[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  
inadequate methodology.?

?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  
was invalid.

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,  
Davis said.

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).

More information about the A2k mailing list