Joff Wild

The Supreme Court has agreed to hear a case that may have a significant effect on the threshold under which patents can be invalidated in the US. In Microsoft Corp v i4i Limited Partnership, the court will look at the standard of proof by which patents can be declared invalid. In most civil cases in the US, the standard is "preponderance of the evidence", but in patent invalidity cases the Court of Appeal for the Federal Circuit has stated that the test should be "clear and convincing" evidence - which is a much higher threshold to achieve. If the Supreme Court decides this standard should be revised it could be of significant benefit to defendants claiming that patents being asserted against them are invalid.

There are two reasons that lead me to think that Microsoft is likelier than not to get at least some of what it wants from the Supreme Court. First of all, the court has a track record of disagreeing with the CAFC. Second, a string of recent decisions show that a number of the justices have clear concerns about the activities of NPEs; lowering the standard of proof necessary to invalidate a patent could well be seen as another way to make it harder for them to operate. That said, remember I am a journalist with no legal background who lives an ocean away from the US. I could well be horribly wrong! 

A decision in the case should be handed down by July 2011. Chief Justice Roberts will play no part in the deliberations. Apparently he owns Microsoft shares. You can get more analysis of the case at PatentlyO and Peter Zura's 271 blog.

In other Microsoft news, I got a note from an old contact of mine concerning the blog I did last week on the company's purchase of 882 Novell patents for $450 million cash. In the blog I wrote that if the patents in question were of central importance to Linux, then Attachmate - the company buying Novell - had missed a trick by not auctioning them. My correspondent pointed out that this could well have happened:

The fact that there was not a public auction does not mean that there was not a private auction process where the assets were sold to the highest bidder. I wouldn’t assume that they weren’t sold in a private sale and offered to all of the sensible parties. It may just be that MSFT was willing to pay the most.

This is how MOST high value patent portfolios are sold. That’s why the ICAP OT auction process only deals with low end portfolios. The high end stuff doesn’t trade that way.

And that's a point well made, is it not? However, the fact remains that if Microsoft has acquired crucial Linux patents for $450 million, then it has got a great bargain. And that leads me to conclude that they cannot be that important. Otherwise, the price would surely have been higher because other parties would have been keen to get their hands on the patents too. That is unless they have badly misread things. Given that entities interested in pivotal Linux patents would probably have included the likes of IBM and the OIN, that is unlikely; though it is certainly not impossible. Now that really would be a big story.