decoration decoration

When you want to know more...
For layout only
Site Map
About Groklaw
Legal Research
ApplevSamsung p.2
Cast: Lawyers
Comes v. MS
Gordon v MS
IV v. Google
Legal Docs
MS Litigations
News Picks
Novell v. MS
Novell-MS Deal
OOXML Appeals
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v Novell
Sean Daly
Software Patents
Switch to Linux
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.

To read comments to this article, go here
Microsoft v. i4i Oral Argument Transcript - As Text, Translated for Geeks
Tuesday, April 19 2011 @ 03:32 PM EDT

I took the time to do the oral argument transcript [PDF] of Microsoft v. i4i before the US Supreme Court yesterday as text for you, because I know a lot of you don't open PDFs unless it's life or death, and there are some interesting tidbits I want to be sure you don't miss. I've marked those sections in blue.

I know, though, that for many of you, you read a transcript like this and feel like you've landed on the moon. Upside down. Donald Knuth once in an interview with Dr. Dobb's Journal talked about that, how people drawn to computer science don't think like lawyers or like poets. And the reverse is true too, which is one important reason why software patents are even allowed. They are so destructive to innovation and creativity in computer science, I doubt you can find three computer scientists to stand next to each other on the side of software patents. That's hyberbole, but the truth is simply this: most computer scientists are against software patents. I wish judges and lawyers would think about why that is so. They really should give weight to the experts in that field, I think, at least asking them what they think. That has yet to happen. It's still lawyers talking to other lawyers and judges. But I live in hope that someday a case will arrive that is stage front and center about the patentability of software, and my dream is that the court will appoint experts to explain to them why software patents are so harmful.

Meanwhile, let me try to "translate" a bit of what happened at the event, so you will understand when a decision arrives why the judges reached whatever decision they end up reaching.

Here's what Knuth said about lawyers and programmers thinking differently:

DDJ: What distinguishes a "computer scientist" from a "computer programmer?"

Donald Knuth: The difference between a computer programmer and a computer scientist is a job-title thing. Edsgar Dijkstra wants proudly to be called a "computer programmer," although he hasn't touched a computer now for some years. He wrote his really terrific essay on the Humble Programmer discussing this. To me, "computer programmer" is an honorable term, but to some people a computer programmer is somebody who just follows instructions without understanding what he's doing, one who just knows how to get through the idiosyncrasies of some language.

To me, a computer scientist is somebody who has a way of thinking, which resonates with computer programming. The way a computer scientist views knowledge in general is different from the way a mathematician views knowledge, which is different from the way a physicist views knowledge, which is different from the way a chemist, lawyer, or poet views knowledge.

There's about one person in every fifty who has this peculiar way of viewing knowledge. These people discovered each other at the time computers were born. There's a profile of different intellectual capabilities which makes somebody resonate, which makes somebody really in tune with computer programming.

There were computers in the 19th century, the 17th century... I imagine there are computer scientists in the pygmy forest. I haven't really carried this out as an experiment, but I imagine that people may not have machines but one in fifty of them, wherever you go, has this profile, this ability. I'm not a sociologist, nor an anthropologist, but reading publications, reading literature, I can sense how much people think like I do, even if they were writing from a different century.

This is the true explanation of why computer science became a university department so fast all around the world. The reason is not that computers are important tools for mankind, or something like that. The reason is that there were these people out there who had this way of thinking that never had a home before. They get together, they can communicate high bandwidth to each other, the same kind of analogies are meaningful to them. All of a sudden they could come together and work much more efficiently, not in someone else's territory that wasn't for them.

There was a time when there were no physics departments, there was "Natural Philosophy," which combined all kinds of different skills. Over the years, these strong areas of focus materialize, become recognized, and then they get a name. "Computer Science" happens to be one of the more recent ones to crystallize in this way.

Did you notice that lawyers and programmers don't think the same way? That may help you to understand why it feels so alien to you programmers when you read legal documents. It's in a different vein, on another channel. That's what Groklaw is for, obviously, to try to explain to each group what the other is talking about.

Here's some legal commentary by others to help you understand the discussion, but this is from the point of view of how lawyers saw the oral argument:

You've seen how the media covers it, from the items I've been putting in News Picks. Basically, the media wants to know who will win. You do too, but since I don't predict such things, what I want to focus on instead here is the various aspects that the judges have to consider, what their role is, and what it can't do.

Because the important issues that were before the court, as I read the transcript, are these: The two parties to the litigation disagree about what the proper standard is for identifying invalid patents. In this case, Microsoft found prior art that had not been viewed by the USPTO. It issued the patent without that knowledge. What happens now? Normally, a patent that has issued is presumed valid. The USPTO is supposedly the expert. In real life, of course, they don't know as much as one would hope about programming, and some incredibly silly patents have issued. And they are forced to really hurry in their work. They can't look just anywhere for prior art, and they miss pretty much all FOSS prior art, because it isn't collected in the places where they do look.

So the question this case raised is, is the patent system so messed up that a lot of bad patents are issuing and if so, what is the solution? Is there a solution that the court can implement, or does it require the Congress to do something?

Keep in mind that Congress has the responsibility to come up with laws, like patent laws. Judges don't have that assignment. But when another court comes up with an interpretation of how things ought to be, if they get it wrong, the US Supreme Court does have the authority to realign everyone with what they believe is correct.

Underpinning everything in the discussion is the more fundamental question of whether software patents are helping the economy to the degree that a few bad patents are acceptable for the overall good of granting strong protection to patents; or whether something needs to change to fix a system that has issued so many bad patents that they are actually hurting innovation and the country's economy. The folks who argued for i4i and for the US government, which positioned itself on i4i's side, held to the former position, while Microsoft held to the latter [Microsoft has a blog post on what's at stake in this case].

The issue of mindset is important to understand. Otherwise when you read what they said, it will frustrate and infuriate you. Once folks accept and then live with the belief that something is wonderful, like patents, it's very hard for them to see it when it goes over the edge and becomes damaging. Some of the judges seem to be in that general mindset too, as you'll see, but others, like Justice Breyer, understand that protecting invalid patents is damaging.

Nobody understands that software patents are intrinsically and invariably damaging, that they need to get a divorce, so don't expect that. Education is by degrees. It's hard to turn ingrained ideas around, and it's rarely on a dime. So here, all you can expect and hope for is that they'll at least see that invalid patents are not worth high-level protection.

The fact that this is the issue, and that highly qualified and skilled attorneys went in and actually argued on behalf of high protection for invalid patents is weird enough that I wanted to warn you in advance that this is the issue being discussed and evaluated.

That's the Alice in Wonderland part. Programmers reading this want to speak out and say, "But this makes no sense." And it doesn't. But it's like a discussion about motherhood or the flag or something full of emotion. It can get away from pure logic. You've probably experienced that plenty in your life. I remember Richard Stallman once saying that when he'd listen as a child to people chit chatting, small talk, he couldn't understand why they found it the least bit interesting.

So there are different kinds of people, different ways to think about things, and to some degree we are all trapped in our own ways. So try to be broad-minded as you read what they are saying, because I know before we begin that it will make you want to put your head through a wall. Just know that they mean well, probably, and even if they don't, legal issues have requirements and limitations, and everyone must stay inside those four corners. So be thinking about how to help them to comprehend what you already know.

You can't win, for example, by telling the judges that the law is stupid and they should rewrite it. They can't. They can interpret the law that Congress passed, or declare it unConstitutional, etc. but they are not all-powerful, even if they thought like you do, which they don't.

What the judges are thinking about is what is the law? What does it say? What was the Congressional purpose in writing the law? How have other courts interpreted the law? Is there a way, even if we think there needs to be a change, that we can make it happen without going outside our authority? You'll see that when the judges ask about various possible solutions, like giving juries different instructions. That's what they are thinking about, what exactly are they allowed to do?

If that is your focus, you can see that the idea that software shouldn't be patentable subject matter isn't even on the table here in this case. Hopefully there will be a case one day, and I hope then the arguments will be before them to help them understand that issue, that it was a court that decided that, not Congress, but this isn't that case. All that is before them in this case is how hard should it be to identify and overturn an invalid patent after the USPTO has issued it.

I hope these introductory remarks will help you to read the transcript with deeper understanding. The PDF is the official transcript. I've removed line numbers, so those who rely on readers won't have to listen to a computer voice reading out numbers all the time in the middle of sentences. That would drive me bananas, so it's just a thoughtful thing I like to do for those who have visual challenges. We're not using the transcript for legal purposes, just to understand what was said. So removing distractions is OK for that. But this is a reminder to check the PDF for anything that truly matters regarding accuracy, as any transcribing effort can introduce errors. We strive for perfection, but being human is always a drawback when that is your goal.

Also, I've added links to some of the legal cases mentioned, so you can read what they are talking about. That's not in the PDF. The cases matter to everyone there, because everyone is looking for the ruler's edge, what is the right interpretation. If you take time to read the cases, you will definitely understand the discussion better.

If the Supreme Court has issued a ruling, it's very hard to argue that it was all wet. You can, and sometimes a later court will correct an earlier ruling, but it's a higher mountain to climb to prove that the court was wrong than it is to prove a lower court like the district court misread the law.

Microsoft is essentially saying that the Federal Circuit, where patent appeals are heard, has messed up, going so overboard in love with patents since its establishment in the 1980s, that this specialty court keeps making patent law more and more favorable to patent owners and harder and harder for defendants to survive litigation, even to the point that now the court wants the evidentiary burden on defendants to be clear and convincing evidence, not just preponderance of the evidence. Even when a defendant finds new prior art that the USPTO examiner never saw, the patent should be presumed valid, according to the Federal Circuit, and it is only overturnable with clear and convincing evidence.

Everyone here at Groklaw is saying at this point, That can't be the law. It makes no sense. Patent trolls already make a living from weak and bogus patents because of this tilt away from reasonableness and simple fairness.

But if i4i stands, it *is* the law.

That's why there were so many amicus briefs, on both sides, because no matter what decision is reached, the impact will be huge.

i4i isn't a patent troll, by the way. Far from it. But the issue is bigger than i4i. It would like patents to be strong and hard to overturn, and you'll see the arguments they use, which are not irrational. If you believe that patents on software are acceptable and even desirable, their arguments do make sense. If you think patents inspire the small businesses and entrepreneurs to dare to compete against folks like Microsoft, then you would want a strong patent system as protection. Heaven only knows everyone would like protection from Microsoft, I'd opine. Read the district court's memorandum opinion and order [PDF] or this i4i filing and you'll see what i4i went through at Microsoft's hands. It's appalling.

But the question is deeper than i4i and Microsoft and also smaller than who treated who badly. It's about what the evidentiary standard should be. Not who was right or wrong in actions in the case. You know how I always tell you that you can't decide who should prevail in litigation based on who you like? This is Exhibit A. I hope Microsoft prevails, even though I despise their business practices so much I won't use their products any more. But court rulings are not just about the two parties. They will apply to everyone, and that takes us to a bigger picture, and that is what you have to analyze before you think about who you want to prevail. You don't have to like a company to hope they win a particular case.

On educating judges, I wanted to show you one quick excerpt from a hearing transcript in another case, where the judge in the Paul Allen patent litigation, Interval Licensing v. Google et al, spoke to the lawyers for the parties about trying to understand patents and tech so he can reach better decisions:

THE COURT: Markman hearings. I have handled a fair number of patent cases. They are not my favorite, mostly because I am always feeling very inadequate to the job. When I feel inadequate to the job, I can't do a great job for you. I am your pupil; you are the teachers. I don't know anything about how these patents work. I can barely do e-mail. Although I have gotten a reputation for being a tech judge, that doesn't physically know how to do it. I know how to order other people how to do it.

When you approach me, you need to treat me like your brighter-than-average middle schooler. In other words, I have the brain power to learn just about anything you want to teach me, but what I don't have is the experience to know how to put that in context. Don't ever assume, oh, gee, everybody knows that, we don't need a tutorial. You probably do. I will feel more confident about the decisions that I give you if you will work with me from the basics up. A couple of things about being a good teacher is that you have to basically start where your student is. Don't be teaching physics to Ph.D candidates when what you really need is seventh grade science. I will tell you when you get too basic. But for the most part, if we learn a common vocabulary and common principles, we will be on the same page.

The second thing I would tell you is, you are the teachers, I am the pupil. If you overwhelm me, in other words, if you drop the library on me rather than the best book available, I am likely to be discouraged. You need to pick out the best material that you want me to read in order to get ready.

If 12 of you decide you are going to teach me about a particular concept needed for the Markman, I am not going to be able to absorb twelve different points of view. By necessity, if you want me to understand, you have to come at it with a common teaching point.

I will work hard to understand what you try and tell me. I am not shy about speaking up when I don't understand. You shouldn't consider that a problem.

When I first started doing patents, there was a complicated patent that involved the evolution of the internet itself, and the lawyers gave me a book to read, a single 180-page book and I read it, and then we started on the tutorial. I think the tutorial lasted for a day and a half. I said at the end of it, well, have you taught me everything that an average middle schooler might know about the internet? No, Judge, we got you beyond that. I said, well, have I gotten to high school yet? Well, Judge, we think we got you to high school. I said, did I get to college? The response was junior college, Judge, junior college. That's where we are.

Isn't that a bit scary? No disrespect, but lawyers are, in my experience, the caboose on the innovative tech train. And that is, sadly, who must explain tech to judges who can barely do email, as this judge frankly admits.

Now do you see why things like software being allowed to be patented comes from? I wish courts deciding what should and shouldn't be patented and what the standard for invalidation should be would seriously realize they need experts, computer experts, not just experts in the law, to explain issues to them, so they can reach solutions that actually work not just for lawyers and the companies they represent in the particular case but for everyone in the technical field, who must live with decisions made by folks who seriously are not experts in this area of skill. I can't understand why that isn't understood as a basic requirement. For example, is software math? Courts need to figure that out, because if it is, on what basis is it patentable? What is in software code that is not an algorithm and hence patentable? I put that question out some time back, and no one has an answer yet. What good is it to pass laws that conflict with reality? It can only result in problems.

The reason it matters so much to answer that question is what Justice Breyer says during this oral argument:

JUSTICE 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. Okay. 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.


JUSTICE 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.

That is the right question. The problem is, he's asking the wrong people, in my view, and it's not true that "nobody really understands this technology very well." Nobody in *courtrooms* understands it very well, with a few exceptions. But if the lawyers and judges would ask the people who *do* understand it very well, they could get meaningful and useful answers to what is puzzling them. Something this important ought not to be decided on guesswork.








-----------------x No. 10-290


Washington, D.C.

Monday, April 18, 2011

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:03 a.m.


THOMAS G. HUNGAR, ESQ., Washington, D.C.; on behalf of Petitioner.

SETH P. WAXMAN, ESQ., Washington, D.C.; on behalf of Respondents.

MALCOLM L. STEWART, ESQ., Deputy Solicitor General, Department of Justice, Washington, D.C.; on behalf of the United States, as amicus curiae, supporting Respondents.


Official - Subject to Final Review


On behalf of the Petitioner . . . . . . . . 3

On behalf of the Respondents ...............21

On behalf of the United States, as amicus curiae, supporting Respondents .......... 36

On behalf of the Petitioner ............45


Official - Subject to Final Review


(11:03 a.m.)

JUSTICE 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 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 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 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 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 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 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 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 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 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 defense 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 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.



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 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 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 -


MR. HUNGAR: Because that in effect -

JUSTICE 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 KRS 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. That's not -

JUSTICE 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 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 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 BREYER: No, no. The judge says: I want you to find if this metal container is leak proof. Jury: Yes. 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 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 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 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 circumstance.

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.


MR. WAXMAN: Justice Scalia, and may it please the Court.


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



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 GINSBURG: How actively do we acquiesce?

JUSTICE SCALIA: Yes, I would like that notion of active acquiescence.

MR. WAXMAN: I thought that might get a rise out of you.


MR. WAXMAN: I hope I'll get a chance to go to first principles, but having made that provocative statement, the point is -

JUSTICE SCALIA: It's like passive activity, right?

MR. WAXMAN: I may want to submit a supplemental brief on that point.



MR. WAXMAN: 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 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. But more -

JUSTICE 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 pageof 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 Courtyears 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, the better part of page and 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 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 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 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 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?



JUSTICE 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 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 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 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 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 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 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 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. Okay. 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.


JUSTICE 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 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 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.

Thank you.

JUSTICE SCALIA: Thank you, Mr. Waxman.


JUSTICE SCALIA: Mr. Stewart, we'll hear from you now.

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 was 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 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 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.

[PJ: What about if the patent is invalid, though? Then there is a contract that hasn't been fulfilled by the "inventor" if there is no valid invention.

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. There is. 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 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 SCALIA: Thank you, Mr. Stewart. Mr. Hungar, you have 8 minutes for rebuttal.



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, "more easily carried," closed quote, instruction that 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 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 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 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 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 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 SCALIA: Thank you, Mr. Hungar.

The case is submitted.

(Whereupon at 12:02 p.m., the case in the above-entitled matter was submitted.)


[PJ: For the Index - see PDF]

  View Printable Version

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )