Microsoft Loses to i4i

After a three-judge panel on Tuesday upheld patent-infringement charges alleged by a small Canadian company, Microsoft has been ordered to pay more than $290 million in fines, and either stop selling Word or strip its custom-XML editor.

The company lost its appeal of an August district court decision which had previously awarded i4i Inc. $200 million and slapped Microsoft with an injunction on selling Word in its current form. Toronto-based i4i manufactures and sells custom-XML add-ons to the ubiquitous word-processing software.

It’s highly unlikely that Microsoft will stop selling Word, so it must at least alter the software in order to comply with an injunction that will take effect Jan. 11. It also has to pay i4i more than $290 million after additional fees and interest that fattened up the jury-awarded legal penalty.

Tuesday’s ruling has put an end to a nearly three-year battle over i4i’s claims. The company first sued Microsoft in March 2007, alleging that the software superpower was knowingly infringing on a 1998 i4i patent by building a method of processing custom XML into one of Microsoft’s biggest cash cows, starting with Word 2003. Courtesy of blog.seattlepi.com