Sarnoff on the presumption of validity
The relevant main text
Establishing the proper rules for determining validity is extremely important. Erroneous decisions regarding patent validity may have enormous costs to society, as well as to the parties involved, as decisions to enforce invalid patents may dramatically affect [p. 1001] sequential innovation and investment. n24
Footnote 24 is:
See, e.g., Suzanne Scotchmer, Standing on the Shoulders of Giants: Cumulative Research and the Patent Law, 5 J. Econ. Persp. 29 (1991) (discussing effects of patent rights on sequential innovation); Lawrence B. Ebert, NTP/RIM Settlement to lead to patent reform?, IPBiz, Mar. 6, 2006, http://ipbiz.blogspot.com/2006/03/ntprim-settlement-to-lead-to-patent.html (discussing a settlement of patent infringement litigation for $ 612 million between NTP, Inc. - the patent holder - and Research in Motion - maker of the Blackberry(R) - notwithstanding that the patents had been subjected to reexamination proceedings and were initially rejected therein by the Patent Office). Cf. Cecil D. Quillen, Jr., Innovation and the Patent System, 1 Va. L. & Bus. Rev. 207, 217-25 (2006) (discussing adverse effects on businesses - including increased costs of capital - and on innovation of excessive patent damages awards).
Within the cited IPBiz post was the text: [IPBiz note: Microsoft is on the losing end of a $512 million case brought by Eolas. The Eolas patent, unlike the NTP patents, got through re-examination without any amendment. Smith's remarks should be construed in that context.]
Questions about the presumption of validity and its proper scope and application will continue to be at the heart of pro-cedural and substantive patent law disputes. Hopefully, courts will give careful consideration in such disputes to the actual nature of the presumption, the grounds for its existence, the method of its operation, and the evidence that can overcome it. As noted above, it will be critically important for courts to recognize that there is no presumption against challenging validity. To the contrary public policy favors bringing such challenges and considering evidence of invalid-ity even in preliminary relief contexts. Further, the presumption only applies to the facts on which legal conclusions regarding validity operate. Courts will need to be careful not to wrongly infer that the presumption affects the weight to be accorded to competing factual inferences or legal factors when making such legal conclusions. Nor should they import from the presumption of validity public policies that do not exist, such as the idea that granted patents should somehow be preserved from invalidation in the face of factual inferences of invalidity.
and The Volokh conspiracy
In passing, the reader should note that the link to IPBiz at Patently-O has been removed.