What is SurfCast and can it spoil Microsoft's Windows 8 party?

A few days after the Windows 8 operating system went on sale and started generating significant revenue, Microsoft was slapped with a lawsuit by a company no one had ever heard of. The suit targets the core design feature of the new Windows 8 user interface -- the Live Tiles that surface dynamically updated information, such as tweets, photos, notifications and weather data, on the home screen of Windows 8 devices.

Read: Microsoft sued over Live Tiles

SurfCast's bare-bones Web site is short on corporate details, such as who is actually running the show. But it lists seven founders and directors who collectively have decades of experience at major banking and tech companies. The Maine company also says it "designs operating system technology and has four issued patents with additional applications pending." It appears the four patents, all titled "System and Method for Simultaneous Display of Information Sources," are the only technology offered by SurfCast.

The complaint filed yesterday in a U.S. District Court in Maine claims that Microsoft's Live Tiles tech infringes on SurfCast patent No. 6,724,403. SurfCast filed for its patent in October 2000, and it was granted in April 2004. At the time, SurfCast described its concept as a "broadband interface" that takes "several streams of content and integrates them into a single screen environment, enabling users to manage all of these streams at the same time." 

CNET spoke briefly with Ovid Santoro, one of the founders of the company. We asked if patent No. 6,724,403 was acquired by SurfCast and if it was an original invention by Santoro, who has a background in investment banking and venture capital, and Klaus Lagermann, a former IBM executive and programmer. Both are listed as inventors on the patent filing. Santoro responded that he was unable to comment. He gave the same response when asked whether SurfCast makes any products other than the patents it holds. U.S. Patent and Trademark Office records indicate that the inventors of SurfCast's patents have only authored those four patents.

The company is calling for Microsoft to "account for and pay to SurfCast all damages caused to SurfCast by reason of Microsoft's patent infringement."  

A Microsoft spokesperson said the company was "confident we will prove to the court that these claims are without merit and that Microsoft has created a unique user experience."

Microsoft is no stranger to SurfCast's patent, nor is Apple. "The absolute number and rate of amassing citations for the 403 [6,724,403] patent is very unusual, indicating that it's a hot area," said Erin-Michael Gill, managing director and chief intellectual property officer at MDB Capital Group. "The 403 patent has been cited 120 times since it was granted in April 2004. Apple cites it 52 times, and Microsoft 47 times. These, of course, are not random companies, and they have clearly been looking in the same technology area for a long time. But it doesn't necessarily mean they are infringing.

"To give some perspective on the citations, since the time patent 403 was granted, 1,692,000 patents have been granted, but only 508 patents have received as many citations," Gill added. "Looking at the scope and breath of the claim, they are specific enough that invalidating it isn't going to be a trivial task. It's broad enough to cover a pretty wide range of technologies."

In its complaint, SurfCast stated that Microsoft had knowledge of the 403 patent at least as early as April 21, 2009, as evidenced by references in its patent filings.

Thomas Duston, a partner at the Chicago law firm Marshall, Gerstein & Borun, said patent suits by so-called non-practicing entities (companies that merely hold intellectual property and don't make actual products, though SurfCast's site says it designs operating system technology) are often more cookie cutter in nature, so the same language can be reused against numerous defendants. But this claim goes into great detail explaining Microsoft's activities and its efforts to "induce" other people to infringe on the patent as well.

Also, if SurfCast is able to prove Microsoft indeed knew of its patents and "willfully" infringed on them anyway, it can ask for extra damages. That's a handicap for product-building companies that are also in the patent business face. 

"The more active you are in the patent sphere, the more prior art is going to come to your attention," Duston said. That means it offers plaintiffs greater opportunity to argue you knew about a patent and yet you still trespassed on it.

SurfCast is a fresh face in this era of rampant patent litigation, but the founders and directors listed on its Web site have long histories in the banking and computer industries.

Read: Inside Intellectual Ventures, the most hated company in tech

Santoro and Tom Dechaene were executives at Deutsche Bank AG, along with directors David Charters and Michael Cohr.

Other names on the SurfCast site have even more impressive resumes. Jim Cannavino spent 32 years at IBM, ending his career as the executive in charge of corporate strategy and development. Along the way he led IBM's PC business and the OS/2 operating system team. Following his time at IBM, he was president of Perot Systems and then Direct Insite Corp., a financial services technology company in Sunrise, Fla.

Director Bob Carberry held several executive positions at IBM, including founding the company's venture capital arm and overseeing its patent portfolio. He then left IBM after 20 years to become vice president of technology at Blockbuster and Viacom.

SurfCast exercised more than a modicum of patience in waiting to file its suit until after Windows 8 shipped, and the revenue started flowing. It's also a good bet the patent holder has the deep pockets necessary to carry out litigation with Microsoft and other major tech companies if the dispute ends up in a courtroom.