Uniloc Usa, Inc. v. Microsoft Corporation

632 F.3d 1292 (2011)

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Nature of the Case

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Facts

P's '216 patent was an early attempt to combat software piracy. The patent was directed to a software registration system to deter copying of software. The system allows the software to run without restrictions (in 'use mode') only if the system determines that the software installation is legitimate. D's Product Activation feature that acts as a gatekeeper to D's Word XP, Word 2003, and Windows XP software programs. Upon receipt of Microsoft's retail software program, the user must enter a 25-character alphanumeric product key contained within the packaging of Microsoft's retail products. If the Key is valid, the user is asked to agree to the End User License Agreement (EULA), by which the licensor-licensee relationship is initiated. D's software creates a Product ID (PID) and a Hardware ID (HWID) on the user's computer. The PID is formed from the combination of the Product Key, information from the software CD, and a random number from the user's computer. The HWID is generated from information about the user's computer. If the user elects to initiate Product Activation, the software sends a digital license request to Microsoft over the internet, which includes: the PID, the HWID, and additional activation information. This information is entered into one of two software algorithms: the MD5 message-digest algorithm (MD5) for Office products and the SHA-1 secure hash algorithm (SHA-1) for Windows products. The functionality of the MD5 and SHA-1 algorithms is at issue. In the first iteration of the suit, the district court granted summary judgment of non-infringement concluding that the algorithm used at D's remote station to generate a licensee unique ID was not identical to the algorithm used on the user's local station as required by the last limitation in the claim. On appeal, the court reversed and remanded the finding of non-infringement, holding that P had put forth 'extensive and by no means conclusory' evidence that Ds Product Activation used the same algorithm at the local and remote sites and that the issue of whether the accused products met this limitation should have gone to the jury. On remand, Dr. Gemini testified using a base rate of $10-per-activation, and the use of a 25 percent rule of thumb. The jury returned a verdict of infringement and no invalidity of claim 9 of the '216 patent and found D's infringement to be willful. P got $388 million in damages. D asked for: (1) JMOL of invalidity due to anticipation and obviousness; (2) JMOL of non-infringement of the 'licensee unique ID generating means' and 'registration system'/'mode switching means' limitations; (3) JMOL of non-infringement because D could not have directly infringed the system because claim 19 requires acts to be taken on the user's local computer over which D has no control; (4) JMOL of no willfulness; (5) a new trial on damages for the improper use of the 25% rule of thumb and the entire market value rule; and (6) in the alternative, a new trial on infringement and willfulness. The court denied JMOL of invalidity, granted JMOL of non-infringement on the basis of both contested claim limitations, granted JMOL of no willfulness, granted a new trial on damages on the improper use of the entire market value rule, rejected D's arguments regarding the 25 percent rule of thumb and granted in the alternative a new trial on infringement and willfulness. Everybody appealed.