US Court of Appeals Upholds i4i’s Award and Injunction against Microsoft

The United States Court of Appeals for the Federal Circuit released its decision in Microsoft’s appeal against Toronto-based i4i Limited Partnership. The Court of Appeals upheld the lower court’s finding of infringement, the injunction order, and the $240-million US damage award that Microsoft must pay i4i. Microsoft will also have to cease shipping MS Word with the custom XML editor, which was found to infringe i4i’s XML patents.

Back in August 2009, a jury in the Eastern District of Texas found that the 2003 and 2007 editions of Microsoft Word contained XML editing tools that infringed upon i4i’s patent on custom XML editing software. The jury further found that Microsoft had wilfully infringed the technology. It awarded i4i $200 million US in damages. The judge allowed the jury verdict, granted i4i’s motion for a permanent injunction and awarded an additional $40 million US for enhanced damages, together with post-verdict damages and interest (bringing the total to $290 million US).

The Court of Appeals upheld all of the District Court’s findings, only varying the effective date of the injunction. The District Court ordered Microsoft to comply with the permanent injunction within 60 days. As that date had already passed by the time the Court of Appeals rendered its decision, the Court of Appeals changed the effective date to five months from the date of the District Court’s ruling (i.e., January 11, 2010).

Microsoft does not have to back-fix its already-distributed software; it only needs to ensure that software sold after that date has removed the infringing features. Microsoft has also made available a patch through its OEM Partner Centre that removes custom XML functionality from the Word software, noting that the patch is required for US customers.

Microsoft has requested that a full panel of the federal appeals court rehear the case.

McCarthy Tétrault Notes:

According to Microsoft’s petition for a rehearing, the $290-million US award represents the largest patent infringement judgment ever to be affirmed on appeal in the US.