I never thought this would happen, but I'm starting to feel a bit sorry for Microsoft. The Redmond, Washington based company, which you may have heard of, has been in court umpteen times in an ongoing battle with a small Canadian software developer called Infrastructures for Information (i4i). Poor old Microsoft keeps losing to i4i, over and over again. It's undignified and, actually, old news, in a way; however, there's a new development that is worth blogging about. This new development may give Microsoft an important win. The win, if it comes, will arrive with its last-minute application, filed on August 27, 2010, for a writ of certiorari, which is a review by a higher court of the entire record that was seen by a lower court, including the basis upon which the lower court made its decision. In effect, the higher court (in this case none other than the United States Supreme Court – which you may have heard of) can strike down the very basis upon which i4i has sustained its claim against Microsoft. Now, there's no guarantee that the Supremes (the court, not the singers) will grant the review. However, even if it declines the review, that does not imply that it agrees or disagrees with the lower court. It just means that it has decided not to look at the lower court record. It's the legal equivalent of saying, "You boys take your fight outside and don't bother me." Okay, I understand that your eyes are starting to glaze over, but stick with me. It gets interesting. History up to August 27, 2010 Way back when, i4i took out a U.S. patent on some fancy-pants technology for the structuring of documents that uses document metadata (specifically Extensible Markup Language [XML]) to manipulate the text and formatting. Take a look at U.S. Patent No. 5,787,449 – but don't drive or operate heavy machinery after reading it. The opening lines of the patent are simple: "Method and system for manipulating the architecture and the content of a document separately from each other." The patent goes on to claim, "A system and method for the separate manipulation of the architecture and content of a document, particularly for data representation and transformations. The system, for use by computer software developers, removes dependency on document encoding technology. A map of metacodes found in the document is produced and provided and stored separately from the document. The map indicates the location and addresses of metacodes in the document. The system allows of multiple views of the same content, the ability to work solely on structure and solely on content, storage efficiency of multiple versions and efficiency of operation." Clear so far? i4i got into business using its patent and touted it as a tool that would make using Microsoft Word more effective and powerful. Microsoft liked that and began to work with i4i on certain potential U.S. government sales, solely because of i4i's expertise in "custom" XML-based documents. Sometime in 2003, Microsoft got closer to i4i in order to get a clearer understanding of i4i's software. Everything was friendly and i4i hoped that its ongoing relationship with Microsoft was going to mean more open doors and more sales. In the meanwhile, Microsoft continued to develop its own XML technology and released a new version of Word in 2003 that contained technology very much like that of i4i that was covered by the patent. As a result of its in-house development, Microsoft didn't need i4i any longer. Similar technology was also contained in Word 2007 and released by Microsoft. The love affair between i4i and Microsoft was definitely over. In the spring of 2007, believing that Microsoft was engaging in patent infringement, i4i commenced a legal action against Microsoft. The action was brought in the East Texas District courts, where a good many software disputes are heard. After some initial motions that only trial lawyers understand – some of which Microsoft won and some of which Microsoft lost – the matter went to trial. The jury found that Microsoft had deliberately purloined i4i's technology and awarded i4i $200 million. Damages were later affirmed by the judge at $200 million, but an additional $40 million was tacked on top because the infringement was found to be wilful. Ongoing damages were assessed at $144,000 per day between May 21, 2009 until August 12, 2009 – another approximately $12 million. Finally, $37 million was awarded for pre-judgment interest until May 20, 2009 and at $21,000 per day thereafter. When you add all that up – well, it's a whole whack of money, even in Texas. To add injury to insult, the court issued an injunction, effective 60 days after judgment, requiring Microsoft to stop selling and promoting infringing Word software in the U.S. That meant any version of Word that opens .XML, .DOCX or .DOCM files containing "custom XML," except as a plain text document or a non-XML document, couldn't be sold or promoted. Microsoft appealed the findings of the jury and the court's decision. Somewhere in the mix, both Dell and HP submitted "amicus" briefs in support of Microsoft. The good news for Microsoft was that the injunction was suspended during the court's consideration of the appeal. In the fall of 2009, the appeal was heard and the appellate court re-affirmed the injunction as well as the whole decision of the lower court. Microsoft lost again. Interestingly, there was apparently an error in the appellate court's decision on Microsoft's wilfulness as an infringer. Microsoft again appealed, but lost. The date of commencement of the injunction in the sale and promotion of Word containing "custom XML" functionality was extended to January 2010. Microsoft again attempted to appeal, this time on the basis that the U.S. Patent and Trademark Office was re-examining i4i's patent. Microsoft's theory was that a patent cannot support an injunction if it is being re-examined – pretty imaginative legal work. Anyway, that legal theory became irrelevant in April 2010, when the USPTO decreed that the patent was valid. Now Microsoft has filed a petition for a writ of certiorari – a review by a higher court of the materials that the lower court looked at in coming to its decision – challenging the lower court's jurisdiction to make the decision it made. So What? The real battles in the litigation between i4i and Microsoft extend well beyond the parties to it. It highlights the ongoing battle between those who think that software should not be patented and those who are comfortable with the patenting of software. Those who are in favour of software patents say that they promote inventiveness, put ideas into the public domain, accelerate development and give hard-working developers a reasonable chance to make some money on their ideas. Those who are against software patents say that it's often hard to know when your software patent is being infringed and too expensive to either sue or defend a lawsuit over a software patent. (Ask i4i if it's expensive – you bet it is.) The detractors of software patents also say that it's costly to patent anything, that software is best protected through copyright law and that patenting software takes away money that is best paid to developers instead of lawyers. Lawyers, who have often been found to support the concept of legal fees, may disagree. Technology bloggers who are opposed to the patenting of software often accuse i4i of being a "patent troll" – a company that sues to enforce its patent in opportunistic way with no intention to market the patented invention. Indeed, Microsoft made that allegation itself against i4i, despite the fact that Microsoft knew i4i sold actual products using the patented technology as Microsoft's business partner. Real patent trolls are generally regarded as being extortionists and undesirable, and that's probably right. Then there are those who enjoy schadenfreude (it's great with a cheeky chardonnay and some fava beans, I hear) and love the fact that Microsoft is taking a beating at the hands of a little guy. Personally, I doubt that the little guy likes the fight at all. Little guys usually don't, even if they eventually win. I doubt Microsoft will give up without taking the matter right to the very end. It appears that its policy is to fight everything it can. If you think about it, that's a policy that makes some economic sense: it's the biggest guy on the block, and so young gunslingers are likely to come after it. If it maintains a policy of fighting everything, whether it's in the right or in the wrong, then gunslingers will think twice about taking it on in a battle. While I see the brutal efficacy of that policy (I'm from Hamilton, Ontario, where we had to fight our way to and from school every day), I lean the other way. I don't think that any business does itself any long-term harm by saying, "We goofed. Sorry. Here's some reasonable money to make up for it. We're big and sometimes we step on people by mistake, but we'll try not to do this again, guys." It will be interesting to see where this case eventually goes – either way, it's winner take all.
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