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[Update] Supreme Court to Hear Microsoft’s i4i Appeal

Microsoft is asking the Supremes to change the newfangled “clear and convincing” standard of evidence

The United States Supreme Court Monday agreed to hear Microsoft’s long-shot appeal of the i4i decision that dunned Microsoft $290 million for willfully infringing the little privately held Canadian company’s custom XML patent and forced Microsoft to change Word under threat of injunction.

“A decision by the court to take the case could lead to a historic realignment in the patent litigation arena,” Corporate Counsel Online wrote back at the end of September.

Microsoft is asking the Supremes to change the 25-year-old “clear and convincing” standard of evidence for proving a patent invalid in favor of what is called a “preponderance of the evidence,” which is supposed to make it easier to get a patent declared invalid. “Preponderance of the evidence” is the standard a patent holder uses to prove infringement.

Microsoft hasn’t had any luck with the appeals process so far. The Court of Appeals for the Federal Circuit, which came up with the “clear and convincing” rule, upheld the district court’s decision including the validity of the i4i patent, willful infringement, enhanced damages and permanent injunctive relief. Supposedly it is the largest award even upheld on appeal.

The Patent and Trademark Office also re-examined and upheld the validity of the i4i text manipulation patent. Microsoft claims the PTO didn’t consider prior art in issuing i4i the patent and that i4i had sold its technology more than a year before applying for a patent, making it ineligible for a patent. The PTO denied Microsoft’s second bid for a review of the patent just last week.

Microsoft got a lot of industry support in asking the Supremes to hear the case and the National Law Journal says “The Court’s action in granting Microsoft’s petition for certiorari is partly a testament to the growing practice of flooding the justices with amicus curiae briefs at the petition stage, before review is granted.”

Amicus briefs were filed on behalf of the Apache Software Foundation, the Electronic Frontier Foundation, the Computer & Communications Industry Association (CCIA), Facebook, Intuit, Netflix, Newegg, Toyota, Trimble

Navigation Ltd, Intel, Yahoo, Apple, Google, Verizon, HP, Dell, HTC, Wal- Mart, the Cellular Telecommunications & Internet Association (CTIA), the Securities Industry and Financial Markets Association (SIFMA), the Clearing House Association, Teva Pharmaceuticals, the General Pharmaceutical Association, Cisco, SAP, GM, Acushnet and Pregis as well as one filed by 35 professors of law, economic and business from schools such as Stanford, Berkeley and NYU.

They all basically ask the Supreme Court to acknowledge the PTO’s limitations and the fact that the standard encourages “abusive patent suits.”

The PTO only spends maybe 16 or 17 hours reviewing a patent application before issuing a patent. The CTIA’s brief says that 54%-64% of patent cases survive challenges under the clear and convincing rule versus 35% before the Federal Circuit standard.

Whether a jury can distinguish between the two rules is a matter of debate, but a judge might nip a case pre-trial.

Microsoft appealed to the Supreme Court in August. It told the high court “This issue will not benefit from further percolating in the circuit,” which has insisted – unlike regional appeals courts before the specialized patent court was created in the ’80s – on presuming a patent issued by the PTO is valid.

i4i issued a statement saying, “The attack on patent holders and the adverse implications from the standard Microsoft is proposing is unprecedented and would deal a devastating blow to any US patent holder, large or small.”

The case will be argued in the spring.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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