Microsoft loses i4i appeal, faces Word injunction in three weeks

The US Circuit Court of Appeals in DC has today denied Microsoft's appeal to overturn a court injunction preventing it from selling copies of Microsoft Word (or Office with Word). Those copies contain a feature that a jury last May found infringed upon patents held by i4i, a former Microsoft partner that built Word add-ons for editing XML.

Now, Microsoft says it will be ready to sell revised versions of Word 2007 and Office 2007, beginning next January 11 -- the date the court injunction takes effect.

"With respect to Microsoft Word 2007 and Microsoft Office 2007, we have been preparing for this possibility since the District Court issued its injunction in August 2009 and have put the wheels in motion to remove this little-used feature from these products," reads a statement from the company's director of public affairs, Kevin Kutz, this afternoon. "Therefore, we expect to have copies of Microsoft Word 2007 and Office 2007, with this feature removed, available for U.S. sale and distribution by the injunction date. In addition, the beta versions of Microsoft Word 2010 and Microsoft Office 2010, which are available now for downloading, do not contain the technology covered by the injunction."

Kutz added that the company is considering a request for a rehearing, though at that point the question may have become moot. Microsoft began patching Word back in October to remove the infringing feature; not surprisingly, very few general users actually noticed. The offending XML editing feature does not appear in the Beta 1 version of Office 2010, and probably never will.

The official disposition of the Appeals Court was not yet available at the time of this writing (typically during the holiday season, posting documents takes place more slowly). However, it's believed that the original $200 million award for i4i, with interest attached, is now valued at $290 million.

Now that Word will be minus an XML authoring tool, the add-on market for such tools could regenerate. Recently, i4i announced version 3.1 of its latest XML authoring tool add-on for Word, called x4o. The tool enables businesses that must create documents to specific standards -- especially government agencies -- to tailor XML templates for themselves. Those templates enable Word to edit documents using, for the most part, the ordinary word processor, and then save them to the exacting standards they require.

Microsoft saw this as a worthy feature as early as 2001. But then it apparently learned that i4i had a patent for software capable of editing XML schemas separately from XML documents. As i4i claimed last summer, Microsoft proceeded to circulate memoranda among i4i's customers in an effort to generate interest in a Microsoft-only alternative, effectively using i4i's customer base to build its own. Microsoft's defense had been that it and i4i had developed that customer base together, that offering an alternative was essentially pro-competitive (even if it was built into Word), and that i4i only decided to complain when it couldn't keep up its end of the competition -- a defense that evidently failed, in the opinion of the Appeals Court panel.