I4i Ltd. Partnership v. Microsoft Corp. (901422128)

Read for 4/20/11

Reading Notes

Decided by the CAFC in 2010
Infringement of an invention for editing custom XML
I4i sued Microsoft because the custom XML in versions of Word infringed
- Jury found Microsoft liable for willful infringement
- District Court issued an injunction on future sales of Word
CAFC affirms the injunction and modify its effective date
June 1994 i4i applied for a patent for a method for processing and storing information about the structure of electronic documents
- An add-on for Word based on the invention allows Word to work with documents having custom XML
Specifications of the '449 patent
- "Metacode is an individual instruction which controls the interpretation of the content of the data"
- Improved method for editing documents containing XML - stores content and metacodes separately
Improvement means you can work solely on content or structure
Filed suit in 2007
- Infringed claims 14, 18 and 20 by making, using, selling, etc. Word products capable of processing or editing custom XML
- Microsoft counterclaimed for invalidity - not found - and appealed
Issues raised on appeal

1. Construction of claim term "distinct"
2. Jury's validity finding
3. Jury's infringement finding unsupported bu substantial evidence
4. Damages award
5. Issuance and terms of injunction

JMOL only appropriate if the court finds that a "reasonable jury would not have a legally sufficient basis to find for the party on that issue"
- Strict standards to overturn a judgment of wrong jury instruction
"Distinct" is used to describe how the metacode map and mapped content are stored
Microsoft argued "distinct" added two requirements

1. Storing metacode map and mapped content in separate files
2. Ability to edit the document's content and its metacode map independently and without access to each other

- District court rejected these
CAFC agrees with the DC's rejection of Microsoft's limitations
- The term "file" never appears- no clear intent to limit claim scope
- Did not disavow storage means that were not files in the prosecution history
- No claims mention "independent manipulation" - uses the term "separate"
- Conclude that independent manipulation is a benefit but not a limitation
Two issues of validity

Under Rita, DeRose, and Kugimiya
Can only review if the DC's legal conclusion of nonobvious was right based on presumed factual findings
- In light of jury's factual findings, Microsoft did not establish obviousness

S4 was delivered to clients in early 1993
S4 did not create a metacode map
Source code was destroyed so largely based on credibility of creators
- Both claim it did not practice the '449 patent
Microsoft said i4i had to come forward with corroboration to "rebut" prima facie case of anticipation - not true in this instance
- Corroboration was not required in this case
Was sufficient evidence for a jury to find no anticipation - no JMOL

Microsoft wants new trial because of errors in jury instruction about contributory infringement
- CAFC is satisfied with the instruction
Also thinks the judge was wrong to tell them to focus on the XML editor and not all Word
- Allowed because it is a separate an distinct feature
Jury ruling should be upheld if either contributory or induced infringement is supported
- Was also sufficient evidence to support the legal theories
Direct - occurs only when someone performs the claimed method
Contributory - liable if that party sells or offers to sell a material or apparatus for use in practicing a patented process
- Must be substantial evidence to support a finding under this theory
- Must be used in substantial non-infringing ways
Microsoft definitely knew about the '449 patent
Induced - patentee must show direct infringement and that the infringer "knowingly induced infringement and possessed specific intent to encourage another's infringement"

Based largely on expert testimony of damage estimations
- Based on Georgia-Pacific factors
DC did not abuse its discretion is finding Wagner qualified to apply damages methodology
- All expert testimony was relevant and properly fact-based
Survey was extremely conservative
Cannot reach the question of the size of the damages because Microsoft did not file a pre-verdict JMOL on damages
Not entitled to a new trial
Enhanced damages can be added for willful infringement
- Jury found it willful so the DC added $40 million

Microsoft never attacked the jury instruction or the basis for their finding of willfulness
WIllfulness happens "when the infringer was aware of the asserted patent, but nonetheless acted despite an objectively high likelihood that its actions constituted infringement of a valid patent"
- Must show they were aware of this objectively high risk
Microsoft never tried to avoid infringement
Proof that they know of the objectively high risk

Microsoft cannot sell, offer to sell, and/or import any infringing Word products
- Cannot use Word to open an XML file containing custom XML
- Cannot encourage anyone to use Word in that way
- Cannot provide support that describes how to use Word in this way
- Cannot test Word's ability to do this
Only applies to users who purchase or license after the date the injunction takes effect
Affirm issuance and scope
- Rule that the date should be 5 months, not 60 days, from August 11, 2009
i4i's product was rendered obsolete - irreparable injury

Claim is not limited to embodiments described unless there is a clear intention to do so by the patentee
- Not every benefit it a limitation