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The U.S. Supreme Court this morning rejected Microsoft’s appeal in a long-running patent dispute with Canadian technology company i4i, turning away an attempt by Microsoft and its industry allies to lower the standard for challenging patents at trial.

Read the Supreme Court’s decision here: PDF.

The decision upholds a $290 million judgment against Microsoft. But more broadly, it means that companies sued for patent infringement will still be required to meet a high bar to prove the patents invalid in their attempts to wiggle out of the suits.

Microsoft’s case against i4i, involving custom XML technology in Microsoft Word, had been closely watched across the industry. The groundrules for intellectual property litigation are becoming increasingly important as technology giants target each other with patent lawsuits in an effort to extract royalties from each other, or to gain competitive advantage.

Under the current legal standard, the evidence to prove a patent invalid needs to be “clear and convincing.” Microsoft had argued that the standard should be a “preponderance of the evidence” — the traditional requirement in civil cases, meaning more likely than not. At trial, the company failed in its effort to prove the i4i patent invalid under the “clear and convincing” standard.

Microsoft released this statement: “This case raised an important issue of law which the Supreme Court itself had questioned in an earlier decision and which we believed needed resolution. While the outcome is not what we had hoped for, we will continue to advocate for changes to the law that will prevent abuse of the patent system and protect inventors who hold patents representing true innovation.”

We’re awaiting comment from i4i.

Update: Q&A: i4i chairman adds up a $290M verdict vs. Microsoft

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