Argument recap: Court looks to broader question of patent validity

By Ronald Mann
on Apr 19, 2011 at 12:32 pm

When the Court heard argument Monday morning in No. 10-290, Microsoft Corp. v. i4i Limited Partnership, it had as distinguished a group of advocates as it is likely to have this Term:  former Solicitor General Seth Waxman (for i4i), former Deputy Solicitor General Tom Hungar (for Microsoft) and Deputy Solicitor General Malcolm Stewart (for the United States, arguing in support of i4i).  [Disclosure:  Goldstein, Howe & Russell, P.C., which sponsors this blog, filed an amicus brief in support of i4i, but the author of this post was not involved in the case.]

The case came to the Court presenting a hot topic from contemporary legal scholarship: why should courts give deference to the Patent and Trademark Office (PTO), requiring “clear and convincing evidence” to overturn a patent based on prior art that the PTO never considered?  But in the course of briefing, Microsoft’s argument broadened so much that the case at least suggests the question why deference requires the clear and convincing standard even for issues that the PTO did consider.

From the moment Hungar rose to address the Court, the argument focused on the breadth of his position.  Justice Scalia quickly moved to pin Hungar down on how broad a rule he seeks:  “Well you can’t keep shifting horses, now.  I mean, you . . .  can’t ride both horses.  They’re going in different directions.”  Hungar quickly made it clear that he had decided to stand his ground on the broadest possible argument: that the preponderance standard applies for all challenges to patent validity.  His goal throughout the argument was to rebut the idea that he was seeking to overturn decades of settled decisions (several Justices repeatedly asked if he was disagreeing with opinions of Justice Cardozo and Patent Act drafter Judge Rich).  But he stuck to his guns, arguing that all of the Court’s pre-Patent Act cases involved priority of invention (the identity of the true inventor) as opposed to the significance of prior art (relevant to the question whether there was a patentable invention).

When he got past that point, he could argue that in the absence of any settled line of precedent before 1952 (when Congress adopted the Patent Act), the Court should interpret the statute in accordance with its plain meaning rather than some hypothetical prior doctrine.

Justice Breyer asked the only substantial policy question Hungar faced: why the problem with improperly issued patents can’t be solved by reexamination: Hungar’s pointed answer was that the reexamination process does not extend to cases, like many technology disputes, that involve unpublished prior art.

Arguing for i4i, Seth Waxman joined issue with Hungar on the argument about precedent.  He argued that the Federal Circuit’s interpretation has been in place for about three decades and Congress has done nothing to disturb it.  His suggestion that Congress had “actively acquiesced” predictably drew the Court’s attention – with a surprising level of amiability indicative of his rapport with the Justices.

He also argued at length that it makes no sense as a matter of first principles to have a standard of proof that depends on the type of evidence submitted.  But he seemed less successful here.  When he agreed with Justice Ginsburg’s suggestion that the court might instruct the jury that the burden is more easily satisfied by evidence not presented to the PTO, Justice Scalia pointed out that a rule calling for that instruction requires just as much litigation about whether evidence was before the PTO as the rule Microsoft seeks.

Malcolm Stewart (for the United States) started by arguing that the similarity between the language of the Patent Act and the Court’s decisions requires the clear and convincing evidence standard articulated by Justice Cardozo.  But Justice Sotomayor stopped him immediately to raise Microsoft’s point that his argument makes much of the statute superfluous.  Not surprisingly, he emphasized the importance of maintaining the systemic role of the federal agency: a rule that allows invalidation of a patent by a predominance standard unduly devalues the importance of the agency in the patenting process.  Similarly, when he emphasized the structural role of reexamination to give the agency a chance to respond to arguments of improper issuance, Justice Alito stopped him with the argument (drawn from Hungar’s comments a few moments earlier) that reexamination is not available for many disputes, including the one at issue here.

This is probably not a case in which the argument will matter all that much, because the Justices plainly were familiar with the briefs (including dozens of amicus briefs).  But if predictions have to be based on the argument, about the most that can be said is that the Court clearly took to heart the points Hungar presented on behalf of Microsoft.

Note:  Because Chief Justice Roberts is recused, Justice Scalia presided over the argument and will make any opinion assignment; there is the obvious risk that the case will be affirmed by an equally divided Court, providing no guidance to the Federal Circuit and PTO on the questions the case raises.