Last week, the U.S. Court of Appeals for the Federal Circuit, which hears all appeals in patent cases, ruled on an on-going legal battle between Microsoft and Alcatel-Lucent, now seven years old. Brent Kendall of the Wall Street Journal reports on the decision here. The full text (not recommended) can be found here.
Whether the decision represents a win or a loss for Microsoft depends on whose explanation you are reading. On the one hand, the the F.C. refused to declare the patents invalid. On the other hand, they voided a calculation of damages that made Microsoft liable for $358 million, and ordered a new trial to determine the correct amount. New trials are always opportunities for new negotiations for settlement.
The patent at issue was for a 1986 invention by AT&T engineers for a method of suggesting values to be automatically inserted into text fields on a computer screen. AT&T argued that pop-up windows in Outlook and other applications that allow the user to pick a date, for example, and then fill the data into an underlying date field violated that patent, a holding the appellate court has affirmed.
But Alcatel-Lucent argued that the feature was so valuable that damages should be based on the value of the entire computer system (including hardware) paid by a consumer using the software Microsoft thought a more appropriate number would be $6.5 million. We'll see what comes next.
This case is a good example of many problems with the current patent system, a few of which I summarize below:
- Obviousness - The two patents, read in their entirety, don't suggest the kind of innovation that ought to be rewarded with 17 years of monopoly protection. The extension of the claim from touch screens to keyboard entry also seems a stretch.
- Trier-of-fact - That the determination of validity and infringement is made first by ordinary jurors and then affirmed by judges with no particular training in technology is likewise unnerving.
- Procedure - Mainstream media sources reported the initial verdict and damages award as a done deal, a huge blow to Microsoft, etc. In long-running litigation between well-funded litigants, you really have to wait until it's really over (settlements are inevitable if drawn out) to say what's happened.
- Software - The development of software, a relatively new form of invention, is just too fast to work with the slow pace of the patent system. The sources for "prior art" and obviousness (here the appeal rested largely on an article from trade magazine Datamation) are unfamiliar to patent examiners and judges, and easily misunderstood. Software already gets protection under trade secret and copyright law; it doesn't need patent as well.
- Liability - There was, as is usual in such cases, no claim that Microsoft intentionally infringed on the patent or was even aware of its existence. Liability in patent is strict - meaning it has nothing to do with unethical behavior by the defendant.