Last week a Texas judge found in favour of a Toronto company's patent infringement lawsuit against Microsoft, ordering the company to cease the sale of Word 2003, 2007 and Word for Mac 2008 in the United States. A jury also awarded i4i a cool $200 million in damages for infringing their patent on XML, plus another $90 million in penalties and interest.
Microsoft, obviously, plans to appeal the decision. At the root of the issue is the .DOCX file format, based on XML (Extensible Markup Language), which i4i says was their patented idea. Basically i4i patented technology that lets end users manipulate documents with XML.
From a distance i4i appears to be a credible company, converting labels and ensuring international compliance on labels crossing borders. Mostly they focus on pharmaceuticals, which have to obey certain labeling requirements to pass through customs, including batch labeling so drugs can be traced back to their source.
Microsoft will have no trouble paying off the suit and then paying off i4i for future use - they could probably buy the entire company with loose change from Bill Gates' sofa - but that's beside the point. The truth of the matter is that i4i didn't actually invent XML, XML is a joint effort by half a dozen companies including Microsoft (but not including i4i). All i4i did was patent a way of using XML which was pretty obvious to begin with and, as Microsoft and others have argued, the whole point of XML in the first place.
This is just the latest in a long string of "spit on the cake" patent suits. If you're first to patent an idea, then our stupid patent laws say you own that idea in near perpetuity whether or not you actually put the patent into practice. You could go out tomorrow and patent a general flying car concept, then sue the pants of whatever company finally makes it to market with the first working prototype.
Others would argue that i4i didn't invent anything at all, that you can't patent an application of a product. You can't build a dinosaur out of your castle Lego set and claim that you own the right to all Lego dinosaurs.
Right now Apple is being sued by a company that claims it invented the iPhone and by another company that says they invented the touchpad. Neither company suing Apple has produced anything like a working prototype, but instead filed general patents with rough sketches of what a device might look like.
While all of these patent lawsuits should get laughed out of court, the courts seem to find in favour a lot of the time, which is extremely dangerous in my mind. All you need to do is spit on an idea and it becomes yours forever, whether or not you were the first person to think of it or even have the technological know-how or resources to build a working prototype.