Presumption of Validity - Does it Matter Anymore?

35 U.S.C. 282 says it: “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.” This presumption of validity was codified in the 1952 Patent Act. The Federal Circuit has in varying cases described the purpose of establishing the presumption. See, Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1574 (Fed. Cir. 1992) (“[The] presumption is based in part on the expertise of patent examiners presumed to have done their job.”) and Applied Materials, Inc. v. Advanced Semiconductor Materials Am., Inc., 98 F.3d 1563, 1569 (Fed. Cir. 1996) (“The presumption of validity is based on the presumption of administrative correctness of actions of the agency charged with examination of patentability.”)

The Federal Circuit has long established that the burden to overcome the presumption of validity is clear and convincing evidence. “Clear and convincing” generally means highly probable or reasonably certain. Prior to formation of the Federal Circuit in 1982, the burden of proof necessary to rebut varied among the various Circuit Courts – some courts used a “preponderance of the evidence,” some used “substantial evidence,” and some used “clear and convincing evidence.” The Supreme Court has never directly addressed the issue of the proof required to rebut the presumption.

Why do I bring this up? At page 104 of the Association for Molecular Pathology opinion, Judge Sweet had this to say: “While Congress has created a presumption of validity for issued patents, approximately 40% of patents challenged in the courts have been found invalid, indicating that this presumption is far from absolute.”

While it may be fair to say that many patents are (rightly or wrongly) invalidated in litigation, is it fair to simply blow off the statutory presumption of validity?  More importantly, the majority of the cases relied upon by Judge Sweet issued prior to the codification of Section 282, and prior to the formation of the Federal Circuit, which established once and for all that the burden to rebut was “clear and convincing.” Are Judges held to a higher burden of proof now to invalidate than pre 1952 and/or pre 1982? And should that be taken into consideration when relying upon older cases to invalidate a patent?

IDS Admissions as Prior Art

Riverwood International Corp. v. R.A. Jones & Co., 324 F.3d 1346 (Fed. Cir. 2003)

Riverwood owned the '789 and '361 patents, each which were improvements on the '806 patent, which was also owned by Riverwood. He sued Jones for infringing the '789 and '361 patents, but Jones alleged that both patents were invalid in light of the prior art '806 patent because (1) Riverwood included the '806 patent as "prior art" in the Information Disclosure Statement (IDS) for the '361 and '789 patents, which constituted an admission; and 2) there were different named inventors on the '806 patents and the later two patents, with only one inventor in common for all three

Note: In a patent application, the prior art references listed in the IDS constitute the closest art of which the applicant is aware of relating to the invention in the application. The application then discloses and claims an invention over this prior art. Prior art may arise from § 102 or from admissions of the parties.

The Federal Circuit found that the '806 patent was not statutory prior art under § 103. While noting that in In Re Nomiya, the CCPA held that "a statement by an applicant during prosecution identifying certain matter not the work of the inventor as "prior art" is an admission that the matter is prior art," the Federal Circuit held that "that doctrine is inapplicable when the subject matter at issue is the inventor's own work," and " a patentee should not be "punished" for being as inclusive as possible and referencing his own work in an IDS." In particular,

[T]here is an important distinction between the situation where the inventor improves upon his own invention and the situation where he improves upon the invention of another. In the former situation, where the inventor continues to improve upon his own work product, his foundational work product should not, without a statutory basis, be treated as prior art solely because he admits knowledge of his own work. It is common sense that an inventor, regardless of an admission, has knowledge of his own work. (quoting Reading & Bates Construction Co. v. Baker Energy Resources Corp., 748 F.2d 645, 223 USPQ 1168, 1172 (Fed. Cir. 1984).

The Federal Circuit next found that the '806 patent was not statutory prior art under § 102(e), because the reference at issue must specifically be "by another." "Thus, just as a patent issued to the same inventive entity cannot be prior art by admission, an application issued to the same inventive entity cannot be prior art under section 102(e)." Here, although the three patents were issued to three different inventive entities, the subject matter of the '806 patent that Jones intended to rely on as prior art and the subject matter of the claims in question in the '361 and '789 patents may have represented the work of a common inventive entity. The Federal Circuit remanded the obviousness issue to the District Court to determine whether or not this was the situation.

Standards of Review

Just so we're clear, here are the standards of review of the Federal Circuit. Law school students who are reading, this is very important for your appellate briefs. If I've missed something, please leave a comment and I'll edit.

De Novo

Statutory interpretation
Claim interpretation
Contract interpretation
Pretrial stipulation interpretation
Grant of summary judgment
Denial of a motion for JMOL
On sale bar -- question of law, reviewed de novo, based on underlying facts, reviewed for clear error
Obviousness -- question of law, reviewed de novo, based on underlying facts, reviewed for clear error.

Clear Error

Factual findings in bench trials.
Infringement
Validity
Inequitable conduct
Exceptional nature of a case
All issues with factual components
Section 112 requirements

Substantial Evidence

Factual findings in jury trials
PTO fact-finding

Abuse of Discretion

Grant or denial of preliminary injunction
Exclusion of evidence
Denial of a motion for new trial
Denial of motion for JNOV/JMOL