Microsoft Challenges Avistar UC Patents

According to a statement released by San Mateo, Calif.-based Avistar, Microsoft filed requests for re-examination of 24 of Avistar's patents after six months of unsuccessful discussions, which included negotiations surrounding Microsoft potentially licensing Avistar's intellectual property and technology. So far, four of Microsoft's requests have been rejected by the United States Patent and Trademark Office (USPTO) on procedural grounds, Avistar said.

In the statement, Avistar noted that if all procedural flaws are fixed, the USPTO has roughly two months to grant Microsoft's requests and engage in a formal re-examination, a process that can take up to two years.

Microsoft's request for re-examination call into question several of Avistar's patents in the field of instant messaging, video conferencing and online collaboration, all key elements in unified communications, an area that in recent years Microsoft has highlighted as a top priority.

Aside from an issued statement, Avistar declined to comment further, citing advice from counsel concerning possible legal implications.

Microsoft said taks are continuing despite its action. "We are pursuing the USPTO patent re-examination process as part of our ongoing conversations with Avistar. Following this course will help focus our discussion," said Michael Marinello, director of public relations at Microsoft.

Avistar faced a rocky end to 2007 and a tough beginning to 2008. Late last year the Nasdaq Stock Market threatened to delist Avistar due to lack of compliance. An Avistar spokesperson said Tuesday the company is waiting to hear from the Nasdaq about the potential delisting.

Additionally, Gerald Burnett, Avistar's then CEO announced he would resign at the end of 2007. Moss has replaced Burnett.

In December, Avistar launched its first ever channel program hoping to boost declining revenues and re-invigorate its sales to include verticals other than just financial services.

According to Avistar, the patents in question have an important early priority date of 1993 and have already been examined over a large body of prior art and include patents that have successfully withstood previous litigations. Avistar said in the statement that it is confident it can overcome Microsoft's challenge.

In response to Microsoft's challenge, Avistar has withdrawn and re-submitted for examination seven about-to-issue patent applications, giving the USPTO the opportunity to evaluate Microsoft's re-examination documents in these applications as well. Avistar said this will likely delay the formal issue of the seven patents, but Avistar believes the prior art cited by Microsoft will have no impact on these patent applications' claims and should result in stronger patents once they're issued.

"Avistar's patent portfolio has been challenged previously in two significant litigations without effect," Paul Carmichael, Avistar's primary licensing advisor, said in a statement. "We fully believe that this action on Microsoft's part is motivated by its recognition of the applicability of our patents to its products and services. We expect the USPTO will concur that the challenge is without merit."

In the same statement, Avistar's CEO Simon Moss said Microsoft's patent challenge was surprising and unfortunate, but that Avistar will fight the challenge head on.

"It is unfortunate that we have arrived at this," Moss said. "We are frankly quite surprised by Microsoft's action given our lengthy discussions with them. Avistar is going through a significant organizational, technological, financial and cultural transformation. This seems to have been taken by Microsoft as a sign of weakness. All of us at Avistar, in our Board of Directors, in our management team, and in our trusted global advisors, stand behind these patents and will take any steps necessary to ensure their current issuance status."