Supreme Court Rules Against Microsoft In Patent Case

Supreme Court Rules Against Microsoft In Patent Case

WASHINGTON, D.C. - (Mealey's) Endorsing a "clear and convincing" standard for proving patent invalidity, the U.S. Supreme Court on June 9 sided with a patent holding firm in its longstanding dispute with defendant Microsoft Corp. (Microsoft Corp. v. i4i Limited Partnership et al., No. 10-290, U.S. Sup.).

 

The unanimous court, in an opinion written by Justice Sonia Sotomayor, affirmed the Federal Circuit U.S. Court of Appeals in rejecting the software giant's contention that an infringement defendant need only show invalidity by a preponderance of the evidence. 

"Where Congress has prescribed the governing standard of proof, its choice controls absent 'countervailing constitutional constraints,'" Justice Sotomayor wrote, citing Steadman v. SEC (450 U.S. 91, 95 [1981]).  "Congress has made such a choice here." 

The instant suit was filed in 2007 in the U.S. District Court for the Eastern District of Texas.  At issue is respondent i4i Limited Partnership's U.S. patent No. 5,787,449, which covers an improved method for editing custom extensible markup language (XML) for computer text.  A jury found in favor of i4i, awarding it $200 million in damages in May 2009. The District Court rejected Microsoft's request for judgment as a matter of law, issuing a permanent injunction and enhancing the total award to $240 million on grounds of willfulness, leading Microsoft to appeal to the Federal Circuit.

Although the appellate panel initially stayed the injunction, in December 2009 it affirmed the infringement finding and the District Court's damages award and injunction, which prohibits Microsoft from selling or using any infringing Word products with the capability of opening XML files containing custom XML. The Federal Circuit revised its decision in March 2010 but upheld the finding of willfulness. A petition for rehearing en banc was later denied, and Microsoft sought certiorari, which was granted in November.

The question presented for review was whether the Federal Circuit erred in holding that Microsoft's invalidity defense must be proven by clear and convincing evidence, even though the prior art on which the invalidity defense rests was not considered by the U.S. Patent and Trademark Office (PTO) before the issuance of the '449 patent.  Answering in the affirmative, the court noted that although Section 282 of the U.S. Patent Act mandates that a patent "shall be presumed valid," it is silent as to which standard of proof applies with regard to invalidity. 

Deeming "authoritative" the ruling in Radio Corp. of America v. Radio Engineering Laboratories, Inc. (293 U. S. 1 [1934]) - in which Supreme Court Justice Benjamin N. Cardozo advocated a "clear and cogent" evidentiary standard in order to prevail on claims of patent invalidity - the court said the presumption of patent validity "encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof." 

"Under the general rule that a common-law term comes with its common-law meaning, we cannot conclude that Congress intended to 'drop' the heightened standard proof from the presumption simply because §282 fails to reiterate it expressly," it concluded. 

Justice Stephen Breyer wrote a concurrence, joined by Justices Samuel Alito and Antonin Scalia.  Chief Justice John G. Roberts took no part in the consideration of the case. 

[Editor's Note:  Full coverage will be in the June 20 issue of Mealey's Litigation Report: Intellectual Property.  In the meantime, the decision is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #16-110620-008Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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