U.S. Supreme Court Rejects Microsoft’s Bid to Lower Standard to Invalidate Patents
As previously reported on the Ostrolenk web site, in recent years Microsoft has been embroiled in a patent infringement lawsuit with a Canadian firm, i4i. On June 9, 2011, the case came to a close when the U.S. Supreme Court upheld a nearly $300 million damage award and injunction in connection with certain versions of MS-Word in Microsoft Corp. v. I4i Limited Partnership et al, No. 10–290 (U.S. 2011).
Microsoft had appealed the jury verdict claiming abuse of the patent system, and sought to lower the legal standard used to invalidate issued patents. Section 282 of the Patent Act of 1952 states that “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity . . . shall rest on the party asserting” it. Microsoft fought to establish that a “defendant in an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence.” The Supreme Court rejected Microsoft’s position by a vote of 8 to 0, and kept in place the higher legal standard for establishing invalidity, i.e., one of “clear and convincing” evidence, which has been applied for decades.
The patent held by i4i is directed to flexible and efficient document storage and manipulation, including by separating encoding conventions from the content of a document. This is applicable to documents written in the extensible mark-up language (“XML”), which is popular in Internet related applications. In the lawsuit, i4i alleged that versions of Microsoft’s popular word processing software, Microsoft Word, include options for customizing XML in Word documents, which infringes the patent. Microsoft defended by alleging that a software program, “S4,” was sold by i4i more than a year from filing the patent application, and renders the invention unpatentable. Evidence was presented at trial that the Patent Office was not informed of the S4 program, however the named inventors testified that the S4 program did not embody the patented invention. The jury found Microsoft liable for willful patent infringement.
The Supreme Court noted that Section 282 of the Patent Act includes “no express articulation of the standard of proof.” Accordingly, the Court looked to previous court decisions for guidance, and held that previous decisions supported the position that a “preponderance standard of proof was too ‘dubious’ a basis to deem a patent invalid.” The Court further concluded that a “defendant raising an invalidity defense bore ‘a heavy burden of persuasion,’ requiring proof of the defense by clear and convincing evidence.” The Court also noted that “[f]or nearly 30 years, the Federal Circuit has interpreted §282 [in this way] … and [d]uring this period, Congress has often amended §282[.] [N]ot once, so far as we (and Microsoft) are aware, has it even considered a proposal to lower the standard of proof[.]”
Therefore, based on judicial precedent and Congress’s decision not to lower the standard of proof, the Supreme Court let stand the current standard of proof of “clear and convincing” to invalidate an issued patent, and upheld the significant damages award against Microsoft.
Click here for a copy of the i4i Decision