Microsoft Files Reply in i4i Case

Microsoft filed its reply today to i4i's Brief in opposition to Microsoft's appeal. This brief does a good job trying to refocus attention to Microsoft's most winnable issues: (1) claim construction, (2) jury instructions, and (3) damages. The brief (correctly in my opinion) retreats from (abandons?) the "gatekeeper" theme that was so prevalent in Microsoft's opening brief.

From the brief:

i4i labors mightily to paint Microsoft pejoratively, portraying it as a once-close “business partner” that supposedly stabbed i4i in the back and “usurped” i4i’s patented invention. Yet that breathless tale is belied by i4i’s own allegations: i4i admitted there was no evidence Microsoft copied its technology and explicitly disclaimed making any such contention, and i4i never accused Microsoft of breach of contract, misappropriation, or other claims that are typical of a dispute between business “partners.” Rather, this suit reveals a different reality—it was filed not by the supposed “victim,” but by litigation investors, and then fully four years after i4i congratulated Microsoft on the release of its supposedly infringing product.


Unfortunately for i4i, the truth is both comparatively mundane and innocent: After a handful of unfruitful meetings, i4i and Microsoft went their separate ways and Microsoft later released the custom XML functionality for Word that it had told i4i it was developing. And when Microsoft released its custom XML functionality, i4i congratulated Microsoft because Microsoft’s custom XML development platform would increase the opportunities for i4i’s own products, which, to that point, had sold poorly.

But both stories, the truth and i4i’s creative retelling, are ultimately irrelevant to the proper disposition of this appeal. That is because the central issues before this Court are questions of law reviewed de novo.

This brief also dos a nice job of capitalizing on Microsoft's big win against Lucent last week, in a decision that represented a clear reject of that case's application of the total market value rule in patent infringement damages.

From the brief:

Wagner used an outlandishly unrealistic benchmark. As this Court has explained, for a “benchmark” to have any bearing on estimating the value of a patent, the expert must show how it “relates” to the patented technology—i.e., “whether the patented technology is essential to the [benchmark], or whether the patented invention is only a small component or feature of the [benchmark].” Lucent, 2009 WL 2902044, at *23.




i4iMSFTReplySept14.pdf