Microsoft Corp. v. i4i Ltd. P’ship: Microsoft asks the Supreme Court to rule on the evidentiary standard for patent invalidity

Petition for Writ of Certiorari, Microsoft Corp. v. i4i Ltd. P’ship (U.S. 2010)

Petition, hosted by Patently-O

Last week, Microsoft announced that it has filed a petition for writ of certiorari to the Supreme Court in an effort to overturn a $290 million damages award imposed by a federal jury last year. The plaintiff in the case is i4i, L.P., a Canadian technology firm that has accused Microsoft of unlawfully incorporating its patented XML technology into the 2003 and 2007 versions of Microsoft Word.

Having lost in both the Eastern District of Texas and at the Federal Circuit, Microsoft is now asking the Supreme Court to reject the “clear and convincing” evidence standard for holding a patent invalid. Relying primarily on the Supreme Court case KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007), Microsoft argues that the burden of proof for patent invalidity should be reduced when prior art that was not considered by the U.S. Patent and Trademark Office is presented to the court.

In August 2009, JOLT Digest reported on the district court’s decision in the case. Patently-O provides commentary on recent developments.

In its 2009 opinion following a jury trial, the Eastern District of Texas found that Microsoft had willfully infringed i4i’s XML patent by knowingly incorporating the patented technology into the 2003 and 2007 versions of Microsoft Word. The court awarded i4i over $290 million in damages – $40 million of which were punitive – and issued a permanent injunction ordering Microsoft to stop selling Word 2003 and 2007 unless the infringing technology was removed. i4i Ltd. P’ship v. Microsoft Corp., 670 F. Supp. 2d 568 (E.D. Tex. 2009). Microsoft appealed the decision to the Federal Circuit, which affirmed in March 2010. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010). In April 2010, the USPTO upheld the validity of i4i’s XML patent.

In its petition for writ of certiorari, Microsoft asked the Supreme Court to make an exception to the “clear and convincing” evidence standard for holding a patent invalid, to which the Federal Circuit has adhered for the past several decades. The Federal Circuit has stated that the “clear and convincing” standard is appropriate because the PTO’s decision to issue a patent is entitled to deference from the judiciary. In this case, however, Microsoft presented prior art to the Federal Circuit that had never been considered by the PTO before it issued the XML patent. Microsoft argues that the evidentiary standard should be reduced when the court is presented with evidence that has not been considered by the PTO. In support of its position, Microsoft relies on language from KSR International: “the Court ‘th[ought] it appropriate to note that the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished’ where an invalidity defense rests on evidence that the PTO never had an opportunity to consider.” Petition for Writ of Certiorari at 12.

Despite a brief statement or two on the subject in KSR International, the Supreme Court has never directly ruled on the evidentiary standard that is proper when the court considers evidence not previously vetted by the PTO. Microsoft has a lot to lose if the Court declines to accept its petition — the company would owe the largest patent infringement damages award ever affirmed on appeal.

Abby Lauer is a 2L at the Harvard Law School.