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I4i, Microsoft back in court today Add to ...

Toronto-based i4i is up against giant Microsoft Corp. in a patent dispute that the small Canadian software company likes to explain in down-to-earth terms.

"Think of it as we invited them into our house, we went to the fridge and pulled out a beer," i4i founder Michael Vulpe said in an interview from Toronto.

"They saw where the fridge was, where the beer was and they just knocked us out of the way and stole all the beer."

In more legalistic terms, i4i has argued successfully in court that Microsoft knowingly violated a U.S.-issued patent owned by i4i because of the way that the widely used Word word-processing program handles documents.

The two companies are back in court in the United States on Wednesday in a case that started in 2007 and has seen more than $30-million (U.S.) spent on the dispute.

The patent infringement case involves some versions of Microsoft Word 2003 and Word 2007 that use i4i's technology to process electronic documents.

Microsoft is appealing a recent ruling by a Texas judge that says it infringed on i4i's patents and ordered the U.S. software giant to pay i4i $290-million.

In the meantime, Microsoft recently won a legal ruling that will allow it to keep selling dispute versions of its Word desktop software while the appeal goes ahead.

"We are pleased with the result and look forward to presenting our arguments on the main issues on Sept. 23," said Kevin Kutz, a Microsoft spokesman.

Microsoft wouldn't comment further on the case before the Federal Circuit Court of Appeal.

Loudon Owen, i4i chairman, said the Toronto company is not interested in an out-of-court settlement and wants Microsoft to remove its technology from Word products.

"Our objective is clear and it always has been. It's to compete," Mr. Owen said.

Technology analyst Duncan Stewart said disputes over technology are common and about 80 per cent end up being resolved without a legal ruling.

"The most likely outcome here is that there's an out-of-court-settlement, or that the judge gives the two sides a little more time to come to a settlement," said Mr. Stewart, director of research and analysis at Toronto-based Dsam Consulting.

But Mr. Stewart said it's important for a large company like Microsoft to put up a good legal fight whether it's right or wrong "so that nobody looks at them as an easy mark, as a sucker."

Mr. Owen said Microsoft came to i4i around 2000 because the Redmond, Wash.-based company had "very important customers" in the military and intelligence industries and couldn't satisfy their demands.

"We sat down and explained in lurid detail how it worked and why, all the time believing we were protected because we had a patent," Mr. Owen said of i4i's technology.

At issue, is a technology that Mr. Vulpe and Mr. Owen believe is key to managing what's called "unstructured data," or mountains of information that aren't easily usable by a computer program.

"We developed a technology that enabled Word to operate effectively using what's called XML. Our technology allows all of the data that's out there being created, whether its in Word or in fact in other applications, to be put in a data base," Mr. Owen said.

"Where this applies most often is in a large governmental or large corporate environment where you have many, many people creating information that they have to share."

Mr. Owen noted that Microsoft speaks out regularly against its software being appropriated by others.

"They make speeches about it and I believe they call it pirated software."

While many of i4i's customers are pharmaceutical companies such as Bayer, Merck and Nexgen Pharma, i4i was the supplier technology to the U.S. patent office earlier this decade for an overhaul of its Web site for patent submissions.

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