Patent owned by bloatware company and used to make millions invalidated

For those unfamiliar with the Uniloc USA, Inc. v. Microsoft Corp. patent lawsuit, it goes like this. A company called Uniloc, a developer of “try and buy” software (essentially bloatware) that is found in magazines and built in to new PCs, presumably found that its business model wasn’t quite as effective as it had hoped.

So the company decided to sue over 75 companies for infringement of a vague patent (the ‘216 patent) that it filed in 1996. The patent consisted of a trial-based software registration system demanding an activation code issued by the company in order for the user to fully access it. As a result, the software user would somehow manage to avoid piracy.

Unfortunately, many companies were using this system at the time. Sure, Uniloc had it patented, but it wasn’t a particularly unique proposition to begin with. Microsoft was one of the multitude of companies Uniloc sued, and Microsoft nearly lost $388 million in 2009 in the action Uniloc brought against it. The verdict, however, was overturned five months later and then revisited in 2010 when both parties decided to settle for an unknown amount.

A large number of efforts have been made, dating back to 2002, to try and invalidate Uniloc’s patent, but for whatever reason, every single one of them was rejected, until a group of notable companies formed an alliance against Uniloc founder Ric Richardson. The companies, consisting of Sega, Ubisoft, Kofax, Cambium Learning Group, and Perfect World Entertainment, decided to attack Richardson’s method of patent filing rather than the legalities of the patent itself.

After Richardson initially filed the patent in Australia, it took a year for him to repeat the process in the United States, which in turn gave the ‘216 patent an extra year’s worth of priority. That extra year, however, was exactly when the same software registration system began to emerge from other companies. What’s more, Uniloc’s U.S. patent was allegedly even more vague than what was filed in Australia.

The U.S. Patent Office did finally decide to invalidate the patent based on this information alone. Uniloc, however, still has the opportunity to appeal the decision if it so chooses.

An email from Uniloc president and IP counsel Sean Burdick offered their responsive view on the matter in an email:

“The PTAB decision is inconsistent with two prior rulings by the Federal Circuit, and with the opinions of seven patent examiners who previously upheld the validity of the ‘216 patent in multiple reexaminations. Ultimately the PTAB gave undue credibility to a lone expert opinion that was authored by petitioners’ counsel. Congratulations to Erise IP for pulling wool over the eyes of the Patent Office.”

Uniloc’s opponents would contend that the firm was exploiting patent laws for financial gain, and that, at least pending appeal, it can no longer do so.

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Gabe Carey