The Supreme Court of the United States has released its decision
in Microsoft Corp. v. i4i Limited Partnership. i4i, a
Toronto company, prevailed and can now collect its record-setting
The case is of interest to Canadian business as Canadians file
twice as many patent applications in the U.S. as they do in Canada.
Canadians are frequent users of the U.S. Patent Office in part
because the market is significantly larger and also because the
process of moving a patent from an application to grant is often
faster in the U.S.
To obtain patent protection, an invention must be new and not
obvious. Under American law, patent protection is not available if
the claimed invention was on sale in the U.S. more than one year
before the filing of the patent application. This is commonly
referred to as the on-sale bar.
The burden of proving invalidity rests on the person making the
allegation, usually the defendant in an infringement case. Courts
in the U.S. have consistently ruled that the invalidity defence
must be proved by "clear and convincing evidence". The
basic proposition is that the Patent Office was presumed to do its
i4i's patent claimed an improved method for editing computer
documents. It sued Microsoft for intentional infringement, claiming
that certain Microsoft Word products infringed the patent.
Microsoft argued that i4i's patent was invalid because of
the on-sale bar. Specifically, Microsoft alleged that i4i sold a
program known as S4 more than a year before the patent application
was filed, and this invalidated the patent. The source code for the
S4 software was destroyed years before the commencement of the
litigation. There was a factual dispute as to exactly what was in
Microsoft argued at trial and appeal that because the S4
software was not considered by the patent examiner, the clear and
convincing standard should not be applied. It would be unfair to
presume that the examiner did a thorough job when an important
piece of the puzzle was missing. The Supreme Court ruled that the
clear and convincing standard applied, even for prior art that was
not considered by the examiner; the standard of proof does not rise
and fall according to the facts of the case.
This is not to say that the argument cannot be presented to the
jury in future cases. The Supreme Court noted that a jury may be
instructed to consider that the Patent Office did not have the
opportunity to evaluate certain evidence before granting the
patent. A jury may be asked to consider whether the evidence is
materially new and, if so, to consider whether an invalidity
defence has been proved by clear and convincing evidence. In this
case, Microsoft did not ask for such a charge to the jury at the
initial trial. Having not raised this in the first instance, the
Supreme Court found it was too late to now say that such a charge
should have been given. It is expected that such instructions to a
jury will address concerns raised by Microsoft and its supporters
that innovation will be dampened by insulating undeserving patents
from robust invalidity challenges.
While this decision will certainly benefit Canadian companies
that own U.S. patents, it is unlikely to have an impact on how
Canadian courts decide patent cases. The clear and convincing
standard has never been applied in Canadian patent law. Moreover,
Canadian courts give limited consideration to what happened in the
Patent Office during the prosecution of a patent.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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