BIO, AUTM and CropLife International File Joint Brief in Microsoft v. i4i
_________________
MICROSOFT CORPORATION,
Petitioner,
v.
I4I LIMITED PARTNERSHIP AND INFRASTRUCTURES FOR
INFORMATION, INC.,
Respondents.
_________________
On Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
_________________
BRIEF OF AMICI CURIAE BIOTECHNOLOGY
INDUSTRY ORGANIZATION, ASSOCIATION OF
UNIVERSITY TECHNOLOGY MANAGERS, AND
CROPLIFE INTERNATIONAL IN SUPPORT OF
RESPONDENTS
_________________
Thomas DiLenge
General Counsel
Hans Sauer
Deputy General
Counsel for Intellectual
Property
BIOTECHNOLOGY
INDUSTRY
ORGANIZATION
1201 Maryland Ave.,
S.W.
Washington, D.C. 20024
Patricia A. Millett
Counsel of Record
AKIN GUMP STRAUSS
HAUER & FELD LLP
1333 New Hampshire
Ave., NW
Washington, DC 20036
(202) 887-4000
pmillett@akingump.com
Michael C. Small
AKIN GUMP STRAUSS
HAUER & FELD LLP
2029 Century Park East
Suite 2400
Los Angeles, CA 90067
(310) 229-1000
TABLE OF CONTENTS
INTEREST OF AMICI CURIAE ................................. 1
SUMMARY OF ARGUMENT ..................................... 2
ARGUMENT ................................................................ 6
The Clear and Convincing Evidence Standard For
Proving Patent Invalidity Is Critical To
Innovation
A. Durable And Stable Patents Are Vital To
Promoting Innovation…………………..…6
B. The Clear And Convincing Standard For
Patent Invalidation Provides The Patent
System The Reliability And Stability
Upon Which Innovation Depends… ...….7
1. The Clear And Convincing
Standard Is Deeply Rooted In The
Law…...…………………………….7
2. The Statutory Text Comports With
Past Precedent…………………...12
3. The “Clear And Convincing”
Standard Provides Indispensable
Security To Inventors, Developers,
and Investors..............................15
C. Innovation In The Biotechnology
Industry Depends On The Stable And
Durable Patent System That The Clear
And Convincing Evidence Standard
Fosters…………….…………………..…..21
1. Biotechnology Innovation Is
Vital……………………………....21
2. Biotechnology Depends On Secure
And Reliable Patents…………..24
ii
D. Allegations Of Undisclosed Prior Art Do
Not Alter Application Of The “Clear and
Convincing” Standard Of Proof..............30
E. Any Change In The Standard For
Proving Invalidity Should Come From
Congress.………………………………….32
1. Stare Decisis Principles And The
Reliance Of Third Parties On
Court Decisions Weigh Against A
Judicial Unsettling Of The
Standard Of Proof………………32
2. Congress Has Prescribed Its Own
Solution For Questionable
Patents……………………………33
3. Congress Has Canvassed A Broad
Range Of Vantage Points In
Preserving The Clear And
Convincing Standard…………..36
CONCLUSION…………………………………….…...40
iii
TABLE OF AUTHORITIES
Cases
Adamson v. Gilliland, 242 U.S. 350 (1917) ................ 9
Andrews v. Columbia Gas Transmission Corp.,
544 F.3d 618 (6th Cir. 2008) .................................. 17
Blonder-Tongue Labs. v. University of Illinois
Foundation, 402 U.S. 313 (1971) ..................... 11, 14
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
489 U.S. 141 (1989) .................................................. 6
Brown v. Guild (The Corn-Planter Patent),
90 U.S. 181 (1874) .................................................... 9
Bruesewitz v. Wyeth LLC, 131 S. Ct. 1068
(2011) ................................................................ 10, 12
Burlington Indus. v. Ellerth, 524 U.S. 742 (1998) .... 32
Bush v. Lucas, 462 U.S. 367 (1983) ........................... 33
Cantrell v. Wallick, 117 U.S. 689 (1886) ..................... 9
Charles Peckat Mfg. v. Jacobs,
178 F.2d 794 (7th Cir. 1949) .................................. 10
Cleveland v. United States, 531 U.S. 12 (2000) ........ 19
Coffin v. Ogden, 85 U.S. 120 (1873) ...................... 9, 18
Colorado v. New Mexico, 467 U.S. 310 (1984) .......... 18
Columbus Bar Ass’n. v. Kiesling,
925 N.E.2d 970 (Ohio 2010) .................................. 17
Connell v. Sears, Roebuck & Co.,
722 F.3d 1542 (Fed. Cir. 1983) ............................ 12
Corley v. United States, 129 S. Ct. 1558 (2009) ........ 13
Dawson Chem. Co. v. Rohm & Haas Co.,
448 U.S. 176 (1980) .................................................. 6
iv
Deering v. Winona Harvester Works,
155 U.S. 286 (1894) .................................................. 9
Diamond v. Chakrabarty, 447 U.S. 303 (1980) ........ 27
Dickinson v. Zurko, 527 U.S. 150 (1999) .................. 19
Eibel Process Co. v. Minnesota & Ontario Paper Co.,
261 U.S. 45 (1923) .................................................... 9
Evans v. Liston, 568 P.2d 1116
(Ariz. Ct. App. 1977) .................................................. 17
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki
Co., 535 U.S. 722 (2002) ................................... 18, 32
Fullilove v. Klutznick, 448 U.S. 448 (1980) .............. 33
Graham v. John Deere Co., 383 U.S. 1 (1966) .......... 35
In re Kentucky Processing Co., 282 Fed. Appx. 371
(6th Cir. 2008) ........................................................ 17
In re Last Will and Testament of Melson,
711 A.2d 783 (Del. 1998) ........................................ 17
In re Swanson, 540 F.3d 1368 (Fed. Cir. 2008) ........ 34
Insul-Wool Insulation Co. v. Home Insulation,
176 F.2d 502 (10th Cir. 1949) ................................ 10
Kendall v. Winsor, 62 U.S. 322 (1858) ........................ 7
Kewanee Oil Co. v. Bicron Corp.,
416 U.S. 470 (1974) ................................................. .7
Lever Bros. v. Procter & Gamble Mfg.,
139 F.2d 633 (4th Cir. 1943) .................................. 10
Lutz v. Orinick, 401 S.E.2d 464 (W.Va. 1990) .......... 17
Morgan v. Daniels, 153 U.S. 120 (1894) ................... 19
Mumm v. Jacob E. Decker & Sons,
301 U.S. 168 (1937) ................................................. 9
v
Murdock v. Murdock, 176 F.2d 434
(4th Cir. 1949) ........................................................ 10
Nguyen v. Department of Health Medical Quality
Assurance Comm’n., 29 P.3d 689 (Wash. 2001) .... 17
Oriel v. Russell, 278 U.S. 358 (1929) ......................... 18
Payne v. Tennessee, 501 U.S. 808 (1991) .................. 32
Pueblo of Santa Ana v. Baca, 844 F.2d 708
(10th Cir. 1988) ...................................................... 17
RCA v. Radio Engineering Laboratories, Inc.,
293 U.S. 1 (1934) ................................................ 8, 20
S&E Contractors, Inc. v. United States,
406 U.S. 1 (1972) .................................................... 16
Sandarg v. Dental Bd. of California,
109 Cal. Rptr. 3d 826 (Cal. App. 2010) .................. 17
Santosky v. Kramer, 455 U.S. 745 (1982) ................. 31
Schaffer v. Weast, 546 U.S. 49 (2005)………………...14
Sea Island Broadcasting Corp. v. FCC,
627 F.2d 240 (D.C. Cir. 1980) ................................ 17
Seymour v. Osborne, 78 U.S. 516 (1870) ..................... 7
Smith v. Hall, 301 U.S. 216 (1937) ............................. 9
St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502
(1993)……………………….…………………………..14
Thirty and 141 v. Lowe's Home Centers,
565 F.3d 443 (8th Cir. 2009) ................................... 17
United States v. Armstrong, 517 U.S. 456 (1996) ..... 19
United States v. Chemical Foundation,
272 U.S. 1 (1926) .................................................... 19
United States v. Maxwell Land-Grant Co.,
121 U.S. 325 (1887) ................................................ 18
vi
United States v. Tobias , 899 F.2d 1375
(4th Cir. 1990) ........................................................ 17
Warner-Jenkinson Co. v. Hilton Davis Chem. Co.,
520 U.S. 17 (1997) .................................................. 32
Washburn & Moen Manufacturing Company v. Beat
‘Em All Barbed-Wire Company,
143 U.S. 275 (1892) .................................................. 8
Washburn v. Gould, 29 F. Cas. 312
(C.C.D. Mass. 1844) (No. 17,214)............................. 8
Williams Mfg. v. United Shoe Mach. Corp.,
121 F.2d 273 (6th Cir. 1941); aff’d, 316 U.S. 364
(1942) ...................................................................... 10
Wisconsin Alumni Research Foundation v. George A.
Breon & Co., 85 F.2d 166 (8th Cir. 1936) .............. 10
Constitution and Statutes
U.S. Const., art. I, § 8, cl. 8…………………….6, 15 33
35 U.S.C.
§ 200 et seq .............................................................. 27
§ 282 ................................................................ passim
§ 301 ........................................................................ 35
§ 302 ........................................................................ 34
§303(a) ................................................................... .35
§ 311 ........................................................................ 34
§ 312(a) ................................................................... 34
Rules
Supreme Court Rule 37.6 ............................................ 1
vii
Legislative Materials
157 Cong. Rec. S1348-02 (March 8, 2011) (Sen.
Leahy) ..................................................................... 35
America Invents Act, S. 23, 112th Cong. (passed by
Senate, March 8, 2011) .................................... 12, 35
H.R. Rep. No. 82-1923 (1952) .................................... 11
Hearing Before the Subcomm. on Intellectual
Property of the Senate Judiciary Comm., 109th
Cong. (2005) ............................................................ 34
Hearing Before the Subcomm. on the Courts,
Internet, and Intellectual Property of the House
Comm. on the Judiciary, 110th Cong. (2007) ........ 34
S. Rep. No. 82-1979 (1952) ........................................ 11
Stifling or Stimulating – The Role of Gene Patents in
Research and Genetic Testing, Hearing Before
the House Comm. on the Judiciary Subcomm. on
Courts, the Internet and Intellectual Property,
110th Cong. 3 (2007) (Jeffrey P. Kushan) ……..24
Other Authorities
AUTM, LICENSING ACTIVITY SURVEY: FY09 (Dec.
2010) ....................................................................... 27
Bayh, Birch, Joseph P. Allen, and Howard W.
Bremer, Universities, Inventors and Bayh-Dole, 79
Pat., Trademark & Copyright J. 167 (2009) ……...27
Brookes, Graham & Peter Barfoot, Plant
Biotechnology Proven Promising, PG Economics
(Oct. 11, 2005) ........................................................ 23
Burk, Dan & Mark Lemley, Policy Levers in Patent
Law, 89 Va. L. Rev. 1575 (2003)……...24, 28, 36, 37
viii
DiMasi, Joseph A. & Henry G. Grabowski, The Cost
of Biopharmaceutical R&D: Is Biotech Different?,
28 Managerial and Decisions Economics
(2007) ...................................................................... 25
Federal Trade Comm’n, To Promote Innovation: The
Proper Balance of Competition and Patent Law and
Policy (Oct. 2003), available at
http:/www.ftc.gov/os/2003/10/innovationrpt.pdf .. 21,
24, 27, 28
Graham, Stewart J.H. et al., High Technology
Entrepreneurs and the Patent System: Results of
the 2008 Berkeley Patent Survey, 24 Berkeley Tech.
L. J. 1255 (2009) ............................................. passim
Jaffe, Adam B. & Josh Lerner, Innovation and its
Discontents, 1 Capitalism and Society 22 (2006) .. 20
James, Clive, Global Status of Commercial
Biotech/GM Crops: 2010, International Service for
Acquisition, Agri-Biotech Applications Brief, 42-
2010, available at
http://www..isaaa.org/resources/publications/briefs4
2/executive summary/default.asp .......................... 23
Jolly, Yann, et al., Regulatory Approval For New
Pharmacogenomic Test: A Comparative Overview,
66 Food and Drug L.J. 1 (2011) ............................. 25
Kieff, F. Scott, The Patent Process Run Amok,
DEFINING IDEAS (Hoover Institution)
(Feb. 1, 2011), available at
http://www.hoover.org/publications/definingideas/
article/64956 ................................................. 20
ix
Mayo Clinic, Pharmacogenomics: When Medicine Gets
Personal, available at
http://www.mayoclinic.com/health/ personalizedmedicine/
CA00078 ................................................. 22
National Institute of Health: Moving Research from
the Bench to the Bedside: Hearings Before the
House Comm. on Energy and Commerce,
Subcomm. On Health 108th Cong. 47 (2003) (Phyllis
Gardner, M.D.) ....................................................... 24
Sankula, Sujatha, Quantification of the Impacts on
U.S. Agriculture of Biotechnology, National Center
for Food & Agriculture Policy (Nov. 2006),
available at
http://www.ncfap.org/documents/2005biotechExec
Summary.pdf .......................................................... 22
Stevens, Ashley J. et al., The Role of Public-Sector
Research in the Discovery of Drugs and Vaccines,
New Eng. J. Med., Feb. 10, 2011 ........................... 26
THE FEDERALIST No. 43 (JAMES MADISON)
(Clinton Rossiter ed. 1961)……………………………7
Tommy G. Thompson, Secretary of Health & Human
Services, “Biotechnology: Its Promise and
Challenge in the New Century,” Address at the
Emerging Issues Forum on Biotechnology and
Humanity at the Crossroads,
available at
http://www.hhs.gov/news/speech/2004/040426.html.
..................................................................................23
x
Tommy G. Thompson, Secretary of Health and
Human Services, Remarks as Prepared for the
Milken Institute’s Global Conference (April 26,
2004), available at
http://www.hhs.gov/news/speech/2004/040426.html.
..................................................................................25
Walker, Albert, TEXT-BOOK OF THE PATENT LAWS OF
THE UNITED STATES OF AMERICA (1st ed. 1883) ..... 10
INTEREST OF AMICI CURIAE1
The Biotechnology Industry Organization
(“BIO”) is the principal trade association of the
biotechnology industry in the United States. BIO has
more than 1,100 members, including corporations,
nonprofit entities, and academic institutions. While
some of BIO’s corporate members are Fortune 500
companies, 90% of its members are small or mid-size
businesses, with annual revenues of less than $25
million. All of BIO’s members share a strong
commitment to the stability of the Nation’s patent
system and, indeed, for most members the reliability
and durability of patents is vital to their ability to
raise the investment capital that funds their research
and product development efforts.
The Association of University Technology
Managers (“AUTM”) is a nonprofit organization with
an international membership of more than 3,000
technology managers and business executives. The
field of technology management in which AUTM
operates is one of the most active growth sectors of
the international economy. AUTM members come
from more than 300 universities, research
institutions, and teaching hospitals, as well as
1 The parties have consented to the filing of this brief in
letters on file with the Clerk’s office. Pursuant to Supreme
Court Rule 37.6, amici represent that no counsel for a party
authored this brief in whole or in part, and no party or counsel
for a party made a monetary contribution intended to fund the
preparation or submission of this brief. No person other than
the amici themselves made a monetary contribution to the
preparation and submission of this brief.
businesses and governmental organizations that are
involved with managing and licensing innovations
derived from academic and nonprofit research.
CropLife International is a global federation
that represents the plant science industry. CropLife
promotes the international development of crop
protection, seeds, agricultural biotechnology, and
sustainable agriculture in an effort to assist farmers
and consumers, as well as to protect the
environment. Through those activities, CropLife
works closely with those interested in the future of
food production and farming.
Amici have a substantial interest in this
Court’s continued adherence to the long-settled
principle that the invalidity of patents must be
proven in litigation by clear and convincing evidence.
SUMMARY OF ARGUMENT
The stability of patents drives the innovation
that the patent system is intended to promote.
Central to that stability are the presumption in 35
U.S.C. § 282 that patents are valid and the
concomitant requirement that litigants challenging
patent validity in court show by clear and convincing
evidence that the patent is invalid. Together, the
strong presumption of validity and the demanding
clear and convincing evidence standard for proving
invalidity furnish inventors and investors with the
stability and confidence needed to disclose their
discoveries and to invest labor and resources in
innovations that promote the public interest, but that
require long-term commitments of resources to come
to fruition. Petitioner’s campaign to discard the clear and
convincing standard defies a century’s worth of
precedent that Congress codified when it enacted
Section 282. Nothing in the statutory text or
legislative history says that Congress wanted to
change the uniform judicial and scholarly recognition
that challengers to the validity of a patent must
demonstrate invalidity by a heightened showing, or
wanted to permit the presumption of validity to be
overcome by jurors under a mere preponderance
standard. Quite the opposite, petitioner’s position
would read the first sentence of Section 282 right out
of the statute because, if Section 282 as a whole does
nothing more than assign the burdens of proof and
production to the plaintiff, the presumption is
rendered meaningless.
The courts’ longstanding application of the
clear and convincing evidence standard to patent
invalidity claims, and Congress’s endorsement of that
settled law, make sense. That same clear and
convincing standard has historically been used to
protect property rights that have a special need for
security and stability, and those property interests
that are imbued with a significant public interest. It
also enforces the presumption of regularity that
applies to governmental processes. In reliance on the
strength of the property right conferred through the
government’s issuance of a patent, countless
individuals and businesses have formed legitimate
investment-backed expectations about the stability of
the patent system.
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.
Given the substantial property and reliance
interests at stake, any changes to the standard
should come from Congress, not the judiciary.
Congress has the institutional capacity to best assess
in what ways the current patent system should be
changed and to assess the impact of the current
patent system on all industries, not just on the
parties to one particular lawsuit. This distinction
between the vantage point of Congress and that of a
court cautions against judicial intervention in an
area where Congress is and has been active,
especially because there are pronounced industryspecific
differences over the importance of strong
patent protections.
In fact, Congress has already dealt with the
policy concerns about which petitioner complains.
Congress, however, addressed the issue of
questionable patents not by withdrawing the
presumption of validity for all patents in litigation,
but by strengthening the Patent and Trademark
Office’s (“PTO”) examination and reexamination
processes and authorizing an administrative
preponderance standard only on congressionally
prescribed terms. That approach appropriately
focuses the inquiry on specific questionable patents,
rather than categorically devaluing patents across
the board as petitioner would do. In declining to
change the litigation standard for patent validity,
Congress determined that expert evaluation of
patents at the PTO is not fungible with lay jury
evaluation of patents in a trial, and to equate the two
by lowering the proof standard in litigation to a mere
preponderance would upset the careful balance that
Congress struck.
ARGUMENT
THE CLEAR AND CONVINCING EVIDENCE
STANDARD FOR PROVING PATENT
INVALIDITY IS CRITICAL TO
INNOVATION.
A. Durable And Stable Patents Are
Vital To Promoting Innovation.
The Constitution invests Congress with broad
authority to formulate legislation that “promote[s]
the Progress of Science and useful Arts, by securing
for limited Times to Authors and Inventors the
exclusive Right to their respective Writings and
Discoveries.” U.S. Const., art. I, § 8, cl. 8. The
“policy of stimulating invention that underlies the
entire patent system runs * * * deep” in our history.
Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S.
176, 221 (1980). By giving “Inventors” the incentive
and security to develop their innovations and to
share them with the public, the Nation’s patent laws
are critical to furthering the “Progress of * * * useful
Arts.”
More specifically, the patent laws offer
inventors “a carefully crafted bargain for encouraging
the creation and disclosure of new, useful, and
nonobvious advances in technology and design.”
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489
U.S. 141, 150-151 (1989). In exchange for revealing
their innovations to the public, the inventors’
investment of labor and funds is rewarded with “the
exclusive right to practice the[ir] invention for a
period of years.” Id. at 151.
Ensuring that the patent laws provide
appropriate security and reward to inventors is
critical because, without such protection, inventors
will be unable to bear the financial, intellectual, and
resource costs of bringing their innovations to public
use. The grant of a patent thus is “compensation to
the inventors for their labor, toil, and expense in
making the inventions.” Seymour v. Osborne, 78 U.S.
516, 533 (1870).
“The public good,” moreover, “fully coincides”
with that protection of the “inventors’” exclusive
rights in their “useful inventions.” THE FEDERALIST
NO. 43 (JAMES MADISON) (Clinton Rossiter ed. 1961).
Indeed, this Court repeatedly has recognized that the
“productive effort” of inventors has “a positive effect
on society through the introduction of new products
and processes of manufacture into the economy, and
the emanations by way of increased employment and
better lives for our citizens.” Kewanee Oil Co. v.
Bicron Corp., 416 U.S. 470, 480 (1974). See Kendall
v. Winsor, 62 U.S. 322, 328 (1858) (the “primary
object” of patents is to “benefit the public”).
B. The Clear And Convincing Standard
For Patent Invalidation Provides
The Patent System The Reliability
And Stability Upon Which
Innovation Depends.
1. The Clear and Convincing Standard is
Deeply Rooted in the Law.
The “clear and convincing” standard for
proving patent invalidity in litigation that petitioner
seeks to discard (Pet. Br. 14-18) is deeply anchored in
this Court’s precedent. As early as 1844, Justice
Story set “beyond a reasonable doubt” as the
threshold for a jury to find patent invalidity “because
the plaintiff has a right to rest upon his patent for his
invention, till its validity is overthrown.” Washburn
v. Gould, 29 F. Cas. 312, 320 (C.C.D. Mass. 1844)
(No. 17,214) (Story, J.. Circuit Justice).
In the century that preceded Congress’s
enactment of 35 U.S.C. § 282 in 1952, this Court
repeatedly echoed Justice Story, holding that a
heightened showing is required to prove patent
invalidity. For example, this Court held
unanimously in RCA v. Radio Engineering
Laboratories, Inc., 293 U.S. 1 (1934), that a patent’s
“presumption of validity” is “not to be overthrown
except by clear and cogent evidence,” id. at 2, and “an
infringer who assails the validity of a patent * * *
bears a heavy burden of persuasion,” beyond a
“dubious preponderance.” Id. at 8.
Likewise, in Washburn & Moen Manufacturing
Company v. Beat ‘Em All Barbed-Wire Company, 143
U.S. 275 (1892), this Court observed that “almost
every important patent, from the cotton gin of
Whitney to the one under consideration, has been
attacked” by individuals “who imagined they had
made similar discoveries long before the patentee had
claimed to have invented his device,” so much so that
“the popular impression” has arisen “that the
inventor may be treated as the lawful prey of the
infringer,” id. at 284-285. For that reason, this Court
required that proof of invalidity “shall be clear,
satisfactory, and beyond a reasonable doubt.” Id. at
284.
As respondents explain (Br. 13, 18), those
holdings were part of a precedential pattern, cutting
across a variety of invalidity claims and forms of
evidence, in which the common thread was this
Court’s uniform insistence that a heavy burden—not
a mere preponderance—be imposed on those seeking
to overthrow the presumption of validity. See Smith
v. Hall, 301 U.S. 216, 233 (1937) (challenger bears a
“heavy burden of persuasion” when seeking to
invalidate a patent by “showing prior use”); Mumm v.
Jacob E. Decker & Sons, 301 U.S. 168, 171 (1937)
(The “burden is a heavy one, as it has been held that
every reasonable doubt should be resolved against
him.”); Eibel Process Co. v. Minnesota & Ontario
Paper Co., 261 U.S. 45, 60 (1923) (evidence of
invalidity must be “clear and satisfactory”); Adamson
v. Gilliland, 242 U.S. 350, 353 (1917) (“requiring the
defendant to prove his case beyond a reasonable
doubt”); Deering v. Winona Harvester Works, 155 U.S.
286, 301 (1894) (invalidity must be proven “by
evidence so cogent as to leave no reasonable doubt in
the mind of the court”); Cantrell v. Wallick, 117 U.S.
689, 696 (1886) (“every reasonable doubt should be
resolved against” invalidity); Brown v. Guild (The
Corn-Planter Patent), 90 U.S. 181, 227 (1874)
(requiring “conclusive evidence” of invalidity); Coffin
v. Ogden, 85 U.S. 120, 124 (1873) (“every reasonable
doubt should be resolved against” invalidity).
The law of the circuit courts was also uniform
at the time of Section 282’s enactment. Relying on
decisions of this Court such as RCA and Smith, the
circuits had consistently held that the party seeking
to establish the invalidity of a patent had to meet a
heightened standard of proof. See, e.g., Resp. Br. 22
(citing Charles Peckat Mfg. v. Jacobs, 178 F.2d 794,
801 (7th Cir. 1949); Insul-Wool Insulation Co. v.
Home Insulation, 176 F.2d 502, 504-505 (10th Cir.
1949); Murdock v. Murdock, 176 F.2d 434, 437 (4th
Cir. 1949); Lever Bros. v. Procter & Gamble Mfg., 139
F.2d 633, 640 (4th Cir. 1943); Williams Mfg. v. United
Shoe Mach. Corp., 121 F.2d 273, 277 (6th Cir. 1941),
aff’d, 316 U.S. 364 (1942); Wisconsin Alumni
Research Foundation v. George A. Breon & Co., 85
F.2d 166, 167 (8th Cir. 1936).
The views of leading treatises were of the same
accord. See, e.g., Albert Walker, TEXT-BOOK OF THE
PATENT LAWS OF THE UNITED STATES OF AMERICA § 76
(1st ed. 1883) (“[T]he burden of proving want of
novelty is upon him who avers it, and every
reasonable doubt should be resolved against him.”).
That is the settled legal backdrop against
which Congress enacted Section 282’s rule that “[a]
patent shall be presumed valid.” Again and again,
that solid wall of authority had mandated that the
presumption of validity could not be overthrown by a
mere preponderance of the evidence. And that rule is
what Congress carried forward when it enacted
Section 282 without a legislative word of complaint
about the settled standard of proof. “When all (or
nearly all) of the relevant judicial decisions have
given a term or concept a consistent judicial gloss,
[this Court] presume[s] Congress intended the term
or concept to have that meaning when it incorporated
it into a later-enacted statute.” Bruesewitz v. Wyeth
LLC, 131 S. Ct. 1068, 1082 (2011). Indeed, the
legislative record avowed its intent to codify “the
existing presumption of validity.” H.R. Rep. No. 82-
1923, at 29 (1952); S. Rep. No. 82-1979, at 2422
(1952).
Petitioner cites (Br. 24) a handful of district
court cases that it says “question[ed] whether any
presumption of validity was warranted” before
Section 282 was enacted. But Congress answered
that question quite emphatically and directly by
preserving and codifying the existing presumption of
validity long recognized by this Court. That is why,
even after 1952, petitioner cannot find a single
decision of this Court holding or stating that the
presumption of validity can be overcome by a mere
preponderance of the evidence. Not one. In fact, this
Court continued to recognize that Section 282 made
patentees “heavily favored” in validity challenges.
Blonder-Tongue Labs. v. University of Illinois
Foundation, 402 U.S. 313, 335 (1971) (discussing
high evidentiary burden imposed on party seeking to
establish patent invalidity).
Petitioner also notes (Br. 34) that some pre-
1952 circuit decisions held that “the presumption of
validity was, at minimum, ‘weakened’ when the PTO
did not consider relevant prior art.” But that proves
amici’s and respondents’ point. Absent a heightened
standard of proof, there would be nothing to
“weaken.” One speaks of defeating, not weakening,
claims that are subject to ordinary preponderance
invalidation in litigation. In any event, Congress did
nothing in 1952 that remotely resembles the adoption
of a two-tiered system of presumptive validity, and
petitioner’s pre-1952 circuit decisions merely
foreshadowed the Federal Circuit’s rule that, in cases
involving prior art that was not considered by the
PTO, “the patent challenger’s burden may be more
easily carried” as an empirical and factual matter.
See Connell v. Sears, Roebuck & Co., 722 F.3d 1542,
1549 (Fed. Cir. 1983).
Most telling is what petitioner does not and
cannot say: it cites not a whisper from Congress in
1952 or since criticizing the heightened showing of
patent invalidity consistently required by this Court.
Indeed, even modern patent reform proposals leave
untouched the presumption of validity and its
“consistent judicial gloss,” Bruesewitz, supra,
imposing a heightened standard of proof. See
America Invents Act, S. 23, 112th Cong. (passed by
Senate, March 8, 2011). Petitioner’s case, in other
words, is less about statutory construction and more
about its quest to obtain from this Court what patent
challengers could not in 1952 and have not since been
able to obtain from Congress.
2. The Statutory Text Comports with
Past Precedent.
Petitioner’s effort to read the settled
jurisprudential backdrop out of a statute that was
enacted to codify that law fails. To begin with, if
petitioner is right that the issuance of a patent has
no bearing on the standard for proving its invalidity,
then there was no reason for Congress in 1952 to
enact both sentences of Section 282. Specifically,
petitioner posits that Section 282 was all about
assigning the burdens of production and proof to the
infringer challenging the patent’s validity. But if
that is all Congress wanted to do—in flat rejection of
RCA and the unbroken line of precedent of this
Court—then Congress needed only to enact the
second sentence of Section 282: “The burden of
establishing invalidity of a patent or any clam thereof
shall rest on the party asserting such invalidity.”
Congress could have skipped the first sentence (“A
patent shall be presumed valid.”) altogether. The
second sentence would have assigned both the
burden of proof and production to the challenger.
And nothing more would need to have been said.
This Court, however, does not read statutory text to
make 50% of its content surplusage. See Corley v.
United States, 129 S. Ct. 1558, 1566 (2009) (“A
statute should be construed so that effect is given to
all its provisions, so that no part will be inoperative
or superfluous, void or insignificant.”).
Nor, if it wanted the two sentences of Section
282 to tagteam the burdens of proof and production,
would Congress in subsequent amendments have
separated the two sentences by multiple lines of new
text. Instead, Congress’s more extended discussion of
the presumption of validity in the current text of
Section 282 underscores that the presumption of
validity in the first sentence was meant to be one of
legal substance operating in the real world where
inventors and investors make decisions, not just a
procedural rule for courthouse litigation.
Petitioner’s argument (Br. 20-21) that the
presumption of validity merely assigns a burden of
production fails for another reason. In the normal
course, “the determination that a defendant has met
its burden of production” is important not just
because it “rebut[s] any legal presumption,” but also
because it shifts the burden to the plaintiff, who
ultimately bears the burden of proving its claim. St.
Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 509-510
(1993); see Schaffer v. Weast, 546 U.S. 49, 56 (2005)
(“The ordinary default rule [is] that plaintiffs bear
the risk of failing to prove their claims.”). But no
such burden shifting occurs under Section 282,
because the second sentence of the statute imposes
the entire burden of proving invalidity on the party
asserting invalidity. As this Court stated in Blonder-
Tongue, under Section 282, the party seeking to
establish invalidity must “both introduce[] proof to
overcome the presumption and attempt[] to rebut
whatever proof the patentee offers to bolster the
claims.” 402 U.S. at 335 (emphases added).
And even if petitioner were correct that the
first sentence of Section 282 imposes a burden of
production, that would simply beg the question of
what evidentiary showing the party challenging
validity must make to carry its burden-of-proof under
Section 282. That question is answered both by this
Court’s century-worth of pre-1952 precedents,
codified in Section 282, requiring a showing of clear
and convincing evidence, and by Blonder-Tongue‘s
recognition that “patentees are heavily favored as a
class of litigants by the patent statute.” 402 U.S. at
335 (emphasis added).
3. The “Clear and Convincing”
Standard Provides Indispensable
Security to Inventors, Developers,
and Investors.
As if the dearth of legislative direction and
judicial precedent were not enough, the arguments of
petitioner and its amici ignore the “clear and
convincing” standard’s critical contribution to the
stability and reliability of patent rights. Most
basically, patent law cannot make inventors
“secur[e]” in their interests and cannot actually
“promote the progress of science,” U.S. Const., art. I,
§ 8, cl. 8, if their patents are at perpetual risk of
being cast aside in any lawsuit anywhere at any time
in the inherently unpredictable civil litigation
process.
The reliability and durability of patent grants
from the federal government are indispensable to the
fluid disclosure of innovation and to providing the
structural support for turning innovative ideas into
usable and marketable products for the public. For a
broad swath of businesses and industries—
biotechnology, military and heavy equipment, and
durable consumer goods—research, development, and
bringing products to market take substantial time
and long-term investment. Only a reliable and stable
patent system, in which the government’s grant of a
patent right provides meaningful protection, can
make that publicly beneficial innovation possible.
More specifically, the heightened standard for
invalidation fuels innovation by limiting risk and
providing a measure of predictability for patentees
and all affected entities. It furnishes the inventor, as
well as private business, venture capitalists and
others who contribute to the research and
development process, with the confidence that the
expenditure of time, energy, and money will result in
a durable patent—one that lasts long enough to
develop and apply the patent in public uses and
provide a reasonable return. The heightened
standard also promotes the liberal licensing and
transfer of patented technology in pro-competitive
arrangements, frequently involving private and
public sector partnerships, including thousands of
university/industry licensing arrangements. Those
arrangements rest critically on the expectation that
the validity of the patent will not be easily upset.
Changes to the patent system that cause parties to
technology licensing agreements to question the
strength, and thus the value, of an issued patent will
significantly undermine such arrangements.
Applying the “clear and convincing” standard
to the protection of property interests that are of such
public and private magnitude hews closely to
precedent in two respects.
First, this Court’s adoption of the “clear and
convincing” evidence standard in RCA and other
cases reflects the profound public and private
interests at stake in the limited property right that a
patent creates. “[P]atents[] are matters concerning
far more than the interest of the adverse parties;
they entail the public interest.” S&E Contractors,
Inc. v. United States, 406 U.S. 1, 15 (1972). Courts
have long applied the “clear and convincing” standard
to property rights in which there is a distinct societal
need for stability and certainty. For example, only
clear and convincing proof can contest a will,2 reform
a deed,3 establish adverse possession,4 obtain a
prescriptive easement,5 revoke a broadcaster’s
license,6 or revoke a professional license.7 In those
situations, only a heightened showing will provide
the underlying property right sufficient security
against loss through the vagaries of litigation.
Likewise here, a lawsuit seeking patent
invalidation is not an ordinary commercial dispute
over damages that affects only the interests of the
parties; it strikes at the heart of the “delicate
balance” Congress crafted between protecting
inventors, promoting innovative development, and
ensuring fair competition. Festo Corp. v. Shoketsu
Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 731
(2002). Indeed, some of this Court’s earliest cases
applying a heightened standard of proof for patent
invalidation stressed that the grant of a property
right upon which both the grantee and the public
reasonably rely should not be withdrawn lightly. See,
e.g., Coffin, 85 U.S. at 124 (“every reasonable doubt
should be resolved against” invalidity, because the
law in this area “requires not conjecture, but
certainty”).
Thus the “clear-and-convincing-evidence
standard accommodates society’s competing interests
in increasing the stability of property rights and in
putting resources to their most efficient uses,”
Colorado v. New Mexico, 467 U.S. 310, 316 (1984). As
with other important property rights, the standard
also allocates the risk of erroneous judgment between
the litigants and underscores the public importance
that society attaches to the decision to grant patent
rights. Given the stakes in such cases, “[a] mere
preponderance of evidence * * * is not enough.” Oriel v.
Russell, 278 U.S. 358, 362 (1929).
Second, the “clear and convincing” standard
has long been employed to give governmentally created
property interests the legal force, effect, and
durability needed to serve their public purposes. The
“clear and convincing” standard of proof enforces “the
respect due to a patent” and “the immense
importance and necessity of the stability of titles
dependent upon these official instruments.” United
States v. Maxwell Land-Grant Co., 121 U.S. 325, 381
(1887) (land patent case). Indeed, the clear and
convincing standard comports with the protection
that the law has historically accorded to the holders
of government-issued licenses, which, like patents,
are generally regarded as a form of property right.
See Cleveland v. United States, 531 U.S. 12, 26 n.4
(2000). Furthermore, this Court has long recognized
that official actions of the federal government merit a
presumptive legitimacy in judicial decisionmaking.
United States v. Armstrong, 517 U.S. 456, 464 (1996);
United States v. Chemical Foundation, 272 U.S. 1,
14-15 (1926).
Those principles apply equally to the federal
government’s conferral of property rights in a patent.
A challenge to a patent “is an application to the court
to set aside the action of one of the executive
departments of the government” that “gave to the
defendant the exclusive rights of a patentee.”
Morgan v. Daniels, 153 U.S. 120, 124 (1894). When a
litigant seeks “to set aside the conclusions reached by
the administrative department, and to give to the
plaintiff the rights there awarded to the defendant,”
the claim “is not to be sustained by a mere
preponderance of evidence.” Id. See also Dickinson
v. Zurko, 527 U.S. 150, 158-161 (1999) (discussing
Morgan’s reach).
Thus, at two different levels—the distinctive
public interest in protecting certain, significant
property claims imbued with a public interest and
heavy reliance interests, and the respect accorded to
an expert federal agency’s grant of patent property
rights—the “clear and convincing” standard long
embodied in precedent makes sense. Unless patents
have meaningful force and durability for the
inventors and developers who bring innovation to
fruition—unless the United States’ issuance of a
patent property right has more force and respect in
the law than a “dubious preponderance”
determination of lay jurors, RCA, 293 U.S. at 8—the
innovators’ side of the balance is deeply diminished.
Indeed, thousands upon thousands of inventors,
financiers, licensees, private businesses, and public
institutions have built strong reliance interests on
the well-established principle that the validity of
patents issued by the federal government can be
overcome only upon clear and convincing evidence of
invalidity. See Adam B. Jaffe & Josh Lerner,
Innovation and its Discontents, 1 Capitalism and
Society 22 (2006). Abandoning the clear and
convincing standard would profoundly disturb those
legitimate reliance interests. It also would
substantially increase the risk of erroneous jury
invalidation, while pushing the risk of innovation
disclosure, support, and investment to the breaking
point. “A patent that costs a lot to get from the
Patent Office, and a lot more to defend in unending
reexamination, but that gives no advantage in court,
is a patent that doesn’t do much good to anyone.”8
8 F. Scott Kieff, The Patent Process Run Amok,
DEFINING IDEAS (Hoover Institution) (Feb. 1, 2011), available at
http://www.hoover.org/publications/defining-ideas/article/64956.
21
C. Innovation In The Biotechnology
Industry Depends On The Stable
And Durable Patent System That
The Clear And Convincing Evidence
Standard Fosters.
1. Biotechnology Innovation is Vital.
The biotechnology industry is a case in point
for the importance of patent stability. The
exceptionally “rapid pace of innovation in the
biotechnology industry” in recent decades has led to
innovations that have dramatically improved and
even saved lives on a daily basis.9 Biotechnology
advancements provide life-saving medical treatments
and diagnostic procedures, disease- and herbicideresistant
crops, and a host of promising scientific
solutions for modern environmental, medical,
agricultural, and energy challenges. Many of those
products, moreover, find their origins on university
campuses as the result of the critical research that
they can be conducted only within the framework of a
strong patent system.
In the health care arena, the biotechnology
industry has brought to market more than 230 drugs,
diagnostics, therapies, and vaccines for once
untreatable diseases, such as cancer, diabetes,
HIV/AIDS, and autoimmune disorders. Additionally,
more than 400 therapeutic biotechnology products
9 See Federal Trade Comm’n, To Promote Innovation: The
Proper Balance of Competition and Patent Law and Policy
(“FTC Report”), Ch. 3, p. 21 (Oct. 2003), available at
http:/www.ftc.gov/os/2003/10/innovationrpt.pdf.
are currently in clinical trials being tested for their
effectiveness in combating hundreds of diseases –
including numerous common and rare forms of
cancer, heart disease, Alzheimer’s, Parkinson’s,
stroke, cystic fibrosis, multiple sclerosis, lupus,
kidney disease, and liver disease.
Additionally, biotechnology research holds the
promise of developing “personalized medicine,” in
which specialized biotech research tools will permit
the affordable sequencing of an individual’s own
unique genetic code to identify that person’s
susceptibility to certain diseases and to enable
customized medical treatments that are cheaper and
more effective than the current “one-size-fits-all”
approach.
In the agricultural arena, biotechnological
innovation is helping to feed a growing world and to
combat hunger in areas challenged by drought,
flooding, pestilence, and other inclement conditions.
Among other things, biotechnology research and
development has led to the emergence of disease-and
herbicide resistant crops and a concomitant increase
in harvests. In 2006, more than 8 billion pounds of
additional crops were grown in the United States
with over 100 million fewer pounds of pesticides..
And in 2010, more than 14 million famers in China
and India adopted insect-resistant cotton created in
the United States as a means to grow their way out of
poverty.12 Such innovations have reduced the
environmental impact of food production by as much
as 32% for some crops.
Furthermore, crops are being developed that
will grow under adverse conditions, such as water or
nitrogen deficiency. Indeed, “[b]iotech foods could
improve food yields by up to 25 percent in the
developing world and feed the more than three billion
people to be born in the next three decades.”
Finally, biotechnology innovation helps reduce
pollution and dependence on fossil fuels or imported
sources of energy. It serves this vitally important
societal need by developing biofuels that efficiently
convert non-food biomass (crop residues, switchgrass,
and hybrid wood plants) into ethanol and other
valuable materials.
2. Biotechnology Depends on Secure
and Reliable Patents.
A stable and durable patent system, with the
clear and convincing standard for proving patent
invalidity as its centerpiece, is imperative to the
biotechnology industry because it “is the most
research and development-intensive and capitalfocused
industry in the world.15 In fact,
biotechnology research and development
expenditures are more than double the average of the
pharmaceutical industry, which itself is several times
more intensive than any other industry. See FTC
Report at pp. 15-16; Dan Burk & Mark Lemley, Policy
Levers in Patent Law, 89 Va. L. Rev. 1575, 1676
(2003) (“If any technology fits the criteria of highcost,
high-risk innovation, it is certainly
biotechnology. Development of biotechnology
products, particularly in the pharmaceutical sector,
has been characterized by extremely long
development times and high development costs.”).
The costs of biotechnological innovation are
staggering. Biotechnology companies in the United
States invest more than $30 billion annually in
research and development, virtually all of which
comes from private sources.16 The average capitalized cost of
bringing a biologic from the laboratory to human clinical trials exceeds $600
million. Subsequent human testing mandated by the
Food and Drug Administration costs another $624
million. See Joseph A. DiMasi & Henry G.
Grabowski, The Cost of Biopharmaceutical R&D: Is
Biotech Different?, 28 Managerial and Decisions
Economics, 469-479 (2007).
The length of time it takes to bring a
biotechnological product to fruition is equally
daunting. Clinical development of biologics typically
lasts more than eight years. DiMasi& Grabowski, 28
Managerial and Decisions Economics at 469-479.
And the average for vaccine products may be ten
years or longer. See Yann Jolly, et al., Regulatory
Approval For New Pharmacogenomic Test: A
Comparative Overview, 66 Food and Drug L.J. 1, 3
(2011).
The challenge of biotechnology innovation is
heightened further by the sheer uncertainty of the
development process. The costly and time-consuming
research and development of biotechnology products
frequently meets with failure. For every successful
pharmaceutical product, thousands of products are
studied but then rejected. Only a small minority of
drugs that advance to human clinical trials obtain
FDA approval.
Judiciary Subcomm. on Courts, the Internet and Intellectual
Property, 110th Cong. 3 (2007) (Jeffrey P. Kushan).
17 See Tommy G. Thompson, Secretary of Health and
Human Services, Remarks as Prepared for the Milken
The enormous cost, time-commitment,
resource-investment, and uncertainty inherent in
biotechnology development can almost never be borne
by any one person or entity alone. For that reason,
biotechnology innovation depends on partnerships
between numerous stakeholders, including research
universities, public institutions, private industry, and
investors. See Stewart J.H. Graham, et al., High
Technology Entrepreneurs and the Patent System:
Results of the 2008 Berkeley Patent Survey, 24
Berkeley Tech. L. J. 1255, 1317 (2009); Ashley J.
Stevens et al., The Role of Public-Sector Research in
the Discovery of Drugs and Vaccines, New Eng. J.
Med., Feb. 10, 2011, at 535-541 (153 new FDA approved
drugs, vaccines, or new uses for existing
drugs were discovered through research carried out
at public sector research institutions). For example,
a university scientist might discover a new protein
linked to certain cancers. After patenting the
relevant technology, the university might then
license a biotech business or university spin-off
company to begin the time-intensive process of
developing standardized tools for further research, as
well as diagnostic methods, therapeutic treatments,
and other real-world applications for the discovery.
Such licensing arrangements are mutually
beneficial. They provide the licensee with the
exclusive rights needed to attract capital for research
and development, while providing the university with
revenue to support further academic research.
Institute’s Global Conference (April 26, 2004), available at
http://www.hhs.gov/news/speech/2004/040426.html.
Indeed, in fiscal year 2009, 596 new companies were
formed as a result of university research, and 595
were formed in 2008. AUTM, LICENSING ACTIVITY
SURVEY: FY09 (Dec. 2010). The symbiotic
relationship between different entities engaged in
biotechnological research and development is crucial
both to ensuring the continued viability of small and
publicly funded biotechnology research entities,
which cannot afford expensive licensing fees or sale
prices, and to allowing inventors to navigate
successfully the long and resource-intensive road to
the commercial and public use of their products.18
Since this Court first held three decades ago
that genetically-engineered organisms were patent eligible,
see Diamond v. Chakrabarty, 447 U.S. 303,
310 (1980), and since Congress authorized in the
Universities and Small Business Patent Protection
Act of 1980 the licensing of biotechnology innovations
funded by the government, 35 U.S.C. § 200 et seq.,
patents have become the primary asset, and often the
lifeblood, of the biotechnology industry. See FTC
Report, Ch. 3, at 29 (“Biotechnology innovation is
18 Under the University and Small Business Patent
Procedures Act, 35 U.S.C.§ 200 et seq., universities that conduct
research with federal funds may retain title to resulting
inventions and may license them to other parties. The
availability of liberal licensing of biotechnological products has
provided enormous benefits to society, including life-sustaining
medical and agricultural innovations. See Birch Bayh, Joseph
P. Allen, and Howard W. Bremer, Universities, Inventors and
Bayh-Dole, 79 Pat., Trademark & Copyright J. 167, 169 (2009).
heavily dependent on the patent rights that have
been available for biotechnology inventions since
1980.”); Burk & Lemley, 89 Va. L. Rev. at 1687
(“[M]ost biotechnological and chemical inventions
require broad patent protection because of their high
costs and uncertain development process.”); Graham,
24 Berkley. Tech. L. J. at 1278, 1280, 1307
(discussing importance of patents to start-up
biotechnology companies and their investors). That
is because only strong, stable, and durable patent
protection can support the investment of billions of
dollars in biotechnology research and development.
FTC Report at 15. Without those investments, the
capital-intensive and time-consuming advancements
in biotechnology simply could not proceed.
Lowering the standard for proving patent
invalidity in litigation will significantly chill
biotechnological innovation. The necessary
commitment of time, energy, and money to bring a
biotechnological product to market simply may not be
worth it to inventors and investors if, at some point
down the road after a patent is obtained, a lay jury
can wrest the patent away upon a finding of
invalidity under the mere preponderance standard.
And lowering the standard also will unsettle the
existing expectations of countless inventors and
investors who have expended time, energy, and
money in reliance on the principle that the patents
obtained from their efforts will not be lightly
withdrawn by civil litigation.
Finally, the heightened evidentiary standard
facilitates investment in biotechnology not only for
the patentee. Businesses commonly plan
development strategies based on a careful analysis of
the patent landscape in their fields. Assuming
patents to be enduring legal instruments that benefit
from a strong presumption of validity, competing
businesses often decide to “design around” a
competitor’s patent, or to incorporate non-infringing
alternative features that ultimately result in
additional options for consumers. In this way, a
system of strong patent rights facilitates a market in
which alternative products compete on their own
merits, with more consumer choices, and more
options for patients, doctors, and farmers—as
opposed to a market in which ever cheaper copies of
the same product compete on price alone.
In other instances, strong patent rights can
result in products becoming available sooner.
Biotechnology companies often compete for limited
clinical and developmental resources, especially in
efforts to combat rare diseases that affect small,
underserved patient populations. A biotechnology
company’s strong patent position may well persuade
its competitors to defer or redirect their research and
development efforts rather than fight over scarce
clinical resources. In that way, a strong presumption
of validity contributes to an “ordering” function of
patents that encourages the development of
alternative competing products where the market
will bear them, and the conservation of public
development resources where such resources are
limited.
D. Allegations Of Undisclosed Prior
Art Do Not Alter Application Of The
“Clear and Convincing” Standard
Of Proof.
In arguing for wholesale reversal of this
Court’s multiple decisions applying a heightened
showing for patent invalidation, petitioner has
largely turned its back on the issue it brought to this
Court for certiorari review: whether there is an
exception to the “clear and convincing evidence” rule
when “the prior art on which the invalidity defense
rests was not considered by the Patent and
Trademark Office prior to the issuance of the
asserted patent.” Pet. i. Petitioner has abandoned
its argument for a two-tiered standard of proof for
good reason.
First, it is entirely unhinged from statutory
text, which nowhere supports such claim-by-claim
bifurcation of the presumption of validity.
Second, the very argument for an exception to
the rule confesses the error of petitioner’s newfound
premise that no clear and convincing rule has ever
existed at all. If no heightened showing were
required in the first place, there would be no need for
an exception to that rule when undisclosed prior art
is at stake.
Third, the hybrid standard originally
advocated by petitioner (Pet. 15) – one standard for
prior art that was considered and another for prior
art that was not considered – is unworkable in
practice. It would overload the patent examination
process at the PTO because applicants would
confront a system in which the presumed validity of
their patent would depend on the sheer amount of
prior art that was made part of the patent
examination file. Applicants would have little choice
but to overload patent examiners with every
conceivable and identifiable past reference to
preempt the patent’s easy invalidation by lay juries
operating under a mere preponderance standard.
That is of particular concern for patent applications
coming from industries like the biotechnology
industry that already pour extensive resources and
work into their patent applications.
Fourth, the hybrid standard would be
dysfunctional in court. Litigation would devolve into
collateral skirmishes over whether the newly
identified prior art was truly considered by the PTO,
or whether it was immaterial or redundant of art
that was considered. The standard of proof would
change case by case, and perhaps patent claim by
patent claim, in contravention of the basic tenet that
a standard of proof should be uniform. See Santosky
v. Kramer, 455 U.S. 745, 757 (1982) (the “proper
standard of proof” should not be a “case-by-case
determination”). Juror confusion in what is already a
highly technical area would be accentuated if the jury
had to apply differing standards of proof, ratcheting
the standard up and down within the same case
based on the particular type of invalidity argument
presented.
E. Any Change In The Standard For
Proving Invalidity Should Come
From Congress.
1. Stare Decisis Principles and the
Reliance of Third Parties on Court
Decisions Weigh Against a Judicial
Unsettling of the Standard of Proof.
In asking this Court to lower the standard for
proving patent invalidity and thereby jettison its
unanimous decision in RCA and the line of
precedents that preceded and followed it, petitioner
and its amici run headlong into the doctrine of stare
decisis, which operates at its “acme” in this case
because it involves both “property * * * rights, where
reliance interests are involved,” Payne v. Tennessee,
501 U.S. 808, 828 (1991), and “statutory construction,
where Congress is free to change this Court’s
interpretation of its legislation.” Burlington Indus. v.
Ellerth, 524 U.S. 742, 764 (1998).
Indeed, in any patent case in which a litigant
seeks to upset long-standing rules on which firm
reliance interests have been built, the judiciary “must
be cautious before adopting changes that disrupt the
settled expectations of the inventing community.”
Festo, 535 U.S. at 739. In this context in particular,
“[t]he responsibility for changing [such rules] rests
with Congress [because] [f]undamental alterations in
[them] risk destroying the legitimate expectations of
inventors in their property.” Id.; see also Warner-
Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S.
17, 32 n.6 (1997) (“To change so substantially the
rules of the game now could very well subvert the
various balances the PTO sought to strike when
issuing * * * patents which have not yet expired and
which would be affected by our decision.”).
2. Congress Has Prescribed its Own
Solution for Questionable Patents.
The fact that Congress, despite extensive
legislative study and action in the patent area, has
never altered the standard of proof for patent
invalidity should be dispositive. After all, this case is
fundamentally about how best to strike the “delicate
balance the law attempts to maintain between
inventors, who rely on the promise of the law to bring
the invention forth, and the public, which should be
encouraged to pursue innovations, creations, and new
ideas beyond the inventor’s exclusive rights.” Festo,
535 U.S. at 731. That is precisely the type of policy
decision that the Constitution charges Congress, not
the courts, with making. U.S. Const. art. I, §8, cl. 8.
And it is precisely the type of policy decision that is
best made through the comprehensive study of all
competing interests that Congress is institutionally
situated to conduct, rather than through the
microcosm of record-constrained two-party litigation.
Congress, unlike petitioner and its amici and
unlike courts, “has no responsibility to confine its
vision to the facts and evidence adduced by particular
parties,” and, indeed, “its special attribute as a
legislative body lies in its broader mission to
investigate and consider all facts and opinions that
may be relevant to the resolution of an issue.”
Fullilove v. Klutznick, 448 U.S. 448, 502-503 (1980)
(Powell, J., concurring); see Bush v. Lucas, 462 U.S.
367, 389 (1983) (Congress “may inform itself through
factfinding procedures such as hearings that are not
available to the courts.”).
Congress thus can canvass the impact of the
current patent system, including the “clear and
convincing” standard for patent invalidity, on a wide
spectrum of business sectors and industries
nationwide. Congress can also evaluate a body of
empirical evidence that cuts across the entire
economy, and can take into account the views of all
the affected parties, including inventors, investors,
venture capitalists, licensees, research laboratories,
universities, and public institutions. Indeed,
Congress has undertaken just such reviews in
considering changes to the patent laws in recent
years, including changes to the clear and convincing
standard for proving patent invalidity. See Hearing
Before the Subcomm. on the Courts, Internet, and
Intellectual Property of the House Comm. on the
Judiciary, 110th Cong. (2007); Hearing Before the
Subcomm. on Intellectual Property of the Senate
Judiciary Comm., 109th Cong. (2005). But Congress
has never lowered the standard, despite calls from
some quarters to do just that.
In fact, Congress has chosen a different path.
Its monitoring and calibration of the patent system
and invalidity challenges to patents is already
embodied in its authorization of the PTO to
reexamine the validity of patents under a
preponderance standard. 35 U.S.C. §§ 302, 311; see
In re Swanson, 540 F.3d 1368, 1377-1378 (Fed. Cir.
2008). Rather than empty all patents of the stability
and durability enforced by the presumption of
validity under the clear and convincing standard,
Congress has allowed challengers to seek review
under a preponderance standard, but only on
Congress’s terms. The preponderance standard must
be (i) applied by an expert agency empowered both to
modify and invalidate patents; (ii) confined to issues
that the PTO has not already adjudicated; and (iii)
prior art must take the form of objective, inherently
reliable, or self-authenticating evidence like prior
patents and printed publications. See 35 U.S.C.
§§ 301, 303(a), 312(a). Microsoft plainly disagrees
with Congress’s choice. But it is not the role of courts
to re-legislate. Tearing away the judicial backdrop
against which Congress legislated and suddenly
reformulating the litigation standard to mirror the
standard in the reexamination process, without any
of Congress’s limitations, would unravel the
calibrated incentive system for agency processes that
Congress designed.
Notably, that congressional sentiment has
been expressed again in a bill that recently passed
the Senate. See America Invents Act, S.23, 112th
Cong., 1st Sess. (passed March 8, 2011). The
purpose of this legislation is to “establish a more
efficient and streamlined patent system,” 157 Cong.
Rec. S1348-02 (March 8, 2011) (Sen. Leahy), not by
lowering the standard of proof in litigation, but by
enhancing the “inter partes” patent reexamination
process through codification of the PTO’s
preponderance standard in reexaminations. See
S.23, § 5.
In asking this Court to chart a different path,
petitioner ignores the fact that the Constitution
charges Congress with writing the patent laws. This
Court has long recognized that Congress has tasked
the PTO, not courts and not civil litigants, with the
primary responsibility for “sifting out unpatentable
material.” Graham v. John Deere Co., 383 U.S. 1, 18
(1966). While some mistakes are inevitable in a
process that involves thousands of patent
applications annually, that certainly does not prove
that lay jurors with no technical expertise, no larger
framework for analysis, and no background exposure
to the patent system are better suited for the task.
3. Congress Has Canvassed a Broad
Range of Vantage Points in
Preserving the Clear and
Convincing Standard.
Stripped to its essentials, petitioner and its
amici ground their plea for a change in the law on the
argument that the patent system is broken, and
citing the “clear and convincing” standard as
emblematic of the problem. But whether the patent
system is in need of repair, and whether and to what
extent the “clear and convincing” evidence standard
for proving patent invalidity is part of the problem,
are questions that depend very much on vantage
point. Respecting Congress’s comprehensive vantage
point is thus critical because the impact of the patent
system and its importance to business shows
pronounced industry-specific differences. “The
systematic variation in R&D expenditures across
industries naturally affects the need for patent
protection; industries that must spend more time and
money in R&D generally have a greater need for
patent protection.” Burk & Lemley, 89 Va. L. Rev. at
1583. See also Graham, 24 Berkeley Tech. L. J. at
1262 (“[T]he usefulness of patents to technology
entrepreneurs is driven by industry characteristics.”).
The software industry—the industry of
petitioner and many of its amici—is neither as
capital- nor as time-intensive in bringing innovation
to market as many other sectors of the economy are.
Today, in the software industry, “it is still possible to
hire a team of programmers to write a new
applications program for less than a million dollars,”
and “[w]hile debugging a new program is still a
significant undertaking, writing such a program
takes considerably less time than developing a new
drug[.]” Burk & Lemley, 89 Va. L. Rev. at 1582-
1583. Strong patent protection is thus far less
important for software inventions, with their “quick,
cheap, and fairly straightforward post-invention
development cycle,” short lead time to bring the
invention to market, and “relatively low” capital
investment needs. Id. at 1687-1688. See id. at 1622-
1623 (“The need for strong patent protection is
somewhat less for software inventions than it is in
other industries. Software patents are important,
but the relatively low fixed costs associated with
software development, coupled with other forms of
overlapping intellectual property protection for
software, mean that innovation in software does not
depend critically on strong, broad protection.”).
In contrast, “broad patent protection” is more
important for biotechnology innovations, “because of
their high cost and uncertain development process.”
Burk & Lemley, 89 Va. L. Rev. at 1687. See Graham,
24 Berkeley Tech. L. J. at 1262 (“So while we find
that patents help many startups compete in the
market with their technology, this role tends to be
much more pronounced among biotechnology and
hardware companies * * *. Conversely, patents are
much less important as a means by which most
software firms—the majority of which hold no
patents—capture competitive advantage from their
innovations.”).
Importantly, the need for stability and
endurance in patent protection that the biotechnology
industry illustrates is not confined to that industry.
It is, instead, representative of a need that cuts
across a broad cross-section of business and industry,
ranging from defense contractors to heavy
machinery, to household and office products.
The evidence shows that industry-specific
distinctions carry over to financing: venture
capitalists funding biotechnology products consider
patents more important than do venture capitalists
funding software products. Graham, 24 Berkeley
Tech. L. J. at 1307. Not surprisingly therefore,
“[a]fter founding, venture-backed biotechnology and
medical device companies * * * are more likely than
software and [i]nternet firms to file patent
applications.” Id. at 1283.
That is not to say that there should be
industry-specific patent rules. The patent laws,
which universally apply to the diverse inventive
community, should be industry neutral. Rather, the
evidence of industry-specific variations simply
underscores that the perspective that petitioner and
its amici have on the workings of the patent system
and the solutions Congress has prescribed is just
that—one perspective. But the effect of adopting
their proposed rule for patent validity would apply to
all industries and all sectors. The patent rules that
might appear to promote software development
would be devastating for resource- and time-intensive
biotechnology research and innovation that seek to
create agricultural tools to feed a hungry world, to
develop renewable fuels that limit pollution and
reduce dependence on foreign sources of energy, and
to discover medical treatments that save lives. That
is a balance that only Congress can and should draw.
CONCLUSION
For the foregoing reasons, the judgment of the
court of appeals should be affirmed.
Respectfully submitted,
Thomas DiLenge
Hans Sauer
Patricia A. Millett
Michael C. Small