Judge Overturns Uniloc Verdict and $388M Fine

A federal district judge in Rhode Island Tuesday overturned a jury verdict and its huge damages award, thus nullifying a patent infringement case that went against Microsoft last spring.

The case had pitted the software titan’s legal eagles against tiny Uniloc USA, a California software firm owned by an Australian company, which claimed that Microsoft had infringed its patent for activating software.

Uniloc sued Microsoft in October 2003 in regard to 13 of its patented software activation technologies. It claimed that Microsoft had used Uniloc’s technologies in four Microsoft products — Office XP, Windows XP, Windows Server 2003, and a discontinued product called Digital Media Plus.

The case had already been pared down by the judge, who had earlier issued a summary judgment, tossing out the infringement allegations. However, a federal appeals court ruling later reinstated one of the patent infringement claims, and the case went back to the lower court.

On April 8, 2009, the jury found that Microsoft had infringed Uniloc’s patents and awarded the company $388 million in damages.

However, Tuesday, in a one page ruling, the judge vacated the jury verdict as well as the damage award.

“We are pleased that the court has vacated the jury verdict and entered judgment in favor of Microsoft,” Kevin Kutz, a Microsoft spokesperson, said in an e-mailed statement.

This is the second patent infringement case this month where Microsoft has come out either a partial or complete winner. In mid-September, a federal appeals court found that, while Microsoft had infringed one of Alcatel-Lucent’s patents, the damages award was exorbitant and sent that case back to the lower court to have the damages reassessed.

The damage award that was rejected in the Alcatel-Lucent case was a cool $358 million.

Microsoft is still on the hook in its appeal of another infringement case brought by Canadian software firm i4i, which alleged that the company illegally used its patents in Word 2003 and Word 2007’s “custom” XML technologies.

The appeals court in the i4i case has already issued a stay of a permanent injunction halting distribution of copies of Word that contain the infringing technologies that would have taken effect as of October 10. Last week, the appeals court heard oral arguments from both sides and has not said when it will rule.

At stake in the i4i case is another $290 million in damages, penalties, and interest.

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