Microsoft Corp. v. i4i Ltd. P'ship

Citation180 L.Ed.2d 131,564 U.S. 91,131 S.Ct. 2238
Decision Date09 June 2011
Docket NumberNo. 10–290.,10–290.
Parties MICROSOFT CORP., Petitioner, v. i4i LIMITED PARTNERSHIP et al.
CourtUnited States Supreme Court

Thomas G. Hungar, Washington, DC, for petitioner.

Seth P. Waxman, Washington, DC, for respondents.

Malcolm L. Stewart, Bernard J. Knight, Jr., Raymond T. Chen, Robert J. McManus, William LaMarca, Neal Kumar Katyal, Tony West, Ginger D. Anders, Scott R. McIntosh and Joshua Waldman, for United States as amicus curiae, by special leave of the Court, supporting the respondents.

Matthew D. Powers, Weil, Gotshal & Manges LLP, Redwood Shores, CA, T. Andrew Culbert, Isabella Fu, Microsoft Corporation, Redmond, WA, Theodore B. Olson, Thomas G. Hungar, Counsel of Record, Matthew D. McGill, Scott P. Martin, Gibson, Dunn & Crutcher LLP, Washington, DC, Kevin Kudlac, Amber H. Rovner, Weil, Gotshal & Manges LLP, Houston, TX for Petitioner.

Donald R. Dunner, Don R. Burley, Erik Puknys, Kara F. Stoll, Jason W. Melvin, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P. Washington, DC, Seth P. Waxman, Counsel of Record, Paul R.Q. Wolfson, Daniel S. Volchok, Francesco Valentini, Arthur Coviello, Wilmer Cutler Pickering, Hale and Dorr LLP, Washington, DC, Douglas A. Cawley, Jeffrey A. Carter, T. Gordon White, McKool Smith P.C., Dallas, Texas, Robert Greene Sterne, Sterne, Kessler, Goldstein & Fox PLLC, Washington, DC, for Respondents.

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 in-validity 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.

I
A

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, 119 S.Ct. 304, 142 L.Ed.2d 261 (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, 119 S.Ct. 1816, 144 L.Ed.2d 143 (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, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (citing Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 155, 71 S.Ct. 127, 95 L.Ed. 162 (1950) (Douglas, J., concurring)); see post, at 2253 (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, 86 S.Ct. 684 (describing the "basic factual inquiries" that form the "background" for evaluating obviousness); Pfaff, 525 U.S., at 67–69, 119 S.Ct. 304 (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 in-validity 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 (C.A.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, 55 S.Ct. 928, 79 L.Ed. 163 (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 (C.A.Fed.1990) ; Ultra–Tex Surfaces, Inc. v. Hill Bros. Chemical Co., 204 F.3d 1360, 1367 (C.A.Fed.2000) ; ALZA Corp. v. Andrx Pharmaceuticals, LLC, 603 F.3d 935, 940 (C.A.Fed.2010).

B

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 post-trial 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. ––––, 131 S.Ct. 647, 178 L.Ed.2d 476 (2010).

II

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

A

Where Congress has prescribed the governing standard of proof, its choice controls absent "countervailing constitutional constraints." Steadman v. SEC, 450 U.S. 91, 95, 101 S.Ct. 999, 67 L.Ed.2d 69 (1981)....

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