In August, 2009 the U.S. District Court in Marshall, Texas awarded Toronto-based technology company i4i Inc., $290-million (U.S.) from Microsoft Corporation willfully infringing an i4i patent belonging and ordered Microsoft to stop selling its current version of Microsoft Word.

The decision created waves through the technology, business and legal communities, prompting the Court of Appeals for the Federal Circuit to hear the appeal on an expedited basis.

On December 22, the Court of Appeals upheld i4i’s victory and ordered Microsoft to stop selling versions of MS Word that contain an infringing XML editing feature by January 11, 2010.

The David and Goliath battle began in March 2007 when i4i alleged that Microsoft’s use of XML in MS Word 2003, MS Word 2007 and other software in Microsoft’s Office suite infringes U.S. patent No. 5,787,449. After a 7 day trial, a federal jury awarded i4i $200 million dollars in damages. That amount was increased by the judge to reach the $290 million dollar figure.

i4i applied for U.S. patent No. 5,787,449 in 1996 and the patent was issued in 1998. The patent covers computer systems and methods for manipulating the structure and content of a document separately, allowing the content to be presented in different ways by changing only the structure information.

i4i develops software for authoring and submitting pharmaceutical regulatory documents to governmental agencies such as the Food and Drug Administration in the United States, including add-on components for MS Word that allow the structure of a document to be edited independently of its content.

Microsoft has two legal options remaining. The appeals decision was made by a panel of three Court of Appeals judges. Microsoft can ask the entire court to re-hear their arguments in the hope that the other nine judges will see the case differently. Microsoft can also appeal to the Supreme Court of the United States.

Beyond its legal options, Microsoft could remove the infringing features from MS Word or make a deal with i4i.

For the time being, i4i has a stunning victory. As Microsoft’s legal options dwindle, it increasingly appears that i4i will come out on top when the dust finally settles.

Bhupinder Randhawa, B.A.Sc. (Comp. Eng.), J.D., is a member of Bereskin & Parr LLP's Patent Practice Group. He can be reached in either Toronto or Mississauga at 416-957-1630 or brandhawa@bereskinparr.com.