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August 7, 2008

Summary Misjudgment

Uniloc sued Microsoft for infringing 5,490,216, claiming an anti-piracy software registration system. Microsoft's product activation system was accused. The district court judge granted summary judgment of non-infringement despite concession by Microsoft.

Uniloc v. Microsoft (CAFC 2008-1121) [non-precedential]

Uniloc had wanted the judge to recuse himself after appointing an intern that Uniloc considered favorable to Microsoft. That went nowhere.

Although reasonable minds could very well differ over the propriety of hiring this intern to work on the case given his financial ties, no matter how small the monetary amount, to one of the parties involved, the district court did not abuse its discretion in denying the motion for recusal.

Summary noninfringement hinged on construing ID generation.

Uniloc limits its appeal to claims 12 and 19, contending that the district court erred in concluding that Microsoft's Product Activation system lacked a remote licensee unique ID generating means that includes "the identical algorithm used by the local licensee unique ID generating means to produce the [remote] licensee unique ID," or what Microsoft called the "same algorithm" requirement. Uniloc is correct. The district court erred by concluding that:

Once again Uniloc misses the point: the '216 Patent calls for the same algorithm to be used on both sides as the generating means of matching licensee unique IDs. That is simply not the case in Microsoft's system; its values that might qualify as licensee unique IDs are produced by different algorithms, using different inputs, and hence the resulting licensee unique IDs do not match.

Uniloc USA, Inc. v. Microsoft Corp., C.A. No. 03-440 S, slip op. at 24 (D.R.I. Oct. 19, 2007) (emphasis in original).

Microsoft itself conceded at oral argument that the district court erred in failing to note that Uniloc had indeed pointed to statements from Microsoft's affiants that the same hashing algorithm was, in fact, used both locally and remotely. Oral Arg. at 19:29-31, available at http://oralarguments.cafc.uscourts.gov/mp3/2008-1121.mp3 ("The district court did make that small error."). As pointed out in Uniloc's summary judgment opposition brief and summary judgment hearing arguments, Microsoft's affiants confirmed that the same hashing algorithms are used on both the client and server side of the Product Activation system. See Joint App'x at 1188; 1203. Microsoft also asserted in its statement of undisputed facts that the hashing algorithms in question are used to hash license data, which is created from a combination of the Hardware ID and the Product ID, which is in turn created from the Product Key. Moreover, Uniloc presented evidence that these hash algorithms are used to produce matching license digests based upon the testimony of both its expert and Microsoft's affiants. Given the presence of this evidence, which was extensive and by no means conclusory, summary judgment of noninfringement was improper.

Reversed and remanded.

Microsoft presented "several alternative grounds for affirming the summary judgment beyond those which were reached by the district court. We have considered these arguments and conclude they are without merit."

The ruling was 2-1. Chief Judge Michel dissented, thinking Microsoft's other arguments had merit, particularly that the claimed ID requires user personal information, whereas Microsoft's system does not.

This is the second CAFC case this week where judicial impartiality and competence are forefront, both Microsoft cases.

Posted by Patent Hawk at August 7, 2008 11:01 AM | Claim Construction


Who represented Research at trial and appeal? Did you see the judges order awarding $8.6M to Microsoft for attorneys fees? Wow - all that for pre-trial? I also posted the following on patentlyo.

Re Research Corporation Technologies v. Microsoft, I listened to the CAFC oral argument, and it brings to mind the oral argument on appeal of Judge Ditter's finding of contempt by Medtronic of his injunction entered in Eli Lilly v. Medtronic. Medtronic was accused of contempt (i.e., infringing the Mirowski patents in suit) by virtue of: (1) providing a mock-up of an automatic implantable cardioverter-defibrillator (ICD) for a St. Paul Science Museum display on past, present and future medical devices; (2) providing an update in the Medtronic annual report of the status of the ICD development program ongoing in Europe, and; (3) knowing in advance of and/or assisting the presentation of a paper by one of the Medtronic ICD clinical investigators at a medical meeting. Lilly vaguely argued that these acts somehow devalued the exclusion of Medtronic ICDs from the U.S. market gained by the injunction (ignoring the fact that Medtronic had discontinued the clinical testing in the U.S. of any ICDs).

The CAFC panel immediately pounced on the absence of any infringing acts, cut the Lilly arguments short, and issued the reversal within 2 weeks, with the one word opinion "Reversed". The CAFC later heard the appeal of Judge Ditter's 271(e)(1) ruling and reversed, finding no infringement by applying the 271(e)(1) safe harbor to FDA regulated medical devices (affirmed by SCOTUS setting to rest the argument that the statute did not apply to medical devices).

As an aside, Judge Ditter was so predisposed against Medtronic (prior to trial and culminating in the contempt order) that he would not rule on the Medtronic pre-trial motion raising the 271(e)(1) defense until after jury trial, refused to allow Medtronic to present a patent file wrapper non-infringement defense, allowed Lilly to present a reasonable royalty damages theory of a one-time, up-front royalty payment of $26,000,000 as the value (to Medtronic based in part on overly optimistic internal sales projections and the cost to Lilly of the Mirowski patent portfolio) of starting the clinical investigation while the patents in suit were still in force, allowing the jury to treble the damages (a total of $78,000,000 for less than $300,000 in actual clinical test sales of 30 Medtronic ICDs), and reading the word "implantable" into the claims (despite the refusal in the record of the USPTO examiner to allow that word to be put into the claims during reexamination as "implantable" was not enabled by the specification) to render the claims allowable over the non-implantable automatic defibrillator prior art introduced at trial (it is not clear whether Judge Ditter ever looked at the file wrapper to see that action taken by the examiner and it is not discussed at all in his finding of validity, presenting Medtronic with another appeal possibility that was rendered moot).

In any case, Medtronic prevailed on the 271(e)(1) defense, so the other matters were never taken up on appeal. The parties cross-licensed their ICD and pacing patent portfolios as the Lilly subsidiary had in the meantime infringed a number of Medtronic patents. Lilly then spun off Guidant, now owned by Boston Scientific. Some years after the Supreme Court ruling, I was told that Judge Ditter remarked to Medtronic trial counsel that the "wool was pulled over his eyes" by Lilly.

It never occurred to us in either appeal that was heard at the CAFC to ask the CAFC to remand with an order to replace Judge Ditter. But, from now on litigants should be aware of this option when the trial judge for one reason or another becomes irrationally inflamed against an accused infringer or patent holder.

Posted by: Joe Breimayer at August 7, 2008 12:18 PM

". . .the judge informed Uniloc that it had no “veto power” over his hiring of chambers staff and that Uniloc’s only recourse was to move for recusal of the judge himself. Uniloc filed a motion for recusal of the judge, which was denied."

What BS. I've never seen a federal court judge who had no power to decide who his intern is. But it gets worse. Moore denied the recusal motion because:

"an objective, knowledgeable member of the public would not find reasonable basis in doubting the judge’s impartiality given that the intern had no financial stake in the outcome of the case."

OK, so the judge says "if there's a problem w/ the intern you gotta' recuse me," but Moore's analysis is on the indisputable grounds that the judge himself has no connections to MS. Phfftttt.

These MS cases smell real bad. Follow this intern's career and see if he/she doesn't end up as MS counsel. MS's next step in this case will be a charge of inequitable conduct. Mark my word.

Posted by: Babel Boy at August 8, 2008 8:50 AM