On June 9, 2011, the Supreme Court of the United States put an end to a four-year patent battle between Microsoft and Toronto-based i4i. The Supreme Court unanimously upheld a judgment that a feature of Microsoft Word infringes a U.S. patent held by i4i. The Supreme Court upheld a long-standing precedent that only clear and convincing evidence can overcome the presumption that patents issued by the United States Patent and Trademark Office (USPTO) are valid. The Supreme Court rejected Microsoft’s argument to change the law and to adopt a lower standard for invalidity based on a preponderance of evidence.
The Supreme Court upheld an injunction barring Microsoft from selling infringing versions of Word and a damages award of approximately $300 million, including interest. This is the largest damages award to be upheld on appeal in a patent case.
In 2007, i4i sued Microsoft for infringement of its U.S. Patent No. 5,787,449. The patent relates to a method for editing electronic documents which stores the document content separately from metacodes associated with the document’s structure. Microsoft argued that the i4i patent was invalid under the on-sale bar of 35 USC 102(b) because i4i sold a software program (known as S4) incorporating the patented invention more than one year before the effective filing date of the i4i patent. At trial, Microsoft failed to prove by clear and convincing evidence that the S4 product embodied the patented invention because, among other things, the source code for the S4 program was destroyed long before the litigation began. The jury found that Microsoft infringed the i4i patent and that it was valid. The United States Court of Appeals for the Federal Circuit (a prominent patent court) upheld the jury verdict.
In the Supreme Court decision, the judges also rejected an alternative argument made by Microsoft that the lower standard should at least apply where the evidence put forward to invalidate the patent was not before the USPTO during the patent examination process, as was the case with the S4 product. Although it rejected Microsoft’s argument, the Supreme Court did note that evidence that was not before the USPTO during examination may carry greater weight and assist the accused infringer to meet the clear and convincing standard.
The Supreme Court found that the clear and convincing evidence standard has been part of the common law for decades and was intentionally codified by Congress in 35 USC 282. The same standard has been applied for many years by the United States Court of Appeals for the Federal Circuit. Consequently, this decision of the Supreme Court confirms and maintains the status quo.
For more background on the case please see U.S. Supreme Court Will Hear Microsoft's Appeal of a Judgment Awarded to Toronto-based i4i and Update: Microsoft Corporation v. i4i Limited Partnership. The entire decision can be found on the website for the Supreme Court of the United States.