{"id":12042,"date":"2018-10-01T06:51:40","date_gmt":"2018-10-01T10:51:40","guid":{"rendered":"https:\/\/me-en.kaspersky.com\/blog\/patent-5490216-exorcism\/12042\/"},"modified":"2021-12-15T15:28:20","modified_gmt":"2021-12-15T11:28:20","slug":"patent-5490216-exorcism","status":"publish","type":"post","link":"https:\/\/me-en.kaspersky.com\/blog\/patent-5490216-exorcism\/12042\/","title":{"rendered":"The end of the beginning in the fight against patent trolls."},"content":{"rendered":"

For much of August and September of this year I was forced<\/a> into \u2018working from home\u2019, something I don\u2019t normally do. So with zero globetrotting\/commuting\/working out\/interviews\/speeches and other daily workday chores, I had rather a lot of time on my hands. So I read. Lots. There was plenty of the usual bad news, but, occasionally, there was some very good news in there too. In particular, there was good<\/span> excellent news from the front in the fight against patent trolls<\/a>: a district court of Texas rejected Uniloc\u2019s lawsuit against us for infringement of patent US5490216<\/a>. This is the infamous patent that since the early 2000s had struck terror into the hearts of IT companies, added years to the appearance of many a patent lawyer, and mercilessly lightened<\/a> the wallets of more than 160 (!) companies \u2013 including Microsoft and Google, no less.<\/p>\n

But the excellent news doesn\u2019t stop there folks!\u2026<\/p>\n

The combined efforts of the IT industry have secured the invalidation of the IT patent-from-hell. But it\u2019s not just the invalidation itself that\u2019s worth celebrating; also worthy of champagne quaffing is the fact that the invalidation heralds serious (albeit long overdue) change in the U.S. patent system. Sure \u2013 it\u2019s only \u2018slowly but surely\u2019 for now, but slowly is at least better than no change at all; especially when the changes have global significance: at last the IT industry can start to pluck the patent parasites off its back that do nothing but bloodsuck<\/span> hinder technological development.<\/p>\n

The ball hasn\u2019t merely started rolling<\/a>, it\u2019s racing down the hill: developers are becoming freer in what they can do \u2013 protected against persecution from owners of (excuse my Belgian) BS patents: those describing abstract and at times blatantly obvious things, which in practice aren\u2019t even applied or are used only for \u2018milking\u2019 developers of similar technologies.<\/p>\n

All told, the story of patent \u2018216 reads much like a thriller \u2013 so much so that I thought I\u2019d retell it here for your thrill-seeking pleasure. So go get a coffee (better \u2013 popcorn) and settle back down for a mini-nailbiter from the patent parasite side\u2026<\/p>\n

\"\"<\/a><\/p>\n

Uniloc Corporation was founded in Australia in 1992. Back then it did wholly worthwhile, creative activity \u2013 developing solutions for IT security. In that same year one of its technologies for protection from software piracy becomes protected by U.S. patent 5,490,216.<\/p>\n

But some years later the company\u2019s business development took a sharp turn to head off in a completely different direction. In 2003, it set up a network of subsidiaries, whose only activity was\u2026 let\u2019s call it \u2018matters connected with licensing\u2019. And straight off the bat, they go straight for the big(gest) guns: suing Microsoft for infringement of patent \u2018216!<\/p>\n

But first \u2013 a few words about the patent itself\u2026<\/p>\n

The patent covers a software activation method that protects a copy of software from being used on a different device. In other words, it\u2019s to stop a license being used on tens of thousands of computers.<\/p>\n

The activation process consists of the creation of a unique identifier at the user\u2019s end based on details such as time, hard drive serial number, user\u2019s name and address, company name, payment information, and a whole load of others. A unique identifier using the same algorithm is also created at the server\u2019s end, which is sent to the user for a comparison of the identifiers; if they\u2019re the same \u2013 the software is activated. It was infringement of this \u2018patented process\u2019 for which all respondents were eventually charged. For indeed, many companies use comparisons of hashes of this or that data for all kinds of checks.<\/p>\n

But the devil was in the details \u2013 details the respondents didn\u2019t seem to review carefully for 15 years. If they had, they\u2019d have put a stop to the patent extortion.<\/p>\n

So, in September 2003 Uniloc files an action against Microsoft. The case runs on for six years, until in 2009 the court rules in favor of Uniloc, awarding it damages of $388 million. After a series of appeals from both sides, the case reached the Federal Circuit Court of Appeals. But after the hearing there Microsoft and Uniloc settled out of court for an unknown \u2013 though no doubt huge \u2013 figure.<\/p>\n

A key moment in this patent opera was the decision of the court in 2009. It clearly gave Uniloc a whiff of the big bucks, because henceforth Uniloc filed actions against IT companies in spades. It also emboldened Uniloc to buy up new patents, in so doing becoming known as the Patent Troll-in-Chief<\/a>. Why bother with long-term heavy investment into research and development? This was where the easy money was to be made! So, the programmers were replaced by high-end patent lawyers who \u2013 following the patent troll template \u2013 did nothing but suck funds out of the IT industry: funds that could have been spent on development of useful products and services.<\/p>\n

Playing into the hands of the patent troll was the reaction of many of the IT companies Uniloc went after. Given the compelling example of the costly Microsoft defeat, many respondents preferred to feed the troll<\/span> settle out of court: \u201cWell, if Microsoft couldn\u2019t beat them, we sure won\u2019t\u201d.<\/em> And the respondents that did put up a fight? They ultimately lost<\/a>. But then, on October 18, 2013, it was our turn to receive an action for patent infringement from Uniloc.<\/p>\n

Now, those of you, dear readers of my blog, who follow my communiques on our relations with patent trolls<\/a>, will probably recall our motto: \u2018We\u2019ll fight the trolls until the last bullet \u2013 their last bullet\u2019.<\/em> Indeed, feeding trolls is something we\u2019d never do: it just goes soooo against our business philosophy. So each patent infringement action that comes our way we simply calmly counter until we get ourselves a victory. (And of late we\u2019ve found that it\u2019s better to go on the attack<\/a> against the trolls to nip their parasitic tendencies in the bud before they even think of sending us an infringement claim).<\/p>\n

This case is no exception, so we just got down to work\u2026<\/p>\n

We pored through all the patent\u2019s documentation and \u2013 low and behold \u2013 found significant differences between our technology and the patented one. So we patiently sailed through all the different stages of the court proceedings by carefully calculating our possible moves, preparing our argumentation accordingly, and adapting our position as and when necessary. In parallel, a legal procedure seeking invalidation of the patent in the U.S. Patent and Trademark Office was begun, helped by the fact that the Leahy-Smith America Invents Act<\/a> had already (in 2011) come into effect (which introduced several very timely legislative changes into the patent system).<\/p>\n

Then, later (in September 2012) under the same America Invents Act, there were launched two important new procedures for contesting the validity of a patent at the Patent Trial and Appeal Board (PTAB<\/a>): (i) the \u2018Inter Parties Review\u2019 (IPR<\/a>), according to which the patent applicant (the party questioning the validity of a patent) can demonstrate \u2018reasonable likelihood\u2019<\/em> of invalidity of the given patent; and (ii) the Post Grant Review (PGR)<\/a> procedure for invalidation of recent (issued within the previous nine months) patents if the patent applicant can demonstrate invalidity as \u2018more likely than not\u2019!<\/em> (Yes, these semantic peculiarities of U.S. legislation can be baffling at times:)<\/p>\n

Compared with the standard \u2013 court \u2013 procedure of disputing a patent, these new procedures are much quicker (~one year instead of two-and-a-half years), cheaper ($250K instead of $1.5-2M), and \u2013 most importantly \u2013 simpler and more professional: IPR\/PGR decisions are taken by professional patent experts instead of a jury; patent formulas are examined more carefully (although prior art<\/a> is limited to just patents and printed publications); and, finally, the required argumentation level is lower (\u2018likelihood\u2019).<\/p>\n

Now, one could be forgiven for thinking that that\u2019s that \u2013 these new regulatory mechanisms will have seen off patent trolls once and for all. But not so fast!\u2026<\/p>\n

Both procedures in practice turned out to be rather complex; this fact, together with their untested newness, made their application early on slow, and the results they would return were somewhat vague. Nevertheless, many companies jumped at the chance of using them in their attempts at invalidating patents, and this played a positive role: patent trolls being attacked on all sides and with different kinds of argumentation significantly upped the chances of success. Oh\u2026 and talking of success\u2026 fast forward to 2016 \u2013 and the notorious patent \u2018216 finally earned its deserved status of invalid!<\/p>\n

The applicants proved to the PTAB that the priority<\/a> of this patent should be determined as the date of the U.S.<\/em> patent application (September 21, 1993), not the vaguely written Australian<\/em> patent application (yes, to get a patent in the U.S. the priority of a patent or application submitted in another country can be used). Why? Because the Australian and U.S. applications in this case weren\u2019t identical. In the Australian application there was no disclosure of the respective key elements (but for infringement of which they successfully sued Microsoft)! Then, later, an earlier patent<\/a> was presented covering a method of generation of unique identifiers for protecting against software piracy, which served as the last nail in the coffin of patent \u2018216\u2019s validity.<\/p>\n

You think the story stops there? Uh-uh!<\/p>\n

Patent lawyers had to wait another two years until the verdict of Uniloc\u2019s appeal and the decision of the Supreme Court \u2013 to which the trolls turned disputing the constitutionality<\/em> of the new procedures for invalidating patents! But all\u2019s well that ends well\u2026<\/p>\n

The appeal was thrown out and the Supreme Court confirmed<\/a> the constitutionality of the PTAB\u2019s procedures. So yes \u2013 at last, finally: I do believe we are gradually moving toward a new era of patenting. An era oriented at protecting the intellectual property of real inventors, developers and tech businesses, which bring us real progress through their innovations. An era with new, fair rules for the protection of technologies \u2013 without abstract and obvious ideas or algorithms (a tip of the hat here goes to the Alice precedent<\/a>). The \u2018patentability\u2019 of inventions now demands more than generic representations of abstract ideas.<\/p>\n

These new developments and practices in the patent industry bring the much-needed certainty that\u2019s been so long overdue: finally, the travesty of justice that goes by the name of \u2018patent trolling\u2019 is coming to an end. To the very end? Hmmm. We\u2019ll see\u2026<\/p>\n

In the meantime, I\u2019ll close this post with a quote from Winston Churchill<\/a>, which precisely characterizes the current state of affairs in the world of patents: \u2018Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.\u2019<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The story of patent US5490216, which struck terror in the hearts of IT professionals and cost a whole lot of tech companies hundreds of millions of dollars.<\/p>\n","protected":false},"author":13,"featured_media":12045,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1226],"tags":[352,1924,1870,1144],"class_list":{"0":"post-12042","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-technology","8":"tag-kaspersky-lab","9":"tag-patent-trolls","10":"tag-patents","11":"tag-technologies"},"hreflang":[{"hreflang":"en-ae","url":"https:\/\/me-en.kaspersky.com\/blog\/patent-5490216-exorcism\/12042\/"},{"hreflang":"en-in","url":"https:\/\/www.kaspersky.co.in\/blog\/patent-5490216-exorcism\/14404\/"},{"hreflang":"en-us","url":"https:\/\/usa.kaspersky.com\/blog\/patent-5490216-exorcism\/16336\/"},{"hreflang":"en-gb","url":"https:\/\/www.kaspersky.co.uk\/blog\/patent-5490216-exorcism\/14528\/"},{"hreflang":"es-mx","url":"https:\/\/latam.kaspersky.com\/blog\/patent-5490216-exorcism\/13498\/"},{"hreflang":"es","url":"https:\/\/www.kaspersky.es\/blog\/patent-5490216-exorcism\/17090\/"},{"hreflang":"it","url":"https:\/\/www.kaspersky.it\/blog\/patent-5490216-exorcism\/16380\/"},{"hreflang":"ru","url":"https:\/\/www.kaspersky.ru\/blog\/patent-5490216-exorcism\/21432\/"},{"hreflang":"x-default","url":"https:\/\/www.kaspersky.com\/blog\/patent-5490216-exorcism\/24060\/"},{"hreflang":"pl","url":"https:\/\/plblog.kaspersky.com\/patent-5490216-exorcism\/9787\/"},{"hreflang":"de","url":"https:\/\/www.kaspersky.de\/blog\/patent-5490216-exorcism\/17825\/"},{"hreflang":"ja","url":"https:\/\/blog.kaspersky.co.jp\/patent-5490216-exorcism\/21786\/"},{"hreflang":"ru-kz","url":"https:\/\/blog.kaspersky.kz\/patent-5490216-exorcism\/17428\/"},{"hreflang":"en-au","url":"https:\/\/www.kaspersky.com.au\/blog\/patent-5490216-exorcism\/21282\/"},{"hreflang":"en-za","url":"https:\/\/www.kaspersky.co.za\/blog\/patent-5490216-exorcism\/21289\/"}],"acf":[],"banners":"","maintag":{"url":"https:\/\/me-en.kaspersky.com\/blog\/tag\/patents\/","name":"patents"},"_links":{"self":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/12042","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/comments?post=12042"}],"version-history":[{"count":5,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/12042\/revisions"}],"predecessor-version":[{"id":19252,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/12042\/revisions\/19252"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/media\/12045"}],"wp:attachment":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/media?parent=12042"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/categories?post=12042"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/tags?post=12042"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}