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David Topples Goliath: Microsoft Loses Supreme Court Patent Battle

The small Canadian firm i4i has its patent infringement charge upheld in a unanimous verdict. What does this mean for the future of innovation?

Bill Gates

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The Supreme Court issued a ruling against Microsoft Thursday, upholding a decision from a lower court. A Toronoto-based company, i4i, had first lobbied a suit at Microsoft back in 2007, claiming that the Redmond firm had infringed on one of i4i’s patents in its latest version of MS Word. With i4i vindicated, Microsoft will have to pay up $290 million.

We broke down the implications of this trial a few months ago, explaining why i4i called it a moment where “innovation was at the crossroads,” and why a great number of our Most Innovative Companies–including Microsoft competitors like Apple and Google–sided with Redmond. In brief, Microsoft argued that i4i had been issued a bad patent, and Microsoft wanted the courts to accept a lower standard of evidence–a mere “preponderance of evidence”–to pick off the patent. Meanwhile, i4i argued that a higher standard of “clear and convincing evidence” was necessary.

Each side claimed it stood for a brighter and more innovative America. Issuing patents willy-nilly wouldn’t be good for the patent system; neither, though, would offering insufficient protection to legitimate ones. In the end, the Supreme Court didn’t take up the issue of whether Microsoft’s position or i4i’s position was on the side of future-winning innovation. Rather, in its jurisdictional deference, it merely examined the question of which standard of evidence ought to be upheld.

Justice Sonia Sotomayor wrote the opinion, saying that the court had no place to overturn the current reigning standard of evidence, which is “clear and convincing.” That standard had been in effect for 28 years, she wrote, and the court wasn’t about to overturn it. If Microsoft and its backers truly believed that a weaker standard of evidence to invalidate patents would result in a stronger America, it’s a question they’d have to take up with a different branch, in the long run–the legislative. Patent reform doesn’t happen in the courts. It happens in Congress.

How do onlookers feel about the case? You can read about the reactions of a few experts here. Though more of Fast Company‘s Most Innovative Companies sided with Microsoft by filing amicus briefs, a few did side with i4i. The innovation jury remains out.

i4i chairman Loudon Owen called the case “one of the most significant business cases the court has decided in decades,” in a statement. Microsoft, for its part, told Reuters via an email statement that “[w]hile 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.”

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[Image: World Economic Forum]

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Read More: Most Innovative Companies: Microsoft

About the author

David Zax is a contributing writer for Fast Company. His writing has appeared in many publications, including Smithsonian, Slate, Wired, and The Wall Street Journal.

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