10 June 2011

Where “Preponderance Of Evidence” Is Not Enough: Microsoft Defeated Before SCOTUS

Image by Matt Wade on Flickr
Supreme Court

The cold war of software patents has reached the status of a nuclear winter: earlier today the Supreme Court of the United States (“SCOTUS”) delivered its ruling in the case of i4i v Microsoft.

Background

Some years ago I blogged on how Microsoft got hit by a software patent.
However, the Redmond company denied infringement and sought a declaration that i4i’s patent was invalid and unenforceable.
Specifically, Microsoft claimed that i4i marketed the software known as S4 more than one year prior to the filing for its statutory protection.

Not surprisingly,  Microsoft contended that a defendant in an infringement action need only persuade the jury of an invalidity defence by a preponderance of the evidence.
In the alternative, Microsoft insisted that a

preponderance standard must apply at least when an invalidity defense rests on evidence that was never considered by the PTO in the examination process.

Nevertheless, Microsoft lost its case before the (patent owners friendly) District Court for the Eastern District of Texas which applied the long-standing jurisprudence of the Federal Circuit according to which

a patent shall be presumed valid and the burden of establishing invalidity rests on the party asserting such invalidity.
Under the Federal Circuit’s reading of §282, a defendant seeking to overcome this presumption must persuade the factfinder of its in-validity defense by clear and convincing evidence.

The Federal Circuit affirmed the decisions of the District Court and granted a certiorari to the Supreme Court which issued the final rejection to Microsoft’s claim of invalidity.

As PatentlyO‘s Dennis Crouch writes, Microsoft will now likely be forced to pay the $250+ million judgment for infringing i4i’s patent.

What Is The Moral Of The Story?

We must not forget that Microsoft was smote and consequently struck down by a patent troll. Since patent trolls are usually interested to sue “infringers” and force them into settlement agreements, I personally wonder why the guys from Redmond did not undertake such an agreement.

I was made aware that the patent troll allegations towards I4I might be unjustifiable.
Indeed and, unlike non-practicing entities, the company appears to have developed a product and established a sizable client base, particularly among pharmaceuticals such as Bayer, Merck and Schwartz Pharma. Obviously, Microsoft had showed an initial interest on I4I’s patented technology, but finally decided not to enter into a commercial agreement. The patent infringement lawsuit was the consequence.

One question remains: why did Microsoft act that way? Did they attempt to establish a new authority with regard to bad patents, since I4I’s patent grant showed some flaws and that remained undisputed before the Supreme Court? Was Microsoft’s challenging of the governing standard of proof, which currently favours patent owners and, their attempt to replace it with a standard more favourable to defendants in patent suits, a part of a larger strategy?

Either way, the creators of Windows failed.

All in all a disappointing decision – the Supreme Court has had a good chance to lower the threshold to invalidate bad patents, but acted pretty much as Pontius Pilate instead:

Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity. Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any re-calibration of the standard of proof remains in its hands.

26 February 2010

Facebook granted a dubious patent

what shows up in your newsfeedphoto © 2009 Cambodia4kids.org Beth Kanter | more info (via: Wylio)

The readers of the Reguligence Weblog are familiar with the fact that I am not a supporter of software and business method patents. Moreover, I am rather a doubter as to those patents’ furtherance to the Information Technology at all. Nevertheless, I should be grateful to Facebook for giving me an occasion to have another post on this issue.

As you might have already perceived, Facebook has been granted the patent #7669123 for “dynamically providing a newsfeed about a user of a social network”. Basically, Facebook has patented the news feed that provides a user of their social network with the information about what other users are currently doing or at best have done on that network.

To me this is a trivial patent par excellence. While the patent eligibility could be easily satisfied under the Federal Circuit’s holding in Bilski, in pursuance to which “a method claim is surely patentable subject matter if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. ” and a social network could (arguably) serve as an “apparatus”, there are some doubts with respect to that patent’s novelty and non-obviousness. According to GIGAOM, the social network Multiply.com had a similar interface for keeping track of friends’ actions before Facebook launched its own. As regards the inventive step applied, I believe that aforementioned “invention” would be laughably obvious even to a person having just basic knowledge in social networks, not to mention a “person skilled in the art”.

Notwithstanding, the patent, albeit a “weak” one, has been granted and – unless successfully challenged and invalidated- will be valid for the next 17-18 years. I am personally curious whether Facebook will at some time take the risk and attempt enforcement, and hence share the destiny of Amazon and their one-click-patent.

 

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4 January 2010

Beware of the spirits that you call: Microsoft hit by a US software patent

According to a verdict issued by a jury at the District Court for the Eastern District of Texas that the US Court of Appeals for the Federal District has affirmed ,

Microsoft Had Infringed A Patent

owned by I4I Limited Partnership and Infrastructures for Information Inc. The patent is with regard to “a method for processing and storing information about the structure of electronic documents”.
In fact the patent covers the editing of documents containing markup languages like XML and claims to improve said editing process. The patent’s essential output is to be found in an “add-on” software for Microsoft Word, which expands Word’s capability to work with documents containing custom XML.

The claimant alleged that the custom XML editor in certain versions of Word infringed their patent.

Not surprisingly, Microsoft employed the

“Attack Is The Best Defence”

strategy in an attempt to seek a declaratory judgment that the patent in suit was invalid and thus unenforceable, but has eventually failed as the jury refused to follow the brought arguments.
Moreover, the jury found not only that the patent was not invalid, but also that Microsoft’s infringement thereof was wilful.

Upon a lengthy discussion on the claim construction, validity and infringement of the claimant’s patent, the Federal Circuit affirmed the District Court’s ruling.

To me the importance of the instant case lies in that Microsoft is now being served by the consequences of a policy they have advocated in the near past. In my view it would have been better, if they had reflected the 1991 Bill Gates’ warning that patents could bring the software market to a complete standstill and drive out small players.

2 December 2009

In Re Bilski: a setback for business method and software patents?

The PTO addresses Bilski and software patentsphoto © 2010 opensource.com | more info (via: Wylio)

 

In October 2008, the US Court of Appeals for the Federal Circuit (CAFC) issued its decision in re Bilski en banc, describing it as “an historic opportunity to fix the US patent system, as the Bilski rehearing will directly address the boundaries of the subject matter of patents.”

The re Bilski appeal arose from the rejection by the USPTO of all claims because they failed to limit the method’s performance to a specific machine or apparatus, and the method did not involve a transformation of one thing into something different from the original, with the machine-transformation test having been previously articulated in the decisions of the US Supreme Court in Gottschalk v Benson, Parker v Flook and Diamond v Diehr. The Federal Circuit’s decision is thought to have turned the tide for business method patents in the United States.

While Affirming That Business Methods Are Still Patentable

the Court has rejected State Street Bank’s “useful, concrete, and tangible result” test, which many believed had cleared the way for improper patents on fundamental principles and everyday activities that had no connection to technological innovation.

In January 2009, Bilski petitioned the US Supreme Court for a writ of certiorari, seeking to overturn the Federal Circuit decision.

In the meantime the Court

Granted Certiorari

and heard oral arguments on 9 November 2009.

Reading that transcript is a quite funny thing. The Justices seem to openly show their reluctance and, even malice, against petitioners’ alleged invention. Mr Jakes, counsel for the petitioners, had to stand for questions like the one of Justice Breyer “You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things — (Laughter.) — it was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?”

Chief Justice Roberts went even further asking “I’m looking at your Claim 1, in Joint Appendix page 19 to 20. How is that not an abstract idea? You initiate a series of transactions between commodity providers and commodity consumers. You set a fixed price at the consumer end, you set a fixed price at the other end, and that’s it. I mean, I could patent a process where I do the same thing. I initiate a series of transactions with sellers. I initiate a series of transactions with buyers. I buy low and sell high. That’s my patent for maximizing wealth. I don’t see how that’s different than your claim number 1.”

I would not be surprised if the Supreme Court affirmed the Federal Circuit. In such an event, the Justices should take their awaited decision to, hopefully, provide for a long-expected clarity on the patentability of business methods and software implemented inventions.