I4I Ltd. Partnership v. Microsoft Corp.

• Citation: 589 F.3d 1246
• Decision Date: 22 December 2009
• Docket Number: No. 2009-1504.,2009-1504.
• Parties: i4i LIMITED PARTNERSHIP and Infrastructures For Information Inc., Plaintiffs-Appellees, v. MICROSOFT CORPORATION, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

589 F.3d 1246

i4i LIMITED PARTNERSHIP and Infrastructures For Information Inc., Plaintiffs-Appellees, v. MICROSOFT CORPORATION, Defendant-Appellant.

No. 2009-1504.

United States Court of Appeals, Federal Circuit.

December 22, 2009.

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for plaintiffs-appellees. With him on the brief were Don O. Burley, Kara F. Stoll and Jason W. Melvin; and Erik R. Puknys, of Palo Alto, CA. Of counsel on the brief were Douglas A. Cawley and Jeffrey A. Carter, McKool Smith, P.C. of Dallas, TX, and T. Gordon White, of Austin, TX.

Matthew D. Powers, Weil, Gotshal & Manges LLP, of Redwood Shores, CA, argued for defendant-appellant. With him on the brief were Kevin S. Kudlac and Amber H. Rovner, of Austin, TX. Of counsel on the brief were Matthew D. McGill, Minodora D. Vancea, Gibson, Dunn & Crutcher LLP, of Washington, DC; and Isabella E. Fu, Microsoft Corporation, of Redmond, Washington. Of counsel was David J. Lender, Weil, Gotshal & Manges LLP, of New York, NY.

John W. Thornburgh, Fish & Richardson, P.C., of San Diego, CA, for amici curiae Dell Inc. and Hewlett-Packard Company. With him on the brief were John E. Gartman; and Indranil Mukerji, of Washington, DC.

Richard A. Samp, Washington Legal Foundation, of Washington, DC, for amicus curiae Washington Legal Foundation, of Washington, DC. With him on the brief was Daniel J. Popeo.

Before SCHALL, PROST, and MOORE, Circuit Judges.

PROST, Circuit Judge.

This is a patent infringement case about an invention for editing custom XML, a computer language. The owner of the patent, i4i Limited Partnership ("i4i"), brought suit against Microsoft Corporation ("Microsoft"), alleging that the custom XML editor in certain versions of Microsoft Word ("Word"), Microsoft's word-processing software, infringed i4i's patent. After a seven-day trial, the jury found Microsoft liable for willful infringement. The jury rejected Microsoft's argument that the patent was invalid, and awarded $200 million in damages to i4i. The district court denied Microsoft's motions for judgment as a matter of law and motions for a new trial, finding that Microsoft had waived its right to challenge, among other things, the validity of the patent based on all but one piece of prior art and the sufficiency of the evidence supporting the jury's damage award. Although statutorily authorized to triple the jury's damages award because of Microsoft's willful infringement, the district court awarded only $40 million in additional damages. It also granted i4i's motion for a permanent injunction. This injunction, which this court stayed pending the outcome of this appeal, is narrow. i4i Ltd. v. Microsoft Corp., No.2009-1504, ___ Fed.Appx. ___ (Fed. Cir. Sept. 3, 2009). It does not affect copies of Word sold or licensed before the injunction goes into effect. Thus, users who bought or licensed Word before the injunction becomes effective will still be able to use the infringing custom XML editor, and receive technical support from Microsoft. After its effective date, the injunction prohibits Microsoft from selling, offering to sell, importing, or using copies of Word with the infringing custom XML editor. Microsoft is also prohibited from instructing or assisting new customers in the custom XML editor's use.

On appeal, Microsoft challenges the jury verdict and injunction on multiple grounds. Because this case went to trial and we are in large part reviewing what the jury found, our review is limited and deferential. We affirm the issuance of the permanent injunction, though we modify its effective date to accord with the evidence. In all other respects, we affirm for the reasons set forth below.

BACKGROUND

i4i began as a software consulting company in the late 1980s. Basically, companies would hire i4i to develop and maintain customized software for them. Thus, while consumers might not find i4i's products on the shelves at Best Buy or CompUSA, i4i was in the business of actively creating, marketing, and selling software. In June 1994, i4i applied for a patent concerning a method for processing and storing information about the structure of electronic documents. After approximately four years, the United States Patent and Trademark Office ("PTO") allowed the application, which issued as U.S. Patent No. 5,787,449 ("'449 patent"). The invention claimed in the '449 patent forms the basis of this litigation. Since then, i4i has developed several software products that practice the invention. One of these products is "add-on" software for Microsoft Word, which expands Word's capability to work with documents containing custom XML.

XML is one of many markup languages. Markup languages tell the computer how text should be processed by inserting "tags" around text. Tags give the computer information about the text. For example, some tags might tell the computer how to display text, such as what words should appear in bold or italics. Tags can also tell the computer about the text's content, identifying it as a person's name or social security number, for instance. Each tag consists of a delimiter and tag name. The delimiter sets the tag apart from the content. Thus, a tag indicating that "717 Madison Pl. NW" is an address might appear as 717 Madison Pl. NW where "address" is the tag's name and "" are the delimiters. Custom XML allows users to create and define their own tags. i4i refers to tags and similar information about a document's structure as "metacodes." The specification of the '449 patent defines "metacode" as "an individual instruction which controls the interpretation of the content of the data." '449 patent col.4 ll.15-16.

The '449 patent claims an improved method for editing documents containing markup languages like XML. The improvement stems from storing a document's content and metacodes separately. Id. at col.6 ll.18-21. The invention primarily achieves this separation by creating a "metacode map," a data structure that stores the metacodes and their locations within the document. The document's content is stored in a data structure called "mapped content." Claim 14 is illustrative:

A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising:

providing the mapped content to mapped content storage means; providing a menu of metacodes; and

compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and

providing the document as the content of the document and the metacode map of the document.

Id. at col. 16 ll.18-30.

Separate storage of a document's structure and content was an improvement over prior technology in several respects. Importantly, it has allowed users to work solely on a document's content or its structure. Id. at col.7 ll.6-11, 17-20.

Since 2003, versions of Microsoft Word, a word processing and editing software, have had XML editing capabilities. In 2007, i4i filed this action against Microsoft, the developer and seller of Word. i4i alleged that Microsoft infringed claims 14, 18, and 20 of the '449 patent by making, using, selling, offering to sell, and/or importing Word products capable of processing or editing custom XML. i4i further alleged that Microsoft's infringement was willful. Microsoft counterclaimed, seeking a declaratory judgment that the '449 patent was invalid and unenforceable.

Before the case was submitted to the jury, Microsoft moved for judgment as a matter of law ("JMOL") on the issues of infringement, willfulness, and validity. The district court denied Microsoft's motions, and the case was submitted to the jury. The jury found that Word infringed all asserted claims of the '449 patent. The jury further found that the patent was not invalid, and that Microsoft's infringement was willful. It awarded $200 million in damages.

After trial, Microsoft renewed its motions for JMOL on infringement, validity, and willfulness. In the alternative, Microsoft moved for a new trial on these issues based on the sufficiency of the evidence supporting the jury's findings. Microsoft also argued it was entitled to a new trial based on errors in the claim construction, evidentiary rulings, and jury instructions. The district court denied Microsoft's motions. It granted i4i's motion for a permanent injunction and awarded $40 million in enhanced damages.

Microsoft now appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

Microsoft raises numerous issues on appeal. First, Microsoft challenges the district court's construction of the claim term "distinct." Second, Microsoft challenges the jury's validity finding, urging us to find that the '449 patent was anticipated or obvious as a matter of law, or at least grant a new trial on those issues. Third, Microsoft argues that the jury's infringement finding must be set aside because it is unsupported by substantial evidence. Fourth, Microsoft challenges the damages award, specifically the admission of certain expert testimony and the sufficiency of the evidence supporting the award. Finally, Microsoft challenges the issuance and terms of the permanent injunction. We address each of these issues in turn.

I. Standards of Review

For issues not unique to patent law, we apply the law of the regional circuit in which this appeal would otherwise lie. Thus, we apply Fifth Circuit law when reviewing evidentiary rulings and denials of motions for JMOL or new trial. Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1328 (Fed.Cir.2008).

We review denials of JMOL de novo. Cambridge Toxicology Group, Inc. v. Exnicios, 495 F.3d 169, 179 (5th Cir. 2007). JMOL is appropriate only if the court finds that a "reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue." Fed.R.Civ.P. 50(a)(1); see Cambridge Toxicology, 495...