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Weekly Web Watch: The Patent Dispute to End All Patent Disputes


The Supreme Court will decide Microsoft v i4i LP, a case that pits top technology companies against pharmaceutical firms.

Microsoft's (MSFT) lawyers are arguing to the Supreme Court this week that U.S. patent law places too high a burden on business by requiring a defendant to provide clear and convincing evidence that a patent claim is invalid. It's a case that has pitted some of America's premier technology companies against Big Pharma, with huge implications for both, not to mention for the next generation of garage inventors and hopeful entrepreneurs.

Microsoft's allies in the case include Apple (AAPL), Google (GOOG), Cisco Systems (CSCO), Intel (INTC) and Facebook, as well as some financial services institutions and wireless providers.

On the opposing side are brand-name drug makers, represented in the case by a trade group. They fear that their patent protections would be weakened by a lowering of the standard of proof. The U.S. Justice Department also is arguing against Microsoft, on the grounds that a lower standard would make it easier to overturn the decisions of a government agency, the U.S. Patent Office.

At the heart of the case is a $290 million ruling against Microsoft in a patent infringement suit brought by a tiny Canadian firm, i4i LP, which accused Microsoft of using a process it patented as part of its Microsoft Word program. Microsoft argued unsuccessfully that the process was already in wide use when the Canadian company was awarded the patent.

It sounds like legal hair-splitting, but Microsoft essentially is arguing that the "preponderance of evidence" was on its side. A lower court ruled that it needed "clear and convincing evidence." That higher standard has been followed by U.S. courts since 1934.

The court's decision in Microsoft v. i4i LP is expected to be announced in late June. Only eight justices will vote on the case. Chief Justice John Roberts recused himself because he owns Microsoft stock.

In Brief:

Apple Boosts Square: In the race for a share of the mobile payments industry, one contender, the startup Square, just landed a coveted spot in Apple's retail stores. Square's iPhone and iPad apps allow merchants to process credit card transactions with a card-swiper that plugs into the device. Square charges 2.75% per transaction.

Square's apps for Apple and Android devices have been available since May 2010. The company was co-founded by Jack Dorsey, who also co-founded Twitter.

Meanwhile, Google is working with MasterCard (MA) and Citibank (C) to embed mobile payment technology on Android phones, according to

Other competitors in the mobile phone payments field include MobilePay and eBay's (EBAY) PayPal. A joint venture of Verizon (VZ), AT&T (T) and T-Mobile is coming next year.

Facebook Mines For Gold:
Is anybody really shocked by this? If you're on Facebook, and your profile says you're a Bon Jovi fan, and you "like" stories about Bon Jovi, you will start seeing ads for Bon Jovi fan sites. "Facebook is reading my profile, my interests, the people and pages I am 'friends' with, and targeting me," a creeped-out fan tells The Los Angeles Times.

Apparently, Facebook is only lately fully collecting and exploiting the bottomless gold mine of data that people pour into the site about their interests and "likes." Users are finding that their most casual posts can get tagged with an ad minutes after they post it.

Manna for marketers, of course. But the better Facebook gets at it, the less some users like it. One privacy watchdog calls it "stealth digital surveillance."

Still-private Facebook does not release revenue figures, but "people familiar with" the company's finances tell the newspaper that its ad revenue doubled to $2 billion in 2010. That would be a nice chunk of the overall $26 billion Internet advertising expenditure for the year. Detailed data, such as "click-through" rates, are unknown.

More Aggro For MySpace: Facebook at least isn't accused of turning over the identities of its users along with information on their online activities. In a new class-action lawsuit, NewsCorp's (NWSA) MySpace is accused of sharing data that include members' unique ID numbers, which can be traced back to identify them by name. The Wall Street Journal notes that Facebook was accused of this practice last year, and stopped it pronto.

MySpace is up for sale. The company refused to comment.

Busted: Last week's surprise FBI raid on online poker sites netted only 11 arrests of the owners of three sites. But it seems that the abrupt disappearance of Full Tilt Poker, Absolute Poker and PokerStars is having broader implications. A whole industry had grown up around online poker, according to The Wall Street Journal. Celebrity players, bloggers, personal poker coaches and television shows all are out of business overnight, not to mention many under-employed people who made poker a Sunday second job.

Or maybe not. A smaller poker site that wasn't part of the sting showed a 21% rise in player numbers on Saturday.

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