More tech companies than just Microsoft are breathing a sigh of relief after Microsoft’s last ditch appeal to the US Supreme Court prevailed and limited liability for infringement of a domestic software patent abroad. IDG News Service’s Jeremy Kirk explains:
The U.S. Supreme Court ruled on Monday that Microsoft is not liable for using patented AT&T technology in copies of Windows running on computers outside the United States.
The 7-to-1 ruling relieves the software giant from paying what could have been enormous damages and changes how the software industry looks at patent rights.
Microsoft has previously admitted to violating an AT&T patent for converting speech to computer code, which it incorporated into tens of millions of copies of its Windows OS. It settled with AT&T in the United States, but disputed that Windows software running on machines located overseas were covered by the patent.
In delivering the court’s opinion, Justice Ruth Bader Ginsburg wrote that the “master disk” or “electronic transmission” Microsoft gives to foreign manufacturers does not violate the patent on its own since that specific copy is not used on foreign-made computers.
The Supreme Court was the last stop for Microsoft, which had lost a previous court battle. In July 2005, the U.S. Court of Appeals for the Federal Circuit upheld a lower-court ruling that Microsoft was liable to pay fines for foreign sales of patent-infringing software even if it was originally created in the United States.
But Microsoft had gained broad support in its defense efforts, including the Bush administration and tech giants Amazon.com, Intel, and Yahoo, and industry groups such as the Business Software Alliance and the American Intellectual Property Law Association.
Frankly, this seems like putting a Band-Aid on patent laws that are clearly inadequate for modern software (and other) technology, but that’s an all too common story.
Update 5/1: As for what it means to Microsoft:
Brad Smith tells the Wall Street Journal’s Jess Bravin today (click here) that the ruling will lop off about 60% of its exposure in the 45 patent cases pending against it today.
Everyone enjoys a good lawyer joke including Fortune’s David Parloff:
When Google (GOOG) announced its $3.1 billion proposed acquisition of DoubleClick on April 13, recovering monopolists Microsoft (MSFT) and AT&T (T) were the most vociferous complainants urging regulators to scrutinize the deal.
Alluding to the irony, I asked Microsoft general counsel Brad Smith last week if he’d be hiring David Boies, of Boies Schiller & Flexner, to counsel his company on the antitrust issues. It was Boies, of course, who had sliced and very nearly diced Microsoft seven years ago as lead trial attorney for the government in its monopolization case against Microsoft.
“Honestly, it hadn’t occurred to me,” Smith said, but he sounded intrigued, and asked me to have Boies call him if he seemed interested after I spoke to him.
Parloff followed up with Boies and discovered that AT&T had already hired the firm as their DoubleClick complainers. My, how the worm turns.
The sight of Google carrying off DoubleClick to the altar has driven rejected suitor Microsoft to extreme measures – an appeal for antitrust regulators to get involved to stop the wedding:
Microsoft has released the following statement by Brad Smith, Senior Vice President and General Counsel, Microsoft Corporation, on the proposed acquisition of DoubleClick by Google:
“This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online. We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market.”
Even more indicative of the chagrin in Redmond, they rounded up some other aggrieved parties this weekend:
Executives at the software giant said they talked over the weekend with AT&T, AOL and Yahoo about similar concerns.
and even arranged for Brad Smith to be interviewed on Sunday by the NY Times. So far only AT&T has actually weighed in with a public support statement:
“We think antitrust authorities should take a hard look at this deal and the implications,” said Jim Cicconi, senior executive vice president for external affairs at AT&T. “If any one company gets a hammerlock on the online advertising space, as Google seems to be trying to do, that is worrisome.”
The initial antitrust review of a merger lasts 30 days. It is not yet clear whether the Justice Department or the Federal Trade Commission, which share antitrust regulatory duties, will review the Google-DoubleClick deal.
Any review of a merger on antitrust grounds begins with a determination of the “relevant market” in which the two companies operate. “That is the first hurdle in case like this,” said Andrew I. Gavil, a law professor at Howard University, “and it looks as if DoubleClick may well be in a nearby, or complementary, market instead of the same market as Google. And then the question will be how easy it is for new entrants to compete in the online advertising markets.”
The WSJ (subscription reqd.) suggests that Microsoft hopes to raise enough objections that the regulators will make a “second request” for information from the parties, which may kill the deal and will certainly slow down the process. Hmm, I wonder if the folks in Redmond have tried Neelie Kroes at the European Commission yet?
More on the role reversal theme from Paul Kedrosky:
To borrow a phrase from Microsoft’s past, this is a brazen attempt to cut off Microsoft’s future air supply. The latter company is losing share in search, failing at ad placement, trying to find a new leg to growth, and generally floundering expensively in these crucial new fast-growing markets. What better way and time for bid-’em-up Brin to stick the knife in deeper every time Microsoft spots a possible life raft than for Google to buy the target acquisition company — like DoubleClick — out from under Microsoft.
This was, in other words, a strategic and offensive buy, not a financial one, even if you can make a financial quasi-justification for the price. Google is playing very hard ball with Microsoft, deploying brutal tactics right out of the Redmond playbook, circa 1995. Call it $2-billion for DoubleClick’s revenues and customer list, plus another $1-billion for a pinched air tube to Microsoft.
Kedrosky’s take is that if the deal goes through Microsoft will shortly be considering an acquisition of Yahoo, a view also advanced by Larry Dignan earlier this month.
Companies that provide television over internet protocol technology joined forces on Monday to set a single global standard, so that all systems would work together.
The Open IPTV Forum is backed by companies including Ericsson, Matsushita’s Panasonic, Philips, Samsung Electronics, Siemens, Sony, AT&T, Telecom Italia and France Telecom.
Not on the starting list are Alcatel-Lucent and Microsoft, the market leaders and alliance partners in IPTV networks and software.
Filmmakers and TV production companies were not on the list either, but the forum said everyone could join.
The nine founding companies said they want results fast and will hammer out technology requirements by September and a first set of technology specifications by year-end.
Microsoft and Alcatel-Lucent are busy suing each other over patents of course, but that doesn’t seem to keep them from forging ahead in IPTV.
Speaking of the patent lawsuits, I see that Microsoft has now got the U.S. International Trade Commission on Alcatel-Lucent’s back. You’d think that such great pals could work out a deal.