Microsoft Slayer Speaks!

Loudon Owen, chairman of collaboration software vendor i4i, which was just awarded an injunction barring Microsoft from selling Word 2003 or Word 2007, told me his company has “no intention of trying to stop Microsoft from selling Word.”

That’s kind of funny, because that would seem to be the immediate effect of a ruling by U.S. District Court Judge Leonard Davis of the Eastern District of Texas, Tyler Division, who issued a permanent injunction today barring Microsoft from

selling, offering to sell, and/or importing in or into the United States any Infringing and Future Word Products that have the capability of opening a .XML, .DOCX, or .DOCM file (”an XML file”) containing custom XML;

The order specifically identifies Microsoft Office 2003 and Office 2007 as being infringing software.

But i4i isn’t your garden-variety patent troll and actually sells collaboration software that arguably makes similar use of the custom XML Microsoft is accused of stealing. If it loses its appeal, Microsoft could end up having to make strange bed-fellowship with its erstwhile antagonist. Let me explain.

The key to the ruling is found in the last two words in the block-quote above: “custom XML.” According to Owen, i4i invented “custom XML,” which underlies Microsoft ’s format for Word. In essence, XML allows users to transparently “mark-up” their text (i.e., create code as they type that describes what the document is) so that its contents can be easily extracted or discovered. “Microsoft incorporated the ability to use our invention to create customer-defined schemas — templates, forms, etc. — that suit their business model and their business process,” Owen told me.

The invention is critical to the technology offered by i4i which, far from being the patent troll it has been described by some, sells collaboration, group authoring and document management tools, mainly to government entities for whom embedded rules and workflow processes are critical components of the software.

But far from wanting to stop Microsoft from selling Word, Owen told me he hopes Microsoft finds a way to comply with the ruling. “We hope on behalf of everyone that there’s an easy way for them to comply,” Owen said. While the $290 million the court also awarded i4i isn’t a drop in the bucket, the bigger stakes for Owen is how to profit from its invention going forward. Owen didn’t disagree with my suggestion that i4i could become a Microsoft partner by providing the custom XML required for end users to continue using templates, forms and other customized workflow processes. He also didn’t dismiss the idea that Microsoft could license the technology from i4i.

“We’re not ruling out partnering with anybody. We tried working with Microsoft previously and that didn’t work out successfully,” he said.

Microsoft’s Business division, of which Office is the main cog, is at this point the only business on which the company can rely. It has fought hard to win international certification for OOXML as a standard, and has said it will start offering Office through the cloud beginning with Office 2010, because Office is the glue that holds together so many of its business applications, from SharePoint and Exchange and on down the line to many business applications. If this ruling holds up (Microsoft has said it will appeal), Microsoft will have to find another way to hold its Office/SharePoint/Exchange juggernaut together.

If Microsoft loses its appeal, and it fails to come to terms with i4i, it will no longer have that compelling “better together” argument that has so far kept competing vendors of productivity suites, including Oracle (Open Office), Google, and Zoho, at bay.