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The U.S. Court of Appeals for the Federal Circuit has temporarily stayed an injunction against the sale of Microsoft (Nasdaq: MSFT) Word that had been set to go into effect next month.
Microsoft will be able to continue selling copies of its ubiquitous word processing software -- at least until the appeal of the original judgment is heard.
Judge Leonard Davis of the U.S. District Court for Eastern Texas issued the injunction in mid-August, after a jury found that Microsoft had infringed on a patent held by a Toronto-based i4i. The company had sued Microsoft in 2007 for patent infringement, alleging that Microsoft Word unlawfully infringed on its patent based on XML, DOCX and DOCM file formats.
The court also ordered Microsoft to pay US$240 million in damages.
Shortly after the decision Microsoft asked the appeals court to stay the injunction.
Wiggle Room
The appeal will give Microsoft some room to maneuver in the short term. Its ultimate options, though, are fairly limited: It must either successfully overturn the lower court decision, negotiate a settlement with i4i, develop a workaround that meets the scrutiny of the court, or achieve some combination of the above.
Having the injunction lifted, at minimum, gives Microsoft a little more leverage in negotiations with i4i. Indeed, Microsoft pointed to the overwhelming impact a ban would have in its court filing .
"Absent a stay from this Court, on October 10, 2009, Microsoft will be compelled to stop distributing Word and the popular Office software suite -- which includes Word and programs not implicated in this litigation, such as Excel and Power Point -- in the U.S. market until it is able to distribute the redesigned versions of Word and Office."
The friend of the court briefs filed by Dell (Nasdaq: DELL) and HP (NYSE: HPQ) last month are also telling as to the injunction's potential market devastation. The two manufacturers said a ban would affect both PC users and computer makers. Indeed, if the injunction should be affirmed when the appeal is heard on Sept. 23, HP requested that it not take effect until 120 days after the court's decision.
No doubt, the court looked at the consequences -- such as the resulting market upheaval -- an injunction would bring, and factored them into its decision, said Christopher M. Collins, a partner with Vanderpool, Frostick & Nishanian.
Of course, if Microsoft should lose its appeal, the day of reckoning will only have been delayed. However, Collins is not counting Redmond out just yet.
"Microsoft typically does a very good job on its legal analysis," he told the E-Commerce Times. "It usually gets its way in court because it has very sharp lawyers."
Arguments to Come
Also, the Court of Appeals has a reputation for reversing patent cases related to software or computers, said Maria Savio, a attorney with Gottlieb Rackman & Reisman, in an earlier interview with the E-Commerce Times.
Microsoft raised a number of points in its defense -- any of which could be used as a basis for reversing the lower court's decision, she said.
The Federal Circuit will now review the Texas trial court's decision on an expedited basis in view of the potential impact of the decision, Raymond Van Dyke, a technology attorney in Washington, D.C., told the E-Commerce Times.
"Just as with the BlackBerry case, a controversial -- and in this case, foreign -- patentee has taken on a behemoth company with a hugely popular product and won at trial," he said. "The arguments by Microsoft, Dell, Hewlett-Packard and others, however, concerning the potential 'irreparable harm' or disruption to this flagship product and the millions using it daily won the day with the Federal Circuit judges."
Whether that victory will be repeated on Sept 23 remains to be seen, of course.
"As with the BlackBerry case, many eyes will be on the court," said Van Dyke.
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