Microsoft Petitions PTO to Reverse Refusal to Grant Reexam in i4i Dispute, Could Moot Supreme Court Appeal

By Scott M. Daniels
January 6, 2011

The main front of the on-going war between Microsoft and i4i regarding the latter’s U.S. Patent No. 5,787,449 is certainly the Supreme Court. There, Microsoft has asked the Court to reverse a $290 million verdict against it for infringement of the ‘449 patent, arguing that the burden on an accused infringer of proving that a patent is invalid over the prior art should be “preponderance of the evidence” rather than the traditional standard applied by the trial court of “clear and convincing” evidence, at least where the reference asserted was not before the examiner in the original patent prosecution. The Court’s grant of certiorari in this case has understandably generated enormous concern in the patent community, fearful of the potential for undermining the strength of hundreds of thousands of commercially significant patents.

At the same time that Microsoft pursued its appeal of the verdict for i4i, both at the Supreme Court and earlier at the Court of Appeals for the Federal Circuit, Microsoft requested that the Patent Office undertake a new reexamination of the ‘449 patent on the basis of previously considered prior art, but art presented “in a new light” according to Microsoft. This request was dismissed by commentators as a side-show, a mere attempt to support its argument before the Supreme Court, or even a “Hail Mary” (actually, I said that). Indeed, that estimation seemed to be correct when the patent examiner refused to grant Microsoft’s request to grant reexamination – a sharp rejection in view of the very high percentage of reexamination requests that are granted.

At the end of December, we learned that Microsoft had petitioned the PTO Director to order reexamination of the ‘449, and this morning the Microsoft petition has been released to the public. It shows that Microsoft’s chances at the Patent Office are not so long after all, that Microsoft’s argument for reexamination is stronger than many thought. The concerns about the “clear and convincing” standard being abandoned by the Supreme Court may not be justified – there is a real prospect that the Microsoft-i4i dispute could be resolved in the reexamination, without the need for the Supreme Court to reassess the burden of proof standard for accused infringers.

Microsoft begins its petition by invoking the ancient Supreme Court precedent, White v. Dunbar, with its injunction against twisting the meaning of claims like “a nose of wax,” to have one meaning for validity and another meaning for infringement. Specifically, Microsoft complains that the ‘449 claims were construed broadly by the trial court, allowing the jury to find that the Microsoft system infringed the ‘449 claims. “Since the construction of ‘mapped content’ was not limited to ‘raw content,’ the Patentee was able to allege at trial that Microsoft Word infringed the claims of the ‘449 Patent.” On the other hand, the reexamination examiner adopted a narrow an interpretation of the ‘449 claims “that would exclude the accused Microsoft Word software….”

Second, Microsoft faulted the reexamination examiner for not evaluating the prior art disclosure from the perspective of the person of ordinary skill in the art, when he by limited the scope of the claims to the single embodiment disclosed in the ‘449 Patent.

Third, according to Microsoft, the examiner ignored the i4i’s “repudiation of the reasons for allowance of the claims over [the Kugimiya reference] as an independent basis for considering Kugimiya in a ‘new light.’”

Fourth, Microsoft complains that the examiner found that i4i’s “admissions regarding the [Kugimiya reference] do not extend to ‘addresses of use’ even though the District Court construction and trial testimony plainly indicate that ‘addresses of use’ are integral to the meaning of ‘metacode map.’”

Fifth, Microsoft accuses the examiner of consider the disclosure of “the references individually rather than by considering the combined teaching presented by each combination….”

Finally, Microsoft says that the examiner failed to take into account the trial testimony by i4i that was not of record in the earlier reexamination. According to Microsoft, that testimony “rebuts the prior examiner’s claim interpretation,” and replies to the questions raised by the examiner in the first reexamination proceeding.

Much of Microsoft’s argument is based upon assertions that i4i made in the parallel court case, and the Patent Office has lately shown an extreme reluctance to acknowledge “admissions” made in court cases. On the other hand, there seems to be a genuine injustice if claims are construed broadly in court case for infringement, but narrowly at the Patent Office for validity. In fact, such a result would contradict the Patent Office’s long-standing practice of giving claims their broadest reasonable construction. In any event, Microsoft’s petition at least creates the possibility of its dispute with i4i being resolved at the Patent Office, obviating the need for the Supreme Court to take on the potentially disruptive issue of accused infringers’ burden of proof.

The Author

Scott M. Daniels

Scott M. Daniels  
Mr. Daniels heads the Westerman Hattori Daniels & Adrian litigation group, where he handles litigation matters in district courts and at the International Trade Commission. Mr. Daniels also counsels clients by providing infringement and validity opinions, as well as guiding clients’ strategies using post-grant tools such as reexamination and reissue applications.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments.

  1. Bemused January 6, 2011 12:21 pm

    Given the glacial pace of reexaminations, it seems unlikely that reexamination (if granted by the Director) will be concluded before the Supreme Court issues its ruling in this case. Unless, of course, the Supreme Court decides to dismiss or stay the case pending completion of the reexamination. I certainly hope that the Supreme Court will take this petition to the Director for reexamination as an opportunity to get rid of this case without deciding it on the merits. It is quite alarming to think what a mess they can make if they do away withe present “C&C” standard.

  2. IANAE January 6, 2011 12:24 pm

    It is quite alarming to think what a mess they can make if they do away withe present “C&C” standard.

    Do all of other countries in the world realize what an alarming mess they’re currently in?

  3. Gene Quinn January 6, 2011 1:02 pm

    IANAE-

    Are you suggesting that it wouldn’t create a mess to change the settled expectations of property owners? You do understand why property having settled rules that are unchangingbus important, correct?

  4. IANAE January 6, 2011 1:19 pm

    Gene, whenever the C&C standard comes up, the implication is invariably that the “mess” would result from a weakening of patent rights and the associated loss of venture capital investment and resulting economic collapse, not to mention the loss of jobs that are mysteriously only tied to the territorial US by the strength of the patent system (that would grant you exactly the same patent if you applied from abroad).

    Of course it’s generally important to maintain settled expectations. However, in this case I don’t think it’s as big a deal as, for example, what happened in eBay. The automatic availability of an injunction was a terrifying prospect that shaped people’s business decisions and licensing negotiations. Taking that away from non-practicing patentees was a game-changer.

    The C&C standard is simply a gloss on the already present uncertainty as to the validity of a patent, which people already take into account when they make decisions about patents. It won’t make people question every decision they’ve ever made about patent filing or licensing. It’s a minor enough tweak that the settled expectations can take a back seat to what the law ought to be. Certainly not a “mess” that should cause much alarm. And that’s not even considering the settled expectations of the public that they are free to practice the prior art.

  5. blue January 6, 2011 6:19 pm

    “Fifth, Microsoft accuses the examiner of consider the disclosure of “the references individually rather than by considering the combined teaching presented by each combination….”

    Gene, are you sure MS has said this??

    Correct me if i am wrong, I thought individual references are meant to be considered separately unless the references have given clear indications to combine its teachings with other references? Is MS arguing that even when a selection of references do not offer any indications to combine, the unrelated references should nonetheless be considered as a single patent-defeating prior art???

  6. blue January 6, 2011 6:19 pm

    my last comment didn’t post

  7. Anon January 6, 2011 6:29 pm

    to what the law ought to be

    Clearly, you have assumed your own answer. There are plenty of people that feel that C&C is how the law ought to be. And I would include Congress – as indicated in the Re-exam Statutes.

    Even setting that debate aside for the moment, please tell us the benefits of making patents weaker? And please spare us the story about “free to practice the prior art”, because clearly, if it was “prior art”, then the C&C standard would be met by that “prior art”.

    If this is such a “gloss,” then you won’t mind having an extremely clear and convincing argument for going tothe trouble of weakening the system. If it’s such a minor enough tweak, then you could probable live with it, seeing as it is a part of why US patents are the most preferred patent in the world. So yes, to a degree, all of other countries in the world should realize what an alarming mess they’re currently in. You employ the same rationale as the poster known as MaxDrei, and I notice, have the same lack of real response as to the benefit of making the US patent weaker.

    I do not agree with much of anything you have to say, because typically your views weaken the patent system and the patent right, yet you pass yourself off as a “friend” to the patentee.

    I do not buy it. I do not know anyone in my profession that buys it.

  8. Jon Shields January 6, 2011 6:40 pm

    Would a re-examination finding in favor of Microsoft actually moot the court case (even if we assume arguendo that it will come out this way)? I don’t think so. In fact, I’m not even sure if the Supreme Court would grant a stay pending the completion of a re-exam. For one, Microsot’s argument to the Supreme Court is about an on-sale bar, which, if resolved in Microsoft’s favor in litigation, would invalidate the patent. On the other hand, if i4i loses re-examination, there are still numerous appeals i4i could go through, making the outcome uncertain for years. Furthermore, there might be new claims submitted during re-examination (with more lower court litigation), all of which would be thrown out if Microsoft won its case on the on-sale-bar rationale.

    So it seems that while a Microsoft win in the Supreme Court (and subsequent win in a new trial) would make the results of the re-exam irrelevant, the converse is not true (a Microsoft win in re-exam would not seem to moot the Supreme Court case). I could be wrong though.

  9. Gene Quinn January 6, 2011 7:01 pm

    Blue-

    Caught in the spam filter for some reason, posted now.

    Under KSR there wouldn’t need to be a teaching, suggestion or motivation to combine references in order to find an invention obvious. That is nonsense if you ask me, but that was the path the Supreme Court chose to go down.

    -Gene

  10. blue January 6, 2011 9:12 pm

    Gene,

    agreed, the decision of KSR is fundamentally flawed.

  11. IANAE January 7, 2011 9:53 am

    Anon: There are plenty of people that feel that C&C is how the law ought to be.

    Of course there are. All I said was that the disruption to this particular settled expectation isn’t so catastrophic that it should preclude a discussion of what the standard ought to be. If you want to discuss what the standard ought to be, we can do that too.

    Anon: And I would include Congress – as indicated in the Re-exam Statutes.

    That would be very relevant, if we were talking about the standard in re-exam. And if that were the standard in re-exam.

    Have you seen what Congress has to say about the standard of proof in litigation? The statute provides no more than a bare presumption of validity.

    Gene: Under KSR there wouldn’t need to be a teaching, suggestion or motivation to combine references in order to find an invention obvious.

    That’s actually not what KSR says. KSR only says that the teaching, suggestion or motivation doesn’t have to come from the references themselves. The motivation can come from the general knowledge in the art that each teaching can be used for its own benefit.

    It’s very hard to have these conversations when people focus on the names of tests as if they were the tests themselves. “What do you mean, you want to invalidate patents on unclear evidence?” “You don’t think evidence needs to be convincing?” “Patents can be invalidated without a motivation to combine! The horror!”

  12. Anon January 7, 2011 10:42 am

    All I said”

    “If that were”

    “no more than a bare”

    “If you want to discuss what the standard ought to be”

    IANAE, you are incapable of having an honest discussion. I choose merely to point out that your comments assume that you are correct when no such assumption is warranted.

  13. IANAE January 7, 2011 11:26 am

    IANAE, you are incapable of having an honest discussion.

    It’s largely for want of a rational interlocutor, in my experience.

    I choose merely to point out that your comments assume that you are correct when no such assumption is warranted.

    I chose merely to point out that i made no such assumption (your own assumption to that effect is not warranted), and that wasn’t even what I was talking about. You didn’t even bother to address what I was actually trying to have a discussion about (the importance of maintaining this particular settled expectation), which is rather a funny way to have an honest discussion.

  14. Anon January 7, 2011 1:51 pm

    can take a back seat to what the law ought to be.

    Taking a back seat to what the law ought to be is not the same as “let’s discuss what that law ought to be” – this is a typical “rewrite” for you.

    It is immaterial that what I “bothered to address” is not what you were trying to discuss. My point is correct. Having an honest discussion means beginning with an honest discussion – not with beliefs that need to be proven asserted as necessary. And not as attacking the person that points out such a tactic. At the very least you can acknowledge my point instead of prevaricating. Luckily, I have seen your writing and do not hold even such minimum expectations.

    I do not care for your smarmy attitude (rational interlocuter indeed) – it is not deserved. Just because you are smart, does not mean being a smart-ass is your calling. Unless of course, your calling includes being an ass.

  15. blue January 7, 2011 4:51 pm

    IANAE,

    “That’s actually not what KSR says. KSR only says that the teaching, suggestion or motivation doesn’t have to come from the references themselves. The motivation can come from the general knowledge in the art that each teaching can be used for its own benefit.”

    No matter what KSR says, the reasoning of the decision is flawed. KSR discounts the value of combining various exiting features or principles in a new way to achieve a new result – often the very definition of invention. Its obvious that the goal of the decision was allow subjective or hindsight interpretation to be invoked whenever the court, for whatever reasons, wants the infringer off the hook.

    You do not need to have gone through 5 years of law school to see the flaws in the decision. If the decision was so logical, it would not have created so much confusion when it was first established, and it would not have required much explanation from the USPTO to ensure that patent examiners have understood that the mission of KSR was not to discredit every application that was filed at the patent office.

    Another potential problem i see is that KSR subtly encourages the use of DOUBLE STANDARD for assessing novelty. The patent office could carry out its ‘business as usual’ by using TSM for assessing novelty while the judge or infringer could invoke KSR to weaken the validity of TSM during a trial. All in all, KSR brings unnecessary complexity into the novelty or non-obviousness debate during litigation.

  16. The Mad Hatter January 9, 2011 1:59 am

    This is an annoying case. Microsoft, as a company, is totally unethical. They are one of the few companies that I absolutely refuse to do business with (all of my computers are Macs, or run Linux).

    I4I is a Canadian company, who’s office is within a 30 minute drive of my house. With a patent that should never, ever have been issued. I’ve read it, and that patent is a sick joke.

    My solution? Exile the management of both companies to the planet Fenris (see H. Beam Piper’s novel ‘Four Day Planet). Permanently.

    Wayne

  17. patent litigation January 11, 2011 2:58 pm

    Actually, some of those in other countries do realize what an alarming mess they’re in. For instance, I recently read a series of posts on the Indian blog Spicy IP, decrying India’s lack of a presumption of patent validity. The posts made the point that the lack of such a strong presumption can make independent innovators much more vulnerable to bullying and harassment tactics (such as endless reexaminations) by large corporations, which can use such tactics not only to financially crush an inventor, but also to ultimately strip him/her of IP rights. As Indians often don’t tend to be pro-US-policy, I tend to take this particular instance of pro-US-advocacy fairly seriously.
    http://www.generalpatent.com/media/videos/general-patent-corporation-helps-patent-owners-enforce-their-ip-rights

  18. MIRV January 17, 2011 6:58 am

    I would so love to read about Microsoft taking any one of the Linux distibutors to court for patent infringement. Its unfortunate that it will never happen for obvious reasons. Russia is already turning to Linux, and the majority of “third world” nations will too as they develop. Patents are only worth anything to big greedy capitalist corporations that will eventually be the cause of their own demise. The rest of the world is waking up to the cost of proprietary software and the patent nightmare that stems from it. Some of the cost seems to be in spreading pointless FUD to people that are obviously smarter than software companies give them credit for. New and existing computer users are fast becoming aware of the multitudes of free and open source alternatives to patent-protected stupidity, and the US patent system in particular is just a soap opera for them.

  19. Blind Dogma January 17, 2011 11:47 am

    I do so love a new customer, especially one that orders such a large pitcher of Kool-Aid.

    Drink quickly, my friend your tab is open.