Microsoft Loses Appeal in Patent Infringement Case, Rushes to Modify Word Software

U.S. Court of Appeals upholds $200 million award to i4i and affirms injunction on future sales of selected versions of Microsoft’s Word.

December 25, 2009

D.H. Kass

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Microsoft Corp. lost its appeal of a jury’s decision that portions of its Word 2003 and 2007 violate a patent owned by Canadian developer i4i Ltd., a ruling that compelled the software giant to immediately remove the disputed technology from those versions of the product.

The U.S. Court of Appeals for the Federal Circuit in Washington, D.C. upheld a jury verdict and affirmed an injunction against Microsoft for infringing on a patent held by i4i concerning technology for editing custom extensible markup language, known as XML.

“We couldn’t be more pleased with the ruling from the appeals court which upheld the lower court’s decision in its entirety,” said Loudon Owen, i4i chairman.

“This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed,” he said. “The same guts and integrity that are needed to invent and go against the herd are at the heart of success in patent litigation against a behemoth like Microsoft.”

Michel Vulpe, i4i founder and co-inventor, said that the developer is “especially pleased with the court’s decision to uphold the injunction, an important step in protecting the property rights of small inventors.”

In 1998, the U.S. Patent and Trademark Office issued patent 5,787,449, to i4i for inventing a method to process and store information concerning the structure of electronic documents, according to a web site run by Leagle Inc.

The case hinged on Microsoft’s inclusion into the 2003 and 2007 versions of Word a custom XML feature framed on i4i’s technology. In August, a jury awarded i4i $200 million in damages, upon which an additional $90 million has since been added in additional damages, and issued an injunction prohibiting Microsoft from selling versions of Word that feature the offending technology.

The court stayed the injunction while Microsoft appealed the ruling.

Microsoft responded to the appellate court’s decision with a statement that it will comply with the injunction, effective as of January 11, 2010. The injunction is binding only on copies of Word sold or licensed after that date.

The software giant appeared to downplay the consequence of the ruling and said that it already has “put the wheels in motion to remove this little-used feature from these products.”

The company said it expects to have available for sale in the U.S. by the injunction date copies of Word 2003 and 2007 without the custom XML feature.

Microsoft said that beta versions of its Office 2010 and Word 2010 do not contain the technology in question.

Microsoft hints at further legal action

Microsoft did not dismiss the possibility of continuing to press the issue.

“While we are moving quickly to address the injunction issue, we are also considering our legal options, which could include a request for a rehearing by the Federal Circuit Court of Appeals en banc or a request for a writ of certiorari from the U.S. Supreme Court,” said Kevin Kutz, Microsoft director of public affairs.

Still, the appellate court’s ruling seemed to leave Microsoft with little room to maneuver.

According to court records, in the specific language of the ruling the appellate court affirmed the “district court's claim construction” and “the jury's findings of infringement and validity.”

The appellate court ruled that the “district court did not abuse its discretion in admitting i4i's evidence as to damages or in granting enhanced damages,” according to court documents.

Customers who bought or licensed Word prior to the injunction date are not affected by the ruling and will be allowed to use the custom XML editor built into Word. Microsoft will be able to provide technical support to those customers.

New customers will not receive support from Microsoft on the custom XML feature.

TAGS: Microsoft,i4i,Word,patent infringement

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