10 Apr 2012

Uniloc settlement shows value of patent protection

Sydney, 10 April 2012: The settlement of a long-running patent infringement dispute between Australian software company Uniloc and global software giant Microsoft Corporation highlights the value of getting the right advice upfront on the best way to protect potentially valuable intellectual property – or risk having limited legal recourse against future infringers, according to Clayton Utz partner Jim FitzSimons.

Jim, who is the national head of Clayton Utz's Corporate Technology and IP team, appeared on ABC TV's Australian Story program last night as part of a profile on Australian inventor Ric Richardson, the founder of computer security and copy protection software protection company, Uniloc Corporation.

Uniloc recently reached a landmark settlement with Microsoft to end a long-running dispute concerning Uniloc's ownership of a patent for an innovative 'try and buy' software registration system to deter illegal copying, which Ric Richardson invented.

In 1992, Jim advised Ric to apply for a patent in Uniloc's name to protect the company's intellectual property rights in the technology. The Uniloc patent was one of the first to be granted in Australia for an invention that was purely software (patents for the technology were subsequently granted in the US). Jim also represented Ric in his negotiations to licence the rights granted under the patent.

In 2003, Uniloc commenced proceedings against Microsoft claiming infringement of Uniloc's patent. In 2009, a US court ordered Microsoft to pay US $388 million in compensation (then US$530 million) to Uniloc – one of the highest awards in US patent history. Although the verdict was very surprisingly overturned five months later by the trial judge, an appeals court last year upheld the original jury's decision on liability but required a re-hearing on the question of damages. With a trial about to get underway before a federal jury in Providence, Rhode Island, to determine how much Microsoft should pay for infringing the Uniloc patent, the parties announced on 7 March that they had settled the matter.

Jim said the outcome for Uniloc, while hard-won, demonstrated the value of having the backing of a patent in circumstances where the creator of a novel or innovative system, technology or product was required to prove they owned the rights to stop others exploiting their intellectual property. "In my experience, companies tend to regard the patent system as expensive. However, the money Uniloc has spent on obtaining and maintaining its US patents had been minimal compared to the commercial resolution it has achieved," said Jim.

"Interestingly, the media have recently reported on a number of patent infringement suits that have been commenced, such as that brought by Yahoo against Facebook (in California, alleging infringement of a number of Yahoo patents) and Florida-based PanoMap against Apple and Google (alleging infringement of a patent around the Street View feature within Google Maps).

"The Uniloc case serves as a reminder that a patent system can indeed be a very powerful ally in any IP protection structure, and that the protection delivered by the patent system can well justify the cost."

Ric said were it not for our strategic advice nearly 20 years ago, Uniloc would not be in the position it is today. "It has been a long time since Jim sat down opposite me in our first big discussions over Uniloc’s intellectual property, but in retrospect, it was one of my best decisions," he said.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.