The Supreme Court’s decision on a case being heard this week could have some far reaching impacts for patent litigation.  The case, Microsoft Corp. v. i4i, arose from a patent infringement case in 2007.  The suit, which was originally brought by i4i, alleged that the Microsoft Corporation had violated patents relating to tools in Microsoft Word that allowed users to change the “architecture of a document.”  The technology in dispute is specifically the tool in Microsoft Word that allows users to create custom XML documents.

The case was decided in favor of i4i by the United States District Court for the Eastern District of Texas in 2009.  The court’s decision enjoined Microsoft from selling any products that contained the disputed technology.  In an effort to temporarily remedy the situation, Microsoft Corporation replaced all of its products with versions that no longer contained the disputed technology and appealed the decision.

Microsoft Corporation, along with other technology giants like Google and Apple, is now asking the Supreme Court to consider whether juries should be allowed to examine the validity of patents in infringement cases.  The technology giants argue that groups like i4i are filing “dubious patents” and, as a result, are inhibiting innovation.  By advocating for a reform of the jury’s role in a patent dispute, technology giants hope to reduce the impact of litigation by nonpracticing entities.

Also referred to as “patent trolls,” nonpracticing entities often engage in the patent process by buying an inventor’s rights to a patent.  After doing so, these nonpracticing entities hold onto their newly acquired patents until they can make an infringement claim against another business.  Although the technology giants are not the only victims of this process, they argue that they are subject to more lawsuits because of these claims.  As a result, Microsoft hopes to gain a tool in combating what it sees as claims arising from invalid patents.

On the other side of the dispute over what kinds of questions the jury should consider are i4i, 3M, and big pharmaceutical companies like Bayer.  These companies argue that the threshold for receiving a patent is already high enough.  Furthermore, they also argue that allowing juries to consider the validity of a patent during an infringement suit would create uncertainty in the patent system.  According to Sarah Columbia from McDermott Will and Emery, this uncertainty would result in fewer inventors disclosing patents and would also cause patent prosecutors to have to factor in even more works of prior art to prevent a patent from being invalidated during trial.

So what is all of the fuss about?  As it stands right now, patents may only be invalidated if there is clear and convincing evidence showing that the patent was fraudulently or mistakenly filed.  If Microsoft is successful in convincing the Court that patent validity should be subject to the scrutiny of juries and the standard of review is lowered to “preponderance of the evidence,” companies like i4i fear that it will result in a more hostile patent litigation system.  A preponderance of the evidence standard would make it much easier for parties in patent disputes to invalidate patents.

The problem with the preponderance of the evidence standard is that it results in effectively undermining the hard work of inventors and patent prosecutors by making it easier to invalidate a patent.  However, if i4i is successful in the Supreme Court, then the resulting standard would require a showing of clear and convincing evidence before a patent may be invalidated.  Although it may seem more attractive to some, the i4i test may actually set the bar too high and stifle growth; as a result, many less than worthy patents may receive protection despite the lack of innovation.

Therefore the issues that the Supreme Court must address in this case are centered on two of the fundamental rationales for patent protection, innovation and disclosure.  On the one hand, Microsoft is advocating for fewer restrictions imposed from “dubious” patent filings; while on the other hand, i4i is arguing that the system is already complicated and would discourage the disclosure function in patent law.  As a result, the Supreme Court’s decision would most likely have to tip the scales in the favor of one of these underlying aims of patent law.

So what should we look for in the case?  There are major business players on both sides of this dispute so the Court will likely grapple with issues raised in the amici briefs.  Additionally, the Court is likely to decide in one of three ways: (1) in favor of i4i with no change, (2) in favor of Microsoft with a change to when evidence is presented to refute the validity of a patent at issue, or (3) in favor of Microsoft and the large technology enterprises with a sweeping change to the threshold a defendant must pass to invalidate the claim.

Doug Lichtman, a professor at UCLA, wrote in the New York Times last week that a drastic change to the patent litigation process is unlikely and even if the court ruled in favor of Microsoft, it will probably not affect the patenting process greatly.  This, however, is contrary to Ms. Columbia’s point regarding the complexity of the process already.  Consequently, the court must walk a fine line between protecting innovation and promoting the dissemination of intellectual property.   Regardless of how the Court rules, the decision in this case will have long lasting implications for patent litigators across the United States.

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