Supreme Court sits on Microsoft and i4i patent battle

The US Supreme Court has been hearing arguments from Microsoft and Canadian software developer i4i in Microsoft's last chance to avoid paying a fine of more than $290m.

The case began four years ago as a dispute over text management software used in Microsoft Word. The court found against Microsoft and awarded damages to i4i, as well as temporarily seeking to block sales of Word. Microsoft has lost every subsequent appeal in the case.

But what began four years ago as a simple patent dispute could now overturn 20 years of patent law and cause a flood of legal cases challenging new and existing patents.

Microsoft has said that is seeking to change the standard of proof required to contest a patent's validity in court, from "clear and convincing evidence" to the lower "preponderance of evidence" used in civil cases.

"The problem is the standard. Under normal 'preponderance of evidence' rules for civil cases, judges and juries can simply decide which side has the best case on the merits, even while presuming that a 'tie goes to the patent'," said Microsoft's legal team in a blog post.

"But by requiring patent cases to be adjudicated under a special 'clear and convincing' standard even when the Patent Office was unaware of key prior-art evidence, a thumb is placed on the scales of justice. This increases the risk that companies will skate by with a dubious patent, and hold up and tax innovation by others."

Microsoft's case hinges on the claim that i4i was selling software using the patented code before any patent had been issued. I4i had said in court that any information about sales had been deleted.

"It is abundantly clear that the fundamental change in the law which Microsoft seeks would result in an enormous decrease in innovation," said Loudon Owen, chairman of i4i.

"In our view, Microsoft cannot overcome the prevailing law and sound policy of the clear and convincing standard based on its spin campaign that now seems to be focused on innuendo about i4i and an atrociously weak argument that weakening the patent system will encourage innovation."

This case is being heard by eight Supreme Court justices rather than the usual nine, since chief Justice John Roberts recused himself on the ground that he owns Microsoft stock. If the verdict is tied the existing verdict in i4i's favour will stand. A verdict is expected in June.