The plot thickens as the United States Court of Appeals for the Federal Circuit issued an Order earlier today granting Microsoft an expedited appeal of its patent infringement loss to i4i Limited Partnership. In addition to losing approximately $300 million in a decision handed down on Tuesday, August 11, 2009, Judge Leonard Davis of the United States District Court for the Eastern District of Texas also entered a permanent injunction that will become effective 60 days from the judgment date, ordering Microsoft to cease selling the ubiquitous word processing program Word. Of course, Microsoft could remove the infringing functionality from Word, which relates to the opening of a file containing custom XML. Early news reports confidently stated that Microsoft would have absolutely no difficulties accomplishing this task, which were ridiculous on their face, as evidenced by Microsoft scrambling at break-neck speed to secure an expedited hearing in extraordinary fashion. The oral arguments have been scheduled for Wednesday, September 23, 2009, so it appears as if this matter will be coming to a head sooner rather than later.
The idea that Microsoft could simply remove the infringing aspects of Word within 60 days was fanciful at best. Computer software has become increasingly complex, and any user of Microsoft products knows that many Microsoft products simply are not compatible with other software. As software gets more and more complex compatibility issues grow almost exponentially. For example, despite the claims of Microsoft, anyone who has used Vista knows that the operating system is hopelessly flawed. Many programs and peripherals simply are not compatible with Vista, and in my experience Microsoft’s flagship software, Internet Explorer, is less stable on a Vista platform than is Mozilla Firefox. Compatibility is an enormous problem even when you have years to develop software, so the thought that Microsoft could quickly and easily remove infringing aspects within 60 days and not experience potentially crippling and unforeseen compatibility and functionality problems was naive.
The Federal Circuit uncharacteristically granted Microsoft an extremely fast appeal in this case, and as a part of Microsoft’s strategy they predictably requested a stay from Judge Davis’ permanent injunction. Microsoft, in fact, requested that the Federal Circuit grant an administrative stay, but that attempt was denied by the Court, thus leaving Microsoft to seek a stay pending appeal. i4i has until August 25, 2009, to file papers responsive to this request from Microsoft. Microsoft has until August 25, 2009, to file its appeal of Judge Davis’ ruling. Then i4i has been given until Tuesday, September 8, 2009. An earlier order from the Federal Circuit had given i4i until Monday, September 7, 2009, and presumably the error was caught, because that is Labor Day, a National holiday in the U.S., and the Federal Circuit will not be open for business that day. Similarly, an early order granted Microsoft until September 11, 2009, within which to file a response to i4i’s brief, but this was subsequently extended until Monday, September 14, 2009, by 12 noon.
At least one news outlet is reporting that the Federal Circuit has waived the requirement that Microsoft post a bond pending appeal, but has ordered that if Microsoft loses the appeal the payment in lieu of bond must be made within 15 days. I see now mention of this anywhere in the documents available through PACER, but given the fast moving and fluid nature of this matter it is certainly possible that the Federal Circuit has done just this and some reporters have obtained a copy of such an order. The point of requiring the posting of a bond in order to move forward with an appeal is largely, if not solely, based on the fact that the party who was victorious will suffer continued harm assuming they remain victorious on appeal. The posting of a bond balances the risks and hardships, guaranteeing that those who appeal and lose will pay for the additional harm caused. Given Microsoft’s status as one of the largest companies in the United States, and given their large cash holdings, there is little doubt that Microsoft would be able to pay at the conclusion of the appeal should they continue to be on the losing side. Thus, if reports are true, this should not be seen as the Federal Circuit siding with Microsoft over a smaller, Canadian company, but rather a justifiable approach given Microsoft’s ability to pay is hardly in doubt.