Amici Support i4i at Supreme Court in Microsoft Patent Case

By Gene Quinn
March 24, 2011

UPDATED: 6:35pm

Last week the amicus briefs were due in support of i4i in their dispute with Microsoft, which is now at the United States Supreme Court. In what can only be characterized as a huge development, the United States has decided to participate openly on behalf of i4i and has argued that the presumption of validity must remain the same as it exists now. There were a number of interesting amici filings, portions of which appear below to create something of a readers-digest version of the amici in support of i4i.  The five that I highlight here are the U.S. government brief (which is excellent), the venture capital brief and BIO brief (both which eloquently discuss the negative impact there would be on investment if Microsoft’s position is adopted), the brief filed by Dr. Triantafyllos Tafas (of claims and continuations rule fame) and the brief of Ron Katznelson (making an economic argument based on asymmetry of risks).

What becomes clear in reading these briefs (and the excerpts below) is that despite what you might have heard to the contrary the Supreme Court has already previously addressed this issue and has done so in support of a standard appreciably higher than the mere preponderance supported by Microsoft. The argument of those in support of Microsoft has been that at least some Circuit Courts of Appeal had a lower presumption of validity prior to when the Federal Circuit announced the clear and convincing standard of proof and thereby settled patent law. While that may be true it seems abundantly clear that law setting a preponderance standard was directly in conflict with the clear and unambiguous Supreme Court precedent directly on point. In fact, there is even Supreme Court precedent directly on point saying that more than a mere preponderance is necessary even when the prior art has not been previously considered. So perhaps i4i and the amici, including the U.S. government by and through the Solicitor General and the USPTO General Counsel Bernie Knight can convince the Supreme Court not to overrule its own prior decisions and keep an appropriately high standard.

If you are going to read only one of the briefs it really should be the U.S. government brief, which sets out the case as well as one could regarding the history of the heightened standard and why deference ought to be paid to the Patent Office. Several important points were made by the U.S. government including pointing out that a heightened, yet undefined, standard was contemplated by Congress as suggested by the legislative history, and that Congress has long acquiesced to the Federal Circuit clear and convincing standard.  Notwithstanding these excellent arguments, there were a few particular passages that jumped out to me that I want to highlight. First is the the U.S. government’s characterization of Morgan v. Daniels:

In Morgan v. Daniels, 153 U.S. 120 (1894), the Court identified the need for deference to the Patent Office’s delegated authority and expert judgment as the primary rationale for the presumption of validity… In an infringement suit, the Court explained, a patent is presumed valid, and “every reasonable doubt” is resolved against the party asserting invalidity. Ibid. (citing Coffin v. Ogden, 85 U.S. (18 Wall.) 120, 124 (1873), and Cantrell v. Wallick, 117 U.S. 689, 695 (1886)). Drawing on that precedent, the Court held that when an unsuccessful patent applicant seeks direct review of the Patent Office’s action, he must establish the agency’s error by more than “a mere preponderance of evidence,” by proffering “testimony which in character and amount carries thorough conviction.” Id. at 125…

The heightened burden is warranted, the Court held, because a litigant who asserts that an issued patent is invalid seeks to have the courts “set aside the action of one of the executive departments of the government,” made by “[t]he one charged with the administration of the patent system” after “finish[ing] its investigations and ma[king] its determination.” Id. at 124-125.

Next, the U.S. government explains the Morgan v. Daniels holding was applied and even extended by the U.S. Supreme Court, with the Supreme Court recognizing that a standard much more than a mere preponderance is appropriate even when there is prior art not previously considered.

[I]n RCA, an infringement suit in which the defendant argued that the patent was invalid, this Court synthesized earlier decisions applying the presumption of validity in infringement actions, and it reaffirmed that the presumption can be overcome only by “convincing evidence of error.” 293 U.S. at 7…

In discussing the strength of the presumption of validity, the Court canvassed earlier decisions that had applied the presumption in infringement suits—including Coffin and Cantrell, on which the Court in Morgan had previously relied. The Court explained that, although the presumption had “found varying expression in this and other courts,” RCA, 293 U.S. at 7, a “common core of thought and truth” ran through the decisions, id. at 8, to the effect 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.” Id. at 7-8. The Court in RCA thus rejected the preponderance standard, just as the Morgan Court had rejected that standard in the context of a direct action challenging the PTO’s decision. See Morgan, 153 U.S. at 124.

The RCA Court also stated that “[i]f it is true [that the presumption applies] 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.” RCA, 293 U.S. at 8. That statement reflected the Court’s understanding that, while the rationale for a heightened evidentiary standard is particularly strong when an invalidity challenge rests on information that the agency previously considered, the clear-evidence standard should apply even when the challenge is based on information that was not before the examiner.

Finally, with respect to the deference that should be due to the USPTO the government points out that any invalidity challenge is really a collateral attack on the job done by the Patent Office, and they point out that the Federal Circuit already handles prior art not previously submitted without lowering the standard and merely allowing the finder of fact to accord such evidence greater weight in their consideration of whether the invalidity threshold has been met.  The government says:

When the defendant in an infringement suit asserts the affirmative defense that the patent is invalid, he raises what is in practical effect a collateral attack on the PTO’s prior decision to grant the patent.  Accordingly, a validity challenge implicates both the deference due the PTO’s expert factual judgments, made in the exercise of its statutory authority, and the patent holder’s reliance interests in its patents.  Because a standard of proof “serves to allocate the risk of error between the litigants and to indicate the relative importance attached to the ultimate decision,” the amount of
evidence necessary to overcome the presumption of validity should reflect and accommodate the competing interests at stake.  Herman & MacLean v. Huddleston, 459 U.S. 375, 389-390 (1983).  The American Hoist approach of applying the clear-and-convincing-evidence standard in all cases, while allowing the factfinder to accord greater weight to evidence that was not before the PTO examiner, best accommodates these interests.

Another brief worth familiarizing yourself with is the brief filed by a number of venture capital firms.  If Justice Kennedy was not just exaggerating in his Bilski majority opinion when he said the Court was mindful of the parade of horribles predicted if there were a sweeping decision, a brief such as this could be persuasive and allow the Justices to get a sense of what damage likely would be done to the economy if they reach an anti-patent, anti-property-rights decision.  The Summary of the brief of the venture capital firms explains (in part):

Confidence that a new start-up company’s innovative technology will enjoy patent protection is critical to a venture capital firm’s decision to invest in that company.  Replacing the clear-and-convincing standard for overcoming the presumption of a patent’s validity with a preponderance standard would dramatically reduce investment in the innovative companies that drive our Nation’s economic growth.

Venture capital investment has had a profound impact on job creation and economic growth in the United States.  But that investment is heavily dependent on strong patent protection.  For many start-up companies, their central asset is an innovative technology.  Without patent protection, such emerging companies could not hope to compete with more established firms, which would simply take and copy the new product.

[…]

The resulting decrease in confidence that a start-up company’s critical technology will enjoy patent protection will lead venture capital investors to refrain from investing in entire sectors of the economy that require significant investments of capital or time to develop an innovative technology.

The Court should also reject the illusory compromise of a hybrid standard.  From the perspective of venture capital investors, such an approach would be indistinguishable from an across-the-board preponderance standard…

The Biotechnology Industry Organization (BIO) also filed a brief in support of i4i.  BIO clearly agrees with the main thrust of the brief filed by the venture capital firms, but they offer a unique perspective.  At the core biotechnology and all life sciences are about helping people by providing new cures, new treatments and raising the quality of life for those afflicted with ailments and disease.  To obtain these most desirable of all innovations take a lot of time and a lot of money.  As Jim Greenwood (President & CEO of BIO) once told me, a biotech start-up most frequently owns a microscope and a folder to hold their patents in and that is the sum extent of their property.  That might be a slight exaggeration, but not by much.  Without strong patents biotech start-ups simply won’t exist and that is not good for the economy and it is not good for health and well-being of society.  BIO explained:

Reliance on the stability of the patent system has had special force in the context of biotechnology innovation.  Indeed, strong patent protections have been the lifeblood of the dramatic and remarkable biotechnological innovations that have saved and enhanced millions of lives over the past three decades.  The areas of health, agriculture, energy, and environmental protection have all been transformed by these profound advancements.  Because the development of biotechnological products is extraordinarily time-consuming, capital-intensive, and uncertain, such innovations would not have been possible without a strong system of patent protection.  Stable patents have spurred the massive investment of labor and money necessary to bring biotechnological products to market.  And stable patents are the foundation for scores of public-private licensing arrangements, many of which involve universities and other research institutions, that have facilitated the development of biotechnological products.  Lowering the standard for proving patent invalidity will destabilize the security of the patent system on which a broad swath of business and research organizations depends.  And the expectations of inventors and investors who already have committed the resources towards innovation in reliance on well-established principles will be profoundly shaken.

Dr. Tafas filed his brief by and through his attorneys at Kelley Drye & Warren, who also represented him in his successful challenge to the much hated claims and continuations rules set out by the USPTO in 2007.  The Tafas brief tells the story of how Dr. Tafas got to where he is today and provides the perspective of one who is familiar with the unique challenges of being a technology start-up.  The brief explains that Dr. Tafas is a founder of Ikonisys, Inc., which is a company that manufactures a technologically-complex robotic microscope designed to automatically read microscope slides and proffer tentative diagnoses. After
many unsuccessful attempts to raise capital in Europe Dr. Tafas turned to the United States, where unlike in Europe there is strong patent protection provided that is affordable by small
businesses and individuals, as well as large entities.  Dr. Tafas starts out his brief quoting the Book of Job: “Great Men Are Not Always Wise.”  He then rather eloquently explains that the Supreme Court should be weary of the IT companies and academics urging them to overrule the well established law.  We really need to listen to the entrepreneurs who raise capital and create the jobs, not to the supposed wise men.  Tafas explains:

Sometimes wisdom is not in the domain of the powerful or the learned, but resides in the small and seemingly insignificant. While in this case certain powerful IT companies which obtain untold patents each year battle for a position to strengthen their edge in this and future litigations, and certain academicians seek to prove their intellectual prowess by once more knocking conventional understandings, Dr. Tafas respectfully asks this Court to take pause before too hastily dispensing with a standard of proof that this Court, and many Courts afterward, have held to be law of the land, and which has served the innovative community well. Dr. Tafas understands better than most the importance of strong patent rights to emerging companies, and the problems associated with foreign systems that are too often structured so as to be far more favorable to multi-national companies, than to emerging companies and research institutes. Thus, Dr. Tafas asks that the Court carefully consider the
arguments made by those in favor of the dimunition of the standard of proof for invalidity of a patent claim from a “clear and convincing” standard to a “preponderance of evidence” standard, and to carefully dissect the inherent inconsistencies in their arguments.

The brief filed by Ron Katznelson is also worth mention because he takes a wholly different approach.  Katznelson has a Ph.D. in Electrical Engineering, he is an inventor and CEO of start-up companies.  Katznelson is known to most within the patent community for his economic arguments associated with patent law and rulemaking.  In his brief he argues there is an asymmetry between the patent owner and alleged infringer that mandates a higher standard to demonstrate invalidity.  Essentially, the patent owner is the one who would suffer most.  They have already put their cards on the table for the benefit of the public by disclosing the innovation, they have invested money in developing and protecting the innovation, and they have obtained a property right that if invalidated would have consequences much farther than at play in the instant litigation.  Thus, Katznelson argues, a clear and convincing standard is appropriate from an economic standpoint as well as from a legal, precedent based standpoint.  He argues:

The fundamental principle that governs the standard of proof generally under this Court’s jurisprudence involves allocating the risk of factfinder errors between the litigants in a manner that reflects their relative expected risk (harm in the event of an error). Addington v. Texas 441 U.S. 418, 423 (1979).  Thus, a higher burden of proof will be required for a verdict against the litigant that will suffer harm that is substantially greater than that suffered by the adverse litigant under erroneous decisions.  The degree of asymmetry in the countervailing risks to the litigants determines the standard of proof.  Symmetry of the risks among litigants – where both parties have equal risks – creates the ‘preponderance of the evidence’ standard; high asymmetry corresponds to the ‘clear and convincing evidence’ standard; and extremely high asymmetry corresponds to the ‘beyond reasonable doubt’ standard, often used in criminal law.

In contrast with infringement adjudication errors where the litigants face comparable risks, the countervailing risks of error in patent invalidity proceedings are vastly different in magnitude for each litigant.  Whereas the alleged infringer’s risk in an adverse decision amounts only to damages incurred by  his own infringing activity, the patentee’s risk under an error against him is that of losing the patent rights altogether, losing recovery not only from the alleged infringer but from all other parties.  Under such errors, the patentee would be unlikely to receive returns on investments made in discovery and development of the invention – investments made in reliance on the patent bargain.  In addition, when the factfinder erroneously invalidates the patent, the patentee suffers irreparable harm brought about by the public disclosure of the invention required in exchange for the patent grant.  (The accused infringer and the public are unjustly enriched).  Thus, the  quid pro quo of the patent bargain transfers much of the risk of loss to the patentee – a risk not sustained by other parties.

Therefore, the patent bargain and the associated highly asymmetric risks that it imparts on the parties command the “default” heightened standard of proof that  apply under this Court’s precedents.  This requirement does not originate from the patent statute.  Rather, it is based on immutable legal principles rooted in traditional American jurisprudence as reaffirmed in  Winship and  Santosky – prescribing   unconditionally heightened standard of proof whenever the magnitude of the countervailing interests of the litigants are highly asymmetric.  Such is the case in patent invalidity proceedings.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments.

  1. Trademark Litigation March 25, 2011 1:50 am

    Here is a similar story

    The US government has shown support for the small Canadian firm i4i in its ongoing patent infringement lawsuit against Microsoft.

    The US solicitor general filed the amicus curiae brief in support of the company on Friday. A number of other parties have also filed briefs in support of i4i, including General Electric, 3M, Boston Scientific, the Intellectual Property Owners (IPO) association and a number of venture capital firms.

    The case centres around XML tagging features of Word 2003 and Word 2007 which i4i said infringed on patent number 5,787,449 which covers a “method and system for manipulating the architecture and the content of a document separately from each other”.

  2. Blind Dogma March 25, 2011 6:40 am

    What are the chances that any of these concepts will be accepted, much less understood, by the likes of Bobby (who has become the classic example of how not to handle patent law) ?

  3. patent enforcement March 29, 2011 1:04 pm

    It’s at least an encouraging sign that heavyweights like the DOJ and BIO are supporting i4i. If their arguments succeed, then i4i and future patentees can have it both ways — they can keep the clear-and-convincing standard, but with certain evidence being given greater “weight.” Brilliant. As far as I’m concerned, i4i won this patent battle fairly at the lower courts, and Microsoft should have just let it go long before now.
    http://www.washingtonpost.com/blogs/post-tech/post/qanda-small-inventors-raise-patent-reform-concerns/2011/03/28/AFLJ9NpB_blog.html