Microsoft Loses $290M in MS Office Patent Battle

Microsoft has failed in a Supreme Court bid to overturn a $290 million patent violation ruling. Not only is it the largest such award ever upheld, but this final ruling has significant consequences for patent law.

The case involves XML documents, an advanced version of the HTML webpage code that allows data to be tagged to designate its content rather than just the way it appears on screen. The code makes it much easier to organize document content (for example, in a database).

Microsoft Office XML Support Began with Office 2003

Microsoft built support for reading XML documents into the 2003 and 2007 editions of Word, but was accused of using a patented method by Canadian tech firm i4i.

Microsoft not only lost the resulting court case, but was fined a total of $290 million, made up of damages, legal costs and a multi-million dollar penalty for inappropriate courtroom behavior by its legal team.

A series of appeals followed, working all the way up to the Supreme Court. As is required of such cases, the arguments in the appeals changed from the facts of the case to the way the law is interpreted.

Burden Of Proof the Key Dispute

In the Supreme Court hearing, the issue at stake was the way patents are granted by the United States Patent and Trademark Office (USPTO).

The law says that once a patent is granted, the emphasis is on anyone found to have breached it to provide "clear and convincing" evidence that the USPTO was incorrect and the patent is invalid. That's similar to the level of proof required in a criminal case.

Microsoft argued that the burden of proof should be on "the preponderance of evidence", which effectively means "more likely than not." That's the level of proof required in most civil cases. In particular, Microsoft noted this is the level of proof required to prove an alleged patent violation, creating what the company argues is an unfair balance.

Microsoft Office Patent Violation: Verdict Unanimous

The Supreme Court has now ruled against Microsoft by an 8-0 margin, with the ninth judge not taking part in the case because he owns Microsoft stock. The judges said that the existing rules are legal and could only be changed by Congress. (Source: wsj.com)

The case had gone far beyond Microsoft and i4i, with numerous large and small companies providing evidence. It was widely believed that had Microsoft prevailed, patents would have become less powerful and the system would have become more favorable to those with the money to fight a lengthy court case. (Source: npr.org)