Supreme Court Ruling Protects Small Businesses
June 10, 2011

In an important victory for innovative small businesses throughout the U.S., the Supreme Court announced last week their ruling in favor of i4i—a small high-tech company—in their patent infringement suit against Microsoft. The unanimous ruling requires Microsoft to pay i4i $290 million.

 

The case originated in 2009 when i4i sued Microsoft citing the inclusion of i4i-invented XML editing technology in Microsoft Word—a technology on which i4i holds the patent.

 

“The win for i4i is a win for all entrepreneurs, innovators and small businesses,” stated NSBA Past Chair Keith Ashmus, co-founder of Frantz Ward, LLP in Cleveland, Ohio, who crafted NSBA’s amicus brief. “The Supreme Court took a firm stand that small-business innovation, patents and property rights mean something. It still will take solid proof to undermine a patent.”

 

NSBA took special interest in the issue and even filed an amicus brief with the court on behalf of i4i. NSBA member and i4i chairman Loudon Owen responded to the ruling by stating that, “"It is one of the more important business law decisions made by the Supreme Court in decades…”

 

The key issue surrounding the Supreme Court case, and preceding federal and U.S. district court cases was the proof required by Microsoft to invalidate i4i’s rightful ownership of the patent on the XML technology. Microsoft attorneys argued the standard of proof should be lower than what was applied by the lower courts under their precedent. Fortunately, the Supreme Court rejected Microsoft’s argument in ruling for i4i.


The decision, written by Justice Sonia Sotomayor also pointed to laws passed by Congress, stating, "...Not once, so far as we (and Microsoft) are aware, has it even considered a proposal to lower the standard of proof…Any recalibration of the standard of proof remains in its hands."

 

“Siding with Microsoft would have significantly undermined patent protections for small businesses.” stated NSBA President Todd McCracken. “Thankfully, the Supreme Court agreed with i4i and NSBA in asserting that a patent shouldn’t be challengeable by any company with enough cash and drive to do so.”

 

Small-patenting companies produce five times as many patents per revenue dollar as large-patenting companies and 20 times as many as universities—and more small-business innovations are commercialized. According to the U.S. Small Business Administration, small-entity patents cover more original and broader technologies than large-patenting firms, as their measured impact level across downstream technologies is broader than that of large-entity patents. Small-business patenting entities also are more likely to develop emerging technologies than large firms.  

What small businesses don’t have is money to fund lengthy patent litigation.

 

Despite Microsoft having the support of various corporate giants, i4i had the U.S. government and more than 171 other businesses and groups—including NSBA—on its side arguing in favor of fairness and the protection of small business property rights.

 

Click here to read the Supreme Court's ruling.

 

Click here for more on NSBA’s efforts on patent reform and to read the Amicus Brief.