U.S. Supreme Court sides with Toronto's i4i in Microsoft patent battle

TORONTO — Loudon Owen did the unthinkable. He went 15 rounds with the giant and emerged with a knockout victory.

Now, the only thing left to do is ensure his vanquished opponent coughs up the prize money.

On Thursday, the chairman of Toronto’s i4i Inc. was sitting in his office when he received a call informing him that the United States Supreme Court had ruled against Microsoft Corp. and in favour of Mr. Owen’s software company, bringing an end to a landmark legal odyssey that began four years ago with a patent dispute.

Justices with the U.S.’s top court unanimously upheld the record US$290-million jury verdict awarded to the software company by a Texas court in 2009.

For Microsoft, the ruling is a humbling defeat for the world’s largest software company. The judgment represents the single biggest patent dispute loss for a company that has vehemently defended its technological innovation throughout its storied history.

For Mr. Owen — he is also chairman of The Fight Network and a mixed martial arts enthusiast — the ruling from the top court in the land is a victory for the patent system and marks a new beginning for i4i.

“This has become one of the most important business cases in decades that the Supreme Court has taken on, and we’re clearly very pleased with the outcome,” Mr. Owen said in an interview. “We’ve been operating under a cloud and that cloud of litigation has certainly impeded our ability to grow our business.”

i4i launched its patent infringement suit against Microsoft in 2007, claiming that the Redmond, Wash.-based company infringed on a patent — U.S. patent No. 5,787,449 (’449) — related to the XML computer programming language when the technology titan created its Word 2003 and Word 2007 software.

One patent expert in Toronto said it will be difficult for Microsoft to delay paying the damages owed to i4i now that its legal options appear to have been exhausted.

Kevin Kutz, Microsoft’s director of public affairs, said the company was disappointed by the verdict, but that the company would continue to push for patent reform.

“This case raised an important issue of law which the Supreme Court itself has questioned in an earlier decision and which we believed needed resolution,” Mr. Kutz said in a statement.
“While 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.”

The Supreme Court rejected Microsoft’s argument to amend U.S. patent law and lower the standard of proof for defendants in patent infringement cases. Microsoft had asked the court to do away with the long held requirement that a defendant in a patent infringement case prove with convincing evidence the invalidity of the plaintiff’s patent.

Mr. Owen said the court’s decision reinforces the worth of the U.S. patent system.
“The unanimity sends a tremendously loud and powerful message that patent rights have value, that the patent office has value and is respected, and that the patent system is one that bears support and there’s not going to be a dramatic change to the system through the courts.”