Toronto-based technology company i4i Inc. has been awarded $290-million (U.S.) from Microsoft Corporation by a Texas Court for willfully infringing on a patent belonging to i4i.

i4i has developed software for authoring and submitting pharmaceutical regulatory documents to governmental agencies such as the Food and Drug Administration in the United States.

i4i applied for U.S. patent No. 5,787,449 in 1994 and the patent was issued in 1998. I4i’s patent covers computer systems and methods for manipulating the structure and content of a document separately.

i4i filed the case in 2007 and argued that Microsoft’s use of XML in MS Word 2003, MS Word 2007 and other software in Microsoft’s Office suite infringes the patent.

A federal jury in Texas agreed and awarded $200 million to i4i based the market price of a similar standalone product. Following expert testimony, it arrived at a figure of $98 for each individual that used Microsoft’s programs.

This week, District Judge Leonard Davis decided that Microsoft had willfully infringed the patent and added another $40-million, plus $37-million in prejudgment interest payments, and post-verdict damages from May at the rate of $144,060 a day.

Even more stunning than the award for damages, Davis also ordered Microsoft to stop selling Microsoft Word and other software infringing i4i’s patent by October 12, 2009. A spokesman for Microsoft, said that the court's ruling disappoints Microsoft and that the i4i patent is invalid.

The case was filed in March 2007 and has been fought in U.S. Federal Court in Tyler, Texas, a jurisdiction that has heavily favored patent owners in recent years. Microsoft has announced they will appeal. The case will move to the Court of Appeals for the Federal Circuit, which is generally not quite as welcoming for patent owners. The Federal Circuit may delay the injunction, allowing Microsoft to continue to sell MS Word and the other software, but at the risk of an even higher damages award if their appeal fails.