US Supreme Court judgements: Global-Tech, Stanford and Microsoft

The US Supreme Court delivered three important patent decisions in May and June 2011.

The US Supreme Court delivered its judgements in Global-Tech Appliances v SEB, Board of Trustees of Leland Stanford Junior University v Roche Molecular Systems and Microsoft Corporation v i4i Limited Partnership et al on May 31, June 6 and June 9 respectively.

In Stanford, the Supreme Court ruled that the US Bayh-Dole Act does not override the basic patent law principle that “inventors own their inventions”.

Stanford University claimed priority rights to patents for a procedure that tests the effectiveness of AIDS treatments by measuring HIV concentration in blood plasma. It sued Roche for infringing those patents with a HIV testing kit that is had developed and sold worldwide.

Stanford University research fellow Dr Mark Holodniy, one of the named inventors in the patents, had assigned his patent rights to both the university and Cetus Corporation, a molecular diagnostics research company.

The university said that, under the Bayh-Dole Act, which concerns patent rights in inventions made with federal assistance, its rights superseded those of Roche, the company that later bought Holodniy’s agreement with Cetus.

But the Supreme Court disagreed. Ajay Jagtiani, a shareholder in the IP group at Vedder Price PC, said that the Supreme Court “was very clear that the relationship established in Bayh-Dole is a relationship between the contractor and the government, and not the inventor.”

The court examined the language of both assignment agreements and decided that Roche’s agreement superseded that of Stanford University.

While the Bayh-Dole Act cannot help Stanford University, US patent law can provide courts with the means to punish those that induce patent infringement. In SEB, the Supreme Court has ruled that a suspected indirect infringer may induce patent infringement if it wilfully blinds itself to a known risk that a patent exists.

Proving that inducement is intentional requires a showing of “knowledge that the induced acts constitute patent infringement”, according to the Supreme Court’s decision.

The Supreme Court said that a showing of ‘wilful blindness’ is the correct standard. It said: “[T]he defendant must subjectively believe that there is a high probability that a fact exists and the defendant must take deliberate actions to avoid learning of that fact.”

The Supreme Court applied its new test to the case and found that Pentalpha Enterprises, a subsidiary of Global-Tech and a Hong Kongbased home appliance manufacturer, was wilfully blind to the risk of infringing a deep fryer patent that belongs to SEB, a home appliance manufacturer based in France.

Pentalpha copied “all but the cosmetic features of SEB’s fryer” after it purchased one without US patent markings in a foreign market. It sold the infringing deep fryers to Sunbeam Products and home appliance companies. They then resold the deep fryers in the US.

In the Microsoft case, the Supreme Court had to consider what the standard of proof should be when challenging the validity of a US patent in court proceedings. Software company i4i sued Microsoft because it believed that the computer program Microsoft Word infringed its patent for a method for editing computer documents.

The district court and the appeals court agreed with i4i and dismissed Microsoft’s counter claim that the on-sale bar in US patent law rendered the patent invalid. Microsoft pointed to i4i’s sale of a software program more than one year before i4i filed its patent application as proof. But i4i and Microsoft disagreed over whether the software that was sold embodied the invention claimed in i4i’s patent.

The jury was told that clear and convincing evidence was needed to prove that the software did fall within the scope of i4i’s patent. The jury decided that this standard was not met and denied Microsoft’s invalidity claim.

Microsoft disagreed with the ‘clear and convincing’ standard, arguing that a ‘preponderance of the evidence’ standard was sufficient. The Supreme Court said that US patent law requires a patent to be “presumed valid” and this presumption had “long been a fixture of the common law”.

The Supreme Court explained: “According to its settled meaning, a defendant raising an invalidity defense bore ‘a heavy burden of persuasion’, requiring proof of the defense by clear and convincing evidence. That is, the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof.”