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Analysis: Microsoft battles it out for last Word



Sorry - billy's analysis at last for MondayA tiny company in Toronto is threatening to bring a lucrative part of the Microsoft ecosystem to a grinding halt after winning a permanent injunction to halt the sale and distribution of the software giant’s Word and Office packages in the US from October onwards.
 
The injunction was granted to i4i by the US District Court for Eastern Texas on 11 August, which also levied fines of $290m (£175m) against Microsoft, after finding it guilty of willfully infringing a patent held by i4i. 
 
The patent governs software designed to manipulate “document architecture and content”. The injunction covers all Microsoft Word software that opens .XML, .DOCX or DOCM files containing custom XML.   

Microsoft to appeal
It did not take long for Microsoft’s lawyers to frame a retort, filing an emergency motion to stay the injunction on 14 August pending an appeal. 

Responding to Microsoft’s motion, Loudon Owen, Chairman of i4i, said, “[It was] fully expected given the significance of the case and the flagship status of Microsoft Word to the defendant. i4i will continue to vigorously enforce its patent. We firmly believe the jury verdict and judgment were fair and correct and we have been vindicated through this process.” 

In their motion, Microsoft’s lawyers attempted to outline the scale of the threat to the company and its partners if the injunction goes ahead, arguing it would be “irreparably injured by an injunction that has the potential to remove its flagship product from the market for months”.

They also pointed to the “hardship” the public would face “if the ubiquitous Word and Office software is absent from the market for any period” and the “massive disruption” in sales for partners such as Best Buy, HP and Dell. 

In his judgment, Judge Leonard Davis quoted Microsoft claims that redesigning current and upcoming Word products was “an enormous task” and that it could take five months “to re-release the currently infringing products”. But he was adamant the problem was of Microsoft’s own making. 

“Regardless, Microsoft has not presented any evidence on alternative methods for compensating i4i for its previous and ongoing loss of customers, market share, and brand recognition. While Microsoft concedes it has the ability to comply with an injunction encompassing i4i’s proposed language, i4i will be continuingly injured without it.” 

Legal errors
Microsoft’s lawyers claimed it was “expending enormous human and financial capital to make its best effort to comply with the district court’s 60-day deadline”, but suggested there was no point in going ahead with the injunction as the appeal was likely to succeed “because the district court committed numerous legal errors”. 

Microsoft’s appeal raised “a substantial question as to the validity” of i4i’s patent, pointing to the disclosure of two SGL editors in the late 1980s and early 1990s as instances of “prior technologies that did precisely what i4i contends the ’449 patent did”.

The Patent Office, which was unaware of the prior art references “has now provisionally concluded that the ’449 patent is invalid”. Microsoft’s lawyers argue that ordering re-examination of the patent suffices to raise a substantial question of invalidity that warrants a stay. 

But Judge Davis had already concluded that Microsoft’s arguments are without merit. “The simple fact that a re-examination decision has been made by the PTO is not evidence probative of any element regarding any claim of invalidity,” he said. 

He also highlighted that Microsoft had been made aware of i4i’s patent in 2001. “Despite this, Microsoft did not present any evidence (or argue to the jury) that it ever conducted any investigation regarding the patent or i4i’s products.”

An e-mail from Martin Sawicki, a member of Microsoft’s XML for Word development team, to a fellow employee in January 2003 stated, “We saw [i4i’s products] some time ago and met its creators.” The e-mail confirms Microsoft’s awareness of the ’449 patent, its relationship to i4i’s products, as well as Microsoft’s intention to implement similar capabilities in Word.”

If the injunction is overturned, Microsoft’s lawyers will definitely earn their corn on this one.

This was first published in August 2009

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