It was a huge victory for i4i-which had invested significant amounts of time and money in the case-and for owners of intellectual property in general. Still, i4i hasn't been paid a cent from Microsoft and, on August 27, 2010, the global software firm requested that the Supreme Court of the United States review the case.

CanadaOne recently spoke with Michel Vulpe, i4i's founder and chief technology officer, and Loudon Owen, i4i's chairman, about what it takes to bring an innovative product to market-and how they defended their rights against a giant.

Solving a difficult problem

Vulpe founded i4i in 1993 and soon brought on Steve Owens, a colleague whom he had worked with on various projects in the '80s and early '90s, as a partner.

At that time they were doing custom system development. Their clients all faced the same problem: they needed a way for different departments, suppliers and customers to look at the same data from different viewpoints without having to enter that same data over and over again.

Consider a single part used by a company that manufactured car parts for one of the large automakers. The salesperson would be interested in the price of the part, while the production manager would want to know the quantity in stock and accounting would need to know how many items were consumed. In the early 90's this data would have to be entered three times, in three different places, to accommodate the different views.

Equally important was making sure that each department used the same overall label. Things could become very confusing if part 61 in accounting referred to an entirely different product in sales.

Vulpe and Owens realized that what was really needed was a single, universal solution where the data could be entered once, but shown in different views. Customers also made it loud and clear that they'd only entertain an invention if it solved a problem within their existing systems.

"Companies have invested gazillions of dollars in infrastructure," says Vulpe. "It's not just capital costs-it's all the training and everything that's built around it."

The "ah-ha" moment

It was this challenge of showing the same data in different ways while also utilizing the company's existing computing infrastructure, that led to the '449 invention.

The "ah-ha" moment came when Vulpe and Owens realized that they could create a universal solution by creating an application that would work with existing applications, such as Microsoft Word. i4i had figured out a way to create custom views for data, by separating content from its structure, or the way it was labelled.

From a practical standpoint, they would use their invention to create a software application that could share data not only among different departments, but also among different software applications. They developed a practical way for companies to enter the data once, but view it in many different ways.

Right away they knew that they had a big, revolutionary thing. Fortunately, Steve Owens' brother, Richard, a patent lawyer, advised them to protect their intellectual property with a patent.

"He explained to us that we were being naïve," says Vulpe, adding that in the early '90s, it was unusual to patent software. "It turned out to be the right thing [to do]," he says, even though it took from 1994 to 1998 to snag patent '449.

An idea ahead of its time

Today you might look at i4i's technology and think that it looks a lot like "XML" (extensible mark-up language). You would be partially right. In essence, one implementation of i4i's patent enables custom XML creation and authoring.

Notably, i4i filed their patent on June 2, 1994. The first draft standard for XML was not introduced by the World Wide Web Consortium (W3C) until November 1996.

To understand the uniqueness and importance of i4i's invention, you need to take a step back in time. In 1993, when i4i was founded, the Pentium 1 processor had just been released. Computers were much slower, storage space was limited, floppy disks were still in use and games ran on DOS.

Mosaic, the revolutionary web browser that has been credited with popularizing the "web", was first released in 1993. Web pages were primitive and very few options existed for running programs online, never mind storing and managing data. The online software applications we take for granted today simply did not exist.

No one had a way to use a common, universal system to show data in different views, across different applications.

"There were no words for what i4i was trying to do," says Owen. "The words didn't exist-there was no lexicon, so we had to create it."

Raising capital and creating the management team

The next challenge was finding investors with deep enough pockets to commercialize the patent. Enter Loudon Owen of McLean Watson Capital Inc., a venture capital firm with offices in Toronto and Singapore.

At first glance, Michel Vulpe and Loudon Owen might not seem like the most likely business partners.

Vulpe wears a Star Trek ring, races dragonboats and is probably best described as your classic "nerdy programmer". In contrast, Owen is your clean-cut law school grad who went on to get his MBA and also happens to be an Ontario College boxing champion, martial arts enthusiast and ex-professional hockey player.

While Vulpe was working on "geeked out programming stuff" in the early '90s, Owen could be found at Queen's Park as the co-spokesperson for People Against the NDP Budget.

When the two met Owen was fresh off the successful sale of Softimage to Microsoft in 1994. As things turned out, it was precisely their differences that would make the two such a great team. Each made up for the other's deficiencies and offered the other something he needed.

Vulpe saw that Owen would work harder than the other venture capitalist he was in negotiations with.

In turn, Owen saw in Vulpe the talent he needed, along with an idea he could grow.

"Michel had a very clear vision of what could be achieved and also had a great work ethic and an open mind to new and inventive ways of doing things," Owen says. "We were looking for bold initiatives and people we could work with on a day-to-day basis because, when you try to shake things up, it doesn't happen overnight."

McLean Watson decided to back i4i and raised an initial $2 million in 1996.

Riding the rollercoaster

From 1999 to 2000, i4i's business was booming.

Clients included Airbus, Boeing, the U.S. military, a wide variety of publishing houses and even the United States Patent and Trademark Office. Staff had grown from the original four employees (and Jack, the dog) to about 150.

Things looked even brighter when Microsoft came a 'courting.

Owen already had links to Microsoft from his time as a Director and co-chief operating officer at Softimage Inc. During his watch, the Montreal company, noted for its 3-D graphics application, was acquired by Microsoft in 1994 in a stock swap worth about US$130 million.

"They needed help," says Vulpe. "Their customers did not want what Microsoft had to offer. They wanted what we had."

The discussions progressed between the two companies over several months. In fact, i4i sales and tech staff were meeting with Microsoft representatives at the Pentagon on September 11, 2001, to talk about how their technology could aid the intelligence community when the "9/11" attacks struck the U.S.

It was not long before dark days began for i4i.

After an initial surge of interest and activities, sales started to slow down, then ground to a virtual halt. Time marched on and i4i expected to hear back from Microsoft after a couple of months but, says Vulpe, "They never called back."

I4i's staff soon shrank to 50, then to 20. "We had a massive pipeline of customers and prospective customers," says Owen, noting how important it was to have sufficient staff for the work ahead. But business just wasn't materializing.

"All of a sudden the phone stopped ringing," says Vulpe.

Connecting the dots

By 2004, i4i's staff had petered out to 12. "It was a bit of a soul-searching period," says Owen. It wasn't easy telling people they'd worked with for years that they were out of a job-especially when it was such a solid team and Vulpe and Owen couldn't account for the sharp decline in business.

Vulpe had suspicions that Microsoft were capitalizing on the '449 technology and peddling it to other companies. But it would take three years to gather the evidence and prepare the patent infringement case. "You don't want to run off and make allegations against a company lightly-particularly the largest company in the industry and one of the largest in the world," he says.

With so few resources, Vulpe and Owen started tracing the sequence of events and documenting a decade's worth of relevant emails. "It cost a huge amount of time and a lot of brain space," says Vulpe. Over time i4i was able to build up a team to help them.

"Companies are all about the people who work there," Vulpe says, noting how important it is to have employees you can trust.

Holding things together

With a huge legacy of debt, i4i had difficult decisions to make.

"We shrunk the company down to try to get it back to what was sustainable with the cash there was," says Vulpe, "... basically we were going to start all over."

A key turning point came when they were approached by Sanofi Aventis, a world-leading pharmaceutical company.

"They said, we know the FDA is doing some stuff and the FDA would like you guys to get involved in this initiative to do with product labelling that uses the kind of tech that we built," says Vulpe.

i4i focused their efforts vertically and carved out a niche in the pharmaceutical market. Today the company has 30 employees, pharmaceutical companies account for 95 percent of its business and clients include Bausch & Lomb, Merck and Bayer.

And if you try telling i4i that they are a small company, you might be surprised by their response.

"You've got it backwards. We're the Goliath," says Owen, who goes on to clarify that i4i is in the middle of their growth phase. " We're just not there yet," says Owen.

Moving forward

Now i4i waits to find out if the Supreme Court will or will not review Microsoft's case.

"Patents are an interesting type of property," says Vulpe. "Somebody takes something. You don't just sit there and say, oh, that's great, knock yourself out, enjoy it. You wouldn't tolerate it if somebody took your car, took all the beer out of your fridge. Why would we look at it any differently with patent infringement, whether it was Microsoft or somebody else?"

"I've never had any doubts the company will ultimately succeed," says Owen. "We've had a bit of a setback. Now we're going to work that much harder to make sure we succeed. Unless you have that attitude and approach, you're not going to get very far."