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April 19, 2006

Microsoft, Autodesk hit in patent judgement

Posted by David Hunter at 6:48 PM ET.

Bloomberg News:

A Texas jury ruled Microsoft Corp. and Autodesk Inc. must pay $133 million to a Michigan man who claimed he was owed royalties for inventions to prevent software piracy.

The Tyler, Texas, jury today awarded Z4 Technologies, founded by David Colvin of Commerce Township, Michigan, $115 million from Microsoft and $18 million from Autodesk. Colvin claimed two patents were infringed by software including Microsoft’s Office and Windows XP and Autodesk’s AutoCAD.

The verdict is the second large patent loss for Microsoft, the world’s biggest software maker. The company is fighting a 2003 verdict of $521 million for patent infringement over a feature in its Internet Explorer.

The biggest patent loss was in the Eolas patent suit for which Microsoft just shipped an Internet Explorer patch to avoid further liability. As far as this verdict goes:

The Z4 verdict continued a pattern of victories in East Texas federal courts for patent owners claiming infringement.

“There are many indications here that this is a pro-patent district,” Greg Upchurch, research director of LegalMetric LLC, said in an interview. “When you look at the national numbers, it’s a lot higher.”

I guess we can expect the patent trial lawyers to gravitate there. The upfront money is nice for Z4 and a nit for Microsoft, but there is more at stake:

Closely held Z4 can ask that U.S. District Judge Leonard Davis issue an order that could force Microsoft and AutoDesk to change their anti-piracy software. Ernie Brooks, a lawyer for Z4, declined to discuss Z4′s plans.

“We continue to contend that there was no infringement of any kind and that the facts in this case show that Microsoft developed its own product activation technologies well before Z4 Technologies filed for its patent,” Microsoft spokesman Jack Evans said.

The two disputed patents in the Microsoft suit involve passwords and codes assigned to each copy of an authorized version of software.

Which translated means that Microsoft may have to either pay up to Z4 or change the product activation process for some of their cash cows like the Windows operating systems and Office.

There are some further legal proceedings in the matter which offer a ray of hope for Microsoft and Autodesk and are described in the full article, but for the moment it looks like they have a tough choice to make.

Filed under Autodesk, Coopetition, Legal, Microsoft, Patent Lawsuits, Patents

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One Response to “Microsoft, Autodesk hit in patent judgement”

  1. Microsoft gets increased penalty in Z4 patent suit -- Microsoft News Tracker Says:

    [...] Back in April, Microsoft and Autodesk were hit with penalties in a patent infringement suit brought by Z4 Technologies. Yesterday, the judge in the case raised the original $115M Microsoft penalty by $25M: Microsoft willfully infringed on the patents of a small Michigan company and engaged in litigation misconduct in its effort to defend itself, a federal judge ruled Friday. [...]

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