Toronto-based i4i Inc. sued the Redmond, Washington-based Microsoft in March 2007, claiming that some versions of popular Word software violated patent rights it held to XML technology.
In December 2009, a US Court of Appeals upheld a jury verdict and lower court ruling in the case, ordering Microsoft to pay over $290 million in damages to i4i.
Microsoft was accused of infringing on a 1998 XML patent in its Word 2003 and Word 2007 programs. Word uses XML, or Extensible Markup Language, to open .XML, .DOCX, and .DOCM files.
Microsoft had wanted defendants in infringement cases to be able to prove a patent invalid by showing a "preponderance of evidence," rather than the tougher standard of "clear and convincing evidence" to which it was held.
The Supreme Court disagreed and unanimously upheld the appeals court ruling on Thursday.
In a statement following the ruling, Microsoft said it would continue to seek to change the law.
"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," he said.