RSSAgain, it's over: Microsoft loses second review of Word appeal
By Scott M. Fulton, III | Published March 12, 2010, 11:41 AM
A permanent injunction against Microsoft selling versions of Word that contain XML editing ability effectively remains in place today, after a shot-in-the-dark appeal by Microsoft of its appeals loss last December was shot down Wednesday by the DC Circuit Court of Appeals.
Although Microsoft is no longer distributing versions of Word or Office with an XML editor that a jury found infringed upon the patents of former development partner i4i, it made a face-saving effort to change the record of history. Such a change would have shown that Microsoft did not borrow the ideas behind a Word plug-in that i4i demonstrated, for its own purposes, knowing that i4i held a patent on those ideas.
What may be more historically important about Wednesday's ruling -- which replaces the December ruling -- is that it may re-establish an older legal precedent with respect to patent infringement. Patent reformers, including Supreme Court judges, have been utilizing their own judiciary discretion with respect to a benchmark for damages. Legislation still on the table in Congress would change US patent law so that judges must estimate what a product would have been worth had it not been infringed upon, under normal market circumstances, in setting damages.
The reason many damage awards by juries reach into the hundreds of millions of dollars, using formulas that sometimes seem arbitrary, is because they agreed with plaintiffs' attorneys that the real-world damage is so great that any attempt to really estimate loss in monetary value is pointless. That was the case in the i4i trial, where in District Court, a jury decided there was no real formula for measuring the extent of Microsoft's transgression.
The problem considered with the District Court trial was that the base of the damages award was set at $200 million, a figure which admittedly came from a rough estimate of how many copies of Word that Microsoft probably sold during the period in question (2.1 million) times the amount of royalties i4i contended it should have received for each of those copies ($95). Microsoft argued against that formula for numerous reasons, including the fact that not all 2.1 million users of Office or Word would even see the XML editor function in question. Weighing against the need to consider the validity of that strict formula was the notion that i4i had suffered irreparable injury, which the law literally defines as something the law cannot define.
Specifically, i4i argued, Microsoft destroyed the relevant market, so that you couldn't measure it any more. Given that set of circumstances, how would it look for judges to go questioning the jury's formula on nickel-and-dime issues of royalties?
"The district court concluded that there were inadequate remedies at law to compensate i4i for its injury," wrote Judge Sharon Prost for the three-judge panel. "The district court found that before and after Microsoft began infringing, i4i produced and sold software that practiced the patented method. The district court found no evidence that i4i had previously licensed the patent, instead finding evidence that i4i sought to retain exclusive use of its invention. It was not an abuse of discretion for the district court to conclude that monetary damages would be inadequate. In this case, a small company was practicing its patent, only to suffer a loss of market share, brand recognition, and customer goodwill as the result of the defendant's infringing acts. Such losses may frequently defy attempts at valuation, particularly when the infringing acts significantly change the relevant market, as occurred here. The district court found that Microsoft captured 80% of the custom XML market with its infringing Word products, forcing i4i to change its business strategy. The loss associated with these effects is particularly difficult to quantify. Difficulty in estimating monetary damages is evidence that remedies at law are inadequate."
So the injunction stands, but not after tossing Microsoft the most hollow of victories: Sixty days, the Appeals Court decided, was not a fair amount of time for Microsoft to comply with the District Court's order, so it extended the period to five months...from the date of the order. That means the injunction now takes effect on January 11...two months ago.
[EDITOR'S NOTE: On Microsoft's request, we changed our original headline, taking note of the fact that Microsoft did not file a complete appeal on December 22. What it did file was a petition for an en banc rehearing of the existing appeal, and that petition was actually granted, even though the revised opinion issued Wednesday effectively clarifies the Appeals' Court's earlier stand.]
Maximum respect to the dozy twat that's going around -3ing all PC_TOOL's posts. You're clearly lonely or have no idea what you're -3ing.
Score: -5
|Mods are meaningless.
Forget about it...
Score: -1
|This reminds me of the case for Stac's compression that was included in MS-DOS 6.x after Microsoft broke their contract with Stac. The court ruled against Microsoft and Microsoft eventually changed the compression. Eventually Stac went out of business since there wasn't much demand for compression as drive capacity became larger.
Still, it's not right to take advantage and Microsoft (and many others) have enough money to do things the right way.
Score: 1
|If I were to burn a bunch of copies of Microsoft Office to DVD and sell them on Ebay for $5.00 each as "Entitled American Office" I wonder how much I would be fined for and how long I would be in jail? Microsoft did get off easy!!
Score: 6
|Patents != Copyright, Mr. American.
If I infringe on both your patents and copyrights, I would be liable for two entirely different offenses, each carrying their own entirely different consequences.
Score: -1
|If a person gets caught stealing a song or movie they have to pay A LOT more then the retail for it so Microsoft got off easy because they are Microsoft in my book, how about $125,000 a copy?
Score: 7
|Patents != Copyright.
Thank you.
Score: 0
|I, too, was aghast at the $95/copy royalty...but it occurred to me, as I finished the article, that the 'royalty' paid may not have been too out of line given the following considerations:
1. i4i never licensed the product, nor did it have any intention to do so - there was never an established licensing fee.
2. i4i only sold the product directly to customers (I'm guessing the price was around $95).
3. The court/jury probably decided that since i4i only *sold* the product and didn't *license* it, that each 'license' for Word represented a lost sale of the product at full price.
If that is indeed the case, then $95/'license' isn't crazy at all - in fact it seems rather fair. My problem is with that sum being called a 'royalty' - something it is not, nor could it be, since there was never a licensing agreement and the company itself had no intention of licensing the product for direct inclusion in MS Office or any other products. Had it been called renumeration or compensation I kinda wonder if this story would have received any coverage of note (I consider BetaNews to be coverage of note).
Score: 2
|Fair would be to take into consideration how many customers bought Word to do anything specific that i4i's product offered. How often have you consciously used XML to embed business data in a document using a word processor? And if that's indeed what you want to do - why would you buy the more expensive Word suite contrary to the specialized program.
Anyway - I have been using XML since it was in beta for enterprise systems. Wait... I wished I still had all my ancient code. Maybe there is some prior art! It's just a too dumb obvious thing and the retard approving such a patent should be fired and fined.
Score: 0
|"Fair would be to take into consideration how many customers bought Word to do anything specific that i4i's product offered"
Good point - I agree...mostly. It would probably be difficult (if not impossible) to accurately define that group, but it strikes me that it would be 'more fair' if an attempt was made to do this prior to defining the amount of compensation...err, royalties.
"How often have you consciously used XML to embed business data in a document using a word processor?"
I've been trying to cut back...actually never. But I'm not defining 'what can be done' as 'what I can or want to do'. I'm not saying you are, I guess I'm saying I can't really offer a fair, informed opinion on that.
"It's just a too dumb obvious thing and the retard approving such a patent should be fired and fined."
I'm not sure it is a 'dumb obvious thing'- again this is only my opinion, based on my limited knowledge. To those who've used it for a long time it may seem obvious, but for those who've only recently started using it (or haven't used it at all) it may be seem quite novel. As for the patent itself...again, I'm not well enough informed to express any opinion of value on that, but I do have to wonder why MS would use a method that could be identified as being a 'copy' or near enough to infringe on i4i's patent - that seems like a big gamble, unless they specifically wanted to challenge i4i's patent without initiating court action themselves?
It's a crazy universe...I wouldn't live any place else...
Score: 0
|If there are so few customers using the feature (which I agree with), then why did Microsoft bundle it with every copy? If they had provided it as a plugin then they would only have to pay for each downloaded plugin not every copy of Word sold.
Would you say the patent for custom XML was more or less obvious than the FAT short-name lookup table?
Score: 2
|"Fair would be to take into consideration how many customers bought Word to do anything specific that i4i's product offered"
After a little more thought on the issue my opinion has changed in regard to this. MS chose to sell every copy of Word with this ability. If, as the courts found, MS did violate i4i's copyright then they should pay the full amount for every copy sold. MS didn't reduce the price or functionality for those who bought Word/Office and didn't need that feature. Whether the feature was used or not, some part of the product price was there to compensate MS for that feature, thus MS collected money for that feature.
With that in mind, I have to say that a fine for every copy sold (or even full licenses distributed for free) is not out of line. Why free copies as well? They're just as functional as the paid copies, and each one represents another potential loss of sale for i4i...and ultimately, this case seems to be about the 'potential' since we'll never know the possible reality that may have happened if only i4i had been allowed to sell software that employs i4i's method.
Score: 1
|@therealbillybob - good point in your first paragraph. As for the patent 'obviousness' - not sure I can express a valid opinion on that. There are things that are clearly obvious to me that are not to my dad - yet he has been around a LOT longer than I, and has likely forgotten more than I will ever know. Obvious isn't always obvious to everyone, so I'll (in my long winded way) have to say, "I don't know".
Score: 0
|I suppose if you are storing the document data in XML - which Microsoft is - it does seem pretty obvious that you can embed other XML data within the document format. That the US parent office considers that embedding XML within XML might deserve a patent seems to me to be a fair comment on the essential stupidity of the entire process...
Another example of 'American Exceptionalism' no doubt!
Score: -1
|I find MS patents worse.
MS tries to patent a lot of more obvious things.
MS patent n° xxxxxxxxxxxxxxxxxxxxxx
...method and apparatus for turning a page...
Oh please, give me a break!
Score: -1
|The idea that i4i would collect $95 in royalties for each copy of Word/Office sold is absurd. That's roughly 1/2 the retail cost of Word, or 1/4 the cost of Office. The XML component is a very minor inclusion in the Word package, and in reality, I'm betting a license agreement would have netted them closer to $0.95 per copy sold.
Irreparable damage doesn't justify the $95 tag either. If anything, they damaged their image by laying claim to the XML editor in Word. It's abysmal.
Score: 0
|$95 is probably what i4i sell their product for. The fact that no license agreement was made means that i4i deserve the full market value.
If they were only due the licensing fee then where is the incentive for large companies to license anything from a small company? They can just take the technology and the worst-case is that they will have to pay the licensing fee. The best-case is that the company goes out of business.
P.S. It is not the XML editor they have patented, it is a method of embedding business data into documents.
Score: 2
|It's 95 because the most part goes to the fact that MS wilfully infringed upon it.
It's a fine, nothing more.
Score: -1
|