Microsoft Ordered To Pay $200 Million For Patent Infringement

Microsoft has been ordered to pay $200 million for patent infringement stemming from technology used in Word to control text formatting.

The hefty award, handed down Wednesday, to Canadian company i4i followed an eight-day trial in a federal court in Tyler, Texas. Jurors found that Microsoft "willfully infringed" on an i4i patent covering a document-formatting system, McKool Smith, the law firm representing the plaintiff, said in a statement.

Microsoft on Thursday denied it had violated i4i's patent.

"We are disappointed by the jury's verdict," a company statement said. "We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid. We believe this award of damages is legally and factually unsupported, so we will ask the court to overturn the verdict."

Lawyers had argued that Microsoft had infringed on a patent issued in 1998 to i4i that covered software that removed the need for individual, manually embedded command codes to control text formatting in electronic documents. Microsoft was accused of deploying the technology in Word 2003 and Word 2007.

The $200 million award covered lost profits and royalties, McKool Smith said.

The latest verdict was the second time in less than six weeks Microsoft has been ordered to pay a huge fine for patent infringement. The software maker in April was ordered by a federal court in Rhode Island to pay $388 million for violating anti-piracy patents held by Uniloc.

The security vendor sued Microsoft in 2003, claiming that its products were being used illegally in the Windows operating system and the Office productivity suite. Microsoft also argued in this case that the patent is invalid, and it's appealing the verdict.

In March, Microsoft reached a patent settlement with navigation software developer TomTom. TomTom agreed to make unspecified payments to Microsoft, which claimed that Linux code used in TomTom's products contained patented Microsoft technology. Specifically, the allegedly infringed technology was the FAT (File Allocation Table) file system.

However, Microsoft's patent claims have been challenged by the Open Invention Network, an industry group that acquires and licenses open source patents in order to protect Linux.

Patent disputes are common in the tech industry, and a number of vendors, including Microsoft, are pushing for an overhaul of patent regulations that they claim enable frivolous suits and excessive awards. The industry supports the Patent Reform Act of 2009, a bill under consideration in Congress.

InformationWeek Analytics has published an independent analysis of the current state of open source adoption. Download the report here (registration required).