Microsoft loses appeal in $290m patent case

Microsoft on Tuesday lost an appeal against a $290m patent infringement case in its biggest legal setback in an intellectual property case this year.

In spite of the upholding of an injunction barring it from using the infringing code in its widely used Word program, Microsoft said it did not expect the decision to disrupt sales of its Office suite of applications, of which Word is part.

The federal appeals court decision upheld an August judgment in favour of i4i, a Canadian software company that had claimed Microsoft’s Word 2007 infringed a software patent it was awarded more than 10 years ago.

The disputed code involved a way for companies that use Word to customise the software so that some of the data in documents could be more easily readable by machines. This so-called customisable XML enabled i4i to sell an add-on software product to Word, but it dropped the product after Microsoft included a similar capability in its 2007 version of Word.

The appeals court rejected Microsoft claims that the i4i patent should be invalidated because it covered an obvious use of the technology, and because the same idea had been applied in earlier software products.

The lower court judgment against Microsoft earlier this year raised the threat that the company would be blocked from selling new versions of Word as it sought to remove the offending code. The court had ordered it to act within 60 days, though that injunction was put on hold pending appeal.

On Tuesday, the appeals court gave Microsoft until January 11 to comply, while saying that the original 60-day timetable had not given the company long enough to make the necessary changes.

In a statement, Microsoft said it had been preparing for the injunction since the earlier decision and had “put the wheels in motion to remove this little-used feature from these products”. As a result, it said it expected to have altered copies of Word 2007 and Office 2007 available by the injunction date, and added that test versions of the forthcoming 2010 editions of those products “do not contain the technology covered by the injunction”.

Tuesday’s decision ends a string of legal victories which has seen Microsoft succeed in overturning jury verdicts in similar intellectual property disputes.