Uniloc v. Microsoft, No. 03-440 S (D. R.I. Sept. 29, 2009)
Opinion

The United States District Court for the District of Rhode Island vacated one of the largest patent verdicts in history, in which a jury held that Microsoft’s “Product Activation System” (“PA”) infringed on Uniloc’s patented “System for Software Registration” (the “‘216 patent”). In holding that Microsoft did not infringe as a matter of law, the District Court found that Uniloc had not shown the presence of each element of the patent claim or its substantial equivalent in the accused device as required by Lemelson v. United States, 752 F.2d 1538 (Fed. Cir. 1985). The Court, while noting that the jury’s finding deserved deference, expressed its “firm belief” that the jury failed to grasp the complex issues in the case and lacked a legally sufficient basis for the finding.

The Microsoft Blog provides an overview of the case. Betanews provides a thorough analysis of the main legal issues. Evidence Prof Blog provides a look at the admissibility of expert damages testimony.  Current Events in IP Law questions the jurors’ ability to understand the issues.

Uniloc’s ’216 patent software deters unauthorized copying of software by locking the software to one user and allowing it to run only after a licensing procedure is completed. The accused technology, PA, was developed to limit the number of computers on which a single copy of software could be installed. Uniloc sued Microsoft in September 2003, contending that PA infringed five independent claims of the ‘216 patent. The Court granted summary judgment in Microsoft’s favor on non-infringement, and Uniloc appealed. The Federal Circuit remanded the case to determine whether PA uses an identical (or substantially equivalent) process to generate licensee unique IDs. On remand, the jury found that Microsoft infringed one of the claims (Claim 19) and awarded Uniloc $388,000,000 in damages. Microsoft raised a Rule 50 motion seeking a reversal.

In evaluating Microsoft’s motion the Court cited the Lemelson rule on infringement, which states that  “each element of a claim is material and essential, and that in order for a court to find infringement, the plaintiff must show the presence of every element or its substantial equivalent in the accused device.” The first element was the “Licensee Unique ID” (“LUID”) identified in Claim 19, construed as a “unique identifier associated with a licensee.” Uniloc argued that PA used this identifier to represent a software license holder, and Microsoft  challenged the notion that the value is “associated” with an individual licensee. The Court found that a reasonable jury could conclude that an association is created between the license digest and the licensee, based on Uniloc’s theory that the uniqueness of the license digest could in fact create an individual association.

However, the Court did not find sufficient similarities between the products in the other two elements of Claim 19. With regard to the second element, the issue was whether sufficient evidence supported the jury’s conclusion that the algorithms used by the PA system qualified as a “summation algorithm or a summer and equivalents thereof.” The Court concluded that they did not, because Uniloc did not prove that the systems were similar enough in this regard. The Court found “significant (and undisputed) differences between MD5 and the summation algorithm in the ‘216 patent, which cannot be overstated.”

The third element was the “registration system” using “mode switching means,” construed in the ‘216 patent as “a system that allows digital data or software to run in a use mode on a platform if and only if an appropriate licensing procedure has been followed.” Microsoft argued that PA is a verification technology, not a licensing procedure. Users of Microsoft products become legally licensed upon installing the software, and the PA system does nothing by itself to authorize users. The Court agreed with Microsoft and found that PA is not a registration system with mode switching means as that term has been construed. Because PA does not utilize these elements from the ‘216 patent, the Court concluded that there is no infringement as a matter of law.

This decision is the most recent development in a six-year-long dispute. The case has attracted much attention for its magnitude and implications. The reversal may support the argument for a patent-focused court, as the Court found that jury members were not able to sufficiently understand the technical details and legal issues to reach a reliable verdict. There is also concern over the obstacles presented by increasing patent litigation to high-technology entrepreneurs and companies, which may inhibit innovation.

The final resolution of the case is yet to come: Uniloc has expressed its intent to appeal the Court’s decision.

By Debbie Rosenbaum* – Edited by Chris Kulawik
In Re: Sony BMG Music Entertainment Et Al., April 16, 2009, No. 09-1090
Opinion

On Thursday, April 16, The United States Court of Appeals for the First Circuit in Boston, MA overturned a motion granted  by the district court which would have permitted the oral arguments in the case of Joel Tenenbaum vs. the Record Industry Association of America to be broadcast live over the Internet.

In a unanimous opinion by the First Circuit Court of Appeals authored by Judge Bruce Selya, the court ruled that the District of Massachusetts Local Rules, as well as policy statements by the First Circuit Judicial Council, and the United States Judicial Conference, all pointed toward one conclusion: no webcast would be permitted. The decision rested on two premises: 1) Judge Nancy Gertner lacked the authority to permit Internet broadcasts from her courtroom; and 2) the Judicial Council’s 1996 anti-camera resolution banned the use of recording devices in federal courtrooms unless they are used to preserve trial evidence. However, in so holding, the court noted that they were “reluctant to interfere with a district judge’s interpretation of a rule of her court, especially one that involves courtroom management.”

As explained by Copyrights & Campaigns, Judge Kermit Lipez filed a brief concurrence, agreeing with Judge Selya’s conclusion that the rules preclude the webcast, but arguing that there is no good policy reason to disallow it. Copyrights & Campaigns also argues, as does Recording Industry v. the People, that it is ironic that the court of appeals posted an audio recording of the oral argument on its website.

Ray Beckerman has consolidated all the legal documents associated with this portion of the case.

The piracy case at issue involves a 25-year old doctoral student at Boston University named Joel Tenenbaum, who was sued for copyright infringement by the RIAA. If found guilty, Tenenbaum could be fined $150,000 per downloaded song, which would amount to more than $1 million.

As part of his defense efforts, his attorney, Harvard Law Professor Charles Nesson asked the district court to allow a hearing to be streamed live over the Web. The motion was granted, with Judge Gertner noting the keen public interest in the case. The granting of that motion led to this appeal.

*Ms. Rosenbaum is one of the students assisting Professor Nesson on Joel Tennenbaum’s defense team.

Boston Duck Tours v. Super Duck Tours
First Circuit, June 18th, 2008, Nos. 07-2078, 07-2246
Slip Opinion

On June 18, the First Circuit lifted a preliminary injunction granted by the District Court of Massachusetts, which had enjoined Super Duck Tours, LLC (“Super Duck”) from using the phrase “duck tours” in its trade name and the cartoon of a duck in its logo. On July 2, 2007, Boston Duck Tours, LP (“Boston Duck”) filed a complaint in the district court alleging federal trademark infringement and unfair competition and seeking a preliminary injunction against Super Duck. The district court granted the injunction and Super Duck appealed.

The First Circuit held that the lower court clearly erred in concluding that Boston Duck was likely to succeed on the merits of its trademark infringement, by over-estimating the likelihood that use of the phrase and image would cause consumer confusion.

The court of appeals did not address the district court’s ruling regarding Super Duck’s purchase of the key word phrase “Boston duck tours” on Google. “Sponsored linking” or “keyword advertising” allows the purchaser of a keyword to link his or her website to the search engine’s results page with a highlighted link at the top of the page.

The district court found that Super Duck’s sponsored linking did not violate the injunction. It found that sponsored linking, however, does constitute “use” under the Lanham Act, which states that “a mark shall be deemed to be in use in commerce. . . (2) on services when it is used or displayed in the sale or advertising of services.” 15 U. S. C. §1127. The district court reasoned that the plain language of the statute and the majority of courts have considered sponsored linking “use.”

Unlike traditional advertising, sponsored linking makes use of allegedly infringing terms without actually displaying the marks to consumers, making it unclear whether such activity fulfills the “use in advertising” requirement. A split has developed in the circuit courts over interpretation of the act and the First Circuit has yet to rule on the matter. The Second Circuit has distinguished sponsored linking from more overt use of trademarks in advertising online, holding that sponsored linking does not constitute “use.” By contrast the Ninth and Tenth Circuit Courts of Appeals have held that similar internal uses do constitute “use” under the Lanham Act.

In this case, the First Circuit lifted the injunction on the basis of traditional trademark infringement analysis. The court held that the lower court clearly erred in concluding that Boston Duck was likely to succeed on the merits of its trademark infringement. To win its trademark infringement case, Boston Duck had to prove that its mark was entitled to trademark protection and that Super Duck’s use of the mark was likely to confuse consumers. The First Circuit determined that the phrase “duck tours” was generic, and that consumers were unlikely to be confused by the similarity between the names “Boston Duck Tours” and “Super Duck Tours.” The two companies’ similar cartoon duck logos, the court further held, were dissimilar enough to prevent confusion.

Law.com discusses the sponsored linking issue here.

FileWrapper analyzes the case here (with photos).

Press Coverage is also available from Business Week and Boston Magazine.