Microsoft calls for a new trial

Microsoft Corp. called the claim by Canadian developer i4i Inc. that it plotted to drive the company out of business “distorted,” and “a breathless tale” that was not supported by the evidence, according to a court documents.

At the least, Microsoft told the U.S. Court of Appeals for the Federal District, it deserves a new trial. “At minimum, a new trial is warranted,” the company said in a reply brief filed Monday.

But Microsoft also pressed the appeals court for a complete reversal, saying that decisions made by the Texas lower court led “to erroneous verdicts of infringement and validity, and grossly unsupportable damages.”

The head of the Toronto-based firm, however, maintained that the court’s ruling to stop the sale of Microsoft Word was the “correct decision.”

“i4i is confident we will prevail on appeal. We believe the final judgment in favour of i4i, which included a finding of willfull patent infringement by Microsoft and an injunction against Microsoft Word, was the right decision,” said Loudon Owen, chairman of i4i.

Last week, Loudon filed a responding brief in the United States Court of Appeals for the Federal District refuting Microsoft’s claims. The i4i brief “refutes each and every one of the weak defences Microsoft repackaged from the trial and raised on appeal,” Loudon said.

i4i also argued that the injunction that blocks Microsoft from selling current versions of its popular Word software should stand.

“At the same time Microsoft was praising the improved functionality that i4i’s product brought to Word, and touting i4i as a ‘Microsoft Partner,’ Microsoft was working behind i4i’s back to make i4i’s product obsolete,” i4i’s lawyers charged.

“Just five days after i4i’s initial meeting with the XML for Word team, for example, Microsoft executives discussed plans for Word and how it would affect the custom-XML authoring market, noting that it would ‘eventually make obsolete any competitive attempts by third parties to conquer that market,'” the brief continued.

In a patent infringement case the company brought against Microsoft in 2007, i4i accused the software giant of using its technology to build XML editing and “custom” XML features into Word 2003, and later in Word 2007. Microsoft’s response brief saved its most blistering words for i4i, the Toronto-based company that in 2007 said Microsoft illegally used its patented technology to add XML editing, and “custom” XML features, to Word 2003, and later, to Word 2007.

“Having little to rebut Microsoft’s arguments on the merits, i4i devotes the majority of its brief to a distorted presentation of irrelevant ‘evidence’,” read Microsoft’s brief. “i4i labors mightily to paint Microsoft pejoratively, portraying it as a once-close ‘business partner’ that supposedly stabbed i4i in the back and ‘usurped’ i4i’s patented invention.”

Last week, i4i claimed Microsoft marketed the former’s XML software to potential customers at the same time it planned to make that software obsolete by building similar features into Microsoft Word using its technology.

Within days of a 2001 meeting between representatives of the two companies, according to an internal e-mail, someone at Microsoft said, “[I]f we do the work properly, there won’t be a need for their [i4i’s] product,” i4i said as it linked the two events.

That’s nothing but a tall tale, Microsoft said.

“Unfortunately for i4i, the truth is both comparatively mundane and innocent: After a handful of unfruitful meetings, i4i and Microsoft went their separate ways and Microsoft later released the custom XML functionality for Word that it had told i4i it was developing,” the company’s lawyers said in the brief.

Microsoft’s reply was the latest round in a patent infringement case that started two years ago when i4i accused the software maker of using its technology in Microsoft’s popular Word software.

Last May, a Texas jury said Microsoft was guilty of patent infringement, and awarded i4i $200 million in damages. In August, U.S. District Court Judge Leonard Davis added more than $90 million in additional damages and interest to Microsoft’s bill, then issued an injunction that would have prevented it from selling Word 2003 and Word 2007 as of Oct. 10.

Microsoft quickly won a fast-track appeal after warning the three appellate judges that the injunction would create sales chaos for the company and its partners, including Hewlett-Packard Co. and Dell Inc., the world’s two largest computer makers. The injunction, said Microsoft, meant it might have to pull Word, and the Office 2003 and Office 2007 suites, off the market for months.

Two weeks ago, the court of appeals suspended the injunction while it hears and decides Microsoft’s appeal.

Most of Microsoft’s brief was a recitation of points made last month in its request for an appeal, when it lambasted Davis for his handling of the case and called the verdict a “miscarriage of justice.” Microsoft again hit on some of the same points, criticizing Davis’ rulings during the trial and arguing that i4i’s patent was obvious, and thus not protected.

But the company’s lawyers also disputed claims made by i4i in the brief it submitted Sept. 8, particularly the conclusion that Microsoft had schemed to tout i4i’s software on the one hand, and use its technology in Word on the other.

“Most of the evidence demonstrates only that i4i attended certain meetings with Microsoft,” the company said. “There is absolutely no evidence in this record from which a juror reasonably could infer that Microsoft had knowledge of the contents of the [i4i] patent.”

Nor should the injunction against selling current versions of Word stand, said Microsoft. “Even assuming that i4i had shown both competition and harm tied to that competition, an injunction is inappropriate because i4i has not shown that whatever harm it has suffered is irreparable and cannot be remedied by money damages,” Microsoft stated.

“Today’s reply brief is an opportunity to reinforce our key assertions in this case,” said Microsoft spokesman Kevin Kutz on Monday. “We believe the district court erred in its interpretation and application of the law in this case [and] we look forward to the September 23 hearing before the U.S. Court of Appeals.”

Kutz’s reference was to the oral hearing scheduled for next week, when both parties will present their arguments before the panel of three judges.

i4i was unavailable for comment on Microsoft’s brief.

-with files from Nestor Arellano

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