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Yes, Really: A USA Judge Gives Microsoft 60 Days to Stop Selling Microsoft Word and Pay US$290,600,000 Damages to Canadian Company, i4i Inc.

August 12, 2009

A judge on Tuesday ordered Microsoft to stop selling Microsoft Word products in their current form in the U.S., but legal appeals or technical work-arounds make an actual halt of sales unlikely.

The U.S. District Court for the Eastern District of Texas gave Microsoft 60 days to comply with the injunction, which forbids Microsoft from selling Word products that let people create custom XML documents, according to i4i. The ruling, which also includes additional damages Microsoft must pay, are related to a patent infringement suit filed by i4i.

Microsoft allegedly infringed on i4i U.S. patent number 5,787,449, which deals with a method for “manipulating the architecture and the content of a document separately from each other”.

The most common versions of Word on the market now, 2003 and 2007, both allow users to create custom XML documents.

Microsoft did not reply to questions about the affect the injunction will have on it and its ability to sell Word in the U.S. In a statement it said it planned to appeal the verdict.

An appeal could stay the injunction but even if the injunction stands, Microsoft could potentially strip the functionality from Word or possibly build a work-around.

The ruling is unlikely to affect anyone any time soon, said Michael Cherry, an analyst with Directions on Microsoft. “It’s going to take a long time for this kind of thing to get sorted out,” he said.

Custom XML allows people to create forms or templates such that words in certain fields are tagged and then can be managed in a database, said Loudon Owen, a spokesman for i4i. Large companies and government agencies, for example, might create such templates.

I4i’s patent covers technology that lets end users manipulate document architecture and content.

In a March 2007 suit, i4i charged Microsoft with willfully infringing its patent. Earlier this year, a jury in the Texas court ordered Microsoft to pay i4i US$200 million for infringing the patent.

Owen said that if the injunction stands, end users who use custom XML in Word will have to find another way to create templates. “Hopefully you’re going to call us because our intention is to support custom XML,” he said.

The judge also ruled that Microsoft should pay an additional $40 million for willful infringement of the patents and over $37 million in prejudgment interest. Full list below:

  • $200 million in damages for infringing the i4i patent;
  • $40 million in “enhanced damages” for Microsoft’s “willful infringement”;
  • $11.8 million in post-verdict damages, calculated from the May jury verdict through yesterday;
  • $38.8 million in pre-judgment interest.
  • The grand total comes to $290.6 million.

    So, in conclusion:

    It sounds like a joke. But, it’s real and it’s anything but a joke for Microsoft. Judge Leonard Davis, of the U.S. District Court for the Eastern District of Texas, has issued an injunction (PDF Link) that “prohibits Microsoft from selling or importing to the United States any Microsoft Word products that have the capability of opening .XML, .DOCX or .DOCM files (XML files) containing custom XML.”

    Microsoft had been sued by i4i, a collaborative content solution and technology company. Its founder, Michel Vulpe, owned a patent covering a way of reading XML (Extended Markup Language) documents. XML is the basis of Microsoft’s controversial Open XML document formats. The U.S. District Court for the Eastern District of Texas is infamous for supporting patent lawsuits and fast-tracking them. In intellectual property law circles, this Court has become known as “A Haven for Patent Pirates.”

    In this case, though, i4i isn’t a patent troll. It’s a real company that uses its patented technology in real products. It also believes that Microsoft has used its patent in Word. And, what’s to the point, they convinced Judge Davis of this.

    On May 20th 2009, Judge Davis and his court’s jury ruled that Microsoft owed i4i a $200 million patent infringement verdict for having infringed on i4i’s “A system and method for the separate manipulation of the architecture and content of a document, particularly for data representation and transformations,” patent # 5787449.

    Microsoft didn’t settle. Boy, was that a mistake.

    As lawyers who have dealt with Judge Davis before know he doesn’t suffer fools lightly. So on August 11, he signed the order that blocks Microsoft from selling Word. According to the document, “This injunction becomes effective 60 days from the date of this order.”  So, on or about October 12th, Word, and Microsoft Office since all versions contain it, will go off store shelves.

    Some people, like Michael Cherry, an analyst with Directions on Microsoft, don’t think that Microsoft will have to stop Word sales. Sorry. Microsoft may very well have to stop sales or disable Open XML, Word’s new standard document format. This injunction will not be easy to dodge.

    Nick Eaton at SeattlePI reported that, Microsoft wants to fight this out. Eaton wrote that Microsoft spokesman Kevin Kutz said, “We are disappointed by the court’s ruling. We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid. We will appeal the verdict.”

    Good luck with that Microsoft. No, I’m not being sarcastic.

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    2 Comments leave one →
    1. August 12, 2009 5:11 PM

      Why doesn’t MS just buy out the company. That would solve everything I think, and my guess is that I4i is not that big of a company. I’m sure that MS could handle afford them. BTW While Microsoft quality is bad, I do not like seeing them incriminated for Anti-Trust type situations when Apple is 10 times worse.

      • August 12, 2009 5:51 PM

        Exactly! Same thoughts here! But I’m sure that i4i doesn’t want to sell and probably is bigger than you think.

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