Microsoft Loses Fight to i4i Patent in High Court

     (CN) – Microsoft must pay a $290 million fine because some versions of its Word software infringed patents held by i4i, a small Canada-based technology company, the Supreme Court affirmed Thursday.

     Lower courts previously found that Microsoft had infringed on i4i’s patents for XML, or Extensible Markup Language, which allows computers to interpret and display text. The Toronto-based i4i, which has about 30 employees, filed a patent for a “customized XML” tool in 1998.
     Microsoft insisted the patent wasn’t valid, but a federal judge in Texas cited an email sent by a member of Microsoft’s XML for Word development team, which notes, “We saw [i4i’s products] some time ago and met its creators. Word 11 will make it obsolete.”
     In his ruling for i4i last August, U.S. District Judge Leonard Davis fined Microsoft $290 million and ordered it stop selling Word programs that can open custom XML files in the United States.
     Microsoft now sells versions of Word that don’t contain the infringing technology.
     The Federal Circuit rejected Microsoft’s appeal and later refused to rehear the case before an 11-judge panel, leaving the nation’s highest court as Microsoft’s sole venue for appeal.
     In upholding that decision Thursday, the unanimous Supreme Court released three separate opinions. Chief Justice John Roberts did not participate in the court’s consideration or decision of the case, reportedly because he owns shares of Microsoft.
     The justices found that Microsoft failed to prove that i4i’s patent was invalid by “clear and convincing evidence,” rather than by a mere “preponderance of the evidence.”
     Under the settled meaning of the invalidity defense to the violations of the Patent Act, “a preponderance standard of proof was too ‘dubious’ a basis to deem a patent invalid,” Justice Sonia Sotomayor wrote in the court’s lead opinion, joined by all but Justice Clarence Thomas. The long-held presumption requires defendants to satisfy “a heavy burden of persuasion,” under “a heightened standard of proof,” according to the ruling.
      “We recognize that it may be unusual to treat a presumption as alone establishing the governing standard of proof,” Sotomayor wrote. “But given how judges, including Justice Cardozo, repeatedly understood and explained the presumption of patent validity, we cannot accept Microsoft’s argument that Congress used the words ‘presumed valid’ to adopt only a procedural device for /shifting the burden of production,’ or for ‘shifting both the burden of production and the burden of persuasion.'”
     The justices rejected Microsoft’s argument that the heightened standard of proof should be reserved for cases “involving oral testimony of prior invention,” simply to account for the unreliability of such testimony, or in “invalidity challenges based on priority of invention,” where that issue had previously been litigated between the parties in patent-trademark proceedings.
      “Squint as we may, we fail to see the qualifications that Microsoft purports to identify in our cases,” Sotomayor wrote.
     Ultimately, i4i has decades of policy on its side when it comes to the invalidity defense to section 282 of the Patent Act.
     “Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity,” Sotomayor concluded. “Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands.”
     In a concurring opinion joined by Scalia and Alito, Breyer emphasized that the evidentiary standard of proof in patent law applies to questions of fact, rather than questions of law.
     “By preventing the ‘clear and convincing’ standard from roaming outside its fact-related reservation, courts can increase the likelihood that discoveries or inventions will not receive legal protection where none is due,” Breyer wrote.
     Thomas, who did not join in the majority opinion unlike the other justices, said he reached the same conclusion despite finding that Congress never codified a standard of proof when it recognized the invalidity defense. Since the law is silent, the common-law rule stands and requires the heightened burden of proof, Thomas said.

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