Judges Hear Appeal Arguments in Microsoft v. i4i Case

• By Kurt Mackie
• 09/24/09

Lawyers for Microsoft and Toronto-based i4i concluded oral arguments before the United States Federal Circuit Court of Appeals in Washington, DC Wednesday in a patent dispute case.

The case involves the use of "custom XML" technology in Microsoft Word.

A jury rendered a verdict against Microsoft in May. Microsoft appealed the final judgment in the case, which awarded i4i more than $240 million in damages and penalties. The judgment also enjoined future sales of Microsoft Word, starting on Oct. 10.

Microsoft won a stay of the judgment, pending appeal, Aug. 16. Now, with the appeal's oral arguments concluded, the next step will be the appeals court judges' decision. It could take two to four months for a decision to be handed down, according to Loudon Owen, i4i's chairman. He dismissed Microsoft's appeals arguments.

"As we expected, Microsoft repeated the same line of argument that was unsuccessful at trial," Owen said in a prepared statement. "We are confident i4i will prevail."

In its appeal, Microsoft contested the patent violation. It also questioned the conduct of the judge as a "gatekeeper" during the trial. The company's lawyers argued that the judgment should be voided or Microsoft should get another trial.

"At today's hearing we emphasized three points for why a reverse judgment or retrial is warranted: Courts need to construct claims properly, the patent is not valid and we do not infringe it, and common sense can't be abandoned when it comes to damages calculation," said Microsoft spokesperson Kevin Kutz in a prepared statement. "We are pleased with how the hearing proceeded and we look forward to the Court's ruling."

i4i filed a rebuttal earlier this month to Microsoft's initial appeal. In response, Microsoft filed a reply last week, which can be read here (PDF).

Microsoft's court papers claim that the inventor of the custom XML technology, Michel Vulpe, now founder and CTO of i4i, congratulated Microsoft for adding the technology to Microsoft Word. However, Vulpe disputes that account. He sent an e-mail to Jean Paoli of Microsoft, but the e-mail just congratulated him for using XML generically.

"There's a gentleman named Jean Paoli who works for Microsoft and he used to work for a company that we acquired," Vulpe said in a phone call. "He led the development of a not very successful product at Microsoft, but in 2003 (I believe) when this was launched, it was a big deal. It was Microsoft's first significant foray into XML with a standalone product. The note was congratulations to Jean who was the team leader on that --on the success of his launch of his new product. And they [Microsoft's lawyers] were trying to construe that as a note congratulating him on putting custom XML into Word 2003."

Paoli is described as a co-creator of XML in a Microsoft Channel 9 video, and is listed as an editor of the W3C's 1998 draft of XML 1.0.

Vulpe said that i4i's patent describes user-defined schemas in XML, which is what Microsoft calls custom XML. He added that i4i's invention predates the W3C's XML recommendation.

"The invention actually came to fruition way before XML even had been conceived of," Vulpe said. "We developed this--Steve and I--and filed this patent in 1994. The invention was actually conceived of in November of 1993."

Microsoft's court filings have argued that the custom XML invention was obvious, but the jury found otherwise. Vulpe explained that Microsoft tried but couldn't get the technology to work.

"Microsoft had tried in 1994 through 1996 to make its Word product process SGML, and it failed miserably. It was a disaster," Vulpe said. "Microsoft and a lot of other companies had tried to figure out how to make a generic content tool be able to process either SGML or now XML, and we're the only guys who figured out an invention on how to solve that."

Now, any software program (such as Word, Photoshop, etc.) can take advantage of custom XML, Vulpe explained. Previously, you had to have a tool that was dedicated to processing user-defined XML, such as Arbortext, XMetaL or i4i's Grif, he explained.