‘Open’ business models do not remove legal risks traditionally associated with closed and proprietary systems.

Microsoft was recently ordered to stop selling Word and other office software due to an XML document formatting option infringing a software patent owned by i4i. Microsoft has been moving away from its proprietary “.doc” format for a number of years now in an effort to introduce a new open XML format. While the move to an open format has had benefits in interoperability and addressing some of Microsoft’s critics (especially anti-competitive and open source), I’d wager the strategy has had some doubters inside Redmond.

Here’s what the judgement means in practical terms.

1. No, a technical workaround by Microsoft would not be difficult
2. Yes, the difficulty of managing the supply chain and replacing all existing physical versions of Word to comply with the current order would be difficult and inconvenient (very)
3. No, this judgement is unlikely to damage Microsoft’s reputation with end customers (most probably don’t really care about the technicalities of XML document formats, or even software patents for that matter)
4. No, this isn’t a great opportunity for Google Apps, OpenOffice, etc, etc (anyone who has actually tried to use those or similar products for serious, document heavy business purposes will know that those products are not at the same stage of maturity as Word and Excel)

I’ve no doubt that the judgment is just one step towards a commercial solution and, in that regard, establishes some useful parameters. The cost to implement a technical fix is most likely insignificant, so it’s unlikely to feature in any calculation. However the cost to manage the supply chain is most likely much more significant. What’s the cost of the alternative? What’s the cost of the appeal? What are the chances of the appeal succeeding (in this case Microsoft have some technical legal issues with the grounds of appeal which limits its opportunity)?

Another important factor is Microsoft’s product revision cycle – the impending release of Word 2010 will almost certainly introduce a non-infringing replacement product. It’s also possible for Microsoft to “patch” existing versions to make them non-infringing. Any settlement therefore needs to take into account the product’s definite and short life span.

Notwithstanding the opportunity for this matter to be settled, it highlights an often overlooked difficulty with open standards. Just because something is open doesn’t mean you can ignore legal risks more traditionally associated with closed and proprietary systems.