Proving Patent Damages is Getting Harder, but Establishing Patent Invalidity May Be Getting Easier – How i4i, L.P v. Microsoft Corp. May Change the Landscape of Patent Litigation

June 16, 2012

Federal court dockets are flooded with cases of patent infringement claims seeking substantial damages. Parties defending against these claims often argue the patent being asserted is invalid and should not have been issued. The case of i4i v. Microsoft is an excellent example of how evidentiary principles for proving damages and patent validity can affect outcomes, both at trial and on appeal. In this case, a substantial damages verdict was upheld because of a party’s failure to properly preserve for appeal questions about the sufficiency of the successful party’s damages evidence. Given the substantial amount of damages verdict upheld on appeal, this case had widely been viewed to be another important decision about patent damages. The Supreme Court is now poised to consider another issue from the case: whether to lower the evidentiary burden, which now requires proof through clear and convincing evidence, for establishing patent invalidity. From a practical perspective, a heightened standard unrealistically inflates the consideration that each patent application receives and seems unnecessary, given jurors’ inherent tendency to defer to the expertise of the patent examiner. Changing the standard, some argue, will weaken the presumption that an issued patent is valid and discourage innovation. Fortune 500 companies are lining up on both sides of the battle, given their past patent litigation experience. Once the Supreme Court weighs in, potential litigants may reconsider whether to engage in a costly battle, particularly if the patent at issue is of questionable validity.