Toronto firm wins in suit against Microsoft

SIMON AVERY

Globe and Mail Update

May 20, 2009 at 7:31 PM EDT

A small technology company in Toronto has won a Texas jury verdict ordering Microsoft Corp. to pay it $200-million (U.S.) for willful patent infringement.

Privately-held i4i Inc. said that several years ago it approached the world's largest software company with a breakthrough product in data processing, only to be spurned and to see its technology show up later in versions of Microsoft Word.

“It's a big win in terms of vindication. The money's nice, but the vindication is more important,” said Bill Cox, a member of i4i's board of directors and former president of the company.

I4i sued Microsoft in March 2007, claiming the Redmond, Wash., company had infringed on a patent awarded in 1998 for manipulating complex data in electronic documents.

Microsoft

Douglas Cawley, a lawyer for i4i, said Wednesday that e-mails presented during the six-day trial showed that Microsoft was aware of the firm's technology and sought to make it obsolete by including it in its own word processing software.

I4i will now seek an injunction preventing Microsoft from selling those products, Microsoft Word 2003 and 2007. It will also ask the judge for enhanced damages, Mr. Cawley said.

Because the jury found Microsoft had willfully infringed the technology, the judge is allowed to increase a jury award by up to three times the value.

“We are disappointed by the verdict,” said Microsoft spokesman David Bowermaster. “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.”

Two years ago, Microsoft successfully persuaded a district judge to overturn a $1.53-billion jury verdict against it in a case in which Alcatel-Lucent claimed Microsoft's Windows Media Player infringed on two of its patents.

The judge in the i4i case, brought before the U.S. District Court for the Eastern District of Texas, is expected to make a ruling on the jury verdict by mid summer.

I4i's first customer after being awarded the patent was the U.S. Patent and Trademark Office itself, Mr. Cox said. At its peak a few years ago, the firm employed 52 staff, but the poor economy has whittled that number down to 20 today, he said.

“We invented this [technology] and knew it would be a major breakthrough in data processing,” Mr. Cox said. “We told Microsoft about our product and were seeking a relationship with them, and instead of coming to the table with us they decided to make us obsolete. So I think that today's decision is vindication. We did the right thing. We built the right product. We tried to be friends, and when they didn't, we sued them and the jury agreed with us.”

Investors in i4i, include McLean Watson Capital, Northwater Capital Management Inc. and the Ontario Teachers' Pension Fund.

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