CAFC Upholds Huge Fine; Injunction Against Selling Microsoft Word

from the does-mercexchange-mean-nothing? dept

Another example of how the patent system is being used to hinder, rather than help, innovation. While we’re no fans of Microsoft’s view on patents these days, that doesn’t mean we approve of ridiculous lawsuits against the company either. The one that got all the attention this year was a tiny Canadian startup, i4i, that claimed a patent (5,787,449) on editing an XML document, and then sued Microsoft and won (in Texas, of course). Not only did the company win, but the court ruled that Microsoft owed $98 per copy of Microsoft Word for this minor feature. On top of that, the court issued an injunction saying Microsoft could no longer sell Microsoft Word with this feature. Given the MercExchange ruling that said that injunctions don’t always make sense in patent cases, it was hard to defend such an injunction as being necessary.

But… never let common sense get in the way of how the judicial system works when it comes to patents. The appeals court (CAFC) has now upheld the lower court ruling, requiring Microsoft to pay the $290 million and bars further sales of any copy of Microsoft Word with this feature as of January 11th. Microsoft’s response is that it will simply remove this “little-used” feature. So this feature is rarely used, and yet it’s worth $98 per copy of Word sold? How does that make sense?

Meanwhile, the tiny Canadian company is thrilled. It just made hundreds of millions of dollars for stating the obvious. And, rather than encouraging innovation, it’s forcing a company to remove features. How is that innovative? How does that do anything at all to “promote the progress”? While some Canadian law professors might like to make up facts as to why these types of rulings make sense, I’m still at a loss as to how progress has been promoted here.

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Companies: i4i, microsoft

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Comments on “CAFC Upholds Huge Fine; Injunction Against Selling Microsoft Word”

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39 Comments
Anonymous Coward says:

I believe that the judgment was so high as to include punitive damages. Thus, it was not likely calculated as $98 per copy of Word, but at a smaller amount per copy, and a larger amount in order to punish Microsoft such as to deter them (and other large companies) from engaging in such behaviour in the future.

Microsoft had approached i4i and was interested in their custom XML for searching documents quickly. After seeing the results of how i4i’s product worked, Microsoft went off and simply added it to their own existing product. There may have even been some allegations of direct copying of code, I do not remember.

Then, Microsoft on numerous occasions refused to license the functionality from i4i. Internal Microsoft emails brought to light during the trial indicated that Microsoft was aware of these details, and that they had intended on simply squashing the smaller company i4i, as they were much larger.

Just for the record, I do not believe that software should be patentable. At home, (where I have control over the software I use) I only use FOSS. However, if the system allows for software to be patented, then i4i was within their rights to defend their product.

If i4i were simply a patent troll, as is often assumed, they would have attempted to pursue legal suits against OpenOffice and other products that are similar. However, instead, they have publicly announced that they have no intention of doing so.

Norm (profile) says:

Re: Re:

I entirey agree with your assesment of M$’s actions, but there is a problem.

Microsoft duplicated i4i’s product in Word 2007. i4i is not a patent troll, the copied product was originally created for Word 2000 and is not the only product that they offer.

The problem lies in the patent itself. The patent itself is not a description of the duplicated functionality. It is, in fact, an overly broad patent covering the separation of a documents content from its structure, in other words, parsing XML.

I believe that what actually happened is that M$ (in their typical fashion) duplicated their product which angered i4i. They used a patent that, although related, did not actually cover the functionality. Combined, they offer enough evidence (to a layman) that M$ infringed. Without a doubt M$ engaged in some questionable actions in regard to this issue, but it was not patent infringement.

Auditrix (profile) says:

Usually the way these disputes work out is that the licensor will want to receive royalties on this and perhaps other technology in the future from Microsoft, therefore it will often agree to a licensing agreement for a per unit rate of *less than* $98/unit. Of course, it may not work out that way in this case.

Whether the patent is worth $98/unit or not, I commend the system for holding accountable a big business that appears to have profited from stealing the little guy’s IP. It is a step in the right direction towards making it less profitable to steal and more profitable to create new and innovative technology, or at least license it from those who do so.

Derek Bredensteiner (profile) says:

Re: Re:

I understand you come from a background in music licensing, and maybe that’s a different situation.

In software, licensing pieces is a greater hindrance to development than anything else imaginable. Software is iterative and reusable. When you use building blocks that cost money and require licensing, the costs of a potential end product grow infinitely because it’s software built on top of software built on top of software … etc.

There’s 2 reasons royalties/licensed building blocks are used: (1) A standard has been built on them, and it’s impossible to rewrite something to reproduce similar functionality (2) Short sighted thinking (intentionally or unintentionally) that gives the software developed no chance of growth or being reused elsewhere.

The friction created by royalties and licensing in software is immense, and growing.

Brian (profile) says:

Re: Re:

Lets say patenting was as much of a fad in the 60’s as it appears to be today. Just about every computer language, compiler, and line of code would have been patented. This means companies would have to rewrite just about everything whenever they wanted to release some new software. Software and computers would be almost non existent in most homes since costs would probably be far higher than they are today. Pushing for more and more patents is just insane and at some point we have to give up this notion of “but they must also pay” and just redo the system. Patents should be about protecting what you invented from people just stealing it and claiming it as their own not protecting an idea and saying “I THOUGHT OF IT FIRST! ITS MINE!”. If MS stole the code line of line and put it in their software then yah they should be sued but if they had a similar idea and designed and implemented it then no, there should never have been a lawsuit.

ChurchHatesTucker (profile) says:

Re: Re: Re: Re:

“…n this particular case it looked like Microsoft was aware of iti’s concepts and may have copied those concepts intentionally (but not the code)…”

It’s EDITING a (XML) document. Kindergardeners are *aware of the concept.*

I’m sure there was a presentation and all, and once they realized that the only person on the frakin’ planet who would think this is noteworthy is Almis R. Jankus, they just rolled their eyes and carried on.

The fact that Almis R. Jankus, Idiot, is a USPTO Examiner obviously escaped their notice.

Anonymous Coward says:

Re: Re: Re:4 Re:

Do you ever read and thoughtfully consider the technical analysis of others as it pertains to the state of the art at the time an invention was created? Your dismissive comment strongly suggests this is not one of your strong suits. It also suggests that your familiarity with applicable law is lacking in numerous important respects.

Informed comments help to stimulate debate. In this regard your comment at 36 is sorely lacking.

Anonymous Coward says:

As occurs with much too frequency at this site, once more a court is castigated for decisions it makes by persons who have not a whit of familiarity with the actual case and the evidence presented at trial.

If I may be so bold, why not read a court’s decision before launching off on yet another all too predictable tirade?

For those who might actually want to better inform themselves of the pertinent issues, the CAFC’s opinion can be found at http://www.cafc.uscourts.gov/opinions/09-1504.pdf

Derek Bredensteiner (profile) says:

Re: Re:

Having looked over some of the details in that opinion, I’m not sure I follow what you’re saying?

The court agreed that Microsoft infringed on several of the concepts in the patent, and awarded i4i 200 million dollars for this infringement. Microsoft put together a product that included a myriad of concepts, a thousand times more than what’s in the patent application that people wanted to buy and convinced them to do so. They succeeded in the market with their own code. I4i filed a patent application for some concepts that gave them a monopoly on the idea, which they attempted to sell to Microsoft.

Which is the sort of innovation you want to encourage? Patenting concepts or creating products? This reads like a repeat of windshield wiper dude to me …

Anonymous Coward says:

I take it that if Microsoft had prevailed you would have been pleased to state that common sense ruled the day, but since it did not this case proves the farcical nature of patent litigation. Not only that, but awards based upon the rules of law (enhanced damages and injunction) lack merit because they do not comport with your expertise in the law of judicial remedies.

A panel of the CAFC unanimously upholds the trial court’s decision. proof that the CAFC is populated with judges who in substantial measure are found wanting when it comes to common sense.

Fortunately, our judicial system examines contested matters at a far more detailed level than seems to be the case here.

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