[A2k] Bloomberg piece on Microsoft and patent infringement
thiru at keionline.org
thiru at keionline.org
Tue Jan 18 07:12:35 PST 2011
Microsoft, Abbott, Serious Bidness: Intellectual Property
By Victoria Slind-Flor - Jan 5, 2011 6:01 AM GMT+0100
Microsoft Corp., the world?s biggest software maker, infringed a
patent on technology used to deter piracy, an appeals court ruled in a
decision that may change how damages are calculated in future cases.
The ruling by the U.S. Court of Appeals for the Federal Circuit in
Washington yesterday upholds the validity of a patent owned by Uniloc
USA Inc. and Uniloc Singapore Private Ltd., while ordering a new trial
to reassess the damages Microsoft should pay.
?It?s a strong validation of the value of the patent,? Brad Davis,
chief executive officer of Irvine, California-based Uniloc USA, said
in a telephone interview. ?The damages issue is what it is, and we?ll
live with it. We have a sense of how much we contributed to
Microsoft?s bottom line.?
The ruling throws out a common tool used to calculate infringement
awards, and will likely reduce the amount Redmond, Washington-based
Microsoft will have to pay closely held Uniloc. The Federal Circuit
called for a new trial on damages, saying a 2009 lower-court verdict
of $388 million was ?fundamentally tainted by the use of a legally
?This is an important and helpful opinion with respect to the law of
damages, and it may signal the end of unreasonable and outsized
damages awards based on faulty methodology,? David Howard, deputy
general counsel for Microsoft, said in an e- mailed statement. ?We
look forward to the new trial.?
U.S. District Judge William Smith in Providence, Rhode Island, had
thrown out the 2009 verdict Uniloc won. The company was appealing
Smith?s decision, while Microsoft was seeking a court ruling that
would limit the ability of patent owners to seek big damage awards
from large technology companies.
Uniloc?s lawsuit, filed in October 2003, targeted Microsoft?s Windows
XP operating system and some Office programs. Microsoft argued that it
used a different method for registering software and that the patent
The Federal Circuit?s decision to uphold the validity of the patent
may boost Uniloc?s efforts to collect royalties from additional
companies including Symantec Corp. and Adobe Systems Inc. Uniloc
Singapore owns the patent and Uniloc USA is the exclusive licensee,
Lawyers for Uniloc showed jurors during the 2009 trial a pie chart
with $19 billion in revenue from the Windows XP operating system and
some versions of Word. Uniloc was seeking 2.9 percent of that total,
or about $564 million. The jury awarded $388 million.
Smith ruled that, even if the Federal Circuit decided the jury verdict
on infringement was appropriate, Microsoft would be entitled to a new
trial on the damages because Uniloc shouldn?t have been able to use
the $19 billion figure in front of jurors.
The Federal Circuit said courts shouldn?t allow damages to be based on
a common calculation that has as a starting point the ?rule of thumb?
that 25 percent of a product?s value goes to the patent owner.
That method ?fails to tie a reasonable royalty base to the facts of
the case at issue,? the Federal Circuit ruled.
The case is Uniloc USA v. Microsoft Corp., 10-1035, U.S. Court of
Appeals for the Federal Circuit (Washington). The lower court case is
Uniloc USA Inc. v. Microsoft Corp., 03cv440, U.S. District Court,
District of Rhode Island (Providence).
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