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David Whups Goliath in Patent Infringement Suit


Small business advocates hailed last week's U.S. Supreme Court ruling against Microsoft in a multi-million-dollar patent infringement suit as a victory for small business patent protection. The unanimous ruling requires the software giant in Redmond to pay $290 million to i4i, a small hi-tech company in Toronto.

The case began in 2007 when i4i sued Microsoft for including the smaller company's XML editing technology in Microsoft, a technology on which i4i holds the patent. XML deals with metadata; the technology involves ways of representing and storing information about files and documents. (At its largest, i4i had 100 employees; it scaled back after the tech bubble burst.)

Microsoft lost in 2007 and again in 2009 and appealed twice, but lost both times. The U.S. patent office also refused to re-examine the patent. The Supreme Court hearing was Microsoft's last chance.

A number of tech firms filed briefs with the court supporting Microsoft, while a number of venture capital firms, the U.S. government and the National Small Business Association (BSBA) sided with i4i,

When the final verdict came down June 9, the NSBA hailed it win for all entrepreneurs, innovators and small businesses.

"The Supreme Court took a firm stand that small-business innovation, patents and property rights mean something, Keith Ashmus, past chair of the NSBA and co-founder of the law firm Frantz Ward in Cleveland, Ohio, who crafted NSBA’s brief in support of i4i. "It still will take solid proof to undermine a patent. "

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, the NSBA said.  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.