Patent Invalidity: Supreme Court Maintains Status Quo

In June 2011, the Supreme Court upheld a $290 million decision against Microsoft and maintained the standard of proof required to invalidate a patent. (Microsoft v. i4i Ltd. Partnership). (The standard of proof is a scale of how convincing the evidence has to be. On the low end is a "preponderance of the evidence." On the high end is "beyond a reasonable doubt." "Clear and convincing" is in between.)

The decision is considered a victory for patent trolls (entities who purchase patents and enforce them even though they dont sell or use the patent, themselves also known as nonpracticing entities). Microsoft was sued for patent infringement by i4i, a Canadian company. i4i's pursuit eventually forced Microsoft to disable an XML feature of Microsoft Word. Microsoft had been offered a chance to license the patent by i4i before the case blew up, but passed, perhaps believing that the patent would be proven invalid. 

At trial, Microsoft argued that i4i failed to disclose a prior invention that might have invalidated the application (under a principle known as the "one-year rule"). The jury was instructed that the patent could only be invalidated if there was "clear and convincing" evidence of its invalidity. Microsoft and many other tech companies wanted the court to use the lower standard of "preponderance of the evidence," which would make it easier to invalidate many of the iffy patents used by nonpracticing entities. But it didn't happen. The justices refused to change the standard, although it threw one small bone to troll victims: they could tell juries about any evidence that hadn't been considered by the patent office -- such as the facts Microsoft had advanced about i4i's patent.

Bottom line: Tech companies may petition Congress for a change in the standard (which is unlikely). Big pharmaceutical companies are happy with the decision because it makes it more difficult for those who sell generics to invalidate patents.