It's not a bug. No one else but you has ever reported such a problem yet!
Please have a look at the screen capture below. It shows the same text under Arial Unicode MS, Times New Roman, and Verdana on one of our PCs. Each third line is formatted with small caps.
There might be several reasons why small caps are overlapping on your system, and maybe in a particular document:
- You use a non-standard poorly-designed font. Which font type and size are you using?
- Character spacing might be defined as "compressed" in that document, or portion of document. What do you see if you select the overlapping characters and click "Format | Font... > Spacing"? Is "Scaling" set to 100%, and "Spacing" to "Normal"?