Microsoft's defeat before the U.S. Supreme Court in its long-running i4i case has the potential to affect the conduct of future patent-infringement lawsuits.
Last week, the
U.S. Supreme Court denied Microsoft's (NASDAQ:MSFT) appeal in its long-running
patent-infringement suit with Canadian firm i4i. That rendered Microsoft
vulnerable to the nearly $300 million judgment delivered by the lower courts.
That seemed
pretty devastating for Microsoft, which nonetheless tried to put a brave face
on the setback.
"This case
raised an important issue of law which the Supreme Court itself had questioned
in an earlier decision and which we believed needed resolution," a Microsoft
spokesperson wrote in a June 9 email to
eWEEK.
"While the outcome is not what we had hoped for, we will continue to advocate
for changes to the law that will prevent the abuse of the patent system and
protect inventors who hold patents representing true innovation."
In its case
before the Court (filed under Microsoft Corp v. i4i Limited Partnership and
Infrastructures for Information,
No. 10-290), Microsoft's counsel had argued that
the overwhelming standard of evidence needed to invalidate patents made it too
difficult for companies to beat back frivolous patent-infringement suits-a
position with which the Court's justices unanimously disagreed (with the
exception of Chief Justice John Roberts, who recused himself from hearing
arguments in the case).
"According to
Microsoft, a defendant in an infringement action need only persuade the jury of
an invalidity defense by a preponderance of the evidence," reads the court opinion. "In the alternative, Microsoft insists that a preponderance standard
must apply at least when an invalidity defense rests on evidence that was never
considered by the [United States Patent and Trademark Office] in the
examination process. We reject both contentions."
After delving
into the evolution of patent law, the Court digs into what exactly it found
wrong with Microsoft's arguments. "Resisting the conclusion that Congress
adopted the heightened standard of proof reflected in our pre-1952 cases,
Microsoft contends that those cases applied a clear-and-convincing standard of
proof in only two limited circumstances," the opinion continues. However,
"Squint as we may, we fail to see the qualifications that Microsoft purports to
identify in our cases."
And just to
slam the point home:
"Our pre-1952
cases never adopted or endorsed the kind of fluctuating standard of proof that
Microsoft envisions. And they do not indicate ... that anything less than a
clear-and-convincing standard would ever apply to an invalidity defense raised
in an infringement action."
Microsoft had
been seeking to overturn earlier rulings that Word 2003 and 2007 violated i4i's
rights for custom XML. The battle between the two companies extended back to
August 2009, when the federal judge in the U.S. District Court in Eastern Texas
ordered that all copies of those Word editions be removed from retail channels
within 90 days. In between then and now, attorneys for i4i and Microsoft argued
their way up through the U.S. Court of Appeals and beyond.
The Supreme
Court's decision has ramifications for other companies in the technology space
that often find themselves embroiled in patent warfare.
"The ruling
pretty much says the Patent Act of 1952 requires more proof going forward," Ray
Wang, an analyst with Constellation Research, wrote in a June 13 email to
eWEEK. In essence, he wrote, the Court's
decision "shifts the balance back to patent holders for being there first."
In other
words, that ironclad standard of proof will make it difficult to invalidate
patents. Will that make it more difficult for larger companies to knock down
the patent trolls, who launch intellectual-property suits in favor of scoring a
hefty payday? Perhaps. At least in the case of a company like i4i, though, that
high burden of proof offers a sizable defense against even a massive
conglomerate.
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