Bill Gates reportedly once said that “Intellectual property has the shelf life of a banana.”

It’s easy to see why he feels that way. Microsoft files numerous patent applications each year. If one of them doesn’t work out or is outdated by the time it comes to market, there is always another bunch of bananas that haven’t spoiled yet.
One patent is unlikely to make a huge difference for a company like Microsoft.

Individual inventors rarely have that luxury. For them, a single patent application may represent the sum total of a life’s work and fortune. They might spend years developing, refining and testing a single idea. They must consider very carefully before committing their financial resources in the form of filing fees and development costs.

An inventor’s worst nightmare is to use all of their resources patenting and bringing an idea to market, only to have the patent invalidated after the fact.

This point was proven when Microsoft recently argued, and lost, an important case in front of the Supreme Court. In their ruling, the justices refused to reverse a long-standing precedent in patent law, and in so doing, the court protected the rights of small companies and individual inventors.

The case was brought by a small Toronto-based company named I4I. I4I challenged Microsoft’s decision to include pieces of software, to which I4I held the patent, in Microsoft Word. The lower courts initially awarded a $290 million verdict to compensate I4I for Microsoft’s infringement of the patent.

However, Microsoft appealed the decision. Their argument hinged upon the allegation that I4I had used the software in a published product of its own over a year before applying for the patent.

As Bill Gates said so eloquently, new technology can spoil quickly. While the details were disputed, I4I may have feared that their intellectual property would be worth less if they waited. So before fully developing it, they used some preliminary ideas in their own software.

In this case, Microsoft alleged that that I4I’s sale of its software more than a year before filing for a patent invalidated the patent and exonerated Microsoft’s infringement. I4I countered Microsoft’s claim, saying that while it was true they released a piece of software that had elements of or similarities to the patent they ultimately filed, there were also major differences, and those differences meant that the patent they filed was based on new technology.

For decades, courts in the United States have required “clear and convincing evidence” to invalidate an issued U.S. patent. Microsoft sought to change all of that by asking the court to adopt a lighter standard. The standard, which would have required merely a “preponderance of evidence” would have made it easier for Microsoft to invalidate I4I’s patent, and thus escape paying over $290 million in compensation to the company.

The Supreme Court got this one right for a few reasons. First, the court correctly pointed out that the ball really is in Congress’ court. Clear and convincing evidence has been the burden of proof to invalidate a patent both before and after Congress passed the law noting that patents are “presumed valid” in 1952. If the standard is going to be changed, it should be changed by Congress.

Second, patent applications undergo an always long, and often rigorous, approval process to make certain that they are valid. Invalidating the patent without an equally rigorous process would greatly diminish their value. It would place an undue burden upon inventors, especially in a 21st-century economy that demands innovation and invention at a rapidly increasing rate.

Lastly, the court’s decision affirms that even the largest and most well-financed corporations with the best legal teams cannot always get away with patent infringement. It sends a signal to small companies that they can and should continue to innovate, file patents and defend their intellectual property.

Bill Gates was onto something when he pointed out that intellectual property has a short shelf life. That is exactly why it is important to protect the patent claims of small companies and individual inventors.