Microsoft Loses Supreme Court Case Over i4i Patents

Microsoft found its appeal in an intellectual-property suit rejected by the U.S. Supreme Court, making it vulnerable to a nearly $300 million judgment.

The U.S. Supreme Court has rejected Microsoft's appeal in its long-running patent-infringement suit with Canadian firm i4i.

That renders Microsoft (NASDAQ:MSFT) vulnerable to the nearly $300 million judgment delivered by the lower courts.

Chief Justice John Roberts, apparently an owner of Microsoft stock, recused himself from hearing the April arguments in the case. Of the remaining eight court members, Microsoft needed to win five votes to succeed in its appeal, which sought to overturn earlier rulings that Word 2003 and 2007 violated i4i's rights for custom XML.

As it turned out, the justices voted unanimously in favor of the U.S. Appeals Court's earlier ruling, in the process rejecting the core argument of Microsoft's legal counsel, which argued that the overwhelming standard of evidence needed to invalidate patents made it too difficult for companies to beat back frivolous patent-infringement suits.

"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 abuse of the patent system and protect inventors who hold patents representing true innovation."

Microsoft first asked the Supreme Court to hear its appeal in August, seeking to overturn earlier rulings concerning i4i's patents. The previous April, a federal appeals court had rejected Microsoft's request for a multiple-judge review of the lawsuit, which resulted in that multimillion-dollar judgment.

Executives from i4i had repeatedly announced their intention to fight the case to the bitter end. That made the conflict stand out from the majority of intellectual-property suits, which have a tendency to be settled behind closed doors for undisclosed amounts of money.

Microsoft's troubles with i4i extend back to August 2009, when the federal judge in the U.S. District Court in Eastern Texas ordered that all copies of Word 2003 and 2007 be removed from retail channels within 90 days. Microsoft's attorneys managed to argue a delay, only to have the U.S. Court of Appeals uphold the verdict four months later.

That upheld verdict came with the court order that all offending copies of Word be yanked from store shelves by early January 2010. Microsoft responded by asking for a review by all 11 judges on the U.S. Court of Appeals for the Federal Circuit, on top of issuing a patch for Word that it insisted would sidestep the alleged infringement.

The Supreme Court case is filed under Microsoft Corp. v. i4i Limited Partnership and Infrastructures for Information, No. 10-290.