Patent verdict against Microsoft, Autodesk stands

Companies must pay more than $150 million for unlawful use of product activation technologies, federal judge says.

Caroline McCarthy
Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
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A federal judge in Texas has delivered a setback to Microsoft and Autodesk in their patent infringement battle with product activation start-up Z4 Technologies.

U.S. District Judge Leonard Davis turned down the software makers' request for a new trial in a patent infringement lawsuit filed by Z4 Technologies and awarded enhanced damages, ordering Microsoft and Autodesk to pay a combined total of $158 million.

The initial suit was filed nearly two years ago by David Colvin, owner of Michigan-based Z4, over two product activation technologies. One of those technologies is designed to prevent unauthorized use of software; the other is used to combat piracy.

In a verdict reached April 19, a jury found that Microsoft and Autodesk had violated Colvin's patents; the companies' subsequent request for a new trial was turned down Friday. Microsoft is expected to challenge the verdict in the U.S. Court of Appeals.

Representatives for Microsoft and Autodesk, which had asked for a new trial on the basis that the patents were unenforceable because of inequitable conduct, were not readily available. The counsel for Z4 declined to comment.

Not only has the original verdict been upheld, but Microsoft's patent penalty has also been increased by $25 million for enhanced damages, bringing its total bill to $140 million. It also must pay an estimated $2 million in legal fees.

It's the second-biggest patent infringement fee that Microsoft has had to fork over to a smaller company, surpassed only by the $500-plus million that the Redmond, Wash.-based software behemoth was ordered to pay to Eolas Technologies in 2003. Microsoft's fines in antitrust cases, however, have reached into the billions of dollars.

The penalty for San Rafael, Calif.-based Autodesk, originally $18 million, has been increased by $322,000.

The East Texas Federal District Court is a frequent destination for patent infringement complaints, like this summer's Red Hat-JBoss lawsuit, because of its reputation for efficiency on cases in that field.