New Uniloc Damages Trial Ordered

Ongoing patent litigation between Uniloc and Microsoft will continue due to a U.S. Court of Appeals decision, The litigation, which involves the activation technology used in Windows XP, Office XP, and Windows Server 2003, and the most recent decision should have little impact on Microsoft’s customers because Microsoft’s activation technology has changed since the litigation began.

In Jan. 2011, the U.S. Court of Appeals for the Federal Circuit held that Microsoft’s infringement of Uniloc’s patent was supported by substantial evidence, that the U.S. District Court could not grant a new trial on infringement, that the verdict of willful infringement was not supported by evidence, and that the jury’s damage award was fundamentally tainted by the use of a legally inadequate methodology. Therefore, the Court of Appeals affirmed the District Court’s grant of a new trial to determine damages.

Uniloc first filed suit in 2003, and in 2009, a District Court jury found that Windows XP, Office XP, and Windows Server 2003 infringed on Uniloc’s patent for a “System for Software Registration” (patent number 5,490,216). The patent covers an activation technique used to prevent software piracy. As a result of the infringement verdict, Uniloc was awarded US$388 million in damages. In Sept. 2009, District Court Judge William Smith reversed the jury verdict and ruled that Microsoft did not infringe Uniloc’s patent but denied Microsoft’s challenge to the validity of the patent. Smith also ruled that even if an appeals court reinstated the infringement verdict, a retrial was necessary to determine damages, as Uniloc’s lawyers erred in telling jurors that Microsoft took in US$19.1 billion in revenue from the products that allegedly infringed the patent.