Microsoft To Pay $200M In Patent Dispute 81
Pickens writes "eWeek reports that Microsoft has announced it will pay $200 million to settle a patent-infringement suit against it by VirnetX, which alleged that the software giant infringed on its patents related to communications, virtualization and collaboration technology. This payment represents a substantial markup from the $105.7 million that a Texas jury awarded in March when it found that Microsoft had infringed on two US patents held by VirnetX. Microsoft will license VirnetX technology for its own products. 'We believe that this successful resolution of our litigation with Microsoft will allow us to focus on the upcoming pilot system that will showcase VirnetX's automatic Virtual Private Network technology,' says Kendall Larsen, VirnetX Holding Corp.'s CEO. East Texas courts have a reputation as a good place to pursue intellectual property suits against larger corporations. While many of these cases seem to be settled out of court — or dismissed as totally frivolous — recent lawsuits such as those leveled by i4i and VirnetX are notable for at least extending to the Big Judgment phase."
Re:Awww what a shame (Score:5, Insightful)
Even if they have to pay out a few hundred million here and there, I'm sure they make a lot more money
because of the barriers these patents cause to their opponents.
Re:Awww what a shame (Score:5, Insightful)
They patent everything because the system requires them to. You should blame the whole patent system instead.
Re:Money (Score:5, Insightful)
Look at the VirnetX website and look at the products http://www.virnetx.com/products.php [virnetx.com] it has very little other than patent licensing! While they do have a few real products, VirnetX is more or less a patent troll.
Re:Awww what a shame (Score:4, Insightful)
Keeping a technology as a trade secret doesn't make you immune to patent litigation. This is why many companies have a defensive patent portfolio.
Nice (Score:2, Insightful)
Nice to see Microsoft being bitten in the ass by the same patent troll strategy they are adopting.
The much-needed fix to the software patent problem will only happen after the big companies repeatedly pay out more through patent enforcement than they gain from it.
The real problem is big companies, especially Microsoft have invested so much in filing millions of non-innovative, frivolous, obviously prior, stolen and open-ended patents, and have enough lawyers, lobbyists and paid-off politicians in their pocket that there's no hope of getting the patent law fixed until Microsoft want it to be.
Re:East Texas (Score:2, Insightful)
Their analysis doesn't work because a patent suit filed in district X is not likely to be the same as a patent suit filed in district Y. If I have an open and shut case, I'll probably file my suit wherever it is most convenient or cheapest for me to do so. If I have a case that I feel I may or may not win, I'll shop around for the district that balances my chances of winning with the additional expenses. If I intend to make my entire enterprise out of suing other people for patent infringement, I'll set up my business in such a way that the expenses are minimized in the district that gives my the best chance of winning.
In other words, a district with a reputation for being friendly to patent trolls will attract patent trolls and the win loss record of that district will change as a result. It's like finding out that a nearby highway is the safest road in America, and as a result everyone starts driving 100mph down it. It messes with the statistics.
Because MS LOVES patent trolls (Score:3, Insightful)
Remember who was and is behind SCO? Remember who has been constantly threatening to sue Linux for infringing on its patents?
200 million is PEANUTS for MS, a very low price to pay for making sure nobody else can afford to enter the market. Wanna bet that 200 million goes to pursue further lawsuits?
MS will call for patent reform roughly at the same it stops with FUD and breaking standards. Software patents work for Microsoft. The occasional payoff is just the price for their way of doing business. If software patents are removed ANYONE can go into the software market. Not something MS would enjoy at all.
Re:Awww what a shame (Score:5, Insightful)
Re:The bigger you are (Score:2, Insightful)
To be a patent troll one would have to actually litigate against someone. Microsoft doesn't (it occasionally threatens to, but never actually does). By definition, they aren't a patent troll.
Re:The bigger you are (Score:0, Insightful)
As far as I can tell, Microsoft don't actually patent troll. They have a large patent portfolio that is only used defensively. And Ballmer might have made an ass of himself in a casual comment once that has become the touchstone for patent FUD, but there's no actual trolling by any definition of patent trolling I'm familiar with.
Re:Never thought THIS would happen (Score:1, Insightful)
Sure, you could settle, proclaim victory of "IP" (whatever than means), and move on to the next patent troll lawsuit.
OR, alternatively, you could bring out the issues publicly, critique the way the system works, use your political weight to improve the environment, call lobbyists, recommend changes in legislation, and proactively make it better for everyone. When people see one of the biggest players in the industry raising these issues, they'll catch on. Legislators will notice, lobbyists will take up those issues, media will cover it, general public will notice, etc., etc.
For some reason, I don't think the latter has entered Microsoft's mind.
offensive Microsoft patents (Score:4, Insightful)
Microsoft so far are one of the few companies that don't patent troll. They tend to use their portfolio as defensive patents.
Bullshit. Microsoft of course uses their patent portfolio offensively. The reason you don't see these things go to court is because they are so good at it. They have patent cross-license agreements with all the big players, and none of the little players have the resources to fight them. Microsoft has a huge patent portfolio.
If Microsoft wants money from you, they can come with a huge stack of patents and an army of lawyers and say: "Look, we think you violate this patent, but if you think you don't, here are another two dozen you probably violate. And these are the dozen lawyers that are going to tie your company and your employees up in knots for the next ten years with depositions and court dates, keep you from shipping your products, and give you bad press. Now, for just 5% of your revenue, you can save yourself all this trouble. Do the math: even if you eventually win it's cheaper. Any questions?"
The only people moderately immune from this are open source developers, because they can basically tell Microsoft to put their cards on the table or go f*ck themselves.
Re:Awww what a shame (Score:3, Insightful)
Blame and punishment is part of why the patent system is so awful.
The interrelated quality of ideas makes it very difficult to draw boundaries. That combined with the absolutism of this "winner take all" award system where one entity gets all the rewards while everyone else who was working towards similar or identical ideas not only gets nothing but may be forced to abandon years of effort makes for very ugly, expensive fights. It makes the stakes unnecessarily high. The thought behind the patent system is so individualistic and discrete. It's as if they thought invention occurs in a vacuum. Maybe in the days when the population of the world was 1/10 what it is now, it was less likely that people would be independently working on the same ideas. But it still happened. The thinking behind the system does not fit how many developments really come about, with layer upon layer of incremental improvements from many diverse and unrelated groups. So much advancement, possibly most advancement is seeing that an idea from one field can be applied to a problem in a seemingly unrelated field, or that 2 ideas from different areas can form a whole that is greater than the sum of the parts. Even when we can draw clear lines, it doesn't stop ugly, expensive fights breaking out over these monopolies. We tend to let the issue of whether there is prior art be settled in court, later, hoping that it never comes up at all. And the punishments discourage checking. We've also taken a destructive rent seeking approach to the granting of patents, seemingly to raise more money through the collection of more fees. Certainly generates more business for lawyers.
To design a product requires the application of not 1 or 2 or 10 patented ideas, but easily hundreds. The burden of negotiating terms with so many holders is so great that it isn't done. A horrible aspect of these monopoly grants is that holders don't have to deal. They can deny everyone the use of some idea, refusing to sell rights at any price whatsoever. Another possibility is holding a massive project to ransom, extracting not what an idea is really worth, but a big portion of what the massive project is worth, which may be far more than the idea. Imagine if on the eve of the first trip to the Moon, NASA had suddenly been forced to put the project on hold because some patent troll surfaced and got a court to issue an injunction. Millions of dollars of equipment sitting idle, thousands of people hastily assigned makeshift work or furloughed, windows of opportunity missed, and the public horrified by a delay over a trivial legal issue. Think that couldn't happen? Maybe because NASA is government it couldn't happen to them. But it nearly did happen to the Blackberry. SCO tried to hold Linux users-- users, who were not properly part of any alleged patent violations-- to ransom. That's like trying to sue drivers and owners of a particular model of car over something the manufacturer put in the car. Insane! Why does the patent system grant such extreme "remedy" power to the courts, and fail to consider the impact the application of a remedy can have on 3rd parties?
The entire tone of a patent lawsuit is that someone is trying to cheat patent holders by knowingly using their invention without permission. This assumes that patent searches can be done quickly and cheaply, which is not the case. Even after finding patents that may be related, considerable effort must be expended analyzing them to see if they really are related. The system acknowledges the impracticality of this by making damages for unintentional infringement much lighter. But they aren't zero. This further assumes that patents are fairly granted, and can be fairly granted, and don't have any other issues.
Cruel to routinely blame and punish the players to cover up the shortcomings of a bad system.