Uniloc Usa, Inc. v. Microsoft Corp., C.A. No. 03-440 S.

CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
Citation640 F.Supp.2d 150
Docket NumberC.A. No. 03-440 S.
PartiesUNILOC USA, INC. and Uniloc Singapore Private Limited, Plaintiffs, v. MICROSOFT CORPORATION, Defendant.
Decision Date29 September 2009
640 F.Supp.2d 150
UNILOC USA, INC. and Uniloc Singapore Private Limited, Plaintiffs,
v.
MICROSOFT CORPORATION, Defendant.
C.A. No. 03-440 S.
United States District Court, D. Rhode Island.
September 29, 2009.

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Andria Coletta, Francis A. Connor, III, Taylor, Duane, Barton & Gilman, LLP, Providence, RI, Dean G. Bostock, Paul J. Cronin, Eugene A. Feher, Paul J. Hayes, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Boston, MA, for Plaintiffs.

Sheri L. Pizzi, Taylor, Duane, Barton & Gilman, LLP, Providence, RI, for Plaintiffs/Defendant.

Frank E. Scherkenbach, Kurt L. Glitzenstein, Fish & Richardson, P.C., Boston, MA, Isabella E. Fu, Microsoft Corporation,

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Redmond, WA, Joseph V. Cavanagh, Jr., Mary C. Dunn, Blish & Cavanagh, LLP, Providence, RI, John W. Thornburgh, Fish & Richardson P.C., San Diego, CA, for Defendant.

DECISION AND ORDER

WILLIAM E. SMITH, District Judge.


For over six years Plaintiffs Uniloc USA, Inc. and Uniloc Singapore Private Limited (Uniloc) and Defendant Microsoft Corporation (Microsoft) have battled in a high stakes patent dispute in this Court. It has taken them to the Federal Circuit once, and finally to trial where Uniloc scored a massive jury verdict (purportedly the fifth largest patent verdict in history). Before the Court are numerous post-trial motions. After careful consideration of the arguments and the evidence, and mindful of the limitations placed upon the Court in ruling upon a post-trial motion for judgment as a matter of law (JMOL), the Court grants JMOL of non-infringement in Microsoft's favor. And while this holding on non-infringement arguably renders moot many, if not all, of the remaining issues raised by these motions, the Court believes it is both reasonable and potentially useful in the long run, given the breadth and complexity of the issues raised, to tackle a number of other important issues raised by the parties' motions, including willfulness and invalidity.

I. Background1

A. The '216 Patent

The patent-in-suit is U.S. Patent No. 5,490,216 ('216 patent) entitled "System for Software Registration," issued on February 6, 1996. The inventor is Mr. Ric Richardson, an Australian citizen who founded Uniloc and made the claimed invention in Australia in or around 1991 or 1992.2 In broad terms, the patent is directed to a method of reducing unlicensed use of software through casual copying. The technology is intended to deter unauthorized copying by a purchaser of a piece of software by locking the software to a user and allowing it "to run in a use mode on a platform if and only if an appropriate licensing procedure has been followed." '216 patent, col. 2, 11. 53-55. Claim 19, the sole independent claim at issue, reads as follows:

A remote registration station incorporating remote licensee unique ID generating means, said station forming part of a registration system for licensing execution of digital data in a use mode, said digital data executable on a platform, said system including local licensee unique ID generating means, said system further including mode switching means operable on said platform which permits use of said digital data in said use mode on said platform only if a licensee unique ID generated by said local licensee unique ID generating means has matched a licensee unique ID generated by said remote licensee unique ID generating means; and wherein said remote licensee unique ID generating means comprises software executed on a platform which includes the algorithm utilized by said local licensee

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unique ID generating means to produce said licensee unique ID.

The relevant terms (all of which are in play at this stage) were construed as follows:

------------------------------------------------------------------
                registration system a system that allows digital
                 data or software to
                 run in a use mode on a
                 platform if and only if
                 an appropriate licensing
                 procedure has been followed
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                licensee unique ID a unique identifier associated
                 with a licensee
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                use mode a mode that allows full
                 use of the digital data
                 or software in accordance
                 with the license
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                local licensee unique ID in functional terms, to
                generating means generate a local licensee
                 unique ID
                 the structure to perform
                 this function must be a
                 summation algorithm or
                 a summer or an equivalent
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                remote licensee unique in functional terms, to
                ID generating means generate a remote licensee
                 unique ID
                 the structure to perform
                 this function must be a
                 summation algorithm or
                 a summer or an equivalent
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                mode switching means in functional terms, to
                 permit the digital data
                 or software to run in a
                 use mode if the locally
                 generated licensee
                 unique ID matches with
                 the remotely generated
                 licensee unique ID
                 the structure to perform
                 this function must be
                 program code which
                 performs a comparison
                 of two numbers or a
                 comparator or an equivalent
                 of such program
                 code or comparator
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                has matched a comparison between
                 the locally generated
                 licensee unique ID and
                 the remotely generated
                 licensee unique ID
                 shows that the two are
                 the same
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                includes the algorithm includes the identical
                utilized by said local licensee algorithm used by the
                unique ID generating local licensee unique ID
                means to produce generating means to
                said licensee unique ID produce the licensee
                 unique ID
                ------------------------------------------------------------------
                ------------------------------------------------------------------
                algorithm a set of instructions that
                 can be followed to carry
                 out a particular task
                ------------------------------------------------------------------
                

B. Product Activation

The accused technology is Microsoft's patented Product Activation system (PA). This feature is contained in software products sold through retail distribution worldwide, including the accused Microsoft Office XP, Windows XP and Office 2003 products.3 According to Aiden Hughes, the writer of the original code for Microsoft in 1997 that evolved into PA, the goal of the feature was to limit the number of computers on which software was installed by enforcing the limits specified in the applicable product license agreement, or EULA (End User License Agreement). (Trial Ex. Z-2 ("This technology is geared towards reducing software piracy occurring today when end users pass along a copy of their floppies or CDs to a neighbor

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or install software products off of original CDs onto several machines.").)

There is no dispute as to how the PA system operates. Printed on each jewel box of a retail software product is a 25-character alphanumeric string called a Product Key (e.g., MQ9WT-3D8PY-6VF76-GMHVX-DCXFM). No two pieces of software have the same Product Key. A user types the Product Key into a computer to install a piece of software. If the Product Key is valid and the user agrees to the EULA that appears on his or her computer screen, the software is then installed but not yet activated.4 Also at this stage, a Product ID (PID) is created on the user's computer from a combination of data sources, including the typed-in Product Key, Microsoft Product Code (from "bits" on the software CD) and a random number derived from the user's computer. A hardware identifier (HWID) is also generated on the user's machine using components of that computer.

Activation of the software is only achieved when and if a user elects to activate. At that time, the software communicates the following information via the internet5 to the remote Microsoft Clearinghouse server located in Redmond, Washington: the PID; the HWID; and other activation-specific data generated by Microsoft.6 Together, this sequence of data (described as "one big string" by Microsoft's expert Dr. Dan Wallach) forms a "digital license" request sent to the remote Clearinghouse. Once this data (also called the "license object") arrives at the Clearinghouse and is confirmed as valid, it is put through a software algorithm. The algorithm used depends on the product: for Office it is the MD5 (message digest) algorithm, and for Windows the SHA-1 (secure hash) algorithm. After processing by the algorithm, the result is a shortened fixed-bit output (what Microsoft deems the "license digest" and Uniloc tags the "remote licensee unique ID"). The output is encrypted with a secret, private key known only to Microsoft. The result of the encryption, or the digital signature, is concatenated with the original license data and sent back to the user's computer.

The software uses a public key to decrypt the digital signature and recover the hashed license. The user side software also inputs the concatenated original license data into the same MD5 or SHA-1 algorithm as was used on the data at the Clearinghouse. Those two values, the decrypted signature (what Microsoft describes as the "license digest" and Uniloc deems the "remote licensee unique ID") and output of the user side algorithm (what Microsoft also describes...

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