ACRU

Economics and Property Rights at Center of Supreme Court’s Microsoft Case

This column by ACRU Senior Legal Analyst Ken Klukowski was published April 18, 2011 on The Washington Examiner website.

Property rights and economics are at the heart of a Microsoft case that pitted a top Bush lawyer against top Clinton and Obama lawyers in arguments before the Supreme Court yesterday.

Justices heard arguments in Microsoft Corp. v. i4i. At issue was whether i4i’s patent was infringed upon by a feature in Microsoft Word (being used to write this column, ironically).

The case turns on Congress’s language in the 1952 Patent Act, and what burden it places on parties challenging a patent. Although statutory interpretation arguments might not interest most readers, what is interesting are the lawyers involved and the government power at stake.

Bush Deputy Solicitor General Tom Hungar–now a partner at Gibson Dunn–argued for Microsoft. His opponent was Clinton Solicitor General Seth Waxman, representing i4i. Despite Waxman’s formidable stature, the Obama Justice Department wanted to double-team Hungar, securing the Court’s permission to allow Obama Deputy Solicitor General Malcolm Stewart to reinforce Waxman.

Hungar’s argument is a sort that appeals to most judges, especially conservatives. First, the Constitution authorizes patents to promote innovation and prevent economic harm. Second, i4i’s argument isn’t justified by Congress’s words or by Supreme Court precedent. Third, it gives too much deference to government.

This becomes especially important because the trial court instructed the jury to side with i4i unless Microsoft could prove by “clear and convincing evidence” that i4i’s patent was invalid, a task made almost impossible because i4i conveniently deleted the computer source code that it claimed was being infringed by Microsoft.

The normal rule in civil cases is to prove facts by a “preponderance of the evidence,” meaning 51 percent likely or more. So the heightened proof requirement heavily tilts the case.

What was surprising here was the hostility of Justices Ruth Bader Ginsburg and especially Elena Kagan. For example, Kagan began pushing back against one of Hungar’s meticulous page-number citations with “Well, Mr. Hungar… even under your view of the world….” Seems a bit unfriendly for a patent case. It’s not like we’re arguing about abortion.

The only theory I can hazard is that i4i’s argument affords government more power. Either power of the Patent and Trademark Office to grant monopolies, which is a potent economic control, or the power of courts to impose legal requirements not found in the law’s text.

It’s an uphill climb for Hungar to prevail here, because Chief Justice John Roberts recused himself (routine practice if you own stock in a litigating company). This left the always-entertaining Antonin Scalia presiding as the senior associate justice.

The U.S. Court of Appeals for the Federal Circuit held for i4i (and with it government power). A tie vote leaves the lower court’s judgment intact, so a 4-4 split is a loss.

Hungar’s arguments on how to interpret the Patent Act should have resonated with the chief justice (with whom Hungar served during the Bush-41 years). So not being able to get the chief’s vote, Hungar will need to persuade at least one of the liberal justices.

Given the questions he asked, it’s possible that Justice Breyer could side with Microsoft. Breyer seems to relish this sort of case as a fascinating intellectual exercise, hearkening back to his days as a Harvard law professor. Noting the constitutional purpose of patents, he commented, “I can’t work out in my own mind whether in today’s world these first principles cut for the [patent holder] or .”

He’ll work it out eventually, and with it probably decide this case in a battle of legal heavyweights with very different views of government power.