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$290m and a franchise on the line

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America's top court will hear Microsoft defend claims that its Word software infringed on patens held by software maker i4i.

As reported by The Wall Street Journal, the US Supreme Court has agreed to hear Microsoft's appeal against a 2009 court order that it must pay i4i $290m for infringements of patents by Word. A decision is expected by the end of June 2011.

Microsoft had asked the Supreme Court to hear its appeal, while i4i had argued against.

In a statement sent to The Register, Microsoft welcomed the judges' decision to hear its case. David Howard, Microsoft vice president deputy general counsel for litigation, said: "We are gratified by the Court's decision. It's a clear affirmation that the issues raised in this case are critical to the integrity of our patent system. We look forward to presenting our case to the Supreme Court."

Word is an integral component of Microsoft's multi-billion-dollar Office franchise. i4i sued Microsoft for infringement by custom XML in Office, filing its case in the federal District Court for the Eastern District of Texas, Tyler Division, which is historically very friendly to patent holders.

i4i claimed that Microsoft had worked to deliberately destroy its business and that Redmond only started work on custom XML in Word after it had partnered i4i on Office.

The judge in the original 2009 case not only ordered Microsoft to pay $290m to i4i, but also permanently barred Microsoft from selling the 2003 and 2007 version of Word with the offending patents.

Microsoft sidestepped the ban by releasing a patch for the offending Word code, but the $290m fine was subsequently upheld by a US appeals court.

This is Microsoft's third brush with the Supreme Court in 10 years. Twice, Microsoft tried - and failed - to have cases heard by the court. In 2000 and 2001, Microsoft wanted the appeals portion of its anti-trust trial to be fast-tracked to the court. The court heading the Department of Justice's case against Microsoft – where Redmond was accused of abusing its power as a monopolist – had ordered a company break-up, among other remedies. The US Supreme Court rejected Microsoft's attempt for a hearing, and the case went through usual channels, as it was handed back down the lower appeals court.

In 2005, the Supreme Court declined to review the damages ruling against the company on patent-infringement by Internet Explorer, a case brought by Eolas Technologies.

The Supreme Court did find in Microsoft's favor in a case brought by AT&T. The telco had sued Microsoft in 2001 saying Windows infringed on its patents. Microsoft had admitted the violation and settled, but AT&T went on to claim that the agreement had been broken by Microsoft selling Windows with the offending code outside the US. The court found in Microsoft's favor that damages could not be awarded for damages incurred internationally - by shipping Windows outside the US.

A ruling in the i4i case will be eagerly awaited. Patent holders with a stake in US commerce will hope the Supreme Court clarifies the rules governing how patent cases are tried and settled. It will certainly be interesting to see whether the court sides with the tiny patent holder in this case or the bigger defender - a company well used to being the one that drags others into the courts on patent-infringement charges.

What ever the Supreme Court's decision, it's unlikely to clean up the rats' nest of patent ownership and litigation in the US. A decision is more likely to become one more piece of case law material that litigants and defendants use to support their arguments in future cases. ®

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