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Microsoft Ordered To Pay $388 Million In Patent Case

Posted by ryuzaki0 on from the pay-up dept.

jeffmeden writes "BusinessWeek reports today that Microsoft suffered a loss in federal court Monday. The judge rendering the verdict ordered Microsoft to pay $388 Million in damages for violating a patent held by Uniloc, a California maker of software that prevents people from illegally installing software on multiple computers. Uniloc claims Microsoft's Windows XP and some Office programs infringe on a related patent they hold. It's hard to take sides on this one, but one thing is certain: should the verdict hold up, it will be heavily ironic if the extra copies of XP and Office sold due to crafty copy protection end up not being worth $388 million."

53 of 233 comments (clear)

  1. One can dream by WgT2 · · Score: 4, Insightful

    ...should the verdict hold up it will be heavily ironic if the extra copies of XP and Office sold due to crafty copy protection end up not being worth $388 million.

    Yeah, but don't count on it.

    XP has been around for a loooong time for a Microsoft OS. I'm sure they've made more than $388 million off of it... seeing as how they've been holding on to several billion in cash for several years now.

    This doesn't even consider Office sales.

    1. Re:One can dream by Opportunist · · Score: 4, Insightful

      OP talks about $388m being made extra due to copy protection. I.e. $388m they would not have made if they did without it. And I highly doubt that.

      Has copy protection ever kept anyone from copying? At best, the "casual copier". Who has in this case even a free alternative, if he can't figure out how to torrent a version that works.

      --
      We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
    2. Re:One can dream by msormune · · Score: 4, Insightful

      That's not really why the copy protection is for. The protection is there so that you have to break or circumvent it in order to copy the product: It's like a lock on your front door. Sure it won't stop the robbers, but it will make it even more clear for the jury they intended to rob your house.

      So the perfect copy protection is hard to break using normal methods, but is still breakable: It shows the breaker had an INTENTION to illegally make copies.

    3. Re:One can dream by KGIII · · Score: 2, Insightful

      Bingo, got it in one. Additionally, I don't think Microsoft has to worry much about this one. By the time the appeals are exhausted, concessions made, and lawyers paid the company may well be defunct or have been purchased outright by Microsoft. They're about the only ones left with any money.

      --
      "So long and thanks for all the fish."
    4. Re:One can dream by timeOday · · Score: 3, Interesting

      So the perfect copy protection is hard to break using normal methods, but is still breakable: It shows the breaker had an INTENTION to illegally make copies.

      So, at what point did that marginal additional argument against pirates earn Microsoft $388M?

    5. Re:One can dream by QuantumG · · Score: 4, Interesting

      WTF is an illegal copy?

      Show me the law that makes installing a purchased copy of Microsoft Office on more than one computer illegal.

      There isn't one, that's why they need technological measures and scare tactics to enforce it.

      --
      How we know is more important than what we know.
    6. Re:One can dream by Anpheus · · Score: 3, Insightful

      I think even the most uneducated juries (perhaps I'm being too generous) would understand the difference between making a backup and installing 1 copy on ten different computers, and making ten backups of the original disc and keeping them safe.

    7. Re:One can dream by fractoid · · Score: 4, Funny

      No, the biggest Hippocrates founded modern medicine.

      --
      Rampant carbon sequestration destroyed the Dinosaurs' tropical paradise. I'm here to help repair the damage.
    8. Re:One can dream by WCguru42 · · Score: 3, Funny

      They're about the only ones left with any money.

      But I read a week ago that Microsoft wanted bailout money due to lackluster sales of Vista.

      --
      "Educate the mind but never at the expense of the soul."~Blessed Basil Moreau
    9. Re:One can dream by wild_berry · · Score: 2, Informative

      Your DMCA has anti-circumvention provisions, which mean that attempting to get around technology used to stop copying, i.e. copy-protection, is illegal.

    10. Re:One can dream by Tawnos · · Score: 4, Funny

      That's why you read kdawson articles only for the humor. Facts are to be found elsewhere.

    11. Re:One can dream by Zordak · · Score: 3, Informative

      Show me the law that makes installing a purchased copy of Microsoft Office on more than one computer illegal.

      Ummmm... How about Title 17 of the United States Code? 17 U.S.C. s.106 grants the copyright holder the exclusive right to make copies. Section 501 says violating any of the exclusive rights of a copyright holder (including section 106) is a copyright infringement. Installing a copy of Microsoft Office on your hard drive is making a copy of the program (in fact, even just loading it into RAM is making a copy), so you can only do that with a license from Microsoft. Microsoft granted you a license to install it on one computer. So installing it on more than one computer is an infringement of their copyright.

      And no, section 117 won't save you here. That only permits additional copies for archival purposes, or copying into RAM as an essential step in running the program. It doesn't grant you the right to install on more than one computer.

      --

      Today's Sesame Street was brought to you by the number e.
    12. Re:One can dream by mea37 · · Score: 2, Interesting

      Section 117 may not save you WRT putting the program on two hard systems' hard drives (though it does make your comment about "making a copy into RAM" incorrect). Since typical programs these days will not function from the installation CD, I'd argue that section 117 also means I don't need a license to install the program on a single computer. (The theme at which I'm driving is, I don't think I need an EULA at all to use a program I acquire legally. But that's probably a broader topic.)

      Given how section 107 has been applied to other media, it might make installation to multiple computers ok so long as those computers are under a single user's control. Yes, I'm aware that MS would argue otherwise.

    13. Re:One can dream by WCguru42 · · Score: 2, Informative

      Or a week ago was April 1 and whoosh.

      --
      "Educate the mind but never at the expense of the soul."~Blessed Basil Moreau
    14. Re:One can dream by msormune · · Score: 2, Insightful

      Yes, but the idea is still the same: For each case, you must have a single person or a few to commit the break in or copy protection breach. In each case, there's a specific person or a group that did it. That's the whole point. And that's really illegal: the breach, and not the actual copying in most parts of the globe.

      And you should see the tools burglars have :) They have come a long way from a crowbar and simple lock picks. For most modern locks there are specific tools that open the lock pretty fast. Without the tools, it can be very hard.

  2. Yes, that would be ironic... by BadAnalogyGuy · · Score: 2, Interesting

    it will be heavily ironic if the extra copies of XP and Office sold due to crafty copy protection end up not being worth $388 million.

    XP was released in 2001. 400 million copies were in use by 2006. Assuming a paltry $1 profit on every copy sold (it's way higher, but just for the sake of argument), they have already broken even 3 years ago.

    That doesn't even include the Office cash cow.

    Sorry, it is actually anti-ironic. Anironic. The opposite of ironic. Cinori. Aronic.

    1. Re:Yes, that would be ironic... by afidel · · Score: 5, Insightful

      You're missing the point, nowhere near 100% of Office or Windows sales can be attributed to the anti-piracy measures built into their activation systems. In fact I would suggest that the number is near zero as pirated copies of Windows and Office releases are available for download before the product even launches for all who care to pirate them. So now Microsoft has the cost of developing the activation system, the cost of maintaining the activation servers, the cost of implementing Genuine Advantage, and now the cost of this judgement. All because some PHB honestly believes that Microsofts paltry activation systems significantly contribute to revenue retention and growth. Much of the software industry has been infected with the notion since before the days of MS DOS despite the mountain of evidence to the contrary.

      --
      There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
    2. Re:Yes, that would be ironic... by jimicus · · Score: 2, Informative

      You're mis-counting.

      Your numbers would hold up if you assume that every single person on Earth who uses XP (except, presumably, the person who purchased the first copy) had pirated their copy from this first person.

      The set of numbers you want is people who:

      • Planned or attempted to pirate XP but was put off by the anti-piracy measures and instead went and purchased a legitimate copy (including those who were sold an illegal copy in good faith by a dishonest supplier).
      • Purchased a legitimate copy which was incorrectly marked as pirated and when Microsoft told them to suck it up and buy another copy, they did so
    3. Re:Yes, that would be ironic... by dontmakemethink · · Score: 3, Insightful

      Oh come on... $388M is like a parking ticket to Microsoft. They're only appealing the decision to dissuade the hundreds of other would-be claimants from filing the thousands of pending 9+ digit suits against them. They employ more lawyers than programmers ffs!

      Now more than ever, their shareholders are screaming for them to make more money, not better software! What is M$ better at, making money, or good software?

      --

      War as we knew it was obsolete
      Nothing could beat complete denial
      - Emily Haines
    4. Re:Yes, that would be ironic... by YrWrstNtmr · · Score: 4, Informative

      Microsoft are the richest corporation on the planet (to my knowledge)

      Not even close. 1/2 the size of Exxon, smaller than Walmart or Procter & Gamble.

    5. Re:Yes, that would be ironic... by johnsonav · · Score: 4, Informative

      Microsoft are the richest corporation on the planet (to my knowledge) but their income is fading. They are losing money hand over fist for all sorts of reasons.

      What are you talking about? Last year, MSFT's total revenue was $60 billion, compared to $51 billion for FY07. Gross profit was $48.8 billion versus $40.4 billion. And, net income was $17.7 billion versus $14 billion. Their income is not fading. And, they aren't losing money hand over fist.

      --
      ... and that's when the C.H.U.D.'s came at me.
    6. Re:Yes, that would be ironic... by johnsonav · · Score: 2, Informative

      Their cash mountain has just about vanished though.

      Are you talking about the $20 billion they currently have in the bank? Because, that seems like quite a mountain to me. Yes, it has gone down, but they're buying back billions of shares of their own stock. It's not like they're losing the money.

      --
      ... and that's when the C.H.U.D.'s came at me.
    7. Re:Yes, that would be ironic... by quickOnTheUptake · · Score: 3, Informative

      Your list appears to be using market cap. If you look at total equity (a better metric of current richness) the numbers are even stronger. Just as examples:
      Exxon (XOM): 112.9B (Q4 09)
      walmart (WMT): 65.2B (Q1 09)
      Procter & Gamble (PG): 62.4B (Q4 08)
      MicroSoft(MSFT): 34.4B (Q4 08)
      AT&T (AT): 96.3B(Q4 08--higher equity dispite lower cap)
      Johnson & Johnson (JNJ): 42.5B (Q4 08-ditto)
      General Electric (GE): 104.6B (Q4 08 ditto)
      Numbers from Google finance, most recent Q available.

      --
      Mod points: Guaranteed to remove your sense of humor.
      Side effects may include gullibility and temporary retardation
    8. Re:Yes, that would be ironic... by Facetious · · Score: 2, Interesting

      For a long time Microsoft was a growth stock, and their P/E of 30 reflected that. Investors really expected that to continue as their server "products" displaced Unix, foreign markets began to flourish, and embedded products opened up to them. I personally believe that their stock has stayed put for so long simply because all three of these growth strategies were stymied, most often by Linux and/or other F/OSS.

      --
      Let us not become the evil that we deplore.
  3. $388M or $38M? by amazeofdeath · · Score: 3, Informative

    PC World has the figure at $38 million, which one is right? News item here: http://www.pcworld.com/businesscenter/article/162832/microsoft_loses_antipiracy_patent_case.html

    --
    U+F8FF
    1. Re:$388M or $38M? by clarkkent09 · · Score: 4, Informative

      Every other news outlet says $388M: http://news.google.com/news?q=Uniloc so I guess PC World is probably wrong

      --
      Negative moral value of force outweighs the positive value of good intentions.
  4. cleverly... by catmistake · · Score: 4, Funny

    Microsoft will find a way to pay them with copies of Windows XP.

    --
    The Admin and the Engineer
    1. Re:cleverly... by initialE · · Score: 2, Funny

      which are worth $30/ea now.

      --
      Starbucks, Harbuckle of Breath.
    2. Re:cleverly... by Quothz · · Score: 4, Funny

      Microsoft will find a way to pay them with coupons toward the purchase of copies of Windows XP.

      Fixed that for ya.

  5. Karma by NfoCipher · · Score: 4, Funny

    This is what they get for suing TomTom. What goes around..

    --
    I'm sorry, I can't hear you over the sound of how awesome I am.
    1. Re:Karma by wild_quinine · · Score: 4, Insightful

      This is what they get for suing TomTom. What goes around.

      This is slashdot, so an article in which someone does something generally accepted as bad but does it to Microsoft - and to their DRM, no less! - causes some kind of minor implosion.

      Argghh.... Don't.... know... how ... to feel...

      It doesn't matter two shits what this means to Microsoft, and it doesn't matter two shits what this means to DRM. This is definitely not a situation in which two wrongs somehow magic up a right.

      This is just another story about why patents are damaging innovation in the USA, and on a global scale. But don't think that innovation enjoys being held back like this. If this situation is not fixed, we'll suffer - at most - a few more years of this BS, before the rest of the world moves on without the US.

      Don't think it can't happen. If anything the current financial situation makes it more likely. Who's got the time or money to sit around being scared of the US Patent Office?

    2. Re:Karma by NoobixCube · · Score: 4, Funny

      Two wrongs don't make a right, but it does create a warm fuzzy feeling to know someone who wrongs others gets a little of it back. I don't approve of software patents, don't get me wrong, but it is kind of funny that Microsoft spent all that time rumbling about patent infringement and then get slapped with a massive patent infringement bill.

      For some reason, I just had a mental image of Marie Antoinette being drowned in a vat of cake-mix...

      --
      Admit it. You post strawman arguments as AC so you get modded Insightful for refuting them, rather than Troll
    3. Re:Karma by LordLimecat · · Score: 2, Informative
      A quick googling and a peek at an MSFT investor relations article brings this up:

      January 22, 2009 â" Microsoft Corp. today announced revenue of $16.63 billion for the second quarter ended Dec. 31, 2008, a 2% increase over the same period of the prior year.

      A little quick calculation shows that $388 million is slightly less than 2.4% of that--which neatly wipes out that gain on the previous year.

      Just because its not devastating to them doesnt mean its insignificant.

    4. Re:Karma by Hognoxious · · Score: 3, Insightful

      Patents are [supposed to be] for inventions, not ideas.

      A carriage that moves without horses is an idea. A working model/prototype, or schematics to construct one, is an invention.

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
  6. Re:TFA is lacking info... by Alain+Williams · · Score: 5, Interesting
    That is not the point. It would be if this was about copyright, with a patent you can infringe it if you never heard of it, your programmers came up with the idea and coded it -- it just needs for someone to have submitted a patent application before the idea was published somewhere.

    This is why software patents are dreadful -- it simply rewards the guy who filed the patent application first. This is especially true with patents about simple ideas or those that are obvious to someone asked to solve a particular problem -- most software patents fall into this group.

  7. Online Activation DRM by El_Muerte_TDS · · Score: 2, Insightful

    So, who's next? SecuROM, Valve, ... basically every DRM that uses online activation?

  8. The judge must be in error ... by AHuxley · · Score: 2, Funny

    Microsoft researchers can show the fine should be decrease by 3-3000 times.
    ( from http://hardware.slashdot.org/article.pl?sid=09/04/08/1733206 )

    --
    Domestic spying is now "Benign Information Gathering"
  9. Jury of average people+patents? a bad mix IMH0 by N+Monkey · · Score: 4, Insightful

    "jury verdict"

    I wonder if anyone in the jury had even the foggiest idea of what the patent was actually about?

    That strikes me as a real problem in the US system. How can a jury of average people really understand the intricacies of technology? If it takes a bright person 3 or 4 years to do a degree in the patent's subject area, what chance has the jury got to understand all these things in the time of a court case?

    AFAIU, in some other regions these things are at least looked at by a board of people with some "skill in the art". Surely that must be a better way.

  10. Re:This sums it up... by clarkkent09 · · Score: 3, Interesting

    Off topic but interesting article by Richard Dawkins on trial by jury in general:

    http://www.simonyi.ox.ac.uk/dawkins/WorldOfDawkins-archive/Dawkins/Work/Articles/1997-11-16trialbyjury.shtml

    --
    Negative moral value of force outweighs the positive value of good intentions.
  11. Take sides? by igaborf · · Score: 3, Interesting

    It's not hard to take sides at all. Software patents are bad. Period.

    The only possible silver lining to this is that it helps demonstrate the badness of software patents.

    (OK, seeing Microsoft discomfited is a little nice side effect, too.)

    1. Re:Take sides? by argent · · Score: 2, Insightful

      It's not hard to take sides at all. Software patents are bad. Period.

      Indeed, I agree with Microsoft on this: "We are very disappointed in the jury verdict. We believe that we do not infringe, that the patent is invalid and that this award of damages is legally and factually unsupported," Microsoft spokesman David Bowermaster said in a statement. But of course that's because ALL such patents, including Microsoft's patent on the FAT file system, are invalid.

    2. Re:Take sides? by Elektroschock · · Score: 2, Informative

      Software patents are trivial because what they protect is not scarce.

      Microsoft gets the paycheck for what it resisted so violently, even with lobbyists in third nations: sane patent reform.

      Read this IPwatch article to get an idea what is going on in the Microsoft community. Phelps says:

      What we've tried to do with "Burning the Ships" is take IP questions out of the realm of arcane debate among lawyers and show real people, in the midst of a highly dramatic internal struggle at Microsoft, learning how to deploy IP for tangible business benefit. As one reader put it, the book is a "thoroughly entertaining and informative canâ(TM)t-wait-to-get-to-the-next-page read."

      Marshall Phelps wants to turn Microsoft into a kind of patent troll, or as they call it "open innovation".

      IPW: A basic lesson in the book could be interpreted as, 'We were getting hurt by others who had patents, so we used our market power to require partners to agree not to enforce their patents until we had enough of our own patents to start enforcing them the way we didnâ(TM)t want others to do to us.' Can you address that?

      PHELPS: Remember, this was back before software patents were a fact of life. MS was just getting a real head of steam but wasnâ(TM)t at all sure patenting was the way to go.

      So either Microsoft kicks its bastards out or it simply deserves to suffer from these fines of a rotten patent system.

      Ah, this is Marshall Phelps. A dark side of IBM import.

      Sure, the recent job losses at Microsoft will not affect their "creation of IP". Look at SCO! Developers leave your company and lawyers litigate you to the ground. Great business model.

  12. He who lives by the patents... by tangent3 · · Score: 5, Funny

    ...die by the patents.

    1. Re:He who lives by the patents... by MartinSchou · · Score: 2, Funny

      Nah, that's an old one. I like the updated version much better:
      "He who lives by the sword is shot by someone who doesn't"

  13. Re:Jury of average people+patents? a bad mix IMH0 by asc99c · · Score: 4, Interesting

    You only have to read the comments on Slashdot to see that a lot of people with above average technical literacy massively mis-read the scope of the claims of typical patents. And having done this, they often then pronounce the patent 'obvious' and have a lot of ideas of what could be prior art.

    As you say, when an average person looks at it, they could be expected to mis-read the scope of the patent in just the same way, but then not understand the obviousness of the ideas, or know of prior art.

    So a lot of it is going to come down to the skills of the lawyers on each side of the argument. I guess this is why fighting patent cases in the court can get so expensive even if the technical side of the argument is often pretty clear to the Slashdot crowd.

  14. WGA by InsertWittyNameHere · · Score: 4, Funny

    Does this mean I'll have to give up my Windows Genuine Advantage tool? I was enjoying the convenience of the frequent black screens, nag screens and reboots.

  15. Re:TFA is lacking info... by tommi · · Score: 4, Interesting
    Text from the actual patent:

    Systems and methods are provided for auditing and selectively restricting software usage based on, for example, software copy counts or execution counts. In one embodiment, the method comprises verifying whether the serial number for a software installed on a computing device corresponds to one of recognized serial numbers, and calculating a copy count (or software execution count) for the serial number. In response to the copy count exceeding a defined upper limit, a limited unlock key may be sent to the device. The limited unlock key may allow the software to be executed on the device for a defined time period, a defined number of executions, and/or with at least one feature of the software disabled.

    This sounds to me like a really general way of copy protection, yep another rotten software patent in my books.

  16. The summary is incorrect by Bryan+Ischo · · Score: 4, Interesting

    It's actually easy to take sides on this one. Software patents are WRONG, and so I'm on Microsoft's side. For once.

  17. As for a jury interpreting the patent... by Madball · · Score: 2, Interesting

    Good luck with that. Here's a snippet of patent (claim 1).

    1. A registration system for licensing execution of digital data in a use mode, said digital data executable on a 55 platform, said system including local licensee unique ID generating means and remote licensee unique ID generating means, said system further including mode switching means operable on said platform which permits use of said digital data in said use mode on said platform only if a licensee 60 unique ID first generated by said local licensee unique ID generating means has matched a licensee unique ID subsequently generated by said remote licensee unique ID generating means; and wherein said remote licensee unique ID generating means comprises software executed on a plat- 65 form which includes the algorithm utilized by said local licensee unique ID generating means to produce said licensee unique ID.

    Say what?

  18. Re:Breaking Copy protection by TaoPhoenix · · Score: 2, Informative

    Depends on the country.

    First couple lines of Wiki's entry on DMCA

    The Digital Millennium Copyright Act (DMCA) is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures (commonly known as Digital Rights Management or DRM) that control access to copyrighted works

    --
    My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
  19. Re:It's also been proven bogus in court by QuantumG · · Score: 2, Interesting

    There's no fucking consideration.. how can it possibly be a legal contract. For fuck sake, even if you're willing to accept that pressing a button is signing a contract, there's not even dual signing. Click wrap licensing is like the retarded urban myth form of legal nonsense that dominates the software industry. No-one would try this shit in any other industry because it's so fuckin' petty.

    --
    How we know is more important than what we know.
  20. Re:TFA is lacking info... by theantipop · · Score: 2, Informative

    For the love of god, quote the claims not the description. The claims are the only legally pertinent language in a patent. You might still have a point (and probably do), but pointing to what looks like the summary of the description and saying "see I told you so" means nothing. Slashdot readers need a patent law 101 course.

  21. Re:what are you smoking? by Amazing+Quantum+Man · · Score: 2, Informative

    If you're talking GPL, that's not an EULA, it's a *distribution* license. GPL specifically states you do not need to agree to it to use the software.

    BSD isn't an EULA either.

    --
    Fascism starts when the efficiency of the government becomes more important than the rights of the people.