Judges Question Damages in Microsoft-i4i Case

Appeals court judges hearing the latest round of a long-running patent fight between Microsoft (NASDAQ: MSFT) and Toronto technology company i4i on Wednesday questioned a lower court’s calculation that the software giant owed $290 million in damages to the smaller firm.

The appeals court made no immediate ruling on an injunction which a U.S. district court in Texas had imposed in August, that would have barred Microsoft from selling some versions of its popular Word application on the grounds that it infringed i4i’s patent relating to XML, or extensible markup language.

The U.S. Court of Appeals for the Federal Circuit stayed that injunction earlier this month, meaning there is no immediate threat to Microsoft’s sales of the 2003 and 2007 versions of Word, which contain the disputed technology.

Judge Kimberly Moore of the U.S. Court of Appeals for the Federal Circuit took issue on Wednesday with the calculation in the original ruling that XML users who bought a $90 version of Windows would have paid considerably more for a substitute.

“Not everyone who is willing to pay $90 or $200 for a product is willing to pay $500,” she said.

Microsoft also faced skeptical questioning as it asked the appeals court to overturn a lower court’s finding that it had infringed the smaller company’s patent and should be barred from selling versions of Word that contain it.

Microsoft acknowledged being in contact with i4i about the technology, but said there was no direct evidence that anyone at Microsoft actually read the disputed patent.

Judge Alvin Schall was skeptical. “I find it hard to believe that Microsoft didn’t read the patent,” he said.

i4i said that Microsoft approached it in 2000 with an eye toward potentially licensing its technology, and that the two companies made joint presentations but never reached a licensing agreement.

The appeals court judges gave no indication of when they will rule on the case.

The case is: i4i Limited Partnership and Infrastructures for Information Inc v. Microsoft, an appeal from the U.S. District Court for the Eastern District of Texas in case no. 07-CV-113.

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