News Item
i4i versus Microsoft - i4i awarded in excess of $290m
24 August 2009
On 19 August 2009, the United States Court of Appeals for the Federal Circuit, ordered an expedited hearing of the appeal of the high profile case i4i v. Microsoft from the United States District Court for the Eastern District of Texas. This follows the 11 August decision by the District Court which found that Microsoft had infringed i4i's patent. The judgment awarded i4i in excess of $290m and included a permanent injunction to come into effect on 10 October 2009.
Background
In 2007, Canadian company i4i initiated proceedings in the US District Court for the Eastern District of Texas on the basis that Microsoft had knowingly and wilfully infringed i4i’s patent relating to XML (extensible mark-up language), which facilitates text formatting and file readability. The patent was granted in 1998 with the result that the alleged infringing use covered Word 2003, Word 2007 and Windows Vista. Many intellectual property litigants view the Texan Court as fast-acting, extremely user-friendly to plaintiffs and generous when it comes to damages. The Court appears to have lived up to this reputation on this occasion.
In May of this year, a jury found that Microsoft had indeed infringed the patent and awarded i4i $200m. Then, on 11 August, the Texas district court judge found that the patent was valid and confirmed the $200m damages award. He also ordered Microsoft to pay $40m enhanced damages due to the wilful nature of the infringement, post verdict damages of $144,060 from 21 May until the date of judgment, pre-judgment interest of $37,097,032 up to 20 May and $21,102 per day thereafter up until the date of judgment. This brings the total sum imposed to over $290m. Under a separate order, the judge issued an injunction preventing Microsoft from selling in or importing into the US any version of its software able to open custom XML files. Microsoft was given 60 days to comply.
Microsoft’s response
Microsoft has filed an emergency motion to stay the injunction pending its appeal. In that filing it cited the likelihood that its appeal will succeed, the difficulty it will face complying with the 60 day time limit and the irreparable damage to Microsoft and its customers which will occur if it effectively pulls the plug on these flagship products. This stay application is expected to be heard some time in September.
The wider implications
While detractors of multinationals and their practices have been trumpeting this decision as a victory for the little guy, others have doubts that Microsoft will really have to pay the ultimate price. They suggest that i4i’s patent is vague and wide and draw attention to Microsoft’s own patent covering its use of XML, awarded earlier this year. This patent is more specific, directly relating to Word’s use of XML, and might, if integrated into Word, allow Microsoft to circumvent i4i’s patent. They also suggest that Word is just too significant to be allowed to fail. In any case, the parties may yet come to the table and thrash out the terms of a mutually beneficial licence.
Others are concerned that, if this decision is upheld and emboldens i4i to continue asserting its rights, it might take similar action against the XML-based OpenDocument Format, an open-source alternative.
The full ramifications of this dispute have therefore yet to be played out.
For more information contact Simon Portman at sportman@marks-clerk.com.