Judge orders Microsoft to pay US$300M in Word patent case

Injunction bars Word sales, affects Office 2003, 2007, 2010 and Mac 2008

Microsoft must pay nearly US$300 million in damages and interest to Canadian company i4i because it infringed the latter's patent for a document system that relies on XML custom formatting, according to court documents filed yesterday.

U.S. District Court Judge Leonard Davis has also slapped an injunction on Microsoft forbidding it to sell Word 2003, Word 2007, and Word for Mac 2008 in the U.S. The injunction takes effect Oct. 10.

Although a jury awarded Toronto-based i4i $200 million in damages last May, Davis' final order wasn't released until Tuesday. In it, he spelled out the total Microsoft owes i4i.

  • $200 million in damages for infringing the i4i patent;
  • $40 million in "enhanced damages" for Microsoft's "willful infringement";
  • $11.8 million in post-verdict damages, calculated from the May jury verdict through yesterday;
  • $38.8 million in pre-judgment interest.

The grand total comes to US$290.6 million.

Microsoft said it plans to appeal the decision. "We are disappointed by the court's ruling," said company spokesman Kevin Kutz in an e-mail. "We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid. We will appeal the verdict."

According to Davis' injunction, Microsoft is barred from selling "Word 2003, Word 2007 and Microsoft Word products not more than colorably different from Word 2003 or Word 2007," as well as "any Infringing and Future Word products that have the capability of opening a .XML, .DOCX or .DOCM file containing custom XML."

.DOCX, introduced in Office 2003, is the default file format for Word 2003 and Word 2007; .DOCM is the same file format, but with macros enabled. Although the Word 2003 and Word 2007 file formats are different, both are based on XML (Extensible Markup Language).

Word 2008 for Mac, which is already in customers' hands, and Word 2010, the word processor slated for release in Office 2010 in the first half of next year, are also able to open the file formats Davis listed, and thus are affected by the injunction.

This is not the first time that Office file formats have been taken to task. Just last week, for example, Microsoft said it would add a file format "ballot" to Office 2010 as part of a campaign of concessions to ward off European Union (EU) antitrust regulators. Microsoft's proposal let European customers select the default file format from an unspecified number of choices, including the company's own XML-based format, Open Office XML (OOXML) and Open Document Format (ODF), an increasingly popular open-source document standard.

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