Microsoft Loses at Supreme Court, and Big Tech Is Bummed. Too Bad
When the U.S. Supreme Court upheld i4i's patent infringement case against Microsoft (MSFT) yesterday, it did more than ensure that the software giant would have to write a $290 million check to the small Canadian company. It left in place a decades-old interpretation of law that big software companies have long hated.
"Microsoft had worked hard to bring this issue in front of the court, mainly because it's trying to curb the number of patent lawsuits it faces every year," says Steven Rizzi, a partner in the IP litigation practice of law firm Foley & Lardner. "What the Supreme Court did was put its stamp of approval on what has been the practice for 30 years now."
Prove your point
In contention was a legal technicality called the standard of proof. Depending on the type of case, the hurdle to proving your case can be higher or lower. Court cases generally use one of three standards:
- Preponderance of the evidence -- Most often seen in civil cases, someone has to show that their position is, on the balance, more likely to be true than not.
- Clear and convincing -- This requires that the evidence is significantly more likely to be true than not.
- Beyond a reasonable doubt -- Watch enough court procedural dramas on television, or take a basic civics class, and you come across this concept, which only appears in criminal cases. A prosecutor must show that there's no other reasonable explanation for the facts other than the defendant's guilt.
Under precedent, Microsoft should have met the clear and convincing standard. "Microsoft wanted to argue that because [the USPTO] didn't consider it, the burden of proof should be less," says Henry Bunsow, a partner and co-chair of IP litigation at law firm Dewey & LeBoeuf. In other words, Microsoft wanted the court to lower the bar for it.
You're talking, but you're not saying anything
In an 8-0 decision (Chief Justice John Roberts recused himself from the case because he owns Microsoft stock), the court reject Microsoft's position, as Justice Sonia Sotomayor wrote for the court:
The common-law presumption, in other words, reflected the universal understanding that a preponderance standard of proof was too "dubious" a basis to deem a patent invalid."Squint as we may," she wrote, the court found Microsoft's arguments wanting.
Large high tech companies lined up behind Microsoft. A lower burden of proof for invalidation would have made defense against patent suits easier. It also would have created an overall imbalance that would have favored big companies over small. A large corporation could afford to uncover reams of prior art not considered by the patent office. Smaller companies, on the other hand, would lack the necessary resources to find as much prior art to invalidate a big company's patents.
Not all industries agreed. Pharma was on i4i's side because drug companies depend on strong patent protection of a small number of blockbuster products. Weakening the burden of proof could result in overturned patents, allowing competitors to bring the same medicines to market.
An irony-clad position
Big Tech's position in this has been ironic. Although large corporations often try to paint infringement lawsuits as the activity of patent trolls, i4i was clearly a company that used its own patent in products. (In fact, Microsoft faced an additional $40 million in penalties because it repeatedly tried to paint i4i as a patent troll to the jury, even though the judge instructed the company not to.)
Of course, while the giants wear the mantle of victim when attacked, they're usually more than ready to bash each other with patent infringement suits, especially in the mobile arena. The same favorable decision that would have eased the burden of defense against small companies also would have also made it more difficult for tech firms to assert their own patents against competitors.
Finally, had the court taken Microsoft's position, patent prosecution would have become a nightmare. To overcome a potential preponderance of evidence invalidation standard, patent applicants would have to ensure that no potential prior art was left unmentioned. That would have been a heavy burden on patent examiners and slowed the patent process enormously, making the tech companies scream that they were waiting too long for decisions.
Related:
- Word: Why Microsoft Is Patently In Trouble
- Google, OpenDocs, Apple, Others Also in Danger from i4i
- ODF Not Implicated In i4i Suit
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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