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Microsoft Can Get Award Despite Liability to i4i

MIAMI (CN) - An ongoing $290 million patent case against Microsoft has no bearing on the company's right to collect more than $220,900 in damages from an entity that illegally imported and sold its software discs, a federal judge ruled.

In September 2009, Microsoft obtained summary judgment against Technology Enterprises and its owner, James Craghead, for violating the Copyright Act by importing and distributing Microsoft's Student Media software discs, which are manufactured overseas and not licensed for distribution in the United States.

Craghead is jointly responsible for the copyright damages as he owns 99 percent of Technology Enterprises and is its only employee, according to the ruling.

Microsoft then moved for a permanent injunction and to recover $220,955 in profits that Technology Enterprises earned from selling its product.

In a cross-motion, Technology Enterprises and Craghead claimed that Microsoft was not entitled to damages because the imported discs contained versions of Microsoft Word that Microsoft is enjoined from selling due to a 2009 patent-infringement action in which i4i LP won $290 million. Though the Federal Circuit upheld the award, finding that Microsoft used i4i's patented technology without permission, the Supreme Court will rule on the case after hearing oral arguments earlier this month.

Technology Enterprises argued that if Microsoft is barred from selling the discs, then it should not be allowed to sue third parties for profits from selling them. Ultimately, however, the Southern District of Florida disagreed.

"Allowing Technology Enterprises to invoke the i4i injunction as a way to avoid paying damages would be senseless," Judge William Hoeveler wrote.

The defendants also tried to claim that Microsoft cannot claim damages because of inaccurate information in its copyright, but Hoeveler rejected this argument, as well.

As Microsoft proved that Technology Entereprises has "a realistic likelihood of future violations," and that the infringement "confuses the public and harms Microsoft's customer relations," the judge entered the damages award and a permanent injunction.

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