i4i Revisited

April 28, 2011, 10:36 AM

An earlier post explained the recent ruling by the United States Court of Appeals for the Federal Circuit (the appeals court that hears patent appeals) in the case of i4i Limited Partnership and Infrastructures for Information Inc., v. Microsoft Corporation, 598 F.3d 831 ( Fed. Cir. 2010), where the Federal Circuit affirmed a bedrock principle of patent law: Any potential infringer who challenges the validity of a patentin essence, arguing that that the patent should not have been granted for a variety of reasons, including that the claimed invention was already disclosed or was obvious in light of other patents, publications or the like (collectively, called Prior Art)must prove the invalidity claim or defense under a very demanding by clear and convincing evidence burden of proof, even when the Prior Art was not considered in granting the patent. In perhaps one of the most important patent cases of the past decade, the Supreme Court heard argument Monday, April 18, 2011 on the i4i case and its decision could have implications that would drastically change United States patent law and have a profound effect on how corporations protect and profit from their future inventions.

i4i sued Microsoft in 2007, claiming that Microsofts Word program infringed patented technology that allowed users to edit XML code. After a trial, Microsoft was found to have willfully infringed the patent, was ordered to pay i4i $290 million, and was enjoined from selling versions of Word containing the infringing technology (Microsoft has since revised Word). Microsoft challenged the Courts decision claiming that the lower court used the wrong standard to determine a patent's validity: Microsoft argued that where prior art has not been considered by the Patent Office only a "preponderance" of the evidence rather than the heightened "clear and convincing" standard should be applied in challenging the validity of a patent. The Federal Court disagreed with Microsoft and affirmed the lower courts decision. Thereafter, the Supreme Court granted an appeal.

Published reports (see e.g., Reuters and Computer World) reveal disparate opinions from all the Courts Justices (except Chief Justice Roberts who recused himself). Commentators viewing the argument have indicated that the Court had concerns both ways but seemed focused upon the implications of changing the burden of proof standard. For example, Justice Antonin Scalia asked Microsoft's counsel:

Are you going to argue for all the time, in which case, you can appeal to the general rule that we always apply, or are you going to say, oh, yes, we won't apply it normally but only when the prior art hadn't been considered?...I mean, you -- you can't ride both horses. They're going in different directions . . .
Justice Stephen Breyer asked whether the current system protected not only inventions that deserve protection, but also those that may not deserve it. "We're trying to get a better tool if possible to separate the sheep from the goats."

Additionally, Justice Samuel Alito had problems with the higher burden of proof in the Patent Statute: "A presumption normally doesn't have anything to do with clear and convincing evidence . . . Most presumptions can be disproved by much less than clear and convincing evidence. So how do you read that in your position into the language of the statute?"

Several other justices sought refuge in precedent and asked about a Supreme Court precedent from 1934 that could cast doubt on Microsoft's argument. "What do we do?" Justice Elena Kagan asked. "One answer to that question is we go with our prior precedent." Justice Sonia Sotomayor asked whether the dispute could have been resolved with different jury instructions.

A ruling in favor of Microsoft could lead to the reshaping of patent litigation and to the invalidation of many existing patents. Stay tuned: the Supreme Court is expected to hand down its ruling by the end of June.

Stephen E. Noona is the head of Kaufman & Canoles Trial Section and Co-chair of its Intellectual Property Law and Franchising Practice Group. He has been counsel in over ninety (90) patent cases in the Eastern District, is Fellow in the American College of Trial Lawyers and has appeared before the judges in all four Divisions of the Eastern District on patent matters. Stephen E. Noona