Uniloc Can’t Hold Anyone Hostage With Their “Software Activation” Patent Anymore

Uniloc, an Australian computer security and copy-protection software company, suffered a strategic business loss this past month. But the world benefitted.

Granted to the company in 1996. the patent pertained to the act of activating software via an activation key, which has become the de facto model of online software purchase and activation. Patenting this rather fundamental method enabled Uniloc to sue anyone who used any kind of online software activation, making it the company’s cash cow and a prized possession.

For almost two decades, the company has been ensnaring software companies and enforcing its patent and suing ‘defaulting’ companies for millions of dollars.

Clearly, it was a get-rich-quick scheme like no other!

Filed by Ric Richardson, the patent covers any form of usage of “try and buy” software activation, the kind used online all the time. The patent is on the use of activation key for such a “try and buys” deal, which inevitably will come up everywhere an online activation method is used.

Apparently the computer security and copy protection software company had been using poorly written Australian patent for its Digital Rights Management (DRM) system. The Australian patent was filed a year before it was filed in the United States while other companies were releasing similar systems to the market.

The patent has bagged the company many wins, including a USD 388 million win against Microsoft in 2009 — which would have been one of the highest payouts in the US Patent History. However, the Microsoft verdict awarded by the jury was overturned months later by a trial judge, which threw it into further court battles until the parties settled mutually for an undisclosed amount.

Using a similar ploy and wielding the shield of this patent, Uniloc has sued more than 75 companies over time!

Since 2002 many attempts have been made to challenge the patent.
Then Eric Buresh and Mark Lang of Erise IP, Don Daybell and James Maune of Orrick Herrington and Sutcliffe LLP, US, decided to fight the patent.

The fight enabled by Sega of America, Ubisoft, Cambium Learning Group, Lexmark subsidiary Kofax and Perfect World Entertainment leveraged a smart tack.
Instead of fighting the grounds for the patent, this suit took an entirely new approach. They questioned the validity of the way Richardson filed the patent in the United States. They argued that the Australian patent was vague and that the patent shouldn’t have been granted in the first place.

The Patent Trademark and Appeals Board this past month ruled that the patent was invalid, via an inter partes review.
An inter partes review (IPR) in layman’s terms is a way for investors to challenge a patent without getting the federal courts involved in the United States.

A patent hence declared invalid is considered not applicable going forward.

Basis these arguments, the patent failed to hold up to the scrutiny of the IPR. When it came to taking sides, the Patent Trial and Appeal Board (PTAB) sided with Sega of America, Ubisoft, Cambium Learning Group (an educational software developer), Lexmark subsidiary Kofax and Star Trek Online publisher Perfect World Entertainment, the ones on the other side of the Uniloc debacle.

When asked to comment, Uniloc’s President, Sean Burdick wrote: “The PTAB decision is inconsistent with two prior rulings by the Federal Circuit, and with the opinions of seven patent examiners who previously upheld the validity of the ‘216 patent in multiple re-examinations. Ultimately the PTAB gave undue credibility to a lone expert opinion that was authored by petitioners’ counsel. Congratulations to Erise IP [the law firm representing Ubisoft and Co.] for pulling wool over the eyes of the Patent office”.

Uniloc can still choose to appeal the decision of the PTAB, and if Burdick’s comments are given any heed then it probably will.

Since it is the patent registration that has been attacked, previous rulings can be appealed against, as well. People or organizations who have erstwhile been burnt by Uniloc can come back after it.

It should be interesting to see where this goes, where the predator has now become the prey.

Originally published at Chip-Monks.