Microsoft asked to pay Uniloc $388 million for software infringement

A US federal court jury yesterday ordered Microsoft Corp to pay $388 million to Uniloc USA Inc. and Uniloc Singapore Private Ltd for infringing a software patent. The jury decided that the patent is valid and that Microsoft willfully infringes it.

The world's largest software maker said it will appeal the decision.

Initially filed in 2003 in the Rhode Island district court, the suit alleges that Microsoft's product activation system infringes on a patent held by Uniloc.

Irvine, California-based Uniloc makes software that prevents people from illegally installing software on multiple computers. Uniloc said Microsoft's Windows XP and some Office programs infringe on a related patent.

"We are very disappointed in the jury verdict. We believe that we do not infringe, that the patent is invalid and that this award of damages is legally and factually unsupported, We will ask the court to overturn the verdict," Microsoft spokesman David Bowermaster said in a statement.

The patent in question, titled ''System for Software Recognition,'' and filed in 1996, describes a registration system that allows digital data or software to be able to run only if an appropriate licensing procedure has been followed. The technology includes an algorithm that generates a registration number that's unique to the platform on which the data or software is used.

Uniloc uses its antipiracy technology in two products.

The first is NetAnchor, a solution that protects against security breaches by requesting a sample of the hardware ''DNA'' of any device that attempts to communicate with a critical asset and grants access when there is a match with a list of authorised devices.

The second is SoftAnchor, which provides copy protection for software and games to prevent the creation, distribution and use of unauthorised copies

Microsoft's product activation process aims to reduce piracy by requiring people to activate their software, tying it to a particular machine in the process. Users can then reinstall the software repeatedly on that machine, but can't share the software with other people and PCs.

Uniloc sells technology that software developers use to offer flexible licensing terms, such as trial periods.

''They've been struggling for six years against Microsoft the giant, and finally, justice has prevailed,'' said Paul Hayes, Uniloc's attorney.

Microsoft, like other large technology companies, is routinely entangled in litigation over its use of intellectual property. The company has been targeted by both patent holding companies and industry rivals.

Most notably, in 2007 Microsoft lost a high-profile, $1.5 billion award in a patent suit brought against it by Alcatel-Lucent.

In February, 2009, the European Commission has imposed an additional 899 million euros ($1.35 billion) fine on Microsoft for defying sanctions imposed for antitrust violations. (See: EC fines Microsoft $1.35 billion for defying sanctions).

Shares of Microsoft gained 43 cents, or 2.3 per cent, to close at $19.19, on the New York Stock Exchange.