Supreme Court hears Microsoft's argument for patent reform

Microsoft stated its case on patent reform April 18 before eight U.S. Supreme Court justices, as part of its ongoing legal dispute with Canadian company i4i.

Microsoft's oral arguments about evidential standards in patent cases were heard by all justices except John Roberts, who recused himself. Microsoft's arguments stem from the company's past court losses in an intellectual property case involving the plaintiff, i4i. The Toronto-based company sued Microsoft and was awarded more than $290 million in damages in August of 2009 for Microsoft's "willful infringement" of i4i's patent on custom XML technology.

The custom XML technology was found to have been used in older versions of Microsoft Word. Microsoft has since removed the technology in U.S. markets, but it hasn't paid the penalty awarded by an East Texas court.

Microsoft's Supreme Court appeal (PDF) could affect the penalties in the i4i case, perhaps leading to another trial to reconsider them. However, Microsoft's efforts before the Supreme Court go farther. The company's attorneys are arguing that the "clear and convincing evidence" requirement to disprove a patent is too high of a legal standard when the U.S. Patent and Trademark Office lacked "prior art" evidence disproving the patent. Microsoft wants the burden of proof to be lowered to "preponderance of evidence" when disproving a patent.

This position was described in a Microsoft blog post by Brad Smith, Microsoft's senior vice president and general counsel, who was joined in that opinion by attorneys from Apple, Cisco and Facebook. Microsoft has amicus curiae support from a number of tech companies, plus the Electronic Frontier Foundation.

On the other side, i4i has 22 friend-of-the-court briefs filed, including one by the U.S. government. Government attorneys are backing i4i's position that the burden-of-proof standard in patent cases should not be changed.

Microsoft's blog post claims that i4i was selling its technology before the U.S. Patent and Trademark Office considered it for a patent. Microsoft also claims that the evidence it needed in the i4i case was "discarded" by i4i, making it harder to disprove the patent.

i4i's Chairman Loudon Owen said that Microsoft's argument on the burden-of-proof standard in patent cases should be dismissed by the Supreme Court.

"In our view, Microsoft cannot overcome the prevailing law and sound policy of the clear-and-convincing standard based on its spin campaign that now seems to be focused on innuendo about i4i and an atrociously weak argument that weakening the patent system will encourage innovation," Owen said in a released statement. "We are confident we will continue to prevail."

Microsoft has taken its "patent reform" arguments to the U.S. Congress as well, and it has progressed halfway toward that end. Legislation backed by Microsoft called the "America Invents Act" passed in the U.S. Senate in March; it's currently awaiting consideration at the U.S. House of Representatives. One of the changes sought by Microsoft is to replace the current "first to invent" patent rule with a "first to file" approach.