Microsoft loses appeal in patent infringement

Microsoft suffered a defeat on Thursday when the US Supreme Court upheld a record $290 million (Dh1.06 billion) jury verdict against the software giant for infringing a small Canadian company's patent. The justices unanimously agreed with a US appeals court ruling that went against the world's largest software company in its legal battle with Toronto-based i4i. The high court refused to adopt Microsoft's lower standard to replace the long-standing requirement that a defendant in a patent infringement case prove by clear and convincing evidence that a plaintiff's patent is invalid. Redmond, Washington-based Microsoft had argued a lower standard of proof involving a "preponderance of the evidence" would make some ‘bad' patents easier to invalidate while promoting innovation and competition. Justice Sonia Sotomayor, who wrote the opinion, said the court rejected Microsoft's contention that a defendant need only persuade a jury of a patent's invalidity by a preponderance of the evidence. When the US Congress has prescribed the governing standard of proof, its choice generally controls, she said. Legal battle The Obama administration and i4i opposed Microsoft's position and said Congress had accepted the standard in effect for the past 28 years and the Supreme Court should uphold it. The legal battle began in 2007 when i4i sued Microsoft. A federal jury awarded $290 million to i4i after finding that Microsoft, in 2003 and 2007 versions of Word, its word processing application, had infringed i4i's patent relating to text manipulation software. A US appeals court upheld the award, and the US Patent and Trademark Office upheld the validity of the i4i patent. Microsoft continued to dispute the decisions, but removed the contested features from its current software. In appealing to the Supreme Court, Microsoft said it wanted a new trial. But the justices ruled against Microsoft. Microsoft has said it is the largest patent infringement verdict ever affirmed on appeal. It has also said it had set aside money for the verdict, so it was not material to its earnings. "While the outcome is not what we had hoped for, we will continue to advocate for changes to the law that will prevent abuse of the patent system and protect inventors who hold patents representing true innovation," Microsoft's Kevin Kutz said. Issue not over yet as challenge pending The case is not entirely over, however, since Microsoft also has a challenge to the patent pending at the patent office and may have to pay other potential licensing fees, said Michel Vulpe, i4i's founder and chief technology officer. "We're very pleased that the court did the right thing," and that the decision was unanimous, Vulpe told Reuters. Loudon Owen, i4i's chairman, said in a statement, "This is one of the most significant business cases the court has decided in decades."