Uniloc USA, Inc. v. Microsoft Corp.
632 F.3d 1292
| Fed. Cir. | 2011Background
- Uniloc owns US patent 5,490,216 ('216) directed to a software registration system that uses local and remote licensee IDs and a mode switch to permit use only if IDs match.
- Microsoft's Product Activation in Word/Office and Windows creates a PID/HWID, transmits data to Microsoft, and uses MD5 (Office) or SHA-1 (Windows) to generate a license digest and verify activation.
- District court granted JMOL of non-infringement on several limitations and denied invalidity; later held no willfulness and granted a new trial on damages for improper damages methodology.
- Jury verdict found infringement and no invalidity, with willfulness found; damages awarded $388 million.
- On appeal, Uniloc challenges JMOL on infringement and seeks new trial on infringement and damages; Microsoft cross-appeals invalidity and damages rulings.
- The Federal Circuit reverses some JMOLs, affirms no willfulness, affirms new trial on damages, and remands with guidance consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is MD5/SHA1 a 'summation algorithm' under the licensee ID generating means? | Uniloc: MD5/SHA1 generate a licensee ID and thus infringe—they perform a summation function. | Microsoft: MD5/SHA1 are not summation algorithms; they are complex hash/cryptographic processes not within the claimed means. | Substantial evidence supports infringement; MD5/SHA1 can be viewed as summation alternatives under the claim scope. |
| Does the accused Product Activation system include a registration system and mode switching means? | Uniloc: Activation process with vendor data and matching local/remote IDs meets the registration system and mode switching limitations. | Microsoft: Activation occurs after EULA; the grace period is not full use; activation must occur concurrently to meet the claim. | There is substantial evidence of a registration system and mode switching; JMOL of non-infringement on this basis was improper. |
| Can Microsoft be liable for direct infringement where the end-user's computer implements the invention? | Uniloc: Microsoft uses the remote registration station in the required environment; infringement does not require all steps to be performed by Microsoft. | Microsoft: Direct infringement requires the infringing action to be performed by the defendant; others' devices are outside its control. | The environment and claim language support direct infringement by Microsoft in the remote registration context. |
| May the 25 percent rule and entire market value rule support damages, and were they properly applied? | Uniloc: 25% rule is valid baseline; entire market value used as a check to gauge damages; damages are appropriate. | Microsoft: 25% rule is Daubert-inadmissible; entire market value misapplied because it overstates link to the patented feature; damages should be remitted for a new trial. | 25% rule inadmissible; entire market value rule properly rejected as a basis for damages; new trial on damages affirmed. |
Key Cases Cited
- Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323 (Fed. Cir. 2008) (infringement and substantial evidence framework)
- Finjan, Inc. v. Secure Computing, Corp., 626 F.3d 1197 (Fed. Cir. 2010) (proper review of infringement and Daubert considerations)
- IMS Tech., Inc. v. Haas Automation, Inc., 206 F.3d 1422 (Fed. Cir. 2000) (equivalence under §112(6) and structure-function interplay)
- Texas Instruments, Inc. v. ITC, 805 F.2d 1558 (Fed. Cir. 1986) (means-plus-function claim construction scope)
- J. & M. Corp. v. Harley-Davidson, Inc., 269 F.3d 1360 (Fed. Cir. 2001) (means-plus-function limitation analysis)
- i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010) (Daubert and tying expert testimony to facts)
- ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010) (admissibility and relevance of licenses in damages)
- Lucent Technologies v. Gateway, 580 F.3d 1301 (Fed. Cir. 2009) (entire market value rule and basis for damages)
- Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (basis for apportionment in damages)
- Garretson v. Clark, 111 U.S. 120 (U.S. Supreme Court 1884) (basis for entire market value rule)
- Bose Corp. v. JBL, Inc., 274 F.3d 1354 (Fed. Cir. 2001) (basis and scope of damages evidence)