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American Intellectual Property Law Association

The Presumption of The Presumption of Patent Validity in the U.S.Patent Validity in the U.S.

Tom EngellennerAIPLA Presentation to the

Japanese Patent Office (JPO)

Tokyo

April 7, 2014

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Presumption of Patent Validity - Overview

Origins of the PresumptionThe 1952 Patent Act codified this presumptionSince at least 1984, the CAFC has followed this rule

Supreme Court Affirmation of this StandardThe Microsoft v. i4i case ( Sup. Ct. 2007)Are there any exceptions?

Real World Impact of this Presumption in the U.S.

Counterbalance: AIA post-grant procedures?

Conclusions

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Early US cases and the 1952 act

Early U.S. patent cases in which patent validity was challenged mentioned a “heightened burden of proof” but were unclear as to nature of this burden.

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The 1952 Act – Section 282(a):

A patent shall be presumed valid. . . . The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.

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Creation of the CAFC

Even after the passage of the 1952 act, questions remained as to the nature of the presumption of validity. Many district courts (and circuit courts of appeals) read the wording of §282 differently.

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Establishment of the Court of Appeals for the Federal Circuit in 1982 provided a forum for resolution of divergent views.

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CAFC rules: Clear and Convincing Evidence5

. . . § 282 creates a presumption that a patent is valid and imposes the burden of proving invalidity on the attacker. That burden is constant and never changes and is to convince the court of invalidity by clear evidence. American Hoist & Derrick Co. v. Sowa & Sons, Inc. , 725 F.2d 1350, 1360 (Fed. Cir. 1984)

“[I]t must be by clear and convincing evidence or its equivalent, by whatever form of words it may be expressed.” Ibid

The CAFC resolved the dispute between circuits in 1984

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CAFC Decisions (continued)6

“Clear and convincing” evidence is evidence that produces in the mind of the trier of fact an abiding conviction that the truth of the factual contentions are highly probable. Buildex, Inc. v. Kason Indus., Inc., 849 F. 2d 1461, 1463 (Fed. Cir. 1988).

More likelythan not

Highly Probable

Beyondreasonable

doubt

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Supreme Court affirms the presumption7

Microsoft Corp. v. i4i LP, 564 U.S. (2011): Microsoft challenged the presumption of validity,

particularly as it applied to a “prior use” defense never considered by the USPTO.

Supreme Court Held: (A) defendant has the burden of both production and persuasion, (B) the standard of clear and convincing evidence is what Congress intended and is consistent with the Supreme Court’s pre-1952 case law, and (C) the same standard must apply even when the evidence before the judge or jury was not considered during PTO examination.

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Impact in Patent Infringement Cases

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Overall Plaintiff success rates 1990 - 2003

Overall Plaintiff success rates 2006 - 2011

Bench (52%)

Jury (76%)Bench (59%)

Jury (65%)

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Beyond the Legal Standard

Source: Persuasion Strategies, National Jury Survey, 2008, 2011 N=900

If the USPTO issues an inventor a patent, it means the invention is innovative and unique

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The America Invents Act (AIA)

The America Invents Act (AIA) established several new mechanisms for challenging issued U.S. Patents:

Inter partes review Post grant review Cover business method review Derivation proceedings

All of these new proceedings are conducted before a new “Patent Trial and Appeal Board (PTAB).”

NO PRESUMPTION OF VALIDITY AT THE PTAB

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Inter Partes Review11

On September 16, 2012, inter partes reexamination was replaced by inter partes review (IPR)

Inter Partes Review

Grounds 102/103 patents and publications

Standard of review

Reasonable likelihood ofsuccess

Participation Full

Estoppel? Yes

Decision Maker

3 patent judges of New “Patent Trial and Appeal Board”

Inter Partes Reexamination

Grounds 102/103 patents and publications

Standard of review

Substantial new question of patentability

Participation Limited

Estoppel? Yes

Decision Maker An examiner in the Central Reexam Unit

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IPR Statistics

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483 IPR Petitions filed in the first year (Over 1000 Petitions have now been filed)

403 of the 483 petitions (83%) were related to pending patent litigation between the same parties

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Impact of IPRs on District Court cases

• The 403 Petitioners involved in related Federal Court litigation has filed for stays 159 times

But Petitioners are very unlikely to get a stay at the ITC

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IPR final decisions

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• 22 Final judgments in IPRs have issued so far

Comparison with Inter Partes Reexams 1999-2012

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IPR final decisions

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• The 22 Final judgments adjudicated 266 claims

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Conclusions

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The presumption of validity is firmly entrenched in U.S. civil litigation (both in district courts & ITC).

The presumption is particularly advantageous for the patent owner in district court jury trials.

Defendants are increasingly turning to the PTAB to raise invalidity arguments.

Many district courts are willing to stay patent cases pending the outcome of PTAB proceedings – but not the ITC.

So far, the PTAB has been very tough on patent owners.

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Thank you -- ありがとうございます

Tom Engellenner

Pepper Hamilton, LLP

125 High Street

Boston, MA 02110

617-204-5189

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