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Microsoft's Patent Problem
Fortune.com ^ | Tuesday, July 22, 2003 | Roger Parloff

Posted on 07/24/2003 3:01:32 PM PDT by glorgau

Last month, when Microsoft announced its bellwether decision to award employees restricted stock instead of options, it also made news in a federal courtroom—the kind of news you keep quiet about.

Microsoft suffered utter defeat at a crucial pretrial hearing in what appears to be the highest-stakes patent litigation ever—one in which a tiny company called InterTrust Technologies claims that 85% of Microsoft's entire product line infringes its digital security patents. (See Can This Man Bring Down Microsoft?)

InterTrust's engineers developed and patented what they say are key inventions in two areas: so-called digital-rights management and trusted systems. The technologies are essential to the digital distribution of copyrighted music and movies, and to maintaining the security of e-commerce in general. At its prebubble height, InterTrust (founded in 1990) employed 376 people and marketed its own software and hardware products; today it consists mainly of a patent portfolio, 30 employees, and this lawsuit. An investor group led by Sony Corp. of America and Royal Philips Electronics bought the company in January for $453 million, hoping to convince consumer electronics and tech companies—beginning with Microsoft—of the need to license its patents.

Microsoft argued in court that crucial phrases in InterTrust's patents were too vague to be enforceable, and that others required such narrow interpretation that they would have been hard for Microsoft to infringe. But in her July 3 ruling, an Oakland judge resolved 33 of 33 disputed issues against Microsoft and rebuked the company's lawyers for wasting her time by promising proof that never materialized—legal vaporware, in essence.

"This is simply another step in a long legal process," says a Microsoft spokesman, putting the best face on it. "Microsoft will continue to defend itself against what we believe are groundless and overbroad claims."

As agreed before the hearing, the parties now enter a round of settlement talks. Though InterTrust declines to place a pricetag on the suit, it's hard to imagine the company settling now for any sum that does not have a "B" in it. InterTrust claims that its inventions cover technologies that Microsoft has been weaving into its Windows XP operating system, Office XP Suite, Windows Media Player, Xbox videogame console, and .NET networked computing platform, to name just a few. If settlement talks fail and InterTrust prevails in court, it would be entitled to a court order halting sales of all those products. InterTrust CEO Talal Shamoon asks rhetorically, "How much would that be worth to Microsoft?"


TOPICS: Business/Economy; Crime/Corruption; Extended News
KEYWORDS: intertrust; microsoft; patents; techindex
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To: wirestripper
In fact, I use very little of MS security features except those that run without my knowledge.

In fact I use ZERO of this stuff, I dumped MS and have no intention of going back.

41 posted on 07/24/2003 8:22:10 PM PDT by amigatec (There are no significant bugs in our software... Maybe you're not using it properly.- Bill Gates)
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To: Southack
skilled in the industry

Technically speaking "one skilled in the ART."

42 posted on 07/24/2003 8:22:49 PM PDT by Lael (Well, I Guess he DIDN'T go wobbly in the legs!! Now, "W", lets do the REST of the AXIS of EVIL!!)
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To: Lael
correct
43 posted on 07/24/2003 8:23:54 PM PDT by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: rdb3
Got root?

Yep sure do, it is nice being MS free, now where did I my SCO license.....

44 posted on 07/24/2003 8:33:09 PM PDT by amigatec (There are no significant bugs in our software... Maybe you're not using it properly.- Bill Gates)
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To: amigatec
Got root?

Yep sure do, it is nice being MS free, now where did I leave my SCO license.....

It is getting late...

45 posted on 07/24/2003 8:47:00 PM PDT by amigatec (There are no significant bugs in our software... Maybe you're not using it properly.- Bill Gates)
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To: Southack
But you are making too completely different statements. Your first statement: You don't need to be a patent attorney to understand if the patented claim is strong or not. I don't agree. I think it will be up to the court and the patent lawyers to determine if the claim is strong or not [strong].

Your second point is this: The patent has to be written such that **anyone** skilled in the industry can understand and duplicate the patented process. If the patent can't be understood by those skilled in the industry (in this case, us techies), then it will be invalidated by the courts, per patent law may be true. But you can follow the link and read the patents. I read some of them. They are not hard to understand. So I don't think that point applies. Because I can understand them -- the ones I read are pretty readable, and I understand them.

A thing to think about. Sony and Philips dropped about 1/2 of a BILLION dollars to buy a little company that pretty much only had those patents as assets. They didn't drop that much cash without doing the due diligence.

46 posted on 07/24/2003 8:48:09 PM PDT by dark_lord (The Statue of Liberty now holds a baseball bat and she's yelling 'You want a piece of me?')
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To: Southack
And **if** InterTrust manages to prove that they were the first (above), then they've got to show that the defendnts used that precise method, thereby infringing on the patented claim.

Are you familiar with "The Doctrine of Equivalence"? Are you a patent attorney? Do you have any U.S. Patents?

47 posted on 07/24/2003 8:48:20 PM PDT by UnBlinkingEye
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To: UnBlinkingEye
I am expecting to receive my first patent approval later this year. That's the only reason that I know anything about this subject, as I've had a crash course on what I can, should, and shouldn't say in my patent and supporting documentation (like brochures, which I can't even have printed until final approval on my patent comes back).
48 posted on 07/24/2003 8:52:15 PM PDT by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: boris
Do you really think you can patent drawing a line on the screen?...

I know nothing about computers or this suit, but that won't keep me from throwing my 2 cents in. :o)

Time and time again, I watched Gemstar win patent fights over the Electronic Program Guide (EPG) that they purchase from StarSight.

This is nothing more than the grid you see when you pull up the program guide on your digital cable or satellite system. Basically, a grid going out 3 hours and down 6 or so channels.

I'm thinking, "How can anyone patent THAT!?"

Sony and RCA put up no fight and licensed the Gemstar/StarSight notion....
And Gemstar/StarSight keeping winning in the courts....

UNTIL...Charlie Ergen of Dish/Echostar (a renowned tightwad) and Scientific Atlanta said...."See you in court" and wouldn't let go.

As the case moved up to smarter judges, Gemstar/StarSight lost every case and their portfolio is now worthless and News Corp. (who had bought the company) took a bath.

I suggest we look at this judge in Oakland before we start making any side bets.

49 posted on 07/24/2003 8:56:04 PM PDT by eddie willers (Freeping since before the turn of the century!)
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To: microgood
I wonder who patented the for loop or do while loop? They should be able to make big bucks. Or maybe we could go back to logic itself, and descendants of Aristotle could have a field day.

You should learn more about patent law prior to posting statements that indicate your lack of knowledge.

In programming terms:

If I don't understand

Then I shouldn't comment

Else people may not respect my opinion.

50 posted on 07/24/2003 8:57:41 PM PDT by UnBlinkingEye
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To: Nick Danger
Where are all the CNET and ZDNET reporters to warn everyone that this little company might prevail — halting the sale of Windows, Office, and .NET? ...

Maybe it's because, as you pointed out...

Their CEO has not been in the news, threatening Oceans of Blood and Seas of Fire. They haven't threatened Windows users with having to buy licenses from them.

51 posted on 07/24/2003 8:59:27 PM PDT by TheEngineer
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To: Southack
I am expecting to receive my first patent approval later this year. That's the only reason that I know anything about this subject, as I've had a crash course on what I can, should, and shouldn't say in my patent and supporting documentation (like brochures, which I can't even have printed until final approval on my patent comes back

Your credibility is suspect. I don't think you have any idea of what is involved in the process to have a patent allowed.

52 posted on 07/24/2003 9:07:55 PM PDT by UnBlinkingEye
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To: UnBlinkingEye
You are mistaken. Publishing something more than one year before your patent is filed is grounds for having it invalidated by the courts.

And since you don't know if you will have to re-file your patent based upon the USPTO's concept of "Errors", you could find yourself in a world of hurt if you publish at anytime before your patent is officially granted. There simply isn't reason-enough to take the chance that your application will be rejected.

This happened to 3M. Their patent for laser-perforated sheets was invalidated because they published their idea more than a year before they filed their patent application.

53 posted on 07/24/2003 9:19:51 PM PDT by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Southack
Once you have a pending patent you are free to approach others with your idea and you have full protection of the laws pertaining to intellectual property. Of course a pending patent does not mean that the patent will be allowed.
54 posted on 07/24/2003 9:40:19 PM PDT by UnBlinkingEye
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To: UnBlinkingEye
Of course.

Tough luck if you publish and then see your patent denied.

55 posted on 07/24/2003 11:17:28 PM PDT by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: UnBlinkingEye
You should learn more about patent law prior to posting statements that indicate your lack of knowledge.

You are obviously a lawyer and I know a scam when I see one. Lack of knowledge = you do not understand how I am going to pervert the law to steal this money.
56 posted on 07/25/2003 12:29:26 AM PDT by microgood (They will all die......most of them.)
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To: Southack
They won't win--or shouldn't win--on the basis of that claim. I was doing that very thing in 1991.
57 posted on 07/25/2003 4:10:29 AM PDT by jammer
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To: Nick Danger
Now that you mention it.... Usually you can't say anything negative about MS without Bushxp home edition showing up with a flame thrower. Maybe he's patching holes in the OS of his choice. Perhaps he's updating his Microsoft Certified Sales Engineer cert to 2003.

The really notable absence is Dominic Harr - he lives for this sort of thing.

Did somebody give the Munchkins the night off? They seem to stay away together; I wonder if they'll arrive together.

58 posted on 07/25/2003 4:35:17 AM PDT by Salo
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To: Salo
Now that you mention it.... Usually you can't say anything negative about MS without Bushxp home edition showing up with a flame thrower. Maybe he's patching holes in the OS of his choice. Perhaps he's updating his Microsoft Certified Sales Engineer cert to 2003.

I think you are right, unless maybe he got hacked, with all the recent flaws in windows. Even MS was hit with Slapper.

59 posted on 07/25/2003 5:09:07 AM PDT by amigatec (There are no significant bugs in our software... Maybe you're not using it properly.- Bill Gates)
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To: Golden Eagle
Hey Troll how come you are so silent??

When IBM is sued you are all other them, but when MS gets sued you run and hide.

What's the matter Bill hasn't released his FUD papers on this yet??
60 posted on 07/25/2003 6:06:28 AM PDT by amigatec (There are no significant bugs in our software... Maybe you're not using it properly.- Bill Gates)
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