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Supreme Court to hear Microsoft, i4i case Monday

The outcome could have broad implications on the way patents are upheld, experts say

Patent attorneys and inventors of all types are closely watching a Microsoft case that the U.S. Supreme Court will start to consider on Monday.

The case, which centers on a technology patent assigned to i4i that almost forced Microsoft to stop selling its flagship Word software, could have broad implications in the way patents are awarded and upheld, experts said.

Currently, when a patent holder accuses someone of infringing a patent, the burden is on the infringer to prove with "clear and convincing evidence" that the patent is invalid, said Sarah Columbia, head of the intellectual-property litigation practice group at McDermott Will & Emery LLP.

In hearing this case, the Supreme Court could decide to lower that standard of proof, she said.

While arguing against the validity of the i4i patent, Microsoft presented new evidence that had not been considered by the U.S. Patent & Trademark Office when it granted the patent. Microsoft argues that with the new evidence, the burden of proof should be lowered to "a preponderance of the evidence," rather than the stricter clear and convincing evidence, Columbia said.

She envisions three possible outcomes from the Supreme Court. At one extreme, it could lower the standard of proof for patents so that accused infringers have only to prove by a preponderance of the evidence that a patent is invalid.

Alternatively, the court could lower the standard of proof only in situations where an infringer presents new evidence that the patent office has not already considered, as Microsoft has done.

A third option is to leave the current required standard of proof unchanged.

If the court does lower the standard, it would become easier to invalidate patents, Columbia said. "Over time, if the burden of proof is lowered to prove invalidity, you'll find more cases where patents are found to be invalid," she said.

She and others describe other potential consequences.

"There is already enormous pressure for patent attorneys to file every piece of prior art they can think of. If you create this double standard, where art that's not before the patent office somehow weakens the patent, there's even more pressure to [file every piece of prior art]," she said. "We already have a situation where the examiners are fairly overwhelmed with the volume of work. I think we're going to make it worse" if the Supreme Court sides with Microsoft.

I4i paints a more dire picture. "The implications are gargantuan," said Loudon Owen, chairman of i4i. "The whole system for innovation in this country is predicated on the patent system. If patent rights are eroded to where there's no point in having a patent because you can't enforce it, that will disrupt policy and the practice of disclosure."

The resulting uncertainty could cause some inventors to decide against patenting their technology, which would mean others couldn't license the technology to build on top of, he said.

Microsoft countered that "questionable patents that should never have been issued" stifle innovation.

"Responding in litigation to these bad patents imposes a tax on all innovative companies and ultimately on the consuming public," Andy Culbert, Microsoft associate general counsel, said in an e-mailed statement.

The company argues that i4i should never have been granted its patent in the first place. "Microsoft's solution to prevent this type of abuse is to have the courts apply the burden that generally applies in all civil cases - the 'preponderance of evidence' standard -- to prove a patent invalid," Culbert said.

A wide range of companies have lined up on each side of the case. Some make unusual bedfellows. Supporting Microsoft are Apple, Google and the Electronic Frontier Foundation.

Supporting i4i is a longer list, including 3M, Bayer, 19 venture capital firms, the U.S. government and six former commissioners or directors of the patent office.

"If you look at the group that filed amicus briefs, you can see pretty clearly the companies that filed on Microsoft's side tend to be companies who get a lot of lawsuits against them on patents, and in particular a lot of lawsuits against them by what we call nonpracticing entities," Columbia said. Often called "patent trolls," these companies buy up patents and then seek infringers they can pursue for royalties.

While big companies like Microsoft have their own patents to defend, they also get sued frequently, often by patent trolls. "They must be thinking they would rather have the standard lowered for these nonpracticing-entity cases," she said.

Pharmaceutical companies, such as Bayer, are hit less by nonpracticing entities and are more likely to assert their own patents, she said. "Big pharma really uses patents to keep away the [generic brands] so they don't want the standards lowered," she said.

The case dates back to 2007, when i4i sued Microsoft for allegedly infringing a patent covering a technology that lets users manipulate the architecture and content of a document. It said Microsoft infringed the patent by allowing Word users to create custom XML documents. In 2009, the U.S. District Court for the Eastern District of Texas found in i4i's favor and ordered Microsoft to stop selling Word products in the U.S. in their current form. Microsoft eventually removed the feature in order to continue selling the product.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is [email protected]


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