Microsoft Downplays Impact of Possible Supreme Court Patent Ruling

The attorney who argued Microsoft's case before the Supreme Court Monday downplayed the impact on patent law if the jurists rule for the company.

"Microsoft has no interest in dismantling the patent system," said Thomas Hungar, of the Washington D.C. law firm Gibson, Dunn & Crutcher, who represented Microsoft at an oral hearing before the court. "The changes would not be dramatic, and it certainly would not be the end of the patent system that some are claiming."

Hungar compared predictions of dire consequences to "the sky is falling" complaints.

"That's plainly untrue," Hungar said.

Hungar, who spoke after the hour-long Q&A with seven of the nine Justices, pointed out that Microsoft has a large patent portfolio and sometimes relies on lawsuits to enforce those patents.

"Microsoft is one of the leading recipients of patents, and both is sued and sues to enforce patents," Hungar said. "Microsoft wants the patent system strengthened, and the patent playing field fair and balanced."

From Microsoft's point of view, that can come only if the Supreme Court rules in its favor -- a decision is expected by the end of June -- and lowers the burden-of-proof bar at trial.

Under current practice, an accused infringer must show "clear and convincing evidence" that the patent is invalid to escape with a win. Microsoft has suggested that the burden of proof should be lowered to "a preponderance of the evidence."

Changing the standard won't cripple patent law or impact all patents. Instead, only patents that should not have been granted in the first place would be affected, Hungar argued.

That's the heart of Microsoft's case. The company has said that the patent held by Canadian company i4i should not have been issued because the technology had been used in a product sold more than a year before the U.S. Patent and Trademark Office awarded the patent.

"Allowing a bad patent to stand simply because it's propped up by the wrong courtroom standard will in fact undermine the system," said the chief counsels for Microsoft, Apple, Cisco and Facebook in a joint statement issued yesterday.

"The use of this heightened standard in these circumstances creates courtroom conditions that protect bad patents and, in some cases, make it easy to game the system," the companies said. "Ultimately, the harm extends to our national climate for innovation, and the ability for great inventions to support great businesses."

Apple, Cisco, EMC, Facebook, Google and others were among the large technology companies that filed amicus curiae, or "friends of the court," briefs in support of Microsoft's position.

Not surprisingly, i4i sees a ruling in Microsoft's favor very differently.

"It would mean a massive change in the established law, and be extremely detrimental to innovators and inventors," said Loudon Owen, the chairman of i4i, in an interview yesterday. "It would be a bad idea right across the spectrum."

In a conversation with the IDG News Service after the oral hearing, Owen said a move to the lesser standard would be "devastating" to inventors.

"What Microsoft is looking to do is completely disrupt the patent system we have today," Owen said.

Outside observers were hesitant to predict how significant the impact would be if the Supreme Court voted in favor of Microsoft. But it would make it easier for companies accused of patent infringement to dodge the bullet, said Steve Chang, a Washington D.C. attorney with Banner & Witcoff who specializes in patent litigation and sat in on the hearing.

"If it was a simple preponderance of evidence standard, that would immediately make it easier for defendants to challenge the validity of a patent in District Court," said Chang. "But that doesn't mean they would automatically win."

The case before the Supreme Court stemmed from a 2007 lawsuit filed by i4i that charged Microsoft with infringing a patent for custom XML tagging technology. i4i alleged that Microsoft used the technology in its popular Word software.

In 2009, a federal jury awarded i4i nearly $300 million in damages, and told Microsoft to stop selling Word. The injunction was later suspended for several months, giving Microsoft time to modify Word. In January 2010, the company shipped an update to Word 2007 that removed the infringing technology .

The verdict was later upheld by a federal appellate court.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@computerworld.com .

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