by Jake Meyer

Microsoft is currently involved in a patent infringement case involving its word processor program Microsoft Word.  The outcome of this case could determine the fate of Microsoft's most well-known software.  In fact, this very blog post was composed on Microsoft Word.

Microsoft's Word program allegedly infringes Canadian software developer i4i's U.S. Patent No. 5,787,449.  The asserted claim (claim 14) of this patent is directed to "markup languages" for computers.  A markup language inserts "tags" that indicate how a text should be displayed between the tags.  XML, HTML, and SGML are all examples of markup languages.  Microsoft’s brief to the Federal Circuit gives an example of markup language. "For example, <Para> is a computer markup code that indicates the start of a paragraph and </Para> indicates the end of a paragraph."  Claim 14 claims this markup language as a method for producing a "map of metacodes":

A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising: providing the mapped content to mapped content storage means; providing a menu of metacodes; compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and providing the document as the content of the document and the metacode map of the document.

In May, in the Eastern District Court of Texas, a jury found that Microsoft was guilty of infringement and awarded i4i more than 280 million dollars in damages.  An injunction was also ordered which would have prevented Microsoft from selling Word 2003 and Word 2007 after October 10, 2009.  The case is now before the Court of Appeals for the Federal Circuit, which is the court that presides over all appeals in patent cases.  The Federal Circuit granted a stay of the injunction until the appeal is decided.

Among several arguments Microsoft makes in its brief, it argues that the damages are not "reasonable."  The Section 284 of the Patent Act provides for a “reasonable royalty” rate.  Microsoft argues that "No evidence could justify a royalty equal to more than half of the gross revenue per infringing user in exchange for a single infringing functionality, particularly for software like Word that has thousands of other functionalities."  Microsoft argues that i4i's expert presented unreliable evidence for damages through a study.  Microsoft state that the study was sent to 988 businesses and only 46 replied, and then were paid to guess how many other people in their place of employment were using Word in an infringing manner.  Only 19 stated that they had knowledge of any infringing use of Word.  The expert testified that 1.85 million users had used Word in an infringing manner.  If Microsoft's characterization of the expert’s testimony is correct, the damages may be adjusted considerably.

This will be an interesting case to watch as the Federal Circuit’s decision will have a large impact on Microsoft and its word processing software, as it may result in large royalties as well as an injunction.  In that case I may have to learn to use a new word processor.  Further, the validation of i4i's claim could have even larger ramifications for companies and users using software taking advantage of "markup languages" such as XML, HTML, and SGML may also be sued for infringement.