impractical step of enacting a variable standard of proof that must itself be adjudicated in each case, cf. Santosky v. Kramer, 455 U. S. 745, 757 (1982)10—we assume it would have said so expressly.
To be sure, numerous courts of appeals in the years preceding the 1952 Act observed that the presumption of validity is “weakened” or “dissipated” in the circumstance that the evidence in an infringement action was never considered by the PTO. See Jacuzzi Bros., Inc. v. Berkeley Pump Co., 191 F. 2d 632, 634 (CA9 1951) (“largely dissipated”); H. Schindler & Co. v. C. Saladino & Sons, 81 F. 2d 649, 651 (CA1 1936) (“weakened”); Gillette Safety Razor Co. v. Cliff Weil Cigar Co., 107 F. 2d 105, 107 (CA4 1939) (“greatly weakened”); Butler Mfg. Co. v. Enterprise Cleaning Co., 81 F. 2d 711, 716 (CA8 1936) (“weakened”). But we cannot read these cases to hold or even to suggest that a preponderance standard would apply in such circumstances, and we decline to impute such a reading to Congress. Instead, we understand these cases to reflect the same commonsense principle that the Federal Circuit has recognized throughout its existence—namely, that new evidence supporting an invalidity defense may “carry more weight” in an infringement action than evidence previously considered by the PTO, American Hoist, 725 F. 2d, at 1360. As Judge Rich explained: “When new evidence touching validity of the patent not considered by the PTO is relied on, the tribunal considering it is not faced with having to disagree with the PTO or with deferring to its judgment or with taking its expertise into account. The evidence may, therefore, carry more weight and go further toward sustaining the attacker’s unchanging burden.” Ibid. (emphasis deleted) See also SIBIA Neurosciences, Inc. v. Cadus Pharmaceutical Corp., 225 F. 3d 1349, 1355–1356 (CA Fed. 2000) (“[T]he alleged infringer’s burden may be more easily carried because of th[e] additional [evidence]”); Group One, Ltd. v. Hallmark Cards, Inc., 407 F. 3d 1297, 1306 (CA Fed. 2005) (similar).
Simply put, if the PTO did not have all material facts before it, its considered judgment may lose significant force. Cf. KSR, 550 U. S., at 427. And, concomitantly, the challenger’s burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain. In this respect, although we have no occasion to endorse any particular formulation, we note that a jury instruction on the effect of new evidence can, and when requested, most often should be given. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO had no opportunity to evaluate before granting the patent. When it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, the jury may be instructed to consider that question. In either case, the jury may be instructed to evaluate whether the evidence before it is materially new, and if so, to consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence. Cf., e.g., Mendenhall v. Cedarapids, Inc., 5 F. 3d 1557, 1563–1564 (CA Fed. 1993); see also Brief for International Business Machines Corp. as Amicus Curiae 31–37. Although Microsoft emphasized in its argument to the jury that S4 was never considered by the PTO, it failed to request an instruction along these lines from the District Court. Now, in its reply brief in this Court, Microsoft insists that an instruction of this kind was warranted. Reply Brief for Petitioner 22–23. That argument, however, comes far too late, and we therefore refuse to consider it. See Rent-A-Center, West, Inc. v. Jackson, 561 U. S. ___ , ___ (2010) (slip op., at 12); cf. Fed. Rule Civ. Proc. 51(d)(1)(B).
The parties and their amici have presented opposing views as to the wisdom of the clear-and-convincingevidence standard that Congress adopted. Microsoft and its amici contend that the heightened standard of proof dampens innovation by unduly insulating “bad” patents from invalidity challenges. They point to the high invalidation rate as evidence that the PTO grants patent protection to too many undeserving “inventions.” They claim that inter partes reexamination proceedings before the PTO cannot fix the problem, as some grounds for invalidation (like the on-sale bar at issue here) cannot be raised in such proceedings. They question the deference that the PTO’s expert determinations warrant, in light of the agency’s resources and procedures, which they deem inadequate. And, they insist that the heightened standard of proof essentially causes juries to abdicate their role in reviewing invalidity claims raised in infringement actions.
For their part, i4i and its amici, including the United States, contend that the heightened standard of proof properly limits the circumstances in which a lay jury overturns the considered judgment of an expert agency. They claim that the heightened standard of proof is an essential component of the patent “bargain,” see Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 150–151 (1989), and the incentives for inventors to disclose their innovations to the public in exchange for patent protection. They disagree with the notion that the patent issuance rate is above the optimal level. They explain that limits on the reexamination process reflect a judgment by Congress as to the appropriate degree of interference with patentees’ reliance interests. Finally, they maintain that juries that are properly instructed as to the application of the clear-and-convincing-evidence standard can, and often do, find an invalidity defense established.
We find ourselves in no position to judge the comparative force of these policy arguments. For nearly 30 years, the Federal Circuit has interpreted §282 as we do today. During this period, Congress has often amended §282, see, e.g., Pub. L. 104–141, §2, 109 Stat. 352; Pub. L. 98–417, §203, 98 Stat. 1603; not once, so far as we (and Microsoft) are aware, has it even considered a proposal to lower the standard of proof, see Tr. Oral Arg. 10. Moreover, Congress has amended the patent laws to account for concerns about “bad” patents, including by expanding the reexamination process to provide for inter partes proceedings. See Optional Inter Partes Reexamination Procedure Act of 1999, 113 Stat. 1501A–567, codified at 35 U. S. C. §311 et seq. Through it all, the evidentiary standard adopted in §282 has gone untouched. Indeed, Congress has left the Federal Circuit’s interpretation of §282 in place despite ongoing criticism, both from within the Federal Government and without.11
Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity. Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands.
* * *
For the reasons stated, the judgment of the Court of Appeals for the Federal Circuit is Affirmed.
THE CHIEF JUSTICE took no part in the consideration or decision of this case.
1 As originally enacted in 1952, the first paragraph of §282 read: “A patent shall be presumed valid. The burden of establishing invalidity of a patent shall rest on a party asserting it.” 66 Stat. 812. Congress has since amended §282, inserting two sentences not relevant here and modifying the language of the second sentence to that in the text.
2 Although not relevant here, the Court of Appeals modified the effective date of the permanent injunction that the District Court entered in favor of i4i. 598 F. 3d 831, 863–864 (CA Fed. 2010).
3 i4i contends that Microsoft forfeited the first argument by failing to raise it until its merits brief in this Court. The argument, however, is within the scope of the question presented, and because we reject it on its merits, we need not decide whether it has been preserved.
4 A preliminary word on terminology is in order. As we have said, “[t]he term ‘burden of proof’ is one of the ‘the slipperiest members of the family of legal terms.’ ” Schaffer v. Weast, 546 U. S. 49, 56 (2005) (quoting 2 J. Strong, McCormick on Evidence §342, p. 433 (5th ed. 1999) (alteration omitted)). Historically, the term has encompassed two separate burdens: the “burden of persuasion” (specifying which party loses if the evidence is balanced), as well as the “burden of production” (specifying which party must come forward with evidence at various stages in the litigation). Ibid. Adding more confusion, the term “burden of proof” has occasionally been used as a synonym for “standard of proof.” E.g., Grogan v. Garner, 498 U. S. 279, 286 (1991). Here we use “burden of proof” interchangeably with “burden of persuasion” to identify the party who must persuade the jury in its favor to prevail. We use the term “standard of proof” to refer to the degree of certainty by which the factfinder must be persuaded of a factual conclusion to find in favor of the party bearing the burden of persuasion. See Addington v. Texas, 441 U. S. 418, 423 (1979). In other words, the term “standard of proof” specifies how difficult it will be for the party bearing the burden of persuasion to convince the jury of the facts in its favor. Various standards of proof are familiar—beyond a reasonable doubt, by clear and convincing evidence, and by a preponderance of the evidence. See generally 21B C. Wright & K. Graham, Federal Practice & Procedure §5122, pp. 405–411 (2d ed. 2005) (hereinafter Fed. Practice) (describing these and other standards of proof).
5 Among other cases, Justice Cardozo cited Cantrell v. Wallick, 117 U. S. 689, 695–696 (1886) (“Not only is the burden of proof to make good this defence upon the party setting it up, but . . . every reasonable doubt should be resolved against him” (internal quotation marks omitted)); Coffin v. Ogden, 18 Wall. 120, 124 (1874) (“The burden of proof rests upon [the defendant], and every reasonable doubt should be resolved against him”); The Barbed Wire Patent, 143 U. S. 275, 285 (1892) (“[This] principle has been repeatedly acted upon in the different circuits”); and Washburn v. Gould, 29 F. Cas. 312, 320 (No. 17,214) (CC Mass. 1844) (charging jury that “[i]f it should so happen, that your minds are led to a reasonable doubt on the question, inasmuch as it is incumbent on the defendant to satisfy you beyond that doubt, you will find for the plaintiff”).
6 Microsoft objects that this reading of §282 “conflicts with the usual understanding of presumptions.” Reply Brief for Petitioner 4. In support, it relies on the “understanding” reflected in Federal Rule of Evidence 301, which explains the ordinary effect of a presumption in federal civil actions. That Rule, however, postdates the 1952 Act by nearly 30 years, and it is not dispositive of how Congress in 1952 understood presumptions generally, much less the presumption of patent validity. In any event, the word “presumption” has often been used when another term might be more accurate. See Thayer 335 (“Often . . . maxims and ground principles get expressed in this form of a presumption perversely and inaccurately”). And, to the extent Congress used the words “presumed valid” in an imprecise way, we cannot fault it for following our lead.
7 In a similar vein, Microsoft insists that there simply was no settled presumption of validity for Congress to codify in 1952. Microsoft points to a handful of district court decisions, which “question[ed] whether any presumption of validity was warranted,” or which “required the patentee to prove the validity of his patent by a preponderance of the evidence.” Brief for Petitioner 24 (emphasis deleted; brackets and internal quotation marks omitted); see, e.g., Ginsberg v. Railway Express Agency, Inc., 72 F. Supp. 43, 44 (SDNY 1947) (stating, in dicta, that “[i]t may now well be said that no presumption whatever arises from the grant of patent”); see also post, at 1 (THOMAS, J., concurring in judgment). RCA makes clear, however, that the presumption of patent validity had an established meaning traceable to the mid-19th century, 293 U. S. 1, 7–8 (1934); that some lower courts doubted its wisdom or even pretended it did not exist is of no moment. Microsoft may be correct that Congress enacted §282 to correct lower courts that required the patentee to prove the validity of a patent. See American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F. 2d 1350, 1359 (CA Fed. 1984). But the language Congress selected reveals its intent not only to specify that the defendant bears the burden of proving invalidity but also that the evidence in support of the defense must be clear and convincing.
8 For those of us for whom it is relevant, the legislative history of §282 provides additional evidence that Congress meant to codify the judgemade presumption of validity, not to set forth a new presumption of its own making. The accompanying House and Senate Reports both explain that §282 “introduces a declaration of the presumption of validity of a patent, which is now a statement made by courts in decisions, but has had no expression in the statute.” H. R. Rep. No. 1923, 82d Cong., 2d Sess., 10 (1952) (hereinafter H. R. Rep.); S. Rep. No. 1979, 82d Cong., 2d Sess., 9 (1952) (hereinafter S. Rep.). To the same effect, the Reviser’s Note indicates that §282’s “first paragraph declares the existing presumption of validity of patents.” Note following 35 U. S. C. §282 (1952 ed.). Prior to 1952, the existing patent laws already incorporated the sum and substance of the presumption as Microsoft would define it—that is, they “assign[ed] the burden of proving invalidity to the accused infringer,” Brief for Petitioner 14 (emphasis deleted). See 35 U. S. C. §69 (1946 ed.) (providing that a defendant in an infringement action “may plead” and “prove on trial” the invalidity of the patent as a defense); see also Patent Act of 1870, ch. 230, §61, 16 Stat. 208 (same); Patent Act of 1836, ch. 357, §15, 5 Stat. 123 (similar); Patent Act of 1793, ch. II, §6, 1 Stat. 322 (similar); Coffin, 18 Wall., at 124 (explaining that the Patent Act of 1836 “allowed a party sued for infringement to prove, among other defences, that the patentee was not the original and first inventor of the thing patented, or of a substantial and material part thereof claimed to be new” (internal quotation marks omitted)). The House and Senate Reports state, however, that §282 established a principle that previously “had no expression in the statute.” H. R. Rep., at 10; S. Rep., at 9. Thus, because the only thing missing from §282’s predecessor was the heightened standard of proof itself, Congress must have understood the presumption of patent validity to include the heightened standard of proof attached to it.
9 Microsoft cites numerous court of appeals decisions as support for its claim that a preponderance standard must apply in the event that the evidence in the infringement action varies from that considered by the PTO. We see no hint of the hybrid standard of proof that Microsoft advocates in these cases. Indeed, in some of these cases it appears that the court even evaluated the evidence according to a heightened standard of proof. See Jacuzzi Bros., Inc. v. Berkeley Pump Co., 191 F. 2d 632, 634 (CA9 1951) (“Although it is not expressly stated that th[e] conclusion [of invalidity] is based upon evidence establishing the thesis beyond a reasonable doubt, the Trial Court expressed no doubt. And the record shows that such conclusion was supported by substantial evidence”); Western Auto Supply Co. v. American-National Co., 114 F. 2d 711, 713 (CA6 1940) (concluding that the patent was invalid where the court “entertain[ed] no doubt” on the question).
10 Not the least of the impracticalities of such an approach arises from the fact that whether a PTO examiner considered a particular reference will often be a question without a clear answer. In granting a patent, an examiner is under no duty to cite every reference he considers. 1 Dept. of Commerce, PTO, Manual of Patent Examining Procedure §904.03, p. 900–51 (8th rev. ed. 2010) (“The examiner is not called upon to cite all references that may be available, but only the ‘best.’ Multiplying references, any one of which is as good as, but no better than, the others, adds to the burden and cost of prosecution and should therefore be avoided” (emphasis deleted)); Manual of Patent Examining Procedure §904.02, p. 129 (1st rev. ed. 1952) (same), http://www.uspto.gov/ web/offices/pac/mpep/old/E1R3_900.pdf (all Internet materials as visited June 6, 2011, and available in Clerk of Court’s case file); see also Brief for Respondents 45–46 (describing additional impracticalities). We see no indication in §282 that Congress meant to require collateral litigation on such an inherently uncertain question.
11 See, e.g., FTC, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy 28 (Oct. 2003), http://www.ftc.gov/ os/2003/10/innovationrpt.pdf “legislation be that (recommending enacted specifying that challenges to the validity of a patent be determined based on a preponderance of the evidence”); Alsup, Memo to Congress: A District Judge’s Proposal for Patent Reform, 24 Berkeley Tech. L. J. 1647, 1655 (2009) (same); Lichtman & Lemley, Rethinking Patent Law’s Presumption of Validity, 60 Stan. L. Rev. 45, 60 (2007) (proposing “statutory amendment or . . . judicial reinterpretation of the existing statute and its associated case law” to lower the standard of proof to a preponderance of the evidence (footnote omitted)).
BREYER, J., concurring
SUPREME COURT OF THE UNITED STATES
MICROSOFT CORPORATION, PETITIONER v. i4i
LIMITED PARTNERSHIP ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 9, 2011]
JUSTICE BREYER, with whom JUSTICE SCALIA and JUSTICE ALITO join, concurring.
I join the Court’s opinion in full. I write separately because, given the technical but important nature of the invalidity question, I believe it worth emphasizing that in this area of law as in others the evidentiary standard of proof applies to questions of fact and not to questions of law. See, e.g., Addington v. Texas, 441 U. S. 418, 423 (1979). Thus a factfinder must use the “clear and convincing” standard where there are disputes about, say, when a product was first sold or whether a prior art reference had been published.
Many claims of invalidity rest, however, not upon factual disputes, but upon how the law applies to facts as given. Do the given facts show that the product was previously “in public use”? 35 U. S. C. §102(b). Do they show that the invention was “nove[l]” and that it was “nonobvious”? §§102, 103. Do they show that the patent applicant described his claims properly? §112. Where the ultimate question of patent validity turns on the correct answer to legal questions—what these subsidiary legal standards mean or how they apply to the facts as given— today’s strict standard of proof has no application. See, e.g., Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 17 (1966); Minnesota Mining & Mfg. Co. v. Chemque, Inc., 303 F. 3d 1294, 1301 (CA Fed. 2002); Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F. 3d 1296, 1305 (CA Fed. 2010); cf. Markman v. Westview Instruments, Inc., 517 U. S. 370 (1996).
Courts can help to keep the application of today’s “clear and convincing” standard within its proper legal bounds by separating factual and legal aspects of an invalidity claim, say, by using instructions based on case-specific circumstances that help the jury make the distinction or by using interrogatories and special verdicts to make clear which specific factual findings underlie the jury’s conclusions. See Fed. Rules Civ. Proc. 49 and 51. By isolating the facts (determined with help of the “clear and convincing” standard), courts can thereby assure the proper interpretation or application of the correct legal standard (without use of the “clear and convincing” standard). By preventing the “clear and convincing” standard from roaming outside its fact-related reservation, courts can increase the likelihood that discoveries or inventions will not receive legal protection where none is due.
THOMAS, J., concurring in judgment
SUPREME COURT OF THE UNITED STATES
MICROSOFT CORPORATION, PETITIONER v. i4i
LIMITED PARTNERSHIP ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 9, 2011]
JUSTICE THOMAS, concurring in the judgment.
I am not persuaded that Congress codified a standard of proof when it stated in the Patent Act of 1952 that “[a] patent shall be presumed valid.” 35 U. S. C. §282; see ante, at 7. “[W]here Congress borrows terms of art,” this Court presumes that Congress “knows and adopts the cluster of ideas that were attached to each borrowed word . . . and the meaning its use will convey to the judicial mind.” Morissette v. United States, 342 U. S. 246, 263 (1952). But I do not think that the words “[a] patent shall be presumed valid” so clearly conveyed a particular standard of proof to the judicial mind in 1952 as to constitute a term of art. See, e.g., ante, at 12, n. 7 (“[S]ome lower courts doubted [the presumption’s] wisdom or even pretended it did not exist”); Philip A. Hunt Co. v. Mallinckrodt Chemical Works, 72 F. Supp. 865, 869 (EDNY 1947) (“[T]he impact upon the presumption of many late decisions seems to have rendered it as attenuated . . . as the shadow of a wraith”); Myers v. Beall Pipe & Tank Corp., 90 F. Supp. 265, 268 (D Ore. 1948) (“[T]he presumption of [patent] validity . . . is treated by the appellate courts as evanescent as a cloud”); American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F. 2d 1350, 1359 (CA Fed. 1984) (“[I]n 1952, the case law was far from consistent—even contradictory—about the presumption”); cf. Bruesewitz v. Wyeth LLC, 562 U. S. ___, ___–___ (2011) (slip op., at 9– 10) (Congress’ use of a word that is similar to a term of art does not codify the term of art). Therefore, I would not conclude that Congress’ use of that phrase codified a standard of proof.
Nevertheless, I reach the same outcome as the Court. Because §282 is silent as to the standard of proof, it did not alter the common-law rule. See ante, at 6 (“[§282] includes no express articulation of the standard of proof”). For that reason, I agree with the Court that the heightened standard of proof set forth in Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1 (1934)—which has never been overruled by this Court or modified by Congress—applies.
ORAL ARGUMENT OF THOMAS G. HUNGAR ON BEHALF OF THE PETITIONER
Justice Antonin Scalia: We'll hear argument now in Case No. 10-290, Microsoft Corporation v. i4i Limited Partnership.
Mr. Hungar, you may proceed.
Mr. Hungar: Thank you, Justice Scalia, and may it please the Court:
The Federal Circuit's clear and convincing evidence standard ensures the enforcement of invalid patents, even though this Court recognized in KSR that invalid patents stifle rather than promote the progress of liberal arts.
Under this Court's decisions in Grogan and Huddleston, the default preponderance standard should govern in all cases because section 282 does not specify a heightened standard of proof.
And as this Court suggested in KSR, it makes no sense to have a heightened standard of proof when the relevant prior art evidence was never even considered by PTO.
Under any view, it was error to require clear and convincing proof of invalidity in this case.
Justice Ruth Bader Ginsburg: It would be hard to argue, Mr. Hungar, that it makes no sense, but it made sense to Cardozo and Judge Rich.
Mr. Hungar: Your Honor, Justice Cardozo was not addressing a case in which the evidence at issue had not been considered by the Patent Office.
To the contrary, the Court made clear--
Justice Antonin Scalia: Well, you can't keep shifting horses, now.
Are you going to argue for all the time, in which case, you can appeal to the general rule that we always apply, or are you going to say, oh, yes, we won't apply it normally but only when the prior art hadn't been considered?
I mean, you -- you can't ride both horses.
They're going in different directions.
Mr. Hungar: --Your Honor, our position and our view of the correct interpretation of the statute is that Grogan and Huddleston approach.
The statute does not specify a heightened standard; therefore, preponderance, the default standard; applies.
I was attempting to answer Justice Ginsburg's question about the RCA case.
And the RCA case didn't address the question that was discussed in KSR, but we believe, as I said, that the -- that the preponderance standard should govern across the board.
Justice Antonin Scalia: So, you're contradicting Cardozo?
Mr. Hungar: To the extent that -- that Justice Cardozo was discussing a heightened standard in the limited context of priority inventions, we think that that's not consistent with section 282, which, of course, came later.
Moreover, I would note that the concerns that undergirded the Court's heightened standard in priority of invention cases, where -- those concerns were addressed to the -- the problem of primarily oral testimony being offered to substantiate priority of invention claims.
The Federal Circuit has separately addressed that issue by means of its corroboration requirement, which operates separate and independent of the clear and convincing evidence standard, so the concerns that undergirded RCA are -- are completely taken care of by that as well.
Justice Elena Kagan: But Justice Cardozo certainly didn't limit his holding in the way you suggest.
The language of that opinion is extremely broad.
And if you read that opinion, no one would gather from that opinion the kinds of limits that you're suggesting on it.
Mr. Hungar: Actually, Your Honor, I agree that there is some grand language used in dictum in that case.
Certainly, the holding doesn't extend beyond the -- what was presented before the Court.
But, actually, if you read the language carefully, you'll see again and again he refers to the fact that it's a question of -- of prior invention.
He says when the defense is a prior invention, and then he quotes the heightened standard on page 7.
Again, on page 8, he talks about the defense of invention by another.
So he -- and every single one of the cases that he cites there, without exception in that discussion on pages 7 to 8, is a priority of invention case, The Barbed Wire Patent case being the leading example which had explained this rationale for a heightened concern in that specific context.
But you don't have cases applying -- Supreme Court cases applying the heightened standard in other contexts.
And, indeed, you have many cases decided after RCA that don't mention any heightened standard in viewing invalidity questions.
Justice Ruth Bader Ginsburg: But just taking RCA itself, Cardozo said through all the verbal variances there runs this common core of thought and truth, that one otherwise an infringer who assails the validity of a patent bears -- upon its face, bears a heavy burden of persuasion and fails unless his evidence has more than a dubious preponderance.
Mr. Hungar: Yes, Your Honor.
And read -- taken out of context, that could have broad implications, but the sentences before and after clearly make -- indicate that he's talking about priority of invention.
He talks about the title of the true inventor and so forth.
So -- so, again, that's what those cases said, and that's what a fair reading of RCA says.
But, regardless of the best reading of RCA, we -- the -- the question here is what did Congress do in 1952?
And we know that Congress in 1952 could not possibly have understood the law to be an across-the-board clear and convincing evidence standard.
Justice Ruth Bader Ginsburg: Then you -- then you have to be saying that Judge Rich got it wrong because he does deal with the--
Mr. Hungar: Well, certainly -- yes, Your Honor, certainly we think American Hoist is wrong, although I would note that Judge Rich, in his American Hoist decision, says that the cases prior to 1952 were all over the map.
But -- but the relevant question is what would Congress have thought the state of the law was in 1952.
If you think that there's any merit at all to the judicial codification argument, it's perfectly clear that Congress could not have thought in 1952 that the law was an across-the-board heightened standard, because case after case after case rejected the proposition that there is a heightened standard or that the presumption was unaffected when the evidence was not considered by the Patent Office.
The -- we've cited numerous cases in our brief at pages 34 through 36.
The -- and we also in the reply brief at footnote 3 reference a list of over 200 cases, some from before 1952 and some from after 1952, all recognizing that the presumption of validity was weakened or eliminated when the prior art evidence was not considered by the Patent Office.
So, you just--
Justice Elena Kagan: Well, Mr. Hungar, it seems to me that RCA would matter, even under your view of the world, because if you think that Congress did not codify the existing state of the law as to the standard of proof and you think that Congress -- that -- that section 282 was essentially silent as to the standard of proof, then the question is, what do we do?
And one answer to that question is we go with our prior precedent, which is RCA.
Mr. Hungar: --Well, first of all, again, because RCA in context was a case where there was a priority of invention dispute that had been adjudicated in the Patent Office on the same evidence previously resolved by the Court, a priority of invention dispute, where the heightened standard cases had some application, it clearly wouldn't affect the standards in this case.
But, more fundamentally, that's not what Congress thought in 1952, and when you don't have a clear rule to be codified, the default rules of statutory construction apply.
The default rule of statutory construction in a -- on this question, in Grogan and Huddleston, the preponderance standard applies.
And, moreover, while the statute does not specify a heightened standard, it does actually speak to and -- and preclude the argument that i4i makes, because the first sentence refers to patents being presumed valid under this Court's precedent, a presumption shifts the burden of going forward, and the second sentence of the original statute refers to the burden of proof.
Under their interpretation, presumption does all the work.
The first sentence not only shifts the burden of going forward, also shifts the burden of proof, and does so under a heightened standard, which has never been how presumption is interpreted generally in the law, and it renders the second sentence entirely superfluous.
There's no need for it.
Justice Ruth Bader Ginsburg: --It's -- it -- it is true that the Federal Circuit has been consistent now since almost the beginning, since that court came on the scene, and it does have a monopoly on appeal in patent cases since 1984.
Because the -- the Federal Circuit has consistently taken this position, one would have expected that there would have been bills proposed to change it.
Were there any?
Mr. Hungar: No, Your Honor, not that I'm aware of.
But I would note that this is, I think, i4i's congressional acquiescence argument, if you will, and that argument fails for numerous reasons.
First of all, if there could be any acquiescence, and we don't think that the -- this Court's extremely high requirements for such a claim have been satisfied here, but if there could be any acquiescence at all, the first 30 years after enactment of the statute would be the most relevant consideration in determining what Congress had acquiesced in, and it's perfectly clear that the regional circuits all rejected the across-the-board heightened standard that i4i is arguing for.
So if Congress acquiesced in anything, it was not an across-the-board heightened standard.
Justice Sonia Sotomayor: Counsel, I -- I -- having read some of those cases that you've cited that you claim weakened or eliminated the burden of proof standard, most of them didn't quite eliminate it.
Virtually all of them added an instruction to the jury of some sort that said that the application of the standard should take into account the fact that the PTO did not consider evidence -- did not consider the prior art relied upon in the invalidity challenge.
You didn't ask for such an instruction in this case; is that correct?
And if you didn't, why isn't that adequate to convey the point that you're trying to convey, that a jury should, in fact, consider that the PTO never got to see that prior art?
Mr. Hungar: Your Honor, if I understand the -- the question correctly, first of all, I would disagree with the characterization of the cases, but with respect to the preservation issue, we objected to the clear and convincing evidence instruction, and we also said that if -- if any instruction on the heightened standard is going to be given, it needs to reflect that -- the fact that, at least with respect to prior art combinations that were not considered by the Patent Office, the standard should be a preponderance.
And, indeed, that's true of all of the prior art combinations that were at issue in the case.
Justice Sonia Sotomayor: But other judges give a slightly different standard.
They give a clear and convincing standard, and they add a separate instruction that tells the jury, in applying that standard, you should consider the fact that the PTO did not see this evidence.
You didn't ask for that?
Mr. Hungar: We didn't ask--
Justice Sonia Sotomayor: You just asked for the preponderance of the evidence charge?
Mr. Hungar: --But, Your Honor, we did object to the clear and convincing evidence instruction, and so if -- we don't think that's the right answer, the more easily satisfied instruction, if that's what Your Honor is referring to.
But if that were the court's conclusion, that that is in fact what the law requires, then our objection to the clear and -- the unmodified clear and convincing evidence instruction would justify a new trial here.
But more fundamentally, even the Federal Circuit--
Justice Sonia Sotomayor: Why?
Mr. Hungar: --Because that in effect--
Justice Sonia Sotomayor: I mean, you said to the judge below: All you have to charge is preponderance of the evidence.
You never told him: Please explain to the jury that under clear and convincing they can take into account--
Mr. Hungar: --Your Honor, that construction would not solve the fundamental problem, which is that when the Patent Office didn't even consider the evidence, it makes absolutely no sense, as the KRSR court indicated, to have this heightened deference.
The statute requires a degree of deference by shifting the burden of proof and the burden of going forward, but for i4i to say that we need to go beyond what the presumption is, the normal default standard of preponderance, you need some heightened reason for that.
There's absolutely none, particularly when the Patent Office didn't consider the evidence, didn't make a decision, there was no decision and no evidence considered going to the relevant question.
Justice Stephen G. Breyer: I have one question here I would like to get your view on.
I'll assume that the language is open enough in the history so that we could make what would be a change, I think it would be a change.
The reasons as I get from the brief for doing that are because there are two types of errors: It's a bad thing not to give protection to an invention that deserves it; and it is just as bad a thing to give protection to an invention that doesn't deserve it.
Both can seriously harm the economy.
And you are also saying that the Patent Office is out of control, not through its own fault, but there are too few people and too many inventions.
And therefore type two error is a real risk.
So I'm turning you to and say: Well, what should we do about it?
I know your proposal.
But we have also seen in these briefs the following proposal: One, somebody who thinks there is a type two error, go back to the Patent Office and ask for reconsideration.
That's pretty good.
We get the experts to look at it again.
And then that's coupled with: Tell the district judges to stick very closely to their job, allow the clear and convincing standard to apply to facts, and by that we mean brute facts, and let them decide the brute facts, but let the judge decide whether that amounts to obviousness, novelty, or any of the other prerequisites.
Now, I've gotten that out of the amicus briefs, some of which say they support you but they really don't.
So I would like -- I would like your views on those two suggestions as being sufficient to cure the problem that you point to.
Mr. Hungar: --Yes, Your Honor.
First of all, with respect to re-exam, re-exam is not a solution to the problem or an answer to the absence of justification for a heightened standard, for several reasons.
First of all, re-exam is limited in scope.
It can only consider certain types of prior art evidence and issues.
It couldn't, for example -- it was not available for the issue that we're talking about here, the on-sale bar.
There are various issues, the section 112 issues, such as written description and best mode and the like, are not susceptible of re-examination.
Statutory subject matter is not susceptible of re-examination.
Many kinds of prior art, anything other than actual patents or publications, cannot be referenced in the examination.
So it is a limited mode of inquiry that does not address many types of prior art that come up in many types of important cases, technology cases in particular.
So that's one reason why the re-exam solution is not a problem, and of course it can't possibly be used to infer some intent on the part of Congress.
I4i and the government try to suggest that this was part of the scheme of Congress and this is why clear and convincing makes sense.
But re-exam was enacted in 1980, long after the '52 act, so it doesn't shed light on Congress's intent in enacting section 282.
And it was enacted before the Federal Circuit had created its heightened standard, so it can't possibly have been an attempt to address the problems created by an across-the-board heightened standard that did not exist at the time.
In 1980 the law was clear that a preponderance standard governed in most or all cases and a preponderance standard, of course, governs in re-exam as well.
So re-exam is not a solution.
The more easily satisfied instruction or that type of approach.
If that's what I understand--
Justice Stephen G. Breyer: I'm getting that out of the American Intellectual Property Law Association.
I don't blame them for my phrasing of it, but that is what struck the thought in my mind that careful instructions limiting the juries to brute facts and giving the judge the notion, the job of characterizing that -- you heard what I said -- that that will go a long way towards curing the problem you're worried about.
Mr. Hungar: --Your Honor, I don't think it addresses the problem because the fundamental problem is imposing this heightened standard on the jury that has no moorings in the statute and no moorings in common sense, particularly in a case like this one where the relevant evidence was not only not considered by the Patent Office but withheld from the Patent Office.
Under those circumstances--
Justice Stephen G. Breyer: It might not in your situation.
But the problem is in principle as it's put to us that the office and the Federal Circuit emerge giving protection to things that aren't really novel, that aren't really advances on the prior art, et cetera.
Now, if that's the problem, and you carefully instruct the jury, the bad fake patents will go away because the judge will say: Look, this metal case called a battery leakproof is not really novel.
Mr. Hungar: --But, Your Honor, if that were -- the judge can't give an instruction like that.
Justice Stephen G. Breyer: No, no.
The judge says: I want you to find if this metal container is leak proof.
Now it's up to the judge.
Mr. Hungar: Your Honor, I think in many of these cases it would be extremely difficult or impossible for judge to fashion at that level of specificity the factual issues to be considered by the jury.
But more fundamentally, if you're getting into that level of detail and addressing questions that the Patent Office didn't even consider or certainly did not have an opportunity to consider with the full array of procedural advantages that litigation and discovery offer, it just makes no sense to impose a heightened standard.
As one of Your Honor's earlier questions pointed out, the fundamental problem here is that the interests on the i4i side of the equation, the policy interests, are outweighed if anything by this Court's repeated recognition that invalid patents stifle innovation and competition and are very harmful.
Justice Ruth Bader Ginsburg: Mr. Hungar, could we go back to the statute that was enacted in 1952.
Before that the burden of proof on the issue of validity of the patent or the effect of the patent, that was on the challenger.
So when Congress added a presumption of validity, it must have had in mind something more than the defendant would have the burden of proof and the normal standard is preponderance.
So by adding a presumption of validity, must Congress have intended to do something more than simply repeat that the defendant has the burden of proof?
Mr. Hungar: No, Your Honor.
The law actually before 1952 was quite unsettled on that question, as we noted in our brief and as Judge Rich, I believe, noted in the American Hoist case, there were actually cases prior to 1952 saying that the burden was on the patent HOLDER to establish a validity.
So what Congress--
Justice Anthony Kennedy: Burden of going forward or burden of persuasion?
Mr. Hungar: --I believe -- you know, the cases aren't crystal-clear on that.
I think certainly they were talking about the burden of persuasion and presumably also the burden of going forward.
But I don't think -- I don't recall that they speak to that level of specificity.
But certainly there are cases saying the burden is on the patent holder.
Congress overturned those cases by imposing -- by stating in the second sentence that the burden of proof would be on the defendant.
But it only makes sense, as I indicated earlier, for Congress to have added that sentence if it didn't view the presumption sentence as shifting the burden of proof to the defendant, let alone shifting it under a heightened standard, so--
Justice Samuel Alito: If the challenger has the burden of persuasion, wouldn't it almost go without saying that the challenger would also have the burden of production on the issue of invalidity?
So what would be added then by -- what role is played then by that sentence, a patent shall be presumed valid?
Mr. Hungar: --I think that's unclear, Your Honor.
Certainly there are circumstances in which the party with the ultimate burden of proof does not bear -- does not have the burden of persuasion at every stage.
And Congress -- there were also cases prior to 1952 suggesting that the presumption had gone away, that there was no longer a presumption of validity or that the presumption went the other way.
And so again, Congress wanted to be clear; it was saying there is a presumption which shifts the burden of going forward under this Court's precedence, and there is a burden of proof on the defendant, and that's all it did.
To infer that it did something much more, much more than the pre-1952 cases authorized -- there are literally dozens of pre-1952 cases cited in that list of 200 cases referenced at footnote 3 of our brief, from prior to 1952, rejecting the notion that there's an across-the-board heightened presumption of validity; saying, no, if the evidence was not considered by the Patent Office or in some -- the Western Auto case, for example, from the Sixth Circuit says well, there's this -- the exception for oral testimony of prior invention, that's the RCA case; but everything else is preponderance.
So there's no -- there's no heightened presumption of validity in any other circumstances.
So I think the law was clear, and the treatises we cite at page 9 of our reply brief also make clear the treatise writers understood, there was no across-the-board heightened presumption that it was weakened or eliminated when the evidence was not before the Patent Office.
And some of the cases said -- actually RCA itself cites with approval two court of appeals cases that we note in our reply brief, the Studie case and the Wilson case, which rejected the notion of a heightened standard across the board.
They said well, that's true when the issue was adjudicated before the Patent Office, but here where the Patent Office did not adjudicate the issue that doesn't apply.
So again you just can't get out of the pre-1952 case law -- the rule that i4i is urging.
If the Court has no further questions, I would like to reserve my time.
ORAL ARGUMENT OF SETH P. WAXMAN ON BEHALF OF THE RESPONDENTS
Mr. Waxman: Justice Scalia, and may it please the Court.
Justice Antonin Scalia: Mr. Waxman.
Mr. Waxman: The long-settled, clear and convincing evidence standard is correct, one, as a matter of statutory interpretation, two, as a matter of stare decisis in a field in which stability is particularly important, and, three, as a matter of first principles.
As to one, in 1952 Congress codified a long, uniform line of decisions from this Court holding that the presumption of validity imposes a heightened burden of proof, a burden of proof that this Court in RCA unanimously described as, quote, "clear and cogent evidence".
And for the past 28 years Congress has actively acquiesced in the Federal Circuit's consistent holding expressly drawn from RCA that the standard is "clear and convincing".
Justice Ruth Bader Ginsburg: How actively do we acquiesce?
Justice Antonin Scalia: Yes, I would like that notion of active acquiescence.
Mr. Waxman: I thought that might get a rise out of you.
I hope I'll get a chance to go to first principles, but having made that provocative statement, the point is--
Justice Antonin Scalia: It's like passive activity, right?
Mr. Waxman: --I may want to submit a supplemental brief on that point.
What I mean to say is that this is not a statute that Congress enacted and then forgot about.
This is a statute in which beginning in 1980, even before the Federal Circuit was created, Congress started amending the law to address the problem of low-quality patents, with the first re-examination procedure in 1980, any number of amendments, including to section 282, the creation of interparties re-examination in 1999, and the current consideration of a post-grant review process.
So Congress has been very, very active in this field, and what I mean by active acquiescence is it has been very active in this field, it is well aware of the clear and convincing evidence standard, and it has done nothing whatsoever to change it, even make any effort to consider making such a sweeping change in long-standing doctrine.
Justice Elena Kagan: Mr. Waxman--
Justice Samuel Alito: If I could take you back to first principles, which is where you started, I have three problems in seeing your interpretation in the language of section 282.
First, the statute says the burden of establishing invalidity of a patent, et cetera, et cetera, shall rest on the parties asserting such invalidity.
If Congress wanted to impose a clear and convincing burden, why in the world would they not have said that expressly in that sentence?
Number two, if the first sentence,
"a patent shall be presumed valid. "
means that -- is talking about the burden, then it's superfluous, because that's dealt with in the second sentence.
And, third, the phrase "shall be presumed valid" doesn't seem to me at all to suggest clear and convincing evidence.
A presumption normally doesn't have anything to do with clear and convincing evidence.
Most presumptions can be disproved by much less than clear and convincing evidence.
So how do you read that in -- your -- your position into the language of the statute?
Mr. Waxman: Well, as to presumptions generally, I found particularly persuasive your opinion for the Third Circuit in GI Holding.
Justice Samuel Alito: I've gotten a lot smarter since then.
Mr. Waxman: --More directly to the point, and with all due deference to the sensibilities of the presiding Justice for this argument, when Congress enacted section 282 in 1952, the revisers note the House Committee report, the Senate committee report said that they were, quote,
"codifying the existing presumption of patent validity. "
and this Court had unanimously said -- and this is language from RCA that Microsoft does not address -- on page 2 of its opinion says, quote,
"even for the purpose of a controversy of -- with strangers there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence. "
Now, to be sure, that was dicta in the sense that the case in itself involves a priority issue.
But it was the holding of the Court 3 years later in Smith v. Hall; it was repeated on the very same day in Mumm, and it was -- the Court spent an entire page, I think page 7, the better part of page 7 and 8 of its opinion, explaining that -- enunciating a general principle of the law, and it would be a cruel joke on Congress to have said, we are, when it said we are codifying the existing presumption, that that presumption was not exactly what the Supreme -- the Supreme Court unanimously had said, which is a presumption not to be overthrown by clear and convincing evidence.
Now, that's -- it's not that the first sentence uses the word presumption.
It uses the word essentially presumption of patent validity, which is a feature, a uniform feature of the Supreme Court's jurisprudence since the Court first started addressing this issue in 1873, and indeed when Justice Story first decided the Washburn v. Gould case, there is -- their argument is the standard is a preponderance.
There is not one opinion, there is not one sentence, there is not one phrase in any of this Court's line of decisions that supports that proposition -- and when Judge Rich said in 19 -- shortly after 1952 that there was some disarray in the courts' opinions, he was -- and you can look at his opinion in context.
He was talking about lower court decisions that had either ignored or misinterpreted this Court's very clear holdings -- holdings which, by the way, refute not only their argument for a universal standard, preponderance standard, but directly refute their argument that there somehow is some other standard of proof that applies with respect to evidence that assertedly was not before the Patent Office.
That was true of most of this Court's cases decided before RCA, and for that matter after RCA.
Justice Ruth Bader Ginsburg: Would you agree, looking to Judge Rich's opinions, that it would have been in order for the judge to instruct, if the judge had been asked to do so, that the evidence would carry more weight if it hadn't been presented, defendant's evidence would carry more weight if it hadn't been presented to the Patent Office?
Mr. Waxman: Yes, and the Federal Circuit has said that over and over and over again.
I mean, I'm going to quibble with the word "would" because I think the actual language of the instruction can't invade the province of the jury.
But you could -- certainly could say that the defendant contends that the patent is invalid because the law presumes that a patent issued by the PTO is valid, the defendant bears the burden of proving invalidity by clear and convincing evidence, and in deciding whether the defendant has met that burden, you may find it more easily met with evidence that you conclude the Patent Office did not consider in evaluating patentability.
That is the long-standing established rule of the Federal Circuit.
It was stated, as was recognized in American Hoist, in 1984, and the explanation for it, Judge Rich's explanation is exactly the same in cite that this Court's statement's in KSR is, which is that there -- there are -- there are reasons independent of deference to a particular PTO decision that warrant a clear and convincing evidence standard, and -- and this is key -- there is no case from this Court, to my knowledge, in Anglo-American jurisprudence, that creates or sanctions a regime in which there are different standards of proof with respect to a particular issue that a jury has to decide.
The question -- when there is--
Justice Anthony Kennedy: Well, there are case -- there are cases in which the presumption disappears?
Mr. Waxman: --Well, there -- are you referring to cases of this Court?
Justice Anthony Kennedy: Yes.
Well, I mean, there -- there -- there are instances in which a presumption disappears and then the -- the parties begin again with burden of persuasion, et cetera.
Mr. Waxman: Well, okay.
I'm -- I'm talking here about -- the argument here is about the standard of proof, that is, a jury has to be instructed is it beyond a reasonable doubt, is it preponderance, is it clear and convincing?
I'm not aware of any instance in Anglo-American jurisprudence, and certainly Microsoft and its amici have not cited one in which the jury is told that depending on the weight you ascribe to the evidence you heard, you should apply a different standard of proof.
The issue goes to the weight of the evidence.
I mean, imagine a case in -- a regime in which you said, well, you've heard eyewitness testimony.
If you, ladies and gentlemen of the jury, find that the eyewitness really had an unimpeded view, the standard is preponderance, but if you think that the view was impeded or obscured, the standard is clear and convincing evidence.
The -- the assertion that there was evidence that the jury -- that the PTO didn't hear, and as the briefs point out it is far from black and white what the PTO does or doesn't consider.
And in addition the -- it's far from clear whether the unconsidered evidence is, quote, more pertinent than evidence that was considered.
Even assuming that, the jury is told, for reasons of first principles, that I will articulate in a moment if left to my own devices, that the burden of proof is clear and convincing evidence, but you may find that burden more easily met if you find that there was, in fact, evidence relating to validity that was not, in fact, considered by the PTO when it issued this property right.
Now, the first--
Justice Sonia Sotomayor: Isn't there a lower court that has ruled that that standard, in the manner that you've articulated, could confuse a jury as to what clear and convincing evidence means?
Mr. Waxman: --The--
Justice Sonia Sotomayor: In fact, it's not clear and convincing evidence if you phrase it that way, that it's something less than that.
Mr. Waxman: --Well, I mean, a lot--
Justice Sonia Sotomayor: And so, the amici here have suggested alternatives to that language that you're endorsing--
Mr. Waxman: --There -- there are -- there are any number of formulations that trial courts have given.
I think the one that would be clearest would be one that says in deciding whether the defendant has met his burden, you may give added weight to evidence that you find the PTO didn't consider in deciding validity.
The case I think you're referring to was Microsoft's earlier case involving z4, where unlike this case, Microsoft did ask for an instruction but it was rejected by the court -- it was -- it was rejected by the court and found not to be an abuse of discretion.
The key point with respect to that instruction goes to the articulation that was suggested earlier, because in that case the instruction said you -- you make -- I instruct -- I don't have it in front of me, but it was essentially a mandatory instruction to give greater weight or that the burden would be more easily met.
Justice Antonin Scalia: Of course the instruction that you've proposed to the jury, like your adversary's proposition, would require determining what it was that the Patent Office considered.
So you -- you haven't avoided the -- the -- the problem of litigating an -- an issue that -- that would better be avoided.
Mr. Waxman: Well--
Justice Antonin Scalia: You have to do it for your instruction just as -- as he will have to do it for his.
Mr. Waxman: --There is a -- there is a great difference, Justice Scalia, between telling individual jurors what amount of weight they may or may not give to certain evidence in creating a dual standard of proof which would, for reasons that -- that Microsoft's own amici point out, requires -- would require the jury first to determine whether this evidence was or wasn't considered and was or wasn't more pertinent--
Justice Antonin Scalia: Yes, but your -- but your instruction requires that, too.
You're inviting the parties to litigate that issue so that the jury can be instructed.
If you -- if you find that it wasn't considered, you can give it--
Mr. Waxman: --Justice Scalia, as -- as I think all the parties agree, and we reflect the -- we reflect the -- the research, I believe, on footnote 12 of our brief, the -- this point is argued in many, many, many cases.
That is -- and it was true in this case.
Evidence is put on that the jury -- that the PTO didn't consider this particular prior art, although, you know, in this case the file wrapper shows that there were five prior art rejections based on other art before the patent was allowed, and counsel argue it to and fro to the jury, as the Allison and Lemley article points out, the statistics bear out the common sense, which is that juries are, in fact, very influenced by the fact that there was art going to or questioning validity that was not considered by the PTO.
In other words, the instruction, whether the instruction is necessary or not, juries get it, and juries apply it.
What they're not required to do is apply two different standards of proof following all sorts of predicate determinations that they would have to make.
May I simply list the first -- the first--
Justice Ruth Bader Ginsburg: But -- but why -- why -- why not, Mr. Waxman?
If the whole reason for this extra deference, for this clear and convincing standard is a Patent Office is expert and so we defer juries similarly to defer to their judgment, but if they haven't judged anything, what is the justification for continuing to have the clear and convincing standard?
Mr. Waxman: --There -- here are four independent principles that justify the clear and convincing evidence standard across the board regardless of what the jury considered.
Number one, an infringer's validity challenge is a collateral attack on a government decision that has already been made, quite unlike Grogan and Huddleston, that bestows property rights by written instrument.
Number two, the harm from an erroneous determination is hugely asymmetrical.
A single holding of invalidity by a single lay jury vitiates for all time the patent and all of the reliance interest by the inventor and the investors and the licensees who have relied upon that ex ante.
Third, this grant of property rights not only induces reliance, which lack, like the land patent cases induce reliance, this is a grant of a property right that under the Constitution is specifically designed to induce reliance in exchange for the inventor's honoring her half of the patent bargain, that is public disclosure of her intellectual property for the public benefit, and the commitment of capital by investors and licensees that's necessary to bring into fruition for the public benefit.
Justice Elena Kagan: --Isn't there a limited amount of reliance that any patent holder can have, given the re-exam system?
Mr. Waxman: Yes, and the fact -- yes, the re-examine system -- I think your point actually, I wish I had thought to make this point myself.
Re-examine is often invoked by the patent holder.
That is, because re-exam is done by the expert agency and allows the patent -- allows the agency not to have a binary choice of yes, the patent's fine or no, it's invalid for all time, but can narrow the scope of the patent in re-exam, many re-exams are requested by the patent holder.
And more -- and also, when you request re-examination or when the PTO makes a re-exam decision, that decision is good for all time, whichever way it goes, unlike the stark asymmetry in trial court litigation where the patent holder has to win 100 percent of the time.
If the patent holder loses once, the patent under nonmutual offensive collateral estoppel, Blonder-Tongue, the patent is out.
And I should point out that this Court's opinion in Blonder-Tongue, which of course was a case about patent validity--
Justice Stephen G. Breyer: All those first principles are along the lines of how important patents are and what a disaster is it is to the person once they're invalidated.
I think the other side will say: In today's world, where nobody really understands this technology very well, a worse disaster for the country is to have protection given to things that don't deserve it because they act as a block on trade, they act as monopolies, and they will tie the country up in individual monopolies that will raise prices to consumers, et cetera.
You can imagine my spelling out this argument.
Mr. Waxman: --Yes.
Justice Stephen G. Breyer: So I can't work out in my own mind whether in today's world these first principles cut for the patentee or cut for the challenger to the patent.
Mr. Waxman: Those are policy arguments that have--
Justice Stephen G. Breyer: And the first are not?
Mr. Waxman: --Excuse me?
No, the fact that -- the fact that it's a collateral challenge on a government decision bestowing property rights by written instrument, no.
The fact that the harm from an erroneous decision is totally asymmetrical, no.
The fact that what Congress intended was that this grant of property rights actually induced reliance, and finally -- and this is my final first principle, I suppose -- that changing this long-standing standard would marginalize the PTO, the expert agency that we know Congress created to superintend the issuance and re-examination of patents, and to the extent that there are significant policy concerns which I agree with -- may I finish my sentence?
Justice Antonin Scalia: --Finish your sentence.
Mr. Waxman: --which I agree with: A, Congress is on the job; and, B, there is -- those policy reasons say nothing about what Congress thought about the Patent Office in 1952 when it applied this Court's unanimous presumption.
Justice Antonin Scalia: Thank you, Mr. Waxman.
Mr. Stewart, we'll hear from you now.
ORAL ARGUMENT OF MALCOLM L. STEWART ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE RESPONDENTS
Mr. Stewart: Justice Scalia, and may it please the Court:
I would like to begin by addressing briefly this Court's decision in RCA, because I think it's important to notice not only that Justice Cardozo used fulsome and extensive language that was intended to sweep broadly and that was intended to announce a categorical rule; the other thing is the discussion in RCA was intended and was set forward as a recapitulation of prior doctrine.
That is, Justice Scalia -- Justice Cardozo did not purport to announce for the first time a rule as to the weight that should be given a prior patenting decision.
He explained that this is what the Court had done since the latter part of the 19th century and in fact it had been done by Justice Story riding circuit in the early part of the 19th century.
And the court in RCA said a patent is presumed to be valid until the presumption has been overcome by convincing evidence of error.
The requirement of heightened proof was part and parcel of the presumption itself in the same way that I think most lawyers in this country would say that the requirement of proof beyond a reasonable doubt is part and parcel of the presumption of innocence in criminal cases.
If a new criminal statute were enacted saying that the defendant is presumed innocent, but the presumption can be overcome by a preponderance of the evidence, that might be a presumption of innocence, but it wouldn't be the presumption of innocence as it's historically been understood in our country.
The second thing I would say about Congress's presumed intent when it acted in 1952 is that, at least when this Court's precedents are clear, Congress when it uses words that come right from those cases should be presumed to have codified this Court's holdings, not the decisions of lower courts that may have deviated from this Court's instructions.
And I think the presumption that Congress acts against the background of existing law, it's less a prediction or an assessment of what percentage of the legislature were actually aware of the details of RCA.
It's more a method of making the system work, by telling conscientious legislators: If you do read up, if you do understand the contours of Supreme Court's decisions, you can be confident that your words will be--
Justice Sonia Sotomayor: Counsel, the problem with your argument, assuming its validity, is why do you need the second sentence?
If Congress was intending to sweep up in the use of the word "presumption" the need to overturn it by clear and convincing evidence, why did you need the second sentence saying that the other side now bore the burden of persuasion?
Mr. Stewart: --I think there is a belt and suspenders quality to the statute, no matter how you parse it, but I think that Microsoft has essentially the same problem, because they have constructed a theory under which the second sentence does something that the first has not, does not, but they haven't constructed any theory as to why the first sentence is not superfluous.
That is, given the second sentence to the effect that the burden of establishing invalidity is on the challenger, there's no more work to be done by the first sentence.
The other thing I would say in response to Justice Alito's question, which also goes to the natural meaning of the statute, Justice Alito asked, I think, basically, if these precedents were not on the book and we were just looking fresh at the language, what would we assume the standard to be?
And I think we would say, let's look at what the defendant is asking the judge or jury to do.
The defendant is asking the judge or jury to set aside a decision that has been made by then the Patent Office, now the PTO, and we would ask what sort of standard of proof ordinarily applies when a litigant asks a court to set aside an administrative decision.
In a sense, this court had a variant of that problem a few years ago in Dickinson v. Zurko, which dealt with direct court of appeals review of a denial by the PTO of a patent applicant's application, and the statute clearly authorized judicial review in the Federal Circuit, but said nothing about what standard would apply.
And the Court said in the absence of a conflicting standard imposed by the statute, we will look to background principles and administrative law, and the standard will be substantial evidence.
And that's basically what this Court said back in 1894 in Morgan v. Daniels.
It said the reason that we apply a heightened standard when an individual attacks the validity of an issued patent is that that litigant is asking the Court to set aside a decision made by the appropriate executive branch agency.
Justice Samuel Alito: But that ground doesn't carry very much weight when the matter was never considered by the PTO.
Mr. Stewart: I think you are correct that if Congress had focused specifically on the category of cases in which the only evidence brought forward to show invalidity had not been considered by the PTO, it might have addressed that separately.
In our view there are three independent reasons that it makes sense to apply a heightened standard even in that category of cases.
The first two have to do with the interests of the patent applicant, the third has to do with the interests of the PTO.
The first one is that the patent -- the grant of a patent has historically been understood to reflect a quid pro quo between the applicant and the government, and the applicant's part of the bargain was disclose that which might otherwise be maintained as a trade secret, and the government's part of the bargain was give a period of exclusivity.
And I think there is a thread in this Court's cases, especially in the barbed wire patent cases, to the effect that once the patent applicant has honored his part of the bargain a court should be hesitant to essentially deprive him of the benefit for which he contracted unless the evidence is clear.
The court in the barbed wire patent cases said that whatever doubts there may be as to whether the patentee was actually the first inventor should be resolved in the patentee's favor because without question he was the one who first disclosed the information to the public, made it available to the public through the patent application process itself.
The second is related to the patentee's reliance interests, but is more instrumental.
That is, independent of our concerns for fairness to the patent applicant, Congress could reasonably determine that there are enough uncertainties along the way to getting a patent, to having it overturned on various other grounds that in an invalidity suit the patent -- the patentee should have reasonable confidence that it won't be overturned unless the evidence is clear.
And I would like to respond briefly to Your Honor's question, Justice Kagan, about why isn't that diminished by the re-examination process.
I think it is diminished somewhat.
Re-examination is different both because it's done by the expert agency and because it's more nuanced.
The option to narrow the claims to revise the language.
It's not a blunderbuss tool, like setting it aside.
But I would still acknowledge the force of your observation that to some extent, the patent holder's confidence would be greater if there were no re-examination process at all.
And I guess I would say this is just one aspect of the patent law's balancing of competing interests in a way that doesn't serve either to the exclusion of the other; and to use an obvious analogy, the current term of patent protection is 20 years from the -- the date of the application.
Obviously Congress thought 20 years was better than 10 and presumably that was because 20 years gives greater incentive to innovation.
If somebody asked--
Justice Samuel Alito: Why is -- why is re-examination sufficient to answer the concerns that Justice Breyer mentioned, when re-examination can't consider certain issues, and a case such as this doesn't necessarily have to be stayed while re-examination takes place?
Mr. Stewart: --It's not fully sufficient to resolve all challenges to the -- the validity of an issued patent.
Now Congress now has it before it legislative proposals, one of which has passed the Senate, one of which has been voted out of committee in -- in the House, and is currently pending before the court -- the full -- full House of Representatives, that would expand the availability of post, what we now call post-grant review proceedings, where for a limited window of time after a patent is issued, people who oppose the issuance of the patent can come in and object on any ground.
And that wouldn't be limited to the -- the grounds that are specified in the current re-examination proceeding.
So this would -- it reflects Congress's understanding that there is a problem with patents that should not have been issued, but its desire to create additional mechanisms for the PTO to address that problem, rather than to have it be done through litigation.
But that -- the point I was going to make about the 20 and the 10 years is somebody could ask, well if 20 years is better than 10, why wouldn't 30 be better than 20?
And the only answer is 30 presumably would give the patentee even more -- or the potential patentee even more incentive to invent, but at a certain point Congress decides that countervailing considerations require an end.
And it has essentially done something of the same thing with re-examination.
It said we're not going to go so far in the direction of protecting patent holders' reliance interests as to preclude the PTO from reassessing what it's done, but that doesn't mean that reliance interests aren't important.
And the third thing I would say is even when a defendant in an infringement suit comes forward with prior art that was not itself considered by the PTO, there's always the possibility that that prior art will be substantively equivalent to prior art that the PTO did consider; and so in cases like this, in form the defendant would be asking the jury to make a determination that the PTO had never made, but in substance, what the defendant would be asking the jury to do is conclude that what the PTO thought was a patentable advance really was not so.
Justice Antonin Scalia: Thank you, Mr. Stewart.
Mr. Hungar, you have 8 minutes for rebuttal.
REBUTTAL ARGUMENT OF THOMAS G. HUNGAR ON BEHALF OF THE PETITIONER
Mr. Hungar: Thank you, Justice Scalia.
A few points that I would like to make.
First of all, with respect to the suggestion that the jury should be instructed on the weight to be given various forms of evidence, I note that in the z4 case that's been discussed, the Federal Circuit rejected the very, quote, i4i suggests as the solution, and it did so because it would confuse the jury about what the standard is.
Having effectively three standards of proof in patent cases rather than two is hardly a solution to the problem; but more fundamentally, whatever instructions might or might not be appropriate regarding the particular evidence before the jury, there has to be a justification for departing from this default preponderance standard, and no sufficient justification has been offered.
The statute doesn't provide for it, the legislative history doesn't reference it, the pre-1952 case law can't reasonably be read in that way.
That the -- i4i and its amici do not point to a single case in the -- in the years leading up to 1952, the 15 or so years prior where a court of appeals or any court or any commentator said that the rule is clear and convincing evidence across the board.
No one understood that to be the rule.
No one read RCA that way.
Congress would not have done so, either, so you can't get there under codification.
You certainly can't get there under principles of administrative deference.
Even the government admits those that principles don't justify a heightened standard.
Justice Stephen G. Breyer: What about the rule where -- I'm trying this on, I don't buy it necessarily -- the -- the heightened standard exists where the Patent Office did consider it or could have considered it had the infringer asked for reconsideration?
In other words, put the burden on the infringing party to use this procedure, and if he does use it, it's going to get a heightened burden if he loses--
Mr. Hungar: Well, first--
Justice Stephen G. Breyer: --And if he doesn't use it, it should get a heightened burden because he should have used it.
Mr. Hungar: --First of all, Your Honor, I don't see that any way you can get that out of the statute.
But it also wouldn't work, because re-exams--
Justice Stephen G. Breyer: The statute itself doesn't -- we're all going on history here, I mean, and history brought up to date with the words of the statute I don't think cover it either way.
They talk about presumption, but put that to the side.
Mr. Hungar: --Well, there--
Justice Stephen G. Breyer: I wanted your opinion on that as the validity or a useful instruction for juries.
Mr. Hungar: --Well, Congress certainly couldn't have intended that in 1952 because it hadn't yet created re-examination.
Justice Stephen G. Breyer: I'm not asking that question.
I'm asking the question of whether in your experience as a patent lawyer or -- would -- what we're trying to do is we're trying to get a better tool, if possible, to separate the sheep from the goats.
That's what we're after, I think, and so what is that better tool?
Mr. Hungar: Your Honor, as you know, re-exam is not available for many of the types of invalidity issues that arise.
But in any event, if -- if -- if the Court had such a rule, the problem is, re-exam takes a long time, patents plaintiffs generally oppose stays of litigation for re-examination, because they want to get to the jury because they know that juries are much more likely to uphold patents than either judges or the Patent Office on re-exam.
So they want to get the case litigated as quickly as possible so you get through the court system before the re-exam has been completed.
So to the -- in fact if it were true, as some of the amici argue, that a patent applicant -- patent holders are afraid of juries and want the experts at PTO to resolve the questions, which we don't think as a -- as a factual matter is accurate, but if that were true, the patent applicant, the patent holder has the absolute right to initiate re-exam themselves, and they could certainly go to the court and say please stay proceedings pending re-examination.
Normally when -- courts refuse to stay proceedings, because they don't want to prejudice the plaintiff, who is opposing a stay, but if the plaintiff is asking for a stay, there's not going to be any problem.
So the system already permits patent holders to -- to -- to follow that procedure and get re-examination if they want it.
The problem is they usually don't.
And in fact a preponderance standard would encourage that.
With respect to the reliance arguments, the re-examination problem we think addresses that.
The fact that this is a procedural rule under this Court's precedence makes clear that reliance interests are lessened.
In any event, the reliance interests aren't nearly as strong as the same arguments made by many of the same parties in KSR, and MedImmune and eBay where this Court was not persuaded.
It should not be persuaded here, either.
With respect to the legislative history that they rely on, if you're going to look at the legislative history, what it actually says is that Congress is referring to the presumption as stated by the courts, plural -- not the Supreme Court, courts plural -- so if you're going to look at legislative history it actually makes clear that Congress was not looking only at the RCA case which is not even referenced in the legislative history, but was looking at rule as it was understood to exist in 1952, which is not the rule that i4i urges.
With respect to the -- the presumption point, the presumption clearly does serve a purpose, the presumption language in the statute, by overturning the courts -- the prior to 1952 decisions that had rejected the presumption, and by making clear that the burden of going forward is on the defendant, so the plaintiff doesn't have the burden that it would otherwise have of pleading and putting forward evidence at trial of validity.
For all these reasons, we ask that the judgment of the court of appeals be reversed.
Justice Antonin Scalia: Thank you, Mr. Hungar.
The case is submitted.
Justice Sonia Sotomayor: The second case is a patent case that comes to us from the Court of Appeals for the Federal Circuit.
i4i, respondents in this Court hold that the patented issue which claims an improved method for editing computer documents.
i4i, sued petitioner Microsoft, claiming that certain Microsurf -- Microsoft Word products infringe on behalf.
Microsoft counterclaim, seeking a declaration that i4i's patent was invalid under Section 102(b)'s on-sale bar which precludes patent protection for any invention that was on sale in this country more than one year prior to the patent applications.
The parties agreed that i4i had sold the software program known as S4 more than one year prior to its patent application.
They disagreed as to whether S4 embodied the invention claimed in i4i's patent.
Because the S4 software was not considered by the U.S. Patent and Trademark Office, the PTO, Microsoft requested a jury instruction that it was required to prove its in -- invalidity defense only by a preponderance of the evidence.
The District Court, however, instructed the jury that Microsoft was obligated to prove the defense by clear and convincing evidence.
The jury found that Microsoft willfully infringed i4i's patent and that Microsoft failed to prove invalidity.
The Federal Circuit affirmed, relying on its settled precedent that Section 282 of the Patent Act of 1952 requires invalidity to be proved by clear and convincing evidence.
The question before the Court is whether this interpretation of Section 282 is correct.
Section 282 provides that "a patent shall be presumed valid" and "the burden of establishing invalidity of the patent shall rest on the party asserting such invalidity."
Thus, by its expressed term, Section 282 establishes a presumption of patent validity and it provides that a challenger must overcome that presumption to prevail an invalidity defense.
But while the statute states the burden of proof, it includes no express articulation of the standard of proof.
According to site -- Microsoft, this means that Section 282 does not specify the applicable standard of proof, we disagree.
Where Congress uses a common law term in a statute, we assume the term comes with a common law meaning.
Here, by stating that a patent is presumed valid, Congress used a term with a settled meaning in the common law.
As we explained in an opinion filed with the clerk of the Court today, by the time Congress enacted Section 282, the presumption of patentability have long been a fixture of the common law.
According to its settled meaning, an invalidity defense required proof by clear and convincing evidence.
We cannot conclude that Congress intended to drop the heightened standard of proof from the presumption it codified simply because 282 fails to reiterate the standard expressly.
We just -- we reject Microsoft's arguments to the contrary -- contrary.
We also reject Microsoft's argument that a lower standard of proof should apply when an invalidity defense rest on evidence that the PTO never considered like the S4 software here.
The hybrid standard of proof that Microsoft envisions was not a part of the common law presumption of patent validity and nothing in 282 indicates that Congress intended to adopt it.
We note however that most often, a jury instruction should be given when requested and warranted, directing the jury to evaluate whether the evidence before it is materially new, and if so, to consider that fact in determining whether invalidity has been proved by clear and convincing evidence.
We are in no position to judge the parties opposing views as of the wisdom of the clear and convincing evidence standard.
Congress specified the applicable standard of proof in 1952, since then it has allowed the Federal Circuit's correct interpretation of 282 to stand.
Any recalibration of the standard of proof remains in its hands.
The judgment of the Court of Appeals for the Federal Circuit is affirmed.
Justice Breyer has filed the concurring opinion in which Justices Scalia and Alito joined.
Justice Thomas has filed an opinion concurring in the judgment.
The Chief Justice took no part in the consideration or decision of this case.