Loudon Owen, left, the chairman of i4i, and Michel Vulpe, the company's chief technology officerKevin Van Paassen
A Canadian technology firm is headed to the highest court in the United States this week for the final act of a David-and-Goliath saga that pits it against Microsoft Corp.
Toronto-based software-maker i4i Inc. is nearing the end of a four-year legal battle that began when the company sued the software giant for patent infringement. After multiple appeals, both companies will appear before the U.S. Supreme Court in Washington on Monday for an hour-long oral hearing.
The session will mark the conclusion of a case that has the potential to change a fundamental tenet of patent law. Should the top court side with the previous ruling, i4i stands to net about $300-million in damages.
The case began as a relatively simple matter of patent infringement, with i4i successfully claiming that a portion of the software code for Microsoft Word infringed on its intellectual property. But since then, it has taken on much wider significance. The argument Microsoft will present to the Supreme Court essentially makes the case that it should be easier to declare a patent invalid. As such, a Microsoft victory would have far-reaching consequences for everyone from tech startups to the U.S. government.
Indeed, many industry players are also headed to Washington to see how the case plays out. Nineteen venture capital firms and a variety of companies, including 3M Co., have written briefs in support of i4i. For them, the issue is important: Weaker patent protections could reduce the value of their investments.
Since a large number of foreign companies register their patents in the U.S., the case could have global implications.
"This is important for the future of patent law in the next century," i4i chairman Loudon Owen said in an interview as he prepared to fly to Washington for the hearing. "If the standards change, it's going to dramatically disrupt the entire world of information technology."
The scope of the case has grown to such proportions that Microsoft and i4i will be joined by lawyers for the U.S. federal government during Monday's hearings - Washington is backing i4i in its claim. Microsoft is aided in its fight by several of the biggest companies in the technology sector, including Google Inc. and Apple Inc.
The original case dates back to March of 2007, when i4i first sued Microsoft. Two years later, a U.S. federal court sided with the Toronto firm and awarded it about $290-million (U.S.) in damages. The ruling also prohibited Microsoft from shipping versions of its Word software containing the infringing code as of January, 2010.
Microsoft appealed the ruling in late 2009, and again the following year, but lost both times. The U.S. patent office also refused Microsoft's request to re-examine the patent in question. Nonetheless, Microsoft took its case to the Supreme Court, which agreed to hear it last November.
The central dispute in the case relates to the current "clear and convincing" standard of evidence necessary to declare a patent invalid. The system places the onus on the party looking to invalidate a patent to prove why the patent should be thrown out. Microsoft argues that standard stifles innovation, and is asking the court to weaken the standard, thereby making it easier to get a patent tossed aside.
However, i4i and its supporters argue such a move would itself stifle innovation, because inventors would have less incentive to patent their work, knowing that such patents could easily be defeated. Venture capital firms also raised concerns that the value of their investments could drop precipitously if the companies they fund are less able to protect the technology they develop.
The U.S. government's interest in the case is aimed largely at attempting to protect the authority of the federal patent office, which Washington worries could be weakened if its decisions can be more easily overturned.
The Supreme Court is expected to rule on the case this summer, at which point the legal saga will finally come to an end.
Although Mr. Owen didn't quite foresee the extent to which the lawsuit would balloon, he says its outcome is now important not only to i4i, but to the way intellectual property is treated in the U.S. "This is a pivotal case in patent law," he said.