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8/22/2006
01:28 PM
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Microsoft Loses 'Product Activation' Patent Suit, Owes $142 Million

A Texas federal judge has upheld a patent verdict against Microsoft and Autodesk, ordering Microsoft to pay z4 Technologies $140 million in damages, and Autodesk to pay $18 million.

A Texas federal judge has upheld a patent verdict against Microsoft and AutoDesk for their use of product activation software to stymie piracy.

U.S. District Court Judge Leonard Davis rejected Microsoft's and AutoDesk's request for a new trial and upped the amount that Microsoft must pay z4 Technologies by $25 million. Previously, a jury had awarded the Michigan-based z4 $115 million in damages from Microsoft and $18 million from AutoDesk.

However, Davis has refused to grant z4 an injunction against both Microsoft and AutoDesk from using the disputed technologies.

z4 sued the two companies in 2004, saying that Microsoft used its patented product activation technologies to prevent casual copying of Microsoft's Office and Windows XP, and Autodesk's AutoCAD. The companies claimed that they had developed their activation software from scratch. Microsoft will challenge the decision at the U.S. Court of Appeals.

The $142 million Microsoft owes z4 is the Redmond, Wash. developer's second-largest patent infringement judgment, bested only by the 2003 decision in favor of Eolas Technologies and the University of California over browser technologies. In that decision, which is currently on appeal, Microsoft was told to hand over $520 million.

Microsoft was not immediately available for comment on whether the decision will affect whether Windows Vista and Office 2007 use product activation when they release later this year and in early 2007, or if the anti-piracy practice and technologies will be modified.

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