The latest chapter in the Microsoft Corp. (NASDAQ: MSFT) versus i4i Inc. patent infringement court drama has the U.S. Supreme Court agreeing to hear Microsoft’s appeal that, if successful, will have the two companies battling it out over the validity of i4i’s patent.
The issue at the core of the Redmond, Wash.-based software company’s court appeal is about proposing a new patent standard which, according to i4i’s chairman, will make it dramatically easier to invalidate patents (when enforced, patents are found invalid about half the time).
“If this standard is lowered, goodness knows what the percentage is going to be,” said Loudon Owen. “But it’s going to be 75, 85 per cent of the time. If you can’t enforce your patent, why get one?”
“The issue at hand is whether the patent system is going to be healthy or not,” said Owen.
Changing patent standards is beneficial to large corporations like Microsoft, said Owen, because “they’ve got 40 billion on their balance sheet and they don’t want pesky competitors coming up with new technologies that have patent protection.”
In April 2010, the U.S. Court of Appeals denied Microsoft’s appeal after which a three-judge panel upheld a $240-million judgment over willful patent infringement. Toronto-based i4i sued Microsoft in May 2007 claiming it had patented the technology behind the XML in Word 2003 and 2007. The last chance for a successful appeal for Microsoft is at the Supreme Court level.
The concern is that if patents are easier to invalidate, then the patent system will suffer overall, said Owen. “If anything can come up in 10-12 years that can invalidate your patent, then people are going to take mountains of information, they’re going to dump the library of congress on the patent examiner and that’s going to make it impossible to examine the patents,” said Owen.
“It would cause a horrendous chill across the industry of invention and the creation of new technologies,” he said.
If Microsoft’s appeal is successful, the next stage in a court drama that has already been drawn out across three years will be a retrial to look at the validity of i4i’s XML patent.
Just last week, however, the U.S. Patent and Trademark Office (U.S.P.T.O) denied Microsoft’s second ex parte application for a re-examination of the patent in question. Last July, the U.S.P.T.O. already validated the patent in response to Microsoft’s first ex parte application.
As for the money owed to i4i by Microsoft, Owen said i4i has yet to see any of it. “Not a brass razoo. Not a penny,” he said.
Follow Kathleen Lau on Twitter: @KathleenLau.