Microsoft v. i4i: Relevance of the Pending Reexamination

[This post continues the discussion of emergency stays pending appeal that was begun here]

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

Pending Reexamination: Microsoft has submitted its motion for a stay of injunctive relief pending the outcome of its appeal to the Federal Circuit.  Oddly, the first sentence of Microsoft's introduction begins with a statement that the PTO "already had provisionally rejected upon reexamination as anticipated and obvious." By 'provisionally rejected' Microsoft means that a non-final office action has been mailed out in the ex parte reexamination that it requested in November 2008 (the litigation was filed in March 2007).

The opening is odd because of its irrelevance. The vast majority of third party requests for ex parte reexaminations are granted (over 95%) and then 'provisionally' rejected (83% of those). That usual course is simply the beginning of a typically long reexamination process. Even amongst reexaminations that received a non-final rejection – most resulted in a reexamination certificate that confirmed the patentability of at least one original claim. Of course, the final resolution of the reexamination is likely years away. (The figures are based on my own study of 5,000 ex parte reexamination file histories).

The opening is also odd because, to my knowledge, the Federal Circuit has never placed any weight on the fact that a co-pending reexamination has been provisionally rejected.

Finally, the opening is odd because it does not relate to Microsoft's arguments for a stay. In particular, the company does not argue for a stay pending outcome of the reexamination. Microsoft does argue anticipation and obviousness, but those arguments are based on the district court claim construction. As discussed on Patently-O extensively last month, claim construction in court has no direct legal link with the claim construction used at the patent office during reexamination. [Link]

The reexamination request by Microsoft focuses on two prior art references: U.S. Patent No. 6,101,512 ("DeRose") is apparently 102(e) prior art because it was filed prior to i4i's application, and i4i is unable to antedate the reference and a published description of the "Rita" SGML editor. Both of these references were considered by the jury in its analysis. In addition, Judge Davis reviewed the jury determination and found no cause for a JNOV. Interestingly, Microsoft never moved for summary judgment on any of its invalidity arguments based on these references.

To be clear, Microsoft's brief is still well written and presents compelling arguments. The only problem is that its first argument may lead the court astray. A ruling is expected prior to the October 10. 

Documents:

  • Microsoft Motion for Emergency Stay: Download 2009-1504 [Note – A complete brief was due August 25, for that brief, Microsoft was granted permission to file an 18,000 word brief instead of the normal 14,000 word brief]
  • Judge Davis Memorandum: Download 20090817i4imemo 
  • Documents from the Reexamination Download 90010347 

Notes:

  • An important aspect of this case from a policy perspective is that it the patent covers XML software whose function is to facilitate interoperability.  The patent enforcement is looking largely block (or at least control) that function.
  • As the role of reexaminations continue to rise as a litigation strategy, understanding the interplay and conflict between Federal Court decisions and USPTO decisions will become critical.  Important questions involve: waiver; preclusion; and deference.

34 thoughts on “Microsoft v. i4i: Relevance of the Pending Reexamination

  1. On another note Ciaran,

    Your “substance” is nothing more than a few randomly selected bits that tend to support your agenda. Heck, anyone can cob together something like that.

    I don’t see anything with any gravitas on your link to “substance.”

  2. Fair enough Ciaran.

    Seconds since 1970, as a former UNIX developer and embedded system developer myself, I get it. (But it was a little too arcane for what should have been accurate information)

    But, as an application developer, I NEVER worried about “software patents.” Even as an embedded system developer, I seldom worried about them.

    As I have said before on this forum many times (under many different names), if you are on a project involving code that may stray into the realm of patents, you’ll know it – and it won’t be a big problem, because chances are, you will probably be developing some patentable methods yourself.

    An example would be a revolutionary compression encoding method – the kind of thing that is rarely developed “in-house” in the first place. The kind of thing that is purchased or licensed from a third party.

    The second problem is identifying what a “software patent” is. You can’t.

    My impression of you is that you are one of the alarmists and reactionaries that have sprung up in the past few years that heard something from someone about “software patents” and thinks that your ability to sit down with your BigGulp and hack out lines of code until 2AM will somehow be compromised.

    My advice, don’t worry about it. Just get back to work, that code isn’t going to write itself.

  3. Ciaran,

    As a quick example, the following quote from the site you linked to is especially troubling:

    “Be careful of patent lawyers. They make money by filing patents and bringing software developers to court. It’s always in their financial interest to say that software patents are and should be valid.”

    I fear that your crusade will not let you entertain ANY balanced viewpoint or let you process any input from “patent lawyers” without seriously damaging and coloring that input.

    Such motivated agendas tend not to be able to be objective. Please prove me wrong.

  4. Ciaran,

    You state, “I represent the case against software patents by pointing out existing studies and examples, not by saying that I am personally an expert. …”

    There are plenty of sites that represent the case against software patents. I hope you differentiate by keeping in mind that there are two world views in this complex area. And while the bias alert is appreciated (and I will look forward to the information presented), please be aware that having a pre-conceived agenda may likely blind you from the objectivity necessary to understand the interplay between the worlds of Legal and Technology. Also keep in mind that most patent attorneys are well grounded in both worlds. I hope that your site is more than your professed agenda spouting from those with feet only in one world. Good luck with your site!

    On a side note, how was your experience as a software policy representative to the EU? What do you think of the direction that body is moving to with its sidestepping of the “per se” restriction?

  5. @Noise above Law: ok, I see where that could lead people to wonder about my grounding. I’ll note my level of knowledge of the subject at hand in future.

    @Blimpy: Here’s the substance:

    link to en.swpat.org

    swpat.org is less than 4 months old, so I’m still very much in the phase of hurriedly gathering up as much information from as broad a set of sources as possible. There are already plenty of sites that have produced great, professional documents, so I’m aiming to do what I don’t think anyone else has done well yet: breadth, interconnectedness, and making all the existing documents findable.

    The goal is to make a professional site, something that politicians and lawyers will find attractive. The downside of making a wiki public from the start is that people see the “under construction” or amateurish appearance for a while, but in the long run, with others participating and giving review (like yours), the problems are more obvious and should be fixed sooner.

    My background isn’t so important. I represent the case against software patents by pointing out existing studies and examples, not by saying that I am personally an expert. …but to introduce myself to the forum: I’ve worked for years as a software developer (web, then embedded systems), and then for years as a software policy representative to the EU (patents and copyright). I do a lot of work online, so to keep a few shreds of privacy I don’t plug my data into social network sites etc. (starting work in January 1970 is a Unix joke)

  6. “What are your qualifications to weigh in on this topic?”

    He has an opinion. What other qualifications does he need? What are your qualifications?

    Please post your resume before you respond to this comment Blimpy, so that we can ensure that you are entitled to contribute.

  7. Ciaran,

    I personally think your crusade has an amateurish patina. I looked at your website and your main thrust is that software patents are a “pest.” I’m sure anyone who has to deal with potential infringment considers patent a “pest,” But, where is your substance.

    You come off as if you are the first person to opine on patents. I looked at your profile on LinkedIn and it says that you developed software for 2 months in the 70s.

    What are your qualifications to weigh in on this topic?

  8. Mooney, I don’t mess with angry little socialists like you… they don’t have what it takes, if you know what I mean. Also, I don’t like guys who keep trying to borrow my shoes.

  9. Von,

    Thank you for your high quality post. Bravo.

    The only thing I would add for Ciaran, is to be upfront in your post about both the level of your knowledge and your intent from the post. While certain respondents will still ignore a phrase like “I am not familiar with this area”, many regulars will appreciate your candor and try to provide more intelligent feedback.

    This is not because you may be “taxing this high quality forum”, but rather, there are plenty already who tax the forum under the self-asserted guise of “experts” or those who don’t care enough to think through an idea prior to posting.

  10. @von: You’re right, I’m not at all familiar with 35 USC 284, or 285. What you call “basic”, I call “foreign”, and damages is not an area I’ve worked on in any jurisdiction. When EU patent law topics come up, I might be the one answering questions, but on USA topics, when I don’t know, I research or I ask.

    The things I don’t know are also things that most people don’t know, so although I’m sorry for taxing this high quality forum with basic questions, the up side is that I’m documenting this info so that fewer others will ask the same questions (and also so that hopefully fewer others will make comments without having this knowledge). Here’s a wiki page I started a few minutes ago:

    link to en.swpat.org

    It’s just a start, but then again, so is everything at some stage. Thanks for the pointers which enabled me to write that page.

  11. von,

    I did not say the term is “out of favor” I said it is out of favor by people who know what they are talking about and who are smart (like, apparently, you) for the exact reason you mention – it is a propaganda term designed to obscure reality, as intended.

  12. I stand corrected, 756,000 hits for “ignoramus” and only 47,400 for Ciaran O-Riordan.

    From now on, my preferred term is ignoramus… because Google told me so.

  13. Ciaran, you would know the answer to a lot of your questions if you knew some basic patent law. For example, your response to Flash indicates that you are not familiar with 35 USC 284 (the primary section of the patent act, 35 USC 1 et seq., that deals with damages) or the case law interpreting it. Or you’ve confused an award under 35 USC 284 with an award under 35 USC 285 (award of attorneys fees) or possibly even awards pursuant to Fed.R.Civ.P. 11 or 28 USC 1927.

    The only thing that I’m certain of is that you lack so much relevant legal knowledge that you can’t reliably assess the boundaries of your own ignorance. And that makes your summary of this case harmful: It’s useless to folks who know the law and can only mislead folks who don’t. You might want to ask the question: If I know so little about patent law in general (and this case in particular), can I really have an opinion on it?*

    (I think Blimpy’s too harsh and his comment regarding “patent trolls” is simply wrong: Of course the term is still in use. (I prefer not to use the term because I think it’s obscuring in many cases, but the term is definitely not out of favor.)

    *FTR, I am not expressing an opinion on this case. I don’t know if i4i or Microsoft is in the right. That’s because I know enough about patent law to know that I can’t possibly have an opinion regarding whether the asserted patent claims are good claims or bad claims, or that this result is a good result or bad result, without doing a lot of research …. research that I have no intention of doing.

  14. “I counted 115,000 hits for “ignoramous” and only 47,400 for Ciaran O’Riordan.

    What shall we make of that?”

    Um, that 115,000 people can’t spell “ignoramus”?

  15. I counted 115,000 hits for “ignoramous” and only 47,400 for Ciaran O’Riordan.

    What shall we make of that?

  16. Hey, someone needs to answer.

    yes, it’s based on i4i’s lost revenue. The revenue they lost because MS didn’t license. Which is based on MS sales, because that’s what the royalty in question would have been based on.

    SmallCompany X can write whatever application it likes. Using or selling that application might be patent infringement. But they wouldn’t be liable for another’s use.

  17. Thanks for the replies.

    @Flash: As I understood it, the $40M was for trial misconduct, not in
    lieu of treble damages.

    @James: The “MS should be free to…” sentence isn’t a criticism of i4i, it’s a criticism of software patents. The goal of swpat.org is to document the case against software patents. MS, and i4i, and Apple, and you, and I and the communities that have developed GNU/Linux etc. should all be free to write software without having to ask permission of various patent holders. Patents might work for other fields, but in software they’re a pest. I hadn’t thought that visitors would read such sentences as being anti-i4i …I’ll reread the related pages to see how the point can be made clearer.

    @Blimpy: Google gives 226,000 hits for “patent troll” and just 1,500 for “non-practicing entity”. One problem with the latter is that it’s too narrow. If a nuisance company is making most of their income from litigation and patent threats, they’re usually called a troll. With “non-practicing entity”, a company just has to have a failing/failed product, their effect doesn’t change, but the term doesn’t fit.

    @Blimpy#2: Smaller damages does sound logical, but I haven’t found anything in the official documents to suggest that that would be the case. The amount seems to be based on i4i’s lost revenue, not based on the revenue MS gained. So if SmallCompanyX wrote a free application, and it spread like wild fire and made i4i’s market collapse, losing them the same revenue that MS made them lose, would CompanyX be liable for $66m? $200m? (Surely not, but where is it stated?)

  18. Blimpy: “Most who really understand what they are talking about have abandoned that hackneyed phrase”

    Looks like the resident blog troll is peddling lies again. No surprises there.

  19. blimpy – “the phrase “patent troll.” Most who really understand what they are talking about have abandoned that hackneyed phrase – including the guy who invented the phrase.”

    Ahem. Anything to the notion that the guy who invented the phrase abandoned it because he had become the thing he (aptly) named?

  20. Jeffrey–

    It is more than overreaching to say that the opening is irrelevant–it is just plain wrong.

    Dennis would do well to re-visit the definitions of “relevant” and “probative”.

    Certainly relevant, but perhaps of de minimus probative value.

  21. Dennis, I disagree with your assessment of the Microsoft opening. You are right that the Federal Circuit has previously not considered a co-pending reexamination. But this case has shadows of NTP v. RIM. For better or worse one of the key arguments made by RIM in the court of public opinion that has taken hold is that NTP’s patents are invalid because the PTO is rejecting them in reexam. In retrospect, NTP v. RIM did enormous damage to the reputation of the patent system and the Federal Circuit. I don’t think the Federal Circuit wants a repeat.

  22. Certainly the opening argument carries little weight, but I believe it is overreaching to say it is irrelevant. After all, aren’t all of your irrelevance arguments directed to matters of fact rather than law?

  23. ” ask that question because I’m wondering if a small company had written similar software which unknowingly infringed i4i’s patent and caused i4i’s product to fail, would they be liable for $66m? or $200m? or some lesser sum?”

    If a smaller company had infringed, there would presumably be smaller damages based on smaller sales of the infringing product. (This is why patent law is better left to the experts)

  24. To Ciaran O’Riordan:

    Didn’t you know that only people like Mooney continue to use the phrase “patent troll.” Most who really understand what they are talking about have abandoned that hackneyed phrase – including the guy who invented the phrase.

  25. Ciaran O’Riordan

    I know what Northwater Patent Fund is, who the investors are, etc, but from I read in your wiki and post, you lack a fundamental understanding of patent law and law in general. Additionally, your wiki is quite biased against i4i, with such arguments as MS should be “free to write and distribute software.” Are you suggesting that Microsoft should be granted a perpetual license to infringe all software patents and software copyrights?

  26. Stu Lauck:

    Diamond’s reaction is based on fourth party hearsay he heard on TechDirt and other similar “blogs.” So, no, he can’t explain. He only knows IP = bad because it prevents him from getting free music and software (at least legally).

  27. I don’t think it is quite that obvious. Frankly, no one should have a patent on “reading an XML file”, and the fact that they have such a ridiculous patent granted is the root problem and needs to be fixed NOW.

  28. Anyone know more about “litigation investor Northwater Patent Fund”? (motion pdf p13) I’ll add any info I get here:
    link to en.swpat.org

    And does anyone know how the figure of $200m for damages was reached? i4i requested $98 “reasonable royalties” for each of 2.1 million users of word that might have used custom XML (motion pdf pages 15,16). That’s $200m already – so where’s the triple damages?

    I ask that question because I’m wondering if a small company had written similar software which unknowingly infringed i4i’s patent and caused i4i’s product to fail, would they be liable for $66m? or $200m? or some lesser sum?

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