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8/14/2009
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Microsoft Trial Misconduct Cost $40 Million

Judge who banned MS Word sales in U.S. added extra penalty to jury's $200 million award after Redmond lawyer compared plaintiff i4i to TARP recipients.

The judge who banned Microsoft from selling its Word document program in the U.S. due to a patent violation tacked an additional $40 million onto a jury's $200 million verdict because the software maker's lawyers engaged in trial misconduct, court records reveal.

In a written ruling, Judge Leonard Davis, of U.S. District Court for Eastern Texas, chastised Microsoft's attorneys for repeatedly misrepresenting the law in presentations to jurors.

"Throughout the course of trial Microsoft's trial counsel persisted in arguing that it was somehow improper for a non-practicing patent owner to sue for money damages," Davis wrote.

The judge cited a particular incident in which a Microsoft lawyer compared plaintiff i4i, Inc. to banks that sought bailout money from the federal government under the Troubled Asset Relief Program.

"He further persisted in improperly trying to equate i4i's infringement case with the current national banking crisis implying that i4i was a banker seeking a 'bailout'," Davis said.

The jury earlier this year found that Microsoft Word violates an XML editing patent held by Toronto-based i4i. On Tuesday, Davis increased jurors' $200 million verdict against Microsoft to $240 million due to the trial misconduct and other factors.

"All these arguments were persistent, legally improper, and in direct violation of the Court's instructions," Davis said. "Therefore, Microsoft's trial misconduct also supports enhancement," the judge wrote.

Davis also imposed roughly $50 million in additional costs to the verdict, bringing the total that Microsoft must pay to i4i to about $290 million.

Davis also enjoined Microsoft from selling or supporting new copies of Word 2003 or Word 2007 in the United States. The ban takes effect in 60 days unless Microsoft wins an appeal or reaches a settlement with i4i.

A Microsoft spokesman insisted that the i4i patent is invalid and vowed that the company would appeal the ban on Microsoft Word sales.

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