Software Patent Blockbuster: Microsoft loses to i4i

Software Patent Blockbuster: Microsoft loses to i4i

Summary: Software patents continue strong after Supreme Court decision in favor of i4i over Microsoft.

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The Supreme Court of the United States (SCOTUS) ruled today against Microsoft in its appeal of a $290 million jury verdict for infringing Canadian software company i4i's patent. It wasn't close. SCOTUS unanimously upheld a U.S. appeals court's ruling against Microsoft.

Microsoft had argued that the courts should adopt a lower burden-of-proof bar for patent violations. Previously, 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." The SCOTUS didn't buy this argument for one minute.

In the Court's unanimous decision, Justice Sonia Sotomayor wrote (PDF Link), "We consider whether [a section of the Patent Act of 1952] requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does."

This decision doesn't come as much as a surprise. The Obama administration had opposed Microsoft's argument. I4i had argued, with the administration's agreement that Microsoft was essentially seeking a change in patent law and that only Congress could make such a change. One of the commentators on the SCOTUS Blog noted, "The United States supported this result on behalf of the PTO [Patent & Trademark Office]. Essentially, the government never loses patent cases."

As Thomas Carey, a partner at Sunstein, a major intellectual property (IP) law firm and chair of its Business Department, commented, "Rather than settle out of court, Microsoft appealed all the way to the Supreme Court, losing at every stop along the way. At the Supreme Court level, Microsoft challenged the jury instruction concerning the 'clear and convincing' burden of proof needed to overturn a patent; a standard that has been uniformly applied by the Supreme Court for more than 100 years. Not a single justice of this often-divided court saw any reason to change this burden of proof for Microsoft's benefit."

The fight began in 2007 when i4i sued Microsoft for abusing their XML patent in Microsoft Office 2003 and 2007 Open XML (Extended Markup Language) documents format. Indeed, in 2009, the U.S. District Court for the Eastern District of Texas had issued an injunction that could have stopped Microsoft from selling any "Word products that have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML."

Carey thinks, "Microsoft has demonstrated arrogance throughout this affair. First by ignoring the patent, then by trying to overturn a legal standard that it found inconvenient. Had Microsoft succeeded it would have greatly weakened the patent system in the United States, a result that would have been cheered in some circles and denounced in others. But it lost, and must now pay for its decision to ignore the intellectual property rights of a competitor."

Page 2: [What this Patent Decision Means] »

What this Patent Decision Means

The fine, $290-million, is pocket change for Microsoft. Still, it must be a bitter loss for Microsoft since, as Carey observed, the company poured enormous resources into fighting this lawsuit. It's also, though, following in the footsteps of n Bilski v. Kappos, is seen as yet another troubling victory for IP patents by others.

Daniel Ravicher, an attorney and the head of the Public Patent Foundation, a nonprofit legal services organization that represents the public's interests against the harms caused by the patent system, thinks SCOTUS went too far in defending the status quo. "The court has latched on to ambiguous precedent that it admits was 'implicit' to bypass the plain language of the statute in order to sustain a policy choice that is out of touch with the reality of today's patent system and harmful to America."

Andrew Updegrove, a founding partner of Gesmer Updegrove, a top IP and technology law firm, sees some positive things in this decision, "Three cheers for the little guy. As this long and expensive saga shows, patent litigation is an extremely uneven playing field due to the expense and duration of the process. I4i for not only stuck it out through the normal process, but then had to beat back a challenge to change the actual rules of the game as well."

However, Updegrove continued, "Looking at the macro picture, though, the answer is a bit more nuanced. The same Supreme Court decision means that it will remain hard to beat truly bad patents, of which everyone agrees there are way too many in the IT area. That said, the best way to rectify this situation is not to encourage more endless, expensive, patent litigation, but to make sure that only truly valid patents are issued to begin with. So from this perspective, the decision also reaches the right conclusion: Congress should give the USPTO the budget to give every patent application the diligence it needs. It should also ensure that the definition of a 'patentable invention' doesn't cover inventions that don't need patent protection at all, and where the ability to obtain patents stifles, rather than promotes innovation."

Speaking of patent stifling innovation, just think, we have years of companies from Apple to Red Hat to Google to Oracle spending their resources on lawsuits instead of innovation. What fun! What a great use of their time and money!

Related Stories:

Supreme Court rules against Microsoft's attempt to alter patent-infringement rules

Microsoft Patent Case in the Supreme Court's Hands

Supreme Court agrees to hear Microsoft patent infringement appeal

Oracle wants big cut of Android damages as Google's IP headache gets worse

Samsung: Our lawyers should get to see iPhone 5/iPad 3

Topics: Legal, Enterprise Software, Microsoft, Software

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23 comments
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  • Not Good News for Google

    This ruling clears the way for Oracle to kill Android and drive Google out of the headset market. Say goodbye android phones and ChromeBooks.
    Your Non Advocate
    • But that's a good thing if it happens to Microsoft or Apple

      @facebook@... <br>but a bad thing when it happens to Google since Google doesn't actually, directly, make money off of the actual software that has the stol....borrowed code, then it's fine.<br><br>Only big companies like MS, Apple, ect should be sued on vauge patents like this, since this proves the system is perfect the way it is!
      Will Pharaoh
    • that's irelevant for Android

      @facebook@...
      because Google would never steal IP or infringe patents from real innovators.
      Linux Geek
      • Except this case opens the door

        for Oracle winning their case against Android. It also opens the door for Linux getting sued for all manners of patent issues.
        Michael Alan Goff
      • RE: Software Patent Blockbuster: Microsoft loses to i4i

        @Linux Geek A round of applause to our resident jester !!!
        1773
    • It's a win for IP law

      @ facebook@...

      It's a small direct loss for Microsoft, and presumably a justified win for i4i and inventors generally (I don't know the technical details), since a small firm managed to beat a giant. Indirectly, however, it's a big win for firms with large patent portfolios, including Microsoft. It's an equally big loss for Google, who seem to imagine they're above IP law (and it probably isn't a coincidence that they haven't got much IP to speak of). Assuming all of the alleged patent violations in Android, WebM, etc. are valid, Google could be in a lot of trouble.
      WilErz
    • RE: Software Patent Blockbuster: Microsoft loses to i4i

      @facebook@... FUD. This doesn't clear the way for anything. The courts are just interpreting the law as it has been by lower courts for the last 60 years.
      kennon
      • Exactly

        @kennon Exactly. This is an affirmation of Oracle's claim against Google.
        Your Non Advocate
  • This may be just what patent law needs for a change

    "including Apple, Google, Intel, Verizon, a number of auto makers, drug companies and financial services companies " all backed MS in the case (apparently filing friend of the court briefs and such)

    These companies represent enough money to get congress to act and fix some of the moronic patent issues.

    I see a huge push to get patent law reformed in the near future funded by the companies listed above.

    It's about time.
    Cynical99
    • yeah and lets reform the supreme court too

      @Cynical99 Their argument that the patent argument came too late and therefore "we refuse to consider it" is the real problem here.
      otaddy
      • You miss the point

        @otaddy
        The point is not the courts, but congress. With money like the money controlled by that list of companies, they can convince congress to change the law. Remember Mickey Mouse and the recent copyright changes?

        Maybe this is the incentive companies need to lean on congress to get some sanity in the copyright laws as well.

        You just never know -
        Cynical99
  • Message has been deleted.

    LoverockDavidson
    • This of course means this

      That i4i will be coming after whatever passes for your company. Clearly it was all your fault. In fact Microsoft should sue you too; for everything you've got and more.

      Meaning of course you've never read the case, probably hate Canadians etc.
      ego.sum.stig
    • RE: Software Patent Blockbuster: Microsoft loses to i4i

      @LoverockDavidson I'm glad i4i won. Not so much over the patent as much as their business was ruined by Microsoft (let's not forget they actually had a product as opposed to a patent troll) who "incorporated" their ideas into Word and putting them out of the market.
      TGM_1979
  • RE: Software Patent Blockbuster: Microsoft loses to i4i

    "Microsoft was essentially seeking a change in patent law and that only Congress could make such a change." I find it hilarious that the administration would use this argument. It is so funny because the left is normally so in favor of legislating from the bench and political activist judges they are constantly trying to change laws outside of congress.
    kennon
    • Most instances of &quot;legislating from the bench&quot;...

      @kennon
      have at least a tenuous basis in the constitution. "We don't like it" with no constitutional basis gets lawyers laughed out of the courtroom. In this case, it got Microsoft slapped down in a unanimous decision.
      jasonp@...
  • RE: Software Patent Blockbuster: Microsoft loses to i4i

    If Microsoft actually spent money on developing good software instead of blowing it on iffy patent violation claims then they might earn some respect.

    Clearly that won't happen with monkey brain Ballmer at the helm.
    bitrate
  • RE: Software Patent Blockbuster: Microsoft loses to i4i

    I think most are ignoring the horror of the original issue here: some trolls (i4i) got a stupid patent on something that shouldn't even qualifiy for being a patent anyway, and now they succeded to fill their pockets in a law suit against a giant like Microsoft, and ... everybody gets happy because the giant was KO-ed ...
    Well, I hate Microsoft more then almost anything else in this world, BUT .. this IS against any logic !
    Patents like this are an insult for any logical mind !
    You (all americans) SHOULD file a lawsuit against i4i and the Authority that granted them this patent !!!!
    Really, this is an insult to all of us !
    lenrocd
  • RE: Software Patent Blockbuster: Microsoft loses to i4i

    good luck with anyone trying to sue linux LOL do you relize how many distro's are out there?
    vipor231
  • RE: Software Patent Blockbuster: Microsoft loses to i4i

    Anybody consider that MICROSOFT just made it impossible to get a patent struck down unless you have irrefutable proof that it is invalid.

    $300M is chump change to them ... I think they WANTED to prove this issue and make it impossible for others to "hint at" invalidity and wiggle out of an infringement.

    While this is a good decision, it makes everyone else invalidate or pay up.
    BrentRBrian