Upholding patent-infringement charges by a small Toronto firm against Microsoft Tuesday, a US appeals court ordered the software giant to stop selling Word by Jan 11 and pay $290 million in damages.

Microsoft said it will introduce the copies of Word 2007 and Office 2007 without the offending technology by the court-ordered deadline. Tuesday's ruling upholds an earlier injunction against Microsoft that banned the technology giant from selling Word.

The ban was imposed by a Texas court in August after Toronto software firm i4i took Microsoft to court for stealing its patented technology for use in the software. The court had also granted $290 million in damages to the Toronto firm.

Microsoft challenged the ruling in the US Federal Circuit Court of Appeals. Tuesday's ruling by a three-judge bench comes into effect from January 11 next year, banning sale of a number of versions of Microsoft's word-processing software.

In its ruling, the appeals court in Washington said, “In this case, a small company was practicing its patent, only to suffer a loss of market share, brand recognition, and customer goodwill as the result of the defendant's infringing acts.

“The district court (which imposed the ban in August) found that Microsoft captured 80 percent of the custom XML market with its infringing Word products, forcing i4i to change its business strategy.”

The patent stolen by Microsoft was filed by i4i filed in 1998. It pertains to the use of technology that can open documents using the XML computer programming language. The Toronto company said Microsoft stole this technology when it created Word 2003 and Word 2007 software.

Word is the mainstay of Microsoft's business. Its sales accounted for 90 percent of the $18.9-billion earned by the software giant's Microsoft Business division in 2008. Microsoft said it will have new versions of Word 2007 and Office 2007 without the technology patented by the Canadian firm.

In a statement, Microsoft public affairs director Kevin Kutz said his company has “put the wheels in motion to remove this little-used feature from these products.''

He expected that the copies Microsoft Word 2007 and Office 2007 without the offending technology will be available by January 11.

“In addition, the beta versions of Microsoft Word 2010 and Microsoft Office 2010, which are available now for downloading, do not contain the technology covered by the injunction,'' he said.

Lauding the court verdict, i4i chairman Loudon Owen said in Toronto that he was “pleased with the ruling from the appeals court which upheld the lower court's decision in its entirety. This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed.''

The Canadian said, “The same guts and integrity that are needed to invent and go against the herd, are at the heart of success in patent litigation against a behemoth like Microsoft.''

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