Microsoft Requests En Banc Ruling on Presumption of Validity

The recent Federal Circuit decision Lucent v. Gateway is most notable for the Federal Circuit’s treatment of the entire market value rule and other damages issues, vacating the jury’s damages award but affirming the verdict on issues of infringement and invalidity.  Microsoft has just filed a petition for an en banc ruling on whether there should be  a presumption of validity for patents under prior art that was never before the PTO, and therefore whether such  the clear and convincing evidence standard should apply.   The Lucent v. Gateway case is in a particularly useful posture for this inquiry because the claims of the asserted patent were rejected by the PTO in a parallel reexamination proceeding.  Unlike in litigation, the PTO does not accord a presumption of validity when examining the validity of claims under prior art not previously submitted.  Instead of the clear and convincing evidence standard, the PTO determines validity under the lower  preponderance of the evidence standard, the standard Microsoft submits should be adopted in federal litigation when dealing with prior art that was never before the PTO.  The Federal Cicuit’s panel ruling affirmed the jury’s verdict applying the clear and convincing evidence standard and did not address the issue of which standard to apply.

Inventive Step has made posted the en banc request here.

Microsoft argues that prior to the creation of the Federal Circuit several circuits applied the lower standard for art not that was never before the PTO, and thus the rule is one created by the Federal Circuit that should no longer apply under the Supreme Court’s KSR v. Teleflex ruling.  The Court in KSR stated that “the rationale underlying the presumption [of validity]-that the PTO, in its expertise, has approved the claim-seems much diminished where the claim of obviousness is based on prior art that was never before the PTO,” (550 U.S.at 426) giving rise to speculation that the presumption may no longer apply in such situations.

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