We often think of Microsoft as being the aggressor in patent lawsuits. Who can forget their efforts to patent smilies or, more recently and seriously, its anti-Android patent lawsuits. But, remember that Microsoft has often been found guilty of violating patents itself in such cases as against Uniloc. Now, Microsoft has made its last moves against i4i in the Supreme Court over its violation of I4I's XML patents.
This is serious stuff. At one time, a U.S. District Court had ruled that Microsoft couldn't sell any version of Microsoft Word or Office that could create .XML, .DOCX, or .DOCM files. Had that injunction been enforced immediately, there would have been a time during the fall of 2009 when you couldn't have bought Office 2007 or 2010. That's no longer in the cards because Microsoft removed the offending code in December 2009, but besides wanting its $200-million fine back, Microsoft wants, according to Thomas Hungar, of the Gibson, Dunn & Crutcher, who represented Microsoft before the Supremes. "Microsoft wants the patent system strengthened, and the patent playing field fair and balanced."
What Microsoft and friends means by this is that the courts should use a lower burden-of-proof bar for patent violations. As it stands now, if you've been accused of violating a patent you must show "clear and convincing evidence" that the patent is invalid. Microsoft wants the burden of proof to be lowered to "a preponderance of the evidence."
Specifically, Microsoft holds the position that i4i shouldn't have been granted the patent because the technology had been used in a product before the U.S. Patent and Trademark Office (PTO) awarded the patent. Microsoft has a lot of friends who think this is a grand idea including Apple, Cisco and Facebook. Together, the chief counsels declared in a joint statement that "Allowing a bad patent to stand simply because it's propped up by the wrong courtroom standard will in fact undermine the system." And, "The use of this heightened standard in these circumstances creates courtroom conditions that protect bad patents and, in some cases, make it easy to game the system. Ultimately, the harm extends to our national climate for innovation, and the ability for great inventions to support great businesses."
Excuse me if I snort in disbelief. I think all software patents are garbage, but Microsoft uses them like a bludgeon when they're the one holding the attacking side of the club. Just ask Tom-Tom how they felt about being smacked into a patent licensing agreement by Microsoft.
So, what's going to actually happen here? I asked some my intellectual property law buddies and this is what they told me.
The Lawyers' Viewpoint
Andrew 'Andy' Updegrove, a founding partner of Gesmer Updegrove, a top technology law firm, said, "The i4i case first and foremost showcases how badly broken the U.S. patent system is when it comes to software patents. Virtually no one disagrees that they are too easily obtained, for multiple reasons, including the facts that it's very difficult to do "prior art" searches in this area, and because the software team at the PTO is woefully understaffed (there were over 500,000 software patents filed last year) and under-funded. So many would agree with Microsoft that the only way to offset this fact is to get rid of the current strong presumption that a patent, once issued, has been properly issued. First, because it's likely to be wrong in so many cases, and second, because it means that a defendant may unfairly feel that it had better pay up rather than fight; even though it believes that the patent is in fact bogus."
Be that as it may though, Updegrove continued, "Of course, as so often happens in litigation, the case that is before the Supreme Court isn't the right tool for the job that needs to be done. Why? Because the patent at issue appears to be valid, and Microsoft's conduct appears to have been improper, which puts everyone in a bad position. If the Supreme Court does lower the bar on proof, then many (including me) would believe that the state of the law had been improved. But on the other hand, poor i4i, which has already seen its business destroyed and poured millions of dollars into litigation, would have to endure yet more delays and expense even it ultimately still wins under the lower challenge standard."
"Nor is the case as black and white regarding whether the current rule is better for big companies or small ones and individual inventors. In fact, bad patents are bad for everyone," said Updegrove.
Taking a more nuts and bolts approach, Thomas Carey, partner at Sunstein Kann Murphy & Timbers, a leading IP firm and chair of it Business Department, said, "Microsoft has a coherent argument: the standard of proof is not mandated by statute. The patent act only creates a presumption of validity for issued patents, but does not specify the level of proof that is needed to overcome that presumption."
But, "In all likelihood, Stevens, Breyer, Ginsberg and Sotomayor will issue an opinion that sounds like that of a group of strict constructionist conservatives, saying that the courts came loose from their moorings in inventing this 'clear and convincing' standard, one that has little precedent in civil litigation. The conservative justices -- Kennedy, Scalia, Thomas and Alito -- will speak of the deference normally given to administrative agencies like the PTO, and will resist the urge, normally compelling, to take a swipe at the Federal Circuit, which they have heretofore treated as their own personal piñata. Roberts has recused himself. So the result will be a 4-4 deadlock that keeps the status quo."
So come June, when we can expect the Supreme Court to make its judgment, I, and the others, believe we'll see Microsoft lose and the burden of proof on patent violation defendants to be as difficult as ever. The Supreme Court had a shot to kill the current software patent law mess in the Bilski case, but they punted it. Microsoft vs. i4i is not going to be the case to reform the patent law system.
That's a shame because, as Updegrove explains, "At the end of the day, what we really need is patent reform at every level--through Congress, by tightening the laws and better funding the PTO, and by good decisions in court. No matter what the burden of proof is, it still costs both sides millions of dollars to fight it out in court, and that's a pure waste of time and money, and introduces uncertainty in the businesses of both sides. Until true reform happens, even those that strongly support the patentability of software might well wonder whether software patents do more harm than good."