Supremes to Hear Microsoft's i4i Appeal

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The U.S. Supreme Court agreed Monday to hear Microsoft’s appeal of a $290 million patent infringement award granted to a tiny Toronto company in 2009.

Microsoft (NASDAQ: MSFT) has been fighting a pitched battle with the smaller firm — i4i — since 2009, when a federal jury decided that the software giant’s use of “custom XML editor” technology in Word 2003 and 2007, as well as in Office 2003 and 2007, violated i4i’s patents. Later versions of Word and Office — Office 2010, for instance — do not contain the offending code.

i4i originally filed the suit in 2007.

The judge in the case levied damages and penalties against Microsoft of approximately $290 million. Microsoft appealed the verdict twice but was rebuffed both times by the appeals court.

Microsoft also attempted to convince the U.S. Patent and Trademark Office (USPTO) that i4i’s patent was invalidbut, in July 2010, that move was blocked as well when the USPTO ruled i4i’s patent was valid.

In late August, Microsoft sought review by the Supreme Court and, now, the court has granted the larger company’s request.

The case is much more important than a one-on-one fight between technology companies, however, according to spokespersons for both firms.

“We are gratified by the Court’s decision. It’s a clear affirmation that the issues raised in this case are critical to the integrity of our patent system. We look forward to presenting our case to the Supreme Court,” David Howard, Microsoft deputy general counsel for litigation, said in a statement e-mailed to InternetNews.com.

Microsoft had argued that i4i had a product on the market in the U.S. before it applied for a patent, thus making the technology unpatentable under what’s called the “on sale bar” but the USPTO and the appeals court both sided with i4i.

“This case, which comes to the Court on final judgment from the largest patent infringement verdict ever affirmed on appeal, presents an ideal vehicle for [patent law] review,” Microsoft’s filing to the Supreme Court argued in August. Microsoft’s lead counsel on the case is high-profile attorney Ted Olson.

“I think you’ll see this turn into a very high-profile case and a very important one,” Loudon Owen, chairman of i4i, told InternetNews.com. “At some level you have to say, ‘why invent, why patent, and why enforce?’,” Owen said.

As to i4i’s chances of prevailing, Owen was upbeat.

“We have prevailed so far,” he added.

No schedule has been set. However, sources familiar with the case say it may be heard in March or April, and a decision would be likely due in June before the court’s summer recess.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.