Thursday, August 13, 2009

Microsoft Word + custom XML = no more?


Tuesday, Judge Davis of the Eastern District of Texas entered a permanent injunction against Microsoft, enjoining the company from:
1. selling, offering to sell, and/or importing in or into the United States any Infringing and Future Word Products that have the capability of opening a .XML, .DOCX, or .DOCM file (“an XML file”) containing custom XML;
2. using any Infringing and Future Word Products to open an XML file containing custom XML;
3. instructing or encouraging anyone to use any Infringing and Future Word Products to open an XML file containing custom XML;
4. providing support or assistance to anyone that describes how to use any infringing and Future Word Products to open an XML file containing custom XML; and
5. testing, demonstrating, or marketing the ability of the Infringing and Future Word Products to open an XML file containing custom XML.
The Court also entered final judgment, with damages:
  • $200 million for infringement
  • $40 million for willful infringement
  • ~$11.8 million for post-verdict damages
  • ~$38 million in pre-judgment interest
  • (for a total of ~$290 million)
i4i sued Microsoft for infringing U.S. Patent No. 5,787,449 directed to separately manipulating the architecture and content of a document. The '449 invention relied upon a "metacode map," which allowed a reliable method of manipulating the structure of a document without reference to its content. Claims 1-13 were found to be invalid for being indefinite under 35 U.S.C. § 112 ¶ 2.

Claim 14 provides:
14. A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising:
providing the mapped content to mapped content storage means;
providing a menu of metacodes; and
compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and
providing the document as the content of the document and the metacode map of the document.

Direct Infringement

Microsoft's offered 3 arguments that there was no direct infringement: (1) no evidence that Word created a "data structure," as required by the Court's construction of the term "metacode map;" (2) insufficient evidence that Word contained "metacodes;" and (3) improper construction of the terms "distinct map storage means," "mapped content storage means," and "mapped content storage." The Court was not persuaded by any of these arguments.

Indirect Infringement

Microsoft next argued that contributory and inducement infringement was also improper. The Court explained:
A cause of action for contributory infringement flows from 35 U.S.C. § 271(c). That section provides:

Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.


Induced infringement is a separate cause of action from contributory infringement. “In order to prevail on an inducement claim, the patentee must establish first that there has been direct infringement, and second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement.” ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312 (Fed. Cir. 2007) (internal quotation marks omitted). “[I]nducement requires evidence of culpable conduct, directed to encouraging another's infringement, not merely that the
inducer had knowledge of the direct infringer's activities.” Id. at 1306. Furthermore, “[t]he plaintiff has the burden of showing that the alleged infringer's actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (quoting Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)).

Both forms of indirect infringement require the plaintiff to prove corresponding acts of direct infringement. See DSU Med. Corp., 471 F.3d at 1303. Importantly however, a patentee may prove both indirect infringement and the corresponding direct infringement by circumstantial evidence. See Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1219 (Fed. Cir. 2006). “There is no requirement that direct evidence be introduced, nor is a jury's preference for circumstantial evidence over direct evidence unreasonable per se.” Id. Moreover, “[t]he drawing of inferences, particularly in respect of an intent-implicating question . . . is peculiarly within the province of the fact finder that observed the witnesses.” Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986); see also Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed. Cir. 2005) (declining to disturb jury's verdict because intent to induce infringement “is a factual determination particularly within the province of the trier of fact”).
Microsoft offered 3 arguments concerning contributory infringement: (1) insufficient evidence that Microsoft knew Word was "patented and infringing;" (2) insufficient evidence that Word did not have a substantial non-infringing use; and (3) the software couldn't form the basis of a contributory infringement claim because the only claims asserted were process claims. The Court was not persuaded by any of these arguments.

Willfulness
To prevail on a charge of willful infringement, the patentee must show the accused infringer acted with objective recklessness. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). First, the patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions infringed a valid patent. Id. The accused infringer's state of mind is irrelevant to this objective inquiry. Id. If the patentee meets this threshold objective standard, the patentee must further demonstrate that the accused infringer knew or should have
known of this objectively high risk. Id. Whether infringement is willful is a question of fact and reviewed for substantial evidence. Metabolite Labs., Inc. v. Labs. Corp. of Am. Holdings, 370 F.3d 1354, 1359 (Fed. Cir. 2004).
Microsoft offered a number of arguments, none of which were convincing to the Court, including: (1) because the Court invalidated some claims of the '449 patent, Microsoft asserted defenses to the remaining claims, and i4i involuntarily dismissed some accused products, there was no willfulness; and (2) insufficient evidence of whether Microsoft knew of the likelihood of infringement.

The Court then addressed obviousness and anticipation, as well damages.

The Court's claim construction order (also granting partial summary judgment of invalidity) can be found here. Supplemental claim construction here.

The Court's 65-page memorandum and order can be found here. The permanent injunction can be found here. And the final judgment can be found here.


2 comments:

  1. Thanks for the commentary on this case. Any speculation on how this will play out? I am unfamiliar with the history of this case or with i4i? Might this be the end of .docx or does it just force Microsoft to the table to fork over the cash for a license?

    I found this blog through your comment on the invent blog. I see that I have to log in through google for this comment, which redirects to my old blog on blogger (now defunct), it is now at http://www.mxlegal.com/blog. Congratulations on getting this up and running--good start.

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  2. Thank you for your comment, Robert. I have changed the setting requiring people to login to comment.

    As for what will happen in this case, good question. I imagine Microsoft will file an emergency motion asking to stay enforcement, and work diligently to: (1) discuss settlement with i4i; and (2) finalize and release a noninfringing workaround. I would think such a stay would be granted in this case, at least for some limited duration. But of course I am merely speculating.

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