Nyemaster Goode, P.C.

Supreme Court upholds "clear and convincing" standard for invalidating patents

By Wendy Marsh

In a unanimous decision dated June 9th, the U.S. Supreme Court upheld a $290 million jury verdict against Microsoft Corporation for patent infringement in Microsoft Corp. v. i4i Limited Partnership and Infrastructures for Information Inc.  In doing so, the Court rejected Microsoft's contention that a patent infringement defendant need only demonstrate that the patent at issue is invalid by a preponderance of the evidence rather than by the long-standing standard of "clear and convincing" evidence.

The battle between Microsoft and i4i began in 2007 when i4i sued Microsoft for infringement of its patent relating to text manipulation software.  A federal jury awarded i4i $290 million after finding that Microsoft's 2003 and 2007 versions of its word processing application, Word, infringed i4i's patent.  A U.S. court of appeals affirmed the lower court's verdict that upheld the validity of the i4i patent.  Microsoft then appealed to the Supreme Court.  Microsoft has long since removed the i4i technology from Word but continued to fight i4i, believing its patent to be weak and one that should never have been granted.  Microsoft twice requested reexamination of the i4i patent by the U.S. Patent and Trademark Office (USPTO) and the USPTO upheld its validity both times.

In its appeal, Microsoft argued that a lower standard involving a "preponderance of the evidence" was appropriate as it would make some "bad" patents easier to invalidate while still promoting innovation and competition.  Writing for the majority, Justice Sonia Sotomayor said the Court rejected Microsoft's proposed lowering of the standard of proof for patent invalidity, noting that Congress had prescribed the governing standard of proof, and any decision to change the standard in patent infringement cases would therefore have to come from Congress.

Many members of the software industry, including Google Inc., and Yahoo! Inc., supported Microsoft in its quest to lower the standard for invalidating software-related patents (which likewise would have lowered the standard for all patents), while the Obama administration, Bayer AG, 3M Company, and groups representing biotechnology companies and pharmaceutical manufacturers supported i4i.  Chief Justice Roberts, who owns Microsoft stock, recused himself from the case.  Louden Owen, i4i's chairman, characterized the decision as "one of the most significant business cases the [Supreme Court] has decided in decades."  In any event, the Supreme Court's decision maintains the higher evidentiary standard for invalidating any patents, software-related or otherwise.

For the complete decision, click here.


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