Patents are thought of by some as hardware focused and used by the big guys to intimidate with petty lawsuits. In reality, of course, patents are used for much more. They are used to help secure financing, attract M&A interest, create partnerships, and more. From 2007 to 2011, a particularly interesting patent lawsuit took place that showcases just how strategic patents can be. i4i Limited, a Canadian company, sued Microsoft over a patent it owned relating to custom XML encoding, which Microsoft used in Word. In the end, Microsoft lost and had to pay $200 million in damages and was nearly restricted from selling Word over a feature used by almost none of its users. It is a fascinating tale of how software patents used to work, especially as they are coming back into vogue.
I mean, I won’t shed a tear for Microsoft in this case, but it does highlight just how ridiculous software patents are.