The i4i Case

Recently, I reported on a lawsuit, in which U.S. District Court in the Eastern District of Texas issued a permanent injunction that barred Microsoft from selling recent versions of its Word software, because the software violates a patent for processing XML, a markup language that allows users to customize the underlying format of text documents [see original article here]. In addition to the injunction, the court awarded the patent holder damages of approximately $290 million.

On September 3, 2009, the U.S. Court of Appeals for the Federal Circuit granted Microsoft a stay of the injunction, noting simply, "[T]he court determines based upon the motion papers submitted that Microsoft has met its burden to obtain a stay of the injunction."

In its appeal [see a copy here], Microsoft argued that the District Court judge failed to fulfill his role as a "gatekeeper" and did not strike the "delicate balance" needed in patent law disputes, noting specifically:

That balance can be lost if the district court does not protect the process, and patent litigation then becomes a tax on innovation rather than its guardian.

Microsoft argued that the court erred in several respects, including its construction of the patent claim, failure to set aside the jury verdict on the grounds of obviousness, rejection of Microsoft's argument that the patent holder had sold a product that embodied the invention prior to filing the patent, and failure to properly monitor the damages award.

Oral arguments are scheduled for September 23, 2009. This case bears watching, especially concerning how the court views Microsoft's argument on obviousness. As a longtime advocate of software patents, it is ironic that Microsoft is now making an argument that many contend cuts to the heart of why most software patents should be disregarded.

Other Good News: In the Lucent Case, Court Overturns Damages

Microsoft received more good news recently. Last April, after more than six years of litigation, a software developer was awarded $358 million in damages against Microsoft for patent infringement. That award was the fifth-largest patent jury award in U.S. history.

Microsoft appealed, and on September 11, 2009, the U.S. Court of Appeals for the Federal Circuit, though it upheld the jury verdict that Microsoft's calendar date-picker tool infringed the patent held by Alcatel-Lucent, also found that the damages award of $358 million was unjustified based on the evidence, ruling:

Having examined the relevant Georgia-Pacific factors, we are left with the unmistakable conclusion that the jury's damages award is not supported by substantial evidence, but is based mainly on speculation or guesswork. . . . The jury's award of a lump-sum payment of about $358 million does not rest on substantial evidence and is likewise against the clear weight of the evidence.

The court remanded the case to the District Court for another trial on damages. The case is Lucent Technologies Inc. et al. v. Gateway Inc. et al., case numbers 08-1485, 08-1487 and 08-1495, in the U.S. Court of Appeals for the Federal Circuit.