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Tag Archives: Microsoft

Microsoft v. i4i: Snatching Victory from the Jaws of Defeat

Posted in Trial

This post is re-posted from my Retail Patent Litigation Blog — where I write about patent litigation issues specific to retailers and their supply chains — with minor revisions.

Last year, the patent defense bar was disappointed when the Supreme Court refused to lower the standard for invalidating patents based upon prior art that was not considered by the Patent Office.  According to Professor David Schwartz from Chicago-Kent College of Law and Christopher Seaman from Washington and Lee University School of Law, the apparent loss may have actually been a win.  In Microsoft v. i4i Ltd. Partnership, 131 S. Ct. 2238 (2011), Microsoft argued that prior art not considered by the Patent Office should face the lesser preponderance of the evidence standard.  The Supreme Court held that invalidity must be proved  by clear and convincing evidence - the higher standard - whether or not the Patent Office had considered the prior art at issue.  But the Supreme Court allowed that when the prior art had not been considered by the Patent Office, the jury should be instructed that “it has heard evidence that the PTO had no opportunity to evaluate before granting the patent” and to “consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence.”  Id. at 2251.  The decision was largely considered to have maintained the status quo.

Schwartz and Seaman recently released a paper empirically testing what impact the two standards of proof would have versus the Supreme Court’s extra instruction - Standards of Proof in Civil Litigation: An Experiment from Patent Law, Harvard Journal of Law & Technology (Forthcoming 2013).  Schwartz and Seaman provided subjects with a fact pattern and a summary of the parties’ arguments.  Then the subjects were randomly given one of three jury instructions:  1) clear and convincing evidence; 2) clear and convincing evidence with an i4i-type instruction regarding evidence not considered by the Patent Office; and 3) preponderance of the evidence. 

The results were surprisingly good for retailers, and patent defendants generally.  Schwartz and Seaman expected what I would have - that the clear and convincing standard with the extra instruction would act as an intermediate instruction between clear and convincing and preponderance of the evidence.  Here is what the study found:

  • Subjects receiving the preponderance of the evidence instruction invalidated patents more than subjects receiving clear and convincing instructions.
  • Subjects receiving the clear and convincing instructions with an i4i-type instruction invalidated patents at the same rate as subjects with preponderance of the evidence instructions.

Schwartz’s and Seaman’s study suggests that defendants won the i4i case despite losing the preponderance of the evidence argument.  And for those that are inclined to question the validity of Schwartz’s and Seaman’s methodology, they provide extensive grounding for and analysis of the methodology.  Additionally, Schwartz, in particular, has developed a reputation for high-end empirical analysis of patent issues.

What can retailers take away from the study?

  • Your invalidity jury instruction is critical.  Do not let your jury instructions be an after thought.
  • Getting an i4i-type instruction significantly increases your chances of invalidating a patent before a jury.
  • Of course, it is less clear that a judge’s analysis will change upon summary judgment.  Although Schwartz and Seaman did not test this, my expectation is that summary judgment invalidity rates will not change based upon i4i.
  • There is significant value in asserting prior art that was not considered by the Patent Office.
  • The desire for prior art not considered by the Patent Office puts a premium on non-patent prior art searches, like those offered by Article One, among others.

Finally, here is the i4i instruction used by Schwartz and Seaman:

Clear and convincing evidence is evidence that shows it is highly probable that the patent was obvious.  This is a higher standard of proof than a preponderance of the evidence, which means more probable than not.  However, clear and convincing evidence is lower than the beyond a reasonable doubt standard used in criminal cases.

The burden of proving obviousness is more easily satisfied when, as in this case, the prior art on which the claim of obviousness is based was not considered by the Examiner.


Lack of Substantive Allegations Requires Dismissal

Posted in Jurisdiction

Waits v. Microsoft Corp, No. 11 C 7486, Slip Op. (N.D. Ill. Feb. 8, 2012) (Darrah, J.).

Judge Darrah denied plaintiff’s application to proceed in forma pauperis and dismissed plaintiff’s complaint for failure to state a claim. Courts are required to dismiss a complaint when plaintiff seeks in forma pauperis status along with a complaint that fails to state a claim. Plaintiff’s complaint appears to sound in patent, trademarks and copyright. But it was “devoid of any substantive allegations” and, therefore, had to be dismissed.

Northern District’s Ninth Annual Pro Bono & Public Interest Awards

Posted in Legal News

The Northern District of Illinois and Chicago’s Federal Bar Association chapter are hosting their Ninth Annual Awards for Excellence in Pro Bono and Public Interest Service awards program this Tuesday, May 13 beginning at 3:30 pm in the James Benton Parsons Memorial Courtroom (2525) of the Dirksen United States Courthouse at 219 South Dearborn Street. The program is open to everyone and is free of charge.

The keynote speaker will be William Neukom, the President of the ABA and partner in K&L Gates.  Prior to his private practice, Neukom was executive vice president of Law and Corporate Affairs for

Microsoft, where he managed Microsoft’s legal, government affairs and philanthropic


Seven “Awards for Excellence in Pro Bono and Public Interest Service” and one “Special

Recognition Award for Public Interest Service” will be presented to the following Chicago-area lawyers for their pro bono and public interest work before the Northern District:

  • Sara C. Arroyo and Rosa M. Tumialán, of Dykema Gossett PLLC (presented by the Judge Coar);
  • Anthony J. Masciopinto, of Kulwin, Masciopinto & Kulwin, LLP (presented by Judge Manning);
  • Myron Mackoff, of Richardson & Mackoff (presented by the Chief Judge Holderman and Magistrate Judge Valdez);
  • Joshua D. Lee and Amy M. Rubenstein, of Schiff Hardin LLP (presented by the

    Judge Brown);

  • Catherine Caporusso and Margot Klein, of the Federal District Court’s Self-Help Assistance Program (presented by Judge Hibbler);
  • David A. Gordon, Michael B. Nadler, and Kristen R. Seeger, of Sidley Austin LLP (presented

    by Magistrate Judge Schenkier);

  • Lisa R. Kane, of Lisa Kane & Associates, PC (presented by Chief Judge Holderman); and
  • Richard J. Gonzales, Clinical Professor of Law, Chicago-Kent (presented by Chief Judge Holderman).

Eolas v. Microsoft Settled

Posted in Settlement

Eolas Techs. Inc. v. Microsoft Corp., No. 99 C 626 (N.D. Ill.) (Pallmeyer, J.).

Speculation regarding Judge Pallmeyer’s delay of the Eolas v. Microsoft trial is over.  Eolas announced that it settled with Microsoft in a letter to shareholders (available from theSeattle Post-Intelligencer).  No details of the settlement were available, but Eolas told its shareholders to expect a dividend from the settlement of up to $60-$72 per share.  Here is more coverage of the settlement:*

*  As I have explained in previous posts, I will not comment on any news from this case because of my family’s connection to it, but feel free to discuss the case in the comments.

Speculation Re Eolas v. Microsoft Settlement

Posted in Legal News

Eolas Techs. Inc. v. Microsoft Corp., No. 99 C 626 (N.D. Ill.) (Pallmeyer, J.).

Speculation regarding Judge Pallmeyer’s delay of the Eolas v. Microsoft trial is starting in the MSM and on the internet.  The Seattle Post-Intelligencer and the Internetnews.com both have pieces reporting that Eolas and Microsoft are working toward settlement.  Both stories quote a Microsoft spokesperson as saying, "[Microsoft is] in active discussions with Eolas Technologies regarding a possible settlement ."

As I said in my previous posts, I will not comment on any news from this case because of my family’s connection to it, but feel free to discuss the case in the comments.

Eolas v. Microsoft Trial Date Canceled

Posted in Trial

Eolas Techs. Inc. v. Microsoft Corp., No. 99 C 626, Min. Order (N.D. Ill. Jul. 30, 2007) (Pallmeyer, J.).

Late yesterday Judge Pallmeyer entered a minute order striking the Eolas v. Microsoft trial scheduled for this week and setting a status conference for August 30.  As I said in my previous post, I will not comment on any news from this case because of my family’s connection to it, but feel free to discuss the order in the comments.

And thank you to all of you who were interested in guest blogging the trial.  I will get in touch if the trial is rescheduled.  If anyone else is interested email me.

Eolas v. Microsoft Trial Starts Next Week: A Call for Guest Bloggers

Posted in Legal News

Eolas Tech. Inc.v. Microsoft Corp., No. 99 C 626 (N.D. Ill.) (Pallmeyer, J.).

The second Eolas v. Microsoft trial starts Monday, July 30.  The first trial, held before Judge Zagel, was about as close to a media frenzy as patent cases get.  I would love to live blog some or all of the trial.  But I cannot do it because my wife, Laura Donoghue, is a member of Microsoft’s trial team.  However, if one of the Blog’s readers wants to guest blog about the trial, send me an email and we can work something out.  If I do not get a guest blogger for the trial, I will post links to news coverage of the case without any commentary, for obvious reasons.

Keyword Advertising Discussed at INTA

Posted in Legal News

The Chicago Tribune ran a story on the front page of Wednesday’s Business section about the use of trademarks in keyword internet advertising:  Trademark Battlefield.  The story discussed various efforts to stop internet search engines (like those offered by Google, Yahoo and Microsoft) from selling trademarked terms as search keywords.  For example, the story suggested that State Farm, an insurance company, may have purchased the name of its chief competitor, Allstate, from Google.  As a result, if you google "Allstate" Allstate’s websites will come up first in the search results, but in the upper right corner of the search results page, you will see a State Farm ad. 

The story also discussed comments from a Google trademark lawyer, Rose Hagan, during a standing-room-only panel at the International Trademark Association’s ("INTA") meeting on Monday, which was held in Chicago.  Hagan said that Google sells advertising space, not trademarks.  The story also notes that Utah has passed a law which prohibited the use of a competitor’s trademarks as advertising keywords.  For more on the Utah law, check out Eric Goldman’s Technology & Marketing Law Blog (via Marty Schwimmer’s Trademark Blog).  The Utah law and the various lawsuits against Google, Yahoo and Microsoft on this issue are all evidence that this is a very unsettled area of trademark law.  A Yahoo attorney, Laura Hauck Covington, explained that "[w]e’re all trying to find the right, reasonable balance for the owners of trademarks, consumers and advertisers."

Use of Logos Does Not Trigger Advertising Insurance Coverage

Posted in Legal News

Global Computing, Inc. v. Hartford Cas. Ins. Co., No. 05 C 6753, 2007 WL 844618 (N.D. Ill. Mar. 14, 2007) (Hibbler, J.).

Judge Hibbler granted defendant-insurer summary judgment that it had no duty to indemnify or defend plaintiff-insured.  Microsoft brought suit against plaintiff alleging that plaintiff distrbuted counterfeit Microsoft software and used Microsoft logos in its advertising for the software, thus infirning Microsoft’s copyrights and trademarks.  Plaintiff tendered the claim to defendant, its insurer, but defendant refused to defend plaintiff stating that its policy did not cover Microsoft’s allegations.  After settling with Microsoft, plaintiff brought the instant suit alleging defendant breached its duty to defend and indemnify.  The Court noted that by refusing to defend, defendant estopped itself from denying coverage for policy reasons if it breached its duty to defend.  But because Microsoft’s alleged infringement of its copyrights and trademarks (which were exempted from coverage), instead of the use of Microsoft’s advertising ideas, the suit was not covered by the insurance policy.

Reading the Tea Leaves: Microsft v. AT&T Oral Arguments

Posted in Legal News

The big news in patent law this week is the Supreme Court oral argument in Microsoft v. AT&T.  Microsoft exports software from the United States to various countries.  The software code alone cannot infringe AT&T’s patents until it is combined with the hardware, which only occurs after the software has left the United States.  So, exporting the software is not an act of infringement.  The issue, therefore, is whether, pursuant to 35 U.S.C. Section 271(f), exporting the software constitutes:

suppl[y] . . . from the United States . . . [of] all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States,” as well as the “suppl[y] . . . from the United States [of] any component of a patented invention that is especially made or especially adapted for use in the invention.

For more on the issues, you can find the briefs at Patently-O

The case has received substantial media attention both because it was granted cert and because the case could have effects far beyond the international exportation of software.  The oral arguments were interesting (transcript here) and both the main stream media and blogs are frantically reading the tea leaves.

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