Microsoft Appeals Patent Verdict to Supreme Court

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After the U.S. Patent and Trademark Office (USPTO) declared a rival’s XML patent valid last month, Microsoft’s legal team has decided to shoot the moon, appealing the verdict in its patent infringement suit to the U.S. Supreme Court.

Microsoft (NASDAQ: MSFT) had said it might appeal to the Supreme Court following its unsuccessful bid to have the entire federal appeals court rehear the patent infringement case in April. The appeal came a month ago after the USPTO declared tiny i4i’s patent valid.

Microsoft had tried to get the USPTO to declare i4i’s patent declared invalid simultaneously with the district court’s appeals process, but the software giant lost on both attempts.

That set the much larger company up to pay approximately $290 million in damages, penalties, and lost revenues to Toronto-based i4i — unless it can convince the highest U.S. court to intervene. The question is whether there is enough compelling about Microsoft’s claims to convince the Supreme Court to take it on.

The case may also lead some IT decision makers to consider the potential of intellectual property suits as part of the evaluation process for new software acquisitions going forward.

The core of Microsoft’s argument appears to be that i4i had sold products using the now-patented “custom XML” technology before it applied for the patent, thus invalidating i4i’s patent. Microsoft also argued that the district and appeals courts had used the wrong standard when deciding in favor of i4i.

“At trial, Microsoft contended that i4i’s patent is invalid because the disclosed invention had been embodied in a software product sold in the United States more than a year before the patent application was filed … thus rendering the invention unpatentable under the ‘on-sale bar’,” Microsoft stated in its request for review to the high court.

“This case, which comes to the Court on final judgment from the largest patent infringement verdict ever affirmed on appeal, presents an ideal vehicle for that review. The petition should be granted,” Microsoft’s legal team, headed by high profile attorney Ted Olson, added.

Microsoft filed its request for review by the high court — known as a “writ of certiorari” — on Friday.

“Our petition to the Supreme Court focuses on proper standards of proof to determine the validity of a patent, which is a crucial issue for the proper functioning of the patent system. The Federal Circuit Court of Appeals’ ruling in our case departs not only from Supreme Court precedent, but from the rulings of all the other appellate courts, and we are asking the Supreme Court to resolve this conflict,” Kevin Kutz, Microsoft director of public affairs, told InternetNews.com.

i4i filed its patent infringement suitagainst Microsoft in 2007 and the case went to trial in spring 2009. Following a jury verdict that went against Microsoft, the judge ordered the damages and penalties, and put a permanent injunction in place for all Microsoft products that contain the infringing code.

Complying with that order, Microsoft subsequently removed the so-called “custom XML” editor from Word 2003 and 2007 as well as Office 2003 and 2007. Office 2010 and Word 2010, which shipped this spring, do not contain the offending code.

Will the court take Microsoft’s appeal?

“The Supreme Court has been much more active about taking more patent cases recently but this one doesn’t jump out at me,” Janet Linn, an intellectual property attorney with the firm of Eckert Seamans, which is not involved with the case, told InternetNews.com.

Then there’s the problem of the number of cases submitted to the Supreme Court for consideration each term. “A lot more [cases] art submitted than are taken,” Linn added.

“This next step of filing a petition was anticipated — indeed, proclaimed for months by Microsoft. We continue to be confident that i4i will prevail,” Loudon Owen, chairman of i4i, said in an e-mailed statement.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.