[LINK] speaking of M$

[Jan Whitaker]

from Slattery's Watch:


Microsoft must pay $25 million for litigation misconduct

Microsoft has lost its bid to have a patent infringement suit against it 
retried, and has instead been ordered to pay an additional US$25 million 
damages for litigation misconduct.  The decision illustrates how employing 
some litigation tactics, especially against a less powerful adversary, may 
backfire.

In April, Microsoft was ordered by a jury to pay z4, a digital rights 
management technology company, US$133 million for infringement of two of 
z4's patents.  The patents, for product activation technology designed to 
prevent unauthorised use and piracy of software, were used by Microsoft in 
Office and Windows XP.  An award of US$18 million was also awarded against 
Autodesk for using the technology in its AutoCAD program.

Despite the ruling, Microsoft was allowed to continue using the 
technology.  The court decided that, because Microsoft used the product 
activation technology only as a small part of its own product, the 
continuing infringement did not affect z4's ability to market or license 
its inventions to other parties.  Therefore it did not award a permanent 
injunction against Microsoft, although Microsoft was required to pay z4 for 
using its patents.

Microsoft and Autodesk argued that the case against them should be retried 
because z4 withheld information about the prior art when filing its 
patents, rendering them unenforceable.  The District Court rejected this 
argument and refused to order a retrial.

The Court did, however, grant z4's motions for the award of additional 
damages in its favour, and for Microsoft and Autodesk to pay z4's legal 
fees.  Judge Davis increased the penalty against Microsoft not only because 
it continued to wilfully infringe z4's patent, but because its conduct 
during the trial amounted to 'litigation misconduct' and was in bad 
faith.  His Honour noted that Microsoft had listed 3,499 exhibits in its 
defence, but only relied on 107 of these at trial, and held that by doing 
so, Microsoft had unfairly attempted to conceal from z4 the evidence it 
would use.  This tactic also created unnecessary extra work for z4 and the 
Court, and could potentially have confused the jury.  His Honour concluded 
that this was an exceptional case which justified the award of substantial 
additional damages against Microsoft.

This article was written by Nicole Reid, Minter Ellison, Melbourne. For 
questions about legal issues, contact Paul Kallenbach - 
paul.kallenbach at minterellison.com.


Jan Whitaker
JLWhitaker Associates, Melbourne Victoria
jwhit at janwhitaker.com
business: http://www.janwhitaker.com
personal: http://www.janwhitaker.com/personal/
commentary: http://janwhitaker.com/jansblog/

'Seed planting is often the most important step. Without the seed, there is 
no plant.' - JW, April 2005
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