i4i could sue many more vendors if it wins Microsoft case, say experts

If Microsoft Corp. loses its appeal against i4i Inc., the Toronto-based software developer could have legal grounds to pursue patent infringement lawsuits against many other software vendors, according to a law firm.

Both i4i and Microsoft gave 40-minute arguments before a judge in U.S. federal appeals court Sept. 23. The court was hearing Microsoft’s fast-tracked appeal to an injunction issued by a Texan judge that could have banned the sale of Microsoft Word by Oct. 10 and resulted in almost $300 million in fines against the Redmond-based software giant.

There’s no telling when the court will issue its decision. But if Microsoft loses its appeal, i4i may be able to sue a wide array of other software vendors, says Bhupinder Randhawa, an IP lawyer with Bereskin & Parr LLP.

“The use of XML is ubiquitous now and (the patented method) is the main purpose of XML,” he says. “There will probably be a number of places they find infringements.”

i4i has held the patent on XML customization since 1994. The patent describes the process of holding both visible content and hidden meta-code data in the same document.

The patent’s claims cover both the creation of a document that consists of a meta-code map and the conversion of a document into one that contains a meta-code portion, explains Victor Krichkner, registered patent agent with Toronto-based Bereskin & Parr LLP. Some of these claims were used in i4i’s claim against Microsoft.

“The invention in the patent creates methods for storing meta-code separately and distinctly from the raw content,” he says. “The crux of the invention is the ability to manipulate the meta-code structure without touching the content.”

Lawyers discussed the case in a teleconference hosted by CATA Alliance and in a separate interview with ITBusiness.ca. They praised the work done on the 1994 patent held by i4i, at a time when not many software inventions were covered by patents.

i4i chairman Loudon Owen joined the firm in 1996. But he has talked with the technology’s inventors about their decision to create a patent.

“They realized there was a massive problem they kept coming up against,” Owen says. “They found a solution that was very elegant and applied to a wide range of industries.”

Owen wouldn’t comment on whether i4i would pursue other lawsuits if it proves the victor against Microsoft. The company is more interested in using its patent to get back to business with its XML product.

“We think the industry is at a stage that a great business can be built,” the chairman says. “There’s a large and impressive array of customers that need it.”

Court proceedings have revealed some big contracts that i4i had made in the past with its technology. Court proceedings reveal its customers include the U.S. Patent Office itself, as well as military and intelligence clients.

Bereskin & Parr lawyers depicted i4i’s court battle against Microsoft in a “David and Goliath” light. The relatively small company has been able to sustain a prolonged and expensive legal fight that many others couldn’t endure.

Costs for the litigation that’s been done to date could be as much as $10 million, Randhawa says.

Owen wouldn’t comment on the costs of the case.

But the expense may be worth the rewards in the end. Even if the appeals court decides to lessen the $300 million fine against Microsoft, the company may have to licence the XML customization technology from i4i to continue to sell Word.

“Since i4i has a great position to negotiate, it could produce a great royalty stream for many years,” Krichkner says.

It remains to be seen if i4i’s future business could include some sort of licencing deal with Microsoft.

“If Microsoft wants to contact us, they have our phone number,” Owen says.

Lawyers point to the 2006 case of NTP vs. Research in Motion, which similarly involved a small company pursuing a patent infringement case against a larger corporation.

The case was eventually settled with the BlackBerry-maker buying a licence from NTP for a $612.5 million one-time payment.

Lessons learned from i4i v Microsoft

Intellectual property lawyers from Bereskin & Parr LLP describe the ongoing court battle between Microsoft and i4i as a “David and Goliath” epic that reads like a Hollywood movie script. There’s high stakes, volatile personalities, and wide interest in the case.

But the long history of i4i’s dealings with Microsoft offer up more than just entertainment value. There’s some important lessons about software patents to be learned here, Randhawa says. Here’s what to take away from this story:

  • Cast a wide net – Using a broad set of claims in your patent can help protect your invention down the line. “You can be a bit more aggressive by increasing the different ways in which you claim an invention,” Randhawa says. Cover off the methods and the means – such as claiming the discs that deliver your software – and even consider the alternatives that your competitors might use to modify their products to adapt the technology.
  • Early bird gets the worm – “As soon as the idea is crystallized and ready to be structured into a technology, you’ve got to get your patent on file,” Randhawa says. Many countries require you create a patent before any public disclosure of your idea. Otherwise, you could be denied the right to do so. In the U.S., there is a one year leeway on this.
  • Don’t be the pot calling the kettle black – If it comes to a court battle, keep in mind the white hat vs. black hat strategy can be high risk. i4i succeeded and painting Microsoft as the bad guy during its jury case and it helped in the end. But it could just as easily backfire. “The jury may not agree with you and because of that, may paint you in a negative light.” Randhawa says. 

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Jim Love, Chief Content Officer, IT World Canada

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Brian Jackson
Brian Jacksonhttp://www.itbusiness.ca
Editorial director of IT World Canada. Covering technology as it applies to business users. Multiple COPA award winner and now judge. Paddles a canoe as much as possible.

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