i4i is the Toronto-based software company that defeated Microsoft at the US Supreme Court in a recent David-vs.-Goliath decision. On June 9, America’s highest court unanimously upheld an earlier ruling that found Microsoft guilty of patent infringement pertaining to Extensible Markup Language (XML) in its Word software. The court demanded that Microsoft pay $290 million to i4i.
A solid fence defines what is mine and what is yours. As Peruvian economist Hernando De Soto Polar has established, no society will prosper without property protection – and without an information framework (such as a patent office) that reliably records ownership of property.
As you read this, U.S. and Canadian judges are contemplating a $4.5 billion cash bid from a consortium that includes Apple and RIM for patents held by bankrupt Nortel. This represents $4.5 billion of value, as the free market defines value, in ideas and creativity. These are ideas that might never have surfaced but for the existence of robust property law protection.
The outcome of the i4i case was Goliathan in its impact for innovators in Canada around the globe who bang on the door every day of the US Patent and Trademark Office with new ideas to change the world. The process of filing a formal patent in the US patent office and the ensuing back-and-forth exchanges with the patent examiner can be arduous – and expensive in time and legal fees.
If Microsoft had won this case, the amount of money entrepreneurs spend on lawyers would balloon. The main legal question at stake was this: Microsoft wanted to change the standard of evidence proving a patent invalid – from “clear and convincing” to “preponderance of the evidence.” This change would have heralded entrepreneurial angst: the prospect of always feeling like your property is insecure would intimidate entrepreneurs considering property rights protection for their inventions.
How does i4i affect healthcare innovation?
People concerned about healthcare innovation as an engine of human health and wealth generation should applaud Loudon Owen, i4i’s tireless Chairman in this historic legal battle. Consider just two patents that have generated royalty revenues and saved lives: Dr. Harry Jennings’ vaccine for group C meningococcal meningitis; and Dr. Stanley Zlotkin invention of Sprinkles to reduce anemia. Do we want to live in a society that makes it easier for mega-companies with deep pockets to pay lawyers to challenge these types of inventions? The US Supreme Court thankfully said ‘no’.
Many of us in the innovation chattering class like to bemoan the lackluster innovation performance in Canada (and in America, outside Silicon Valley). But we often fail to get concrete with suggestions over how to make things better.
When I think of innovation powerhouses in any sector – technology (IBM); healthcare (Mayo Clinic); consumer goods (Proctor & Gamble) – I think of companies with an embedded, formal innovation process that gives employees space to conjure up new ideas and helps staff objectively consider what aspect of their inventions can be patented and whether commercial value lies therein. Organizations such as Grand Challenges Canada have recognized this, which is why they support scientists in endeavors to commercialize solutions that improve global health.
If we have confidence that our property rights will be protected once we invent something to change the world, we’re going to be more willing to spend resources and time to pursue property protection. So the next time you consider filing for a patent, remember: we are all i4i.
This content was originally published here.