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Microsoft Plans to Fight Ban on Word

A federal district court judge has ordered Microsoft to stop selling Word in the U.S. - and the tiny company behind the lawsuit is digging in for a David vs. Goliath showdown.

Toronto-based i4i, which has 30 employees, claims that Microsoft violated an obscure patent related to Extensible Markup Language or XML. It's a key software component of many Web sites and computer programs, including Word.

Judge Leonard Davis agreed Tuesday, ordering Microsoft to pay $290 million in fines and stop selling Word in the U.S. in 60 days. That could derail a core business for the world's largest software maker.

As part of Microsoft Office, Word is used by hundreds of millions of people worldwide. Office accounted for more than $3 billion in sales in the company's last fiscal year.

"It's not a question of fear or pride or anything else," Loudon Owen, i4i chairman says. "We're very respectful of Microsoft, but when you're in the right you have to persevere."

Microsoft plans to appeal. "We are disappointed by the court's ruling," said Microsoft spokesman Kevin Kutz in a statement. "We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid."

I4i, which mainly makes software for drug and defense companies, obtained the patent for a "customized XML" tool in 1998. XML is a specialized alphabet that can capture any kind of computer file as a regular text.

Microsoft started using XML as an alternative way to save Word files in Word 2003 and made it the default format for all Office files in Office 2007.

This made it easier for Microsoft and its partners to create programs such as accounting software that generates reports in Word formats, said Rob Helm, analyst at research firm Directions on Microsoft.

I4i sued Microsoft in 2007, claiming that Word uses the patented process. Now, "Microsoft is behind the eight ball and has 60 days to see if it can get the federal appeals court to stay the injunction," said Henry Sneath, a Pittsburgh intellectual property lawyer.

No one expects Microsoft to actually pull Word off the market. It's a big company with deep pockets that has faced many legal challenges over the years. It could win the appeal, settle with i4i, or even buy out the company.

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