Word: Why Microsoft Is Patently In Trouble

(MoneyWatch)  The mind-numbing number of lawsuits filed by so-called patent trolls has inured us to the consequences of patent suits that actually have merit. But despite the fact that i4i filed its suit against Microsoft in a district known to lawyers as "rocket docket" because of the speed and likelihood of winning injunctions there, this is one suit that seems to have real merit.

The ruling strikes at the heart not only of Word, but also Microsoft's overall use of productivity software as a gateway to its other enterprise applications and suites (including Exchange, SharePoint and line-of-business applications). If, as I think is likely, the Tyler, Texas court's ruling stands, Microsoft will have to either come to an agreement with i4i -- and quickly -- or find a way to comply with it that still allows it to keep selling Word.

Particular sections of Judge Leonard Davis's opinion reveal just how much legal hot water Microsoft is in (hat tip to retired attorney Paul Merrill):

• i4i isn't just a shell company holding a patent that should never have been awarded ?€" it's a bona fide software company with an application suite that could compete with Microsoft in certain markets, if only Microsoft hadn't stolen its key innovation (pp. 48-49);
• Microsoft suggested that in lieu of an injunction, it could pay i4i an ongoing royalty for use of the custom XML functionality (which ignores i4i's right to refuse Microsoft a license and does nothing to compensate i4i for its loss of brand recognition and market share (p. 55)
• Microsoft's counsel was concerned enough on the merits of the claim to repeatedly make a "patent troll" argument to the jury despite having been instructed by the court not to do so (misconduct which cost it an additional $40 million in penalties). (pp. 42-43)

That said, pundits like Steven J. Vaughn-Nichols, who could never be mistaken for a Microsoft shill, think the suit is entirely without merit, and reflects badly on the patent system to boot.

To me, the i4i patent reads like a classic, over-reaching patent that covers prior art, which should have prevented it from ever becoming a patent. It's these kinds of patents, and courts like the Eastern District of Texas, which approve these IP patent lawsuits almost as a reflex, which harms everyone in the technology business.... U.S. patent law and enforcement has become a disgrace, and each such 'victory' drives up the cost of technology for all of us and makes real innovation ever harder to achieve.

And Gary Edwards of Open Stack Business Systems, and Microsoft adversary in good standing, told me he thinks the patent is a "cruel joke."

But I think Microsoft knows better, despite its promise to appeal the decision. And I agree with Joe Wilcox, who provides a great technical explanation of i4i's patent and how Microsoft seems to have infringed, and notes:

Perhaps i4i carefully chose the venue of Tyler, Texas, but this doesn't look to me to be a patent troll case.