The judges were asked to reconsider a 2009 ruling regarding i4i's patent, which covers a "method and system for manipulating the architecture and the content of a document separately from each other". Microsoft lost its first appeal in December, and then lodged a second appeal for a panel hearing and for an 'en banc review' before the full appeals court. The Texas federal circuit panel's decision on Wednesday is part of that process.
"The appeals court has again upheld the lower court's decision in its entirety," i4i chairman Loudon Owen said in a statement. "In addition, it issued a more detailed analysis in concerning the finding of willfulness in this case. The determination that Microsoft willfully infringed i4i's patent stands."
In May 2009, a Texas jury ordered Microsoft to pay $200m (£128m at the time) to i4i for infringing on the patent. Then, in August, a Texas judge granted i4i an injunction against Microsoft that prohibited the software maker from carrying out US sales or imports of any Word products that can open XML, DOCX or DOCM files containing custom XML.
Microsoft issued an US-only update to Word 2007 in January this year, removing the functionality that the lower court found infringed on i4i's patent. In February, i4i released a product, x4w V 1.0, which it said returns custom XML functionality to Word 2007 documents.
For more of this story, read Judges uphold Word patent-infringement ruling on ZDNet UK.