Microsoft wins reprieve – can continue selling Word for now

A federal appeals court granted Microsoft’s request to suspend an injunction that would have barred the company from selling its Word software next month.

In a short order filed late last week, the Court of Appeals for the Federal District approved Microsoft’s earlier request for a stay of the injunction stemming from a copyright infringement lawsuit filed a Toronto-based software company.

“Without prejudicing the ultimate determination of this case by the merits panel, the court determines based upon the motion papers submitted that Microsoft has met its burden to obtain a stay of the injunction,” the court said.

“We are happy with the result and look forward to presenting our arguments on the main issues on September 23,” said Microsoft spokesman Kevin Kutz in an e-mail.

Kutz’s reference was to the oral hearing before the Court of Appeals, during which both sides will present their cases.

The three-judge panel will render its verdict at some point after the Sept. 23 hearing.

Representatives for i4i were not available for comment.

The injunction by U.S. District Court Judge Leonard Davis would have prevented Microsoft from selling Word 2003 and Word 2007 in their current forms after Oct 10.

Judge Davis made the ruling on Aug. 11, after the company was found guilty in May by a Texas jury of infringing a patent held by Toronto software developer i4i.

In a 65-page summary opinion, Davis had said Microsoft knew of the patent held by i4i as early as 2001, but nevertheless set out to make the Canadian developer’s software “obsolete” by adding a feature to Word.

Davis awarded i4i more than $290 million in damages and interest.

On Aug. 18, Microsoft filed a motion to stay the injunction while it took the case to appeal.

In that motion, Microsoft warned of “massive disruptions” to its sales, as well as those of important OEM partners, if the injunction was not put on hold.

“Microsoft and its distributors (which include retailers such as Best Buy and OEMs such as HP and Dell) face the imminent possibility of a massive disruption in their sales,” Microsoft had argued in the motion.

“If left undisturbed, the district court’s injunction will inflict irreparable harm on Microsoft by potentially keeping the centerpiece of its product line out of the market for months,” the firm’s lawyers added.

“The injunction would block not only the distribution of Word, but also of the entire Office suite, which contains Word and other popular programs.”

Microsoft also said retooling Word to remove the infringing “custom” XML feature puts an unfair burden on the company.

“Already, Microsoft is expending enormous human and financial capital to make its best effort to comply with the district court’s 60-day deadline,” stated Microsoft in the motion.

“Even if Microsoft ultimately succeeds on appeal, it will never be able to recoup the funds expended in redesigning and redistributing Word, the sales lost during the period when Word and Office are barred from the market, and the diminished goodwill from Microsoft’s many retail and industrial customers.”

Elsewhere, Microsoft painted a bleak picture for users. “Even if the injunction will not affect Microsoft’s existing Office customers, consumers and businesses, who require new copies of Office and Word, would be stranded without an alternative set of software.”

Microsoft’s attorneys also claimed that the situation would be a “major public disruption,” and would “have an effect on the public due to the public’s undisputed and enormous reliance on those products.”

During the trial, Microsoft said it would take five months for it to craft new versions of Word that omitted the offending feature. i4i countered, saying that it could be done much faster than that with a software patch.

Barry Negrin, a partner with the New York firm Pryor Cashman LLP who has practiced patent and trademark law for 17 years, agreed with i4i’s view that Microsoft should be able to work around the injunction with an “easy technical” fix.

“All Microsoft has to do is disable the custom XML feature, which should be pretty easy to do, then give that a different SKU number from what’s been sold so it’s easy to distinguish the two versions.”

Microsoft has been granted a fast-track appeals process, which requires i4i to file a response to Microsoft’s appeal by next Tuesday, Sept. 8.

Microsoft’s rebuttal must reach the court by noon on Sept. 14.

Both Dell and HP have filed amicus curiae, or “friend of the court,” briefs, arguing that Word’s revision, and the resulting changes necessary on their part to re-image new PCs, would “require extensive time- and resource-consuming retesting.”

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