News

Judge Sides With Microsoft, Voids $388M Uniloc Award

• By Kurt Mackie
• 09/30/2009

A trial judge on Tuesday voided a $388 million jury award to Uniloc in its long-running intellectual property dispute with Microsoft.

The Judgment can be accessed here (PDF), while the Decision and Order is available here (PDF, 30 MB).

The judge, William E. Smith of the U.S. District Court representing Rhode Island, essentially ruled that the jury was incapable of reaching the verdict that it did, which included a finding of willful infringement of Uniloc's software anti-piracy patent (U.S. Patent No. 5,490,216).

Uniloc, based in Irvine, Calif. and Singapore, went to trial charging that the Microsoft's patented product activation system for Windows XP, Windows Server 2003 and Office XP had infringed Uniloc's patent. The case was originally filed at the end of 2003.

Uniloc makes physical device recognition technology that generates user identities from the computer hardware. It uses hashing algorithms to track the "unique IDs" of software licensees. The technology employs a summation algorithm to generate the unique ID. The judge, in his Decision and Order, disagreed with the jury that Microsoft used summation algorithms in its product activation system that violated Uniloc's patent.

"A simple comparison of MD5 as a whole to the algorithm Uniloc's patent discloses clearly reveals non-equivalence," the judge stated on page 31. MD5 is the message digest algorithm that was used in Microsoft Office.

The judge added that the jury was essentially incompetent in being able to understand the issue.

"The Court has reviewed the transcripts and evidence with painstaking detail in the light most favorable to Uniloc, careful not to act as the eleventh juror. What remains is a firm belief (indeed a certitude) that the jury 'lacked a grasp of the issues before it' and reached a finding without a legally sufficient basis," the judge wrote (p. 37).

The judge even disputed that Microsoft knew about the possibility of infringement. The inventor, Ric Richardson, had "provided his 'concept' to Microsoft for evaluation in 1993," noting that parts were associated with a patent application, but "this general reference cannot support finding a knowing risk of infringement of Claim 19," according to the judge (p. 47).

Uniloc plans to file an appeal.

"We are disappointed by the decision the trial judge has made to overturn the jury's unanimous verdict in Uniloc's patent infringement case against Microsoft," a statement from Uniloc explained. "We believe that the jury's verdict in April was thoughtful, well reasoned and supported by the evidence presented. Since the patent status remains unchanged, Uniloc will continue to protect its intellectual property and appeal the Judge's decision to override the jury's verdict to the US Court of Appeals. We are confident that Uniloc will ultimately prevail."

Microsoft, for its part, was satisfied with the judge's decision.

"We are pleased that the court has vacated the jury verdict and entered judgment in favor of Microsoft," stated Kevin Kutz, a Microsoft spokesperson.