Judge Leonard Davis of the Eastern District of Texas must be feeling pretty good about himself right about now. Over the summer, Judge Davis oversaw a patent infringement trial pitting an obscure Canadian company called i4i against Microsoft. After entering a $290 million judgment and a permanent injunction against Microsoft in August preventing it from selling Microsoft Word 2007 and Microsoft Office 2007, he was attacked by the software giant’s lawyers at Weil, Gotshal & Manges. In its opening brief before the Federal Circuit, Microsoft provided a long list of purported errors made by Judge Davis, including his decision to enhance the jury’s $200 million damages award by $40 million due in part to statements made at trial by Microsoft’s lead attorney and former Litigator of the Week, Matt Powers of Weil Gotshal.

But on Tuesday, the Federal Circuit affirmed nearly all of Judge Davis’s decisions, along with the findings of the jury. The only exception was a modification of the permanent injunction issued by Judge Davis; the appeals court concluded that the injunction would take effect five months after Judge Davis’s August 11, 2009 order, not sixty days. That means that Microsoft now has until January 11, 2010 to stop selling the offending versions of Word. But even that was expected. Donald Dunner of Finnegan, Henderson, Farabow, Garrett & Dunner, who argued the appeal for i4i, told us that the appeals panel asked him at oral argument about the effective date of the injunction. Dunner told the judges that i4i would go along with whatever the court deemed appropriate. “That was not a surprise,” said Dunner of the date change. ( Listen to the oral arguments here.)

The appeals court did not disturb Judge Davis’s decision to enhance the jury’s award. Since the jury found that Microsoft’s infringement was willful, Judge Davis had the authority to treble damages. He juiced the award by $40 million in part due to statements Powers made at at trial–over the judge’s objections–comparing i4i to a bank seeking a bailout. The Federal Circuit noted that the statements made by Powers were not the “prototypical case of litigation misconduct.” Had the statements been the sole base for the enhancement, the court noted, it would have been improper. But since Judge Davis considered factors other than the statements by Powers, the Federal Circuit concluded that the judge had not abused his discretion.

We sent an email to Powers, but did not hear back. In a prepared statement, Microsoft said it would take steps to comply with the injunction, but that it would also consider a request for en banc rehearing at the Federal Circuit or filing a cert petition with the Supreme Court.

“While we are moving quickly to address the injunction issue, we are also considering our legal options,” said Kevin Kutz, a Microsoft spokesman.

Loudon Owen, chairman of i4i, said the company “couldn’t be more pleased” with the Federal Circuit’s decision. He also gave a shout out to his litigation team, which included lawyers from McKool Smith and Parker, Bunt & Ainsworth at trial and Finnegan Henderson on appeal. “This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed,” said Owen in a statement. “The same guts and integrity that are needed to invent and go against the herd, are at the heart of success in patent litigation against a behemoth like Microsoft. Congratulations to our entire team who provided such dynamic leadership, courage and tenacity!”

Dunner of Finnegan Henderson, who argued more than his fair share of appeals at the Federal Circuit, told us this was the largest appeal he’s ever won in dollar terms. “It’s a wonderful Christmas gift,” he said.

Dunner will soon get a shot at topping his win against the same defendant. But this time, he’ll have to reinstate a verdict against Microsoft. In September, a federal judge vacated a $388 million jury verdict against Microsoft for Uniloc USA.