It has been reported by ZDNet and many other news outlets that Microsoft lost its appeal to the United States Supreme Court and will now have to pay i4i the sum of $290 million dollars. While many have been quick to say Microsoft came out the loser in the transaction, even though the amount is practically pocket change, I’m not so sure Microsoft is the only loser.

In the appeal, Microsoft did not argue that they were not guilty of infringing on the patents of i4i, Microsoft argued that that the courts should adopt a lower burden-of-proof bar for patent violations. However, the Court reaffirmed the concept that accused patent violators must show “clear and convincing” evidence that the patent is invalid.

The strongly worded reaffirmation of the “clear and convincing” concept could have repercussions in future patent cases where companies are claiming to have patent rights for what many would consider dubious technology. We are already seeing individuals and companies claiming to have patented everything from podcasting to human genes.

Many would like to see the courts adopt the less-stringent “preponderance of evidence” doctrine which would help with the invalidation of bad patents. (Detailed information of bad patents can be found on the Public Patent Foundation.)

The patent system is, to put it succinctly, broken. Too many companies are being granted patents that have no basis being granted and then suing or threatening to sue other companies for “infringing.” This trend has got to stop. The hostile environment created by these frivolous patent claims and the resources required to address them are a detriment to continued innovation.

What do you think? Do you consider the multitude of bad patents and the litigation it spawns to be bad thing? Do you think we need reforms? Do you think the current patent system encourages or stifles technological innovation?