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Microsoft loses Word patent appeal, will change code

After a three-judge panel upholds an earlier patent verdict against Microsoft, the company says it will change Microsoft Word 2007 to avoid having an injunction halt sales in January.

Updated 12:20 p.m. PST with additional information and background.

Microsoft has lost an appeal in a patent case that will force it to alter Microsoft Word to avoid an injunction on sales of the product.

I4i Chairman Loudon Owen McLean Watson

Microsoft lost a patent case involving a companycalled I4i in May, after a jury ruled that Microsoft infringed one of i4i's patents with a custom XML feature found in Word. In August an injunction was placed on sales of Word pending the appeal, which did not go in Microsoft's favor Tuesday.

"We couldn't be more pleased with the ruling (click for PDF) from the appeals court which upheld the lower court's decision in its entirety. This is both a vindication for I4i and a war cry for talented inventors whose patents are infringed," said Loudon Owen, chairman of I4i, in a statement.

The technology in question involves "any Microsoft Word products that have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML," according to a copy of the injunction released in August. I4i's Owen said at the time that his company wasn't out to force a halt in sales of one of Microsoft's most profitable products, and it doesn't appear that will happen.

Microsoft said it planned to remove the feature from all copies of Microsoft Word 2007 that will be sold on or after January 11, 2010. Prior copies of Word 2007 are not affected by the injunction, and Word 2010 is being designed without the infringing technology, the company said.

"While we are moving quickly to address the injunction issue, we are also considering our legal options, which could include a request for a rehearing by the Federal Circuit Court of Appeals en banc or a request for a writ of certiorari from the U.S. Supreme Court," said Kevin Kurtz, director of public affairs for Microsoft, in a statement.

The ruling also means that Microsoft is on the hook for $200 million in damages awarded by the jury as well as additional fees and interest. Reuters reported the total would reach $290 million.

I4i, unlike other high-profile patent plaintiffs of recent memory (what's NTP up to these days?), appears to actually have a business. The company, based in Toronto, helps companies publish and organize documents created with XML, and appears to have carved out a niche in the pharmaceutical and biotech industries.

The patent in this case, No. 5,787,449, was issued in July 1998.