Judge Overturns $388M Penalty Against Microsoft In Patent Case

Microsoft is off the hook for a $388 million damage award after a federal judge Tuesday overturned a jury verdict that Microsoft had infringed a patent held by antipiracy software developer Uniloc.

Judge William Smith in the U.S. District Court for Rhode Island vacated the jury's finding in April that Microsoft violated a patent on security software held by Uniloc.

Uniloc USA, based in Irvine, Calif., and its Singapore-based parent Uniloc Singapore Private Ltd., did not immediately return a request for comment about the judge's ruling and whether it intended to appeal.

Uniloc sued Microsoft in October 2003 claiming that antipiracy technology Microsoft was using to prevent unauthorized use of the Windows XP operating system and some of its Microsoft Office applications infringed its patent.

The case went to trial earlier this year, and Uniloc argued that Microsoft earned $19.1 billion in revenue from Windows XP and Microsoft Word and sought 2.9 percent of that, or $564 million. The jury ruled in Uniloc's favor and imposed a $388 million penalty against Microsoft.

Microsoft had argued that it used a different method for registering software than that used by Uniloc and that the patent was invalid. Judge Smith, in his order, said the jury that ruled in favor of Uniloc "lacked a grasp of the issues before it and reached a finding without a legally sufficient basis," according to a report from the Bloomberg news service. But the judge also denied Microsoft's challenge to the validity of the Uniloc patent.

The jury award was the second-largest patent verdict this year, according to Bloomberg, after a $1.67 billion verdict against drug maker Abbott Laboratories in July.

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