Legal News

Ban on Microsoft Word, $290M Fine to Hold, Fed. Cir. Rules

By Ashby Jones

Technology Davids have reason to feel buoyed on Wednesday, as one of their own has landed a blow against Microsoft, for decades an undisputed software Goliath.

The Federal Circuit on Tuesday affirmed a $290 million patent-infringement judgment against Microsoft. The panel will also bar the Softies from selling current versions of Word, its nearly ubiquitous word-processing program. (But fear not, Word lovers. Microsoft said it has been preparing modified versions of the affected programs that should be ready when the injunction goes into effect on Jan. 11, allowing sales to continue without interruption. It also doesn’t affect already-sold copies of Word. Click here for the WSJ story on the ruling, by reporters Brent Kendall and Don Clark. Click here, here and here for earlier LB posts on the case.

After the jury verdict, rendered in favor of i4i Inc., a Toronto-based technology company, Texas federal judge Leonard Davis issued a permanent injunction that barred Microsoft from selling Word 2003 and Word 2007, versions of the product that use a technology called “Custom XML” that is used to classify documents for retrieval by computers. Judge Davis also ordered Microsoft to pay more than $290 million in penalties.

Earlier, Judge Davis hit Microsoft with a $40 million fine, based partly on the conduct of Microsoft's lawyer, Weil Gotshal's Matt Powers.

As Kendall and Clark astutely point out the nuances of the debate on injunctions in infringement actions:

A landmark Supreme Court ruling in 2006, in a case involving eBay Inc., reversed precedents that had virtually guaranteed patent holders could receive injunctions.

I4i’s case for an injunction, however, was bolstered by the fact that it sells software products based on its patent, unlike some patent holders who don’t practice their inventions and instead use them to seek licensing fees from others.

Kevin Kutz, a Microsoft spokesman, said Tuesday that it had been preparing for the ruling, and had “put the wheels in motion” to remove what it called the little-used Custom XML feature from Word 2007 and Office 2007, the current suite of products that includes Office.

Meanwhile, the company is considering its legal options, including the possibility of asking the U.S. Supreme Court to review the ruling, he said.

I4i’s chairman, Loudon Owen, said in a statement that the company “couldn’t be more pleased” with the ruling. “This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed,” he said.

Full post as published by Law Blog - WSJ.com on December 23, 2009 (boomark / email).