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Microsoft Must Pay $388 Million To Settle Patent Claim

Jury finds that anti-piracy tools in Windows and Office infringe on technology owned by Uniloc.

Microsoft has been hit with one of the largest patent awards on record, as a jury on Thursday ordered the software maker to pay $388 million to a security vendor that claims Redmond misappropriated its technology.

The jury found that Microsoft violated anti-piracy patents held by Uniloc. Uniloc sued Microsoft in federal court in Rhode Island in 2003, claiming that its products were being used illegally in the Windows operating system and the Office productivity suite.

A Microsoft spokesman told news agency Reuters that the company plans to appeal the verdict. "We believe that we do not infringe, that the patent is invalid, and that this award of damages is legally and factually unsupported," the spokesman said.

Microsoft, along with a number of other tech vendors, has called for an overhaul of patent regulations it claims enable frivolous suits and excessive awards and supports the Patent Reform Act of 2009. Among other things, the bill calls for damages in patent cases to be awarded only on the basis of the inventor's specific improvements over prior works, and not on the whole value of the invention itself.

"This legislation -- if enacted -- will help modernize that patent system in important respects and represents a significant step forward in efforts to bring balance and predictability to the outcomes of patent litigation cases," Microsoft deputy general counsel Horacio Gutierrez said in a statement earlier this month.

Microsoft last month reached a patent settlement with navigation software developer TomTom. TomTom agreed to make unspecified payments to Microsoft in order to settle Redmond's claims that Linux code used in TomTom's products contained patented Microsoft technology -- specifically, the FAT file system.

Investors on Thursday downplayed the significance of Uniloc's victory on Microsoft's bottom line, as the software maker's shares were up 1.46%, to $19.47, in midafternoon trading.

InformationWeek has published an in-depth report on Windows 7. Download the report here (registration required).

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