What the i4i-Microsoft patent case means for software users

The Supreme Court decision affirming the $240 million judgment against Microsoft for violating i4i's XML patent highlights the broken technology-patent system, especially for software.

You may have read last week about Microsoft losing a patent-infringement case to Canadian software vendor i4i. The patent in question covers a technique for implementing XML in word-processing software.

If you use a recent version of Word or nearly any other word-processing program, you probably benefit from the software's use of XML, which makes your files smaller and more efficient, among other advantages. It's only right that whoever invents a technique that improves software should be rewarded.

The question the courts wrestled with in the i4i-Microsoft case is whether the innovation i4i patented is actually patentable. In the end, the Supreme Court stood by the U.S. Patent and Trademark Office's original award of the i4i patent as meeting the U.S. Patent Act requirements of being novel, non-obvious, and clearly definable.

What exactly was patented in Patent No. 5,787,449?
i4i originally applied for the patent at the heart of the case in 1994, and it was awarded in 1998. It describes a technique for separating a document's content from the data about the content and the document itself, or metadata. There's nothing new about this concept, which dates back to the beginnings of markup languages in the 1970s and '80s, if not earlier.

The i4i technique uses a metacode mapping system that allows users to make changes to the document's metadata and to its content independently. i4i's site provides links to all the pertinent material in the case, including to the patent description (PDF) and Thursday's Supreme Court decision on the case (PDF).

According to transcripts of the various proceedings between Microsoft and i4i, Microsoft was aware of the i4i patent prior to the addition of XML features to Microsoft Word. One of Microsoft's arguments against enforcement of i4i's patent claim was that Word's implementation of XML doesn't allow independent changes to a file's content and metadata.

Perhaps more importantly, Microsoft claims i4i used the same XML technique in a word-processing program called S4 that i4i sold prior to applying for the '449 patent. This would activate the on-sale bar to the patent award: you can't patent something that has already been offered for sale.

This is where the crux of the case lies for tech companies. To win its claim that the i4i patent should not be enforced against it, Microsoft has to show clear and convincing evidence to the jury. This is a higher standard of proof than Microsoft believes it should meet, which is to prove the patent doesn't apply by a preponderance of the evidence.

The Supreme Court agreed with the U.S. Court of Appeals for the Federal Circuit that the clear and convincing evidence standard applies. (The Supreme Court decision disagrees with some other findings of the Federal Circuit, such as whether a software "invention" must run on a machine or transform data in some way--the so-called machine-or-transformation test.)

A flood of software, business-process patent applications
When the Patent and Trademark Office approved i4i's '449 patent, it was unaware of the S4 program, and in fact i4i had destroyed the S4 source code long before it sued Microsoft for infringing on its XML patent in Word's implementation of the technology. This made it nearly impossible for Microsoft to submit the clear and convincing evidence required to refute i4i's patent-infringement claim.

The case was decided by a jury and withstood challenges all the way to the court of last resort. Whatever the merits of the claims and counterclaims in the case, the '449 patent is valid and Microsoft Word infringed on the patent. What happens now?

Tech companies have been put on notice that they have to vet their products for potential violation of existing patents. This will make software and other tech products more expensive to develop. It will also add to the legal bills of tech organizations of all types and sizes.

Unfortunately, the PTO has been inundated with patent applications relating to software and business processes, such as the patented process that lets energy companies hedge their losses due to bad weather that was at the heart of Bilski v. Kappos, which the Supreme Court decided in June 2010. (Greg Stohr and Susan Decker describe that decision on the Bloomberg/BusinessWeek site.)

Congress considers ways to address the patent backlog
Article I, section 8, of the U.S. Constitution states that "Congress shall have power... to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." That would seem to include the software industry, which has as much right as any other business to benefit from its inventiveness.

It can take years for patent applications to be approved. Considering the pace of technological change, the delay can have a stifling effect on innovation--sometimes by allowing patent applicants to enjoin other organizations when the validity of their patents is still in question.

Amazon's on-again, off-again, on-again patent for one-click purchases may be the poster child of such patents. The original patent awarded in 1999 was rejected in large part upon review by the PTO in 2007 because of multiple examples of prior art. It was ultimately confirmed last year and is now set to expire in 2017, although Amazon may apply for an extension, according to analysts. Eric Engleman describes the case on his TechFlash blog.

The patent-reform bill currently making its way through Congress would replace the first-to-invent provision with the same first-to-file approach used in Europe, Japan, and other jurisdictions. Some critics claim this will be a disincentive for inventors and will benefit organizations that are able to file fastest. One such critic is Dale L. Carlson on the National Law Journal site.

Others claim the first-to-file provision is unconstitutional, as Tom Barkley reported earlier this month on the Wall Street Journal site.

The bill would also allow the PTO to retain the fees it collects from inventors rather than allowing Congress to use the revenue for other purposes. Some in Congress claim this will be a windfall for the office and will allow it to operate beyond Congressional oversight, as Gauthem Nagesh explains on the Hillicon Valley blog.

Of course, supporters point out that the PTO needs the revenue to act faster and more thoroughly on patent applications.

Despite the opposition, the bill's supporters believe it will ultimately pass with only minor tweaks. Whether it achieves its goals of speeding, streamlining, and otherwise enhancing the patent-authorization and -challenge process is anybody's guess. All technology users care about is whether patent reform will translate into better products that get to market faster.

All the better if the resulting products are also more affordable. Well, I can dream, can't I?

About the author

    Dennis O'Reilly began writing about workplace technology as an editor for Ziff-Davis' Computer Select, back when CDs were new-fangled, and IBM's PC XT was wowing the crowds at Comdex. He spent more than seven years running PC World's award-winning Here's How section, beginning in 2000. O'Reilly has written about everything from web search to PC security to Microsoft Excel customizations. Along with designing, building, and managing several different web sites, Dennis created the Travel Reference Library, a database of travel guidebook reviews that was converted to the web in 1996 and operated through 2000.

     

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