Davis ordered Microsoft to pay in excess of $290 million and issued a permanent injunction against the software giant for the "449 patent." The judge ruled that Microsoft willfully infringed on the patent and permanently enjoined Microsoft from selling Word 2003 and Word 2007 in the United States and using any infringing future Word products to open an XML file containing custom XML.

"We are very pleased with the terms of the final judgment. The financial award due to i4i is now over $290 million and a permanent injunction has also been issued against Microsoft," said Michel Vulpe, founder of i4i and an inventor of the 449 patent. "We feel vindicated with this result. i4i will do its utmost to support custom XML users, which is particularly important to implement the ISO 29500 OOXML standard."

The Case Against Word

The technology in this case focuses on a particular type of electronic document. Generally, a "document" as manifested in a computer program has two distinct parts: The content -- the text that the user has created in the document -- and the structure -- the encoding that allows the computer to recognize the meaning of the text.

A type of structural information within an electronic document sometimes comes in the form of metacodes. Standardized computer languages were developed that utilized metacodes to allow a computer to understand the meaning behind certain text that a user placed in a document. An early example of these languages is the Standard Generalized Markup Language (SGML). Later, a markup language was developed called the Extensible Markup Language (XML).

The 449 patent created a reliable method of processing and storing content and metacodes separately and distinctly. The data structure primarily responsible for this separation is called a metacode map. According to the patent, the metacode map allows a computer to manipulate the structure of a document without reference to the content.

Enforcing Patents

Over the years, Microsoft has developed different versions of Word with increasing functionality. In 2003, Microsoft introduced a version of Word with XML editing capabilities. In 2007, i4i LP filed action, alleging Microsoft infringed the 449 patent. At a May 2009 trial, i4i contended that Microsoft's use of certain Word 2003 and all of Word 2007 products for processing XML documents with custom XML elements infringed the patent.

"This judgment demonstrates how a specialized fund can bring capital and patent-litigation management expertise to a company with an important patented invention to help it level the playing field when enforcing its rights against a much larger corporation," said Michael Cannata, director of i4i LP and adviser to the Northwater Intellectual Property Fund.

i4i LP is a licensing entity affiliated with i4i. i4i LP owns the 449 patent issued by the U.S. Patent Office in 1998. Investors in i4i LP include McLean Watson Capital and the Northwater fund.