Defeating Microsoft in patent case, Uniloc looks to future

Network World - A small security company that won a $388 million judgment against Microsoft after accusing the company of patent infringement has big plans for the future.

Uniloc, with U.S. headquarters in Irvine, Calif., prevents software piracy by creating a unique device fingerprint that can distinguish the computer in your hands from any other computer ever built. Vendors that want to prevent unauthorized use of software tie their product activation processes to Uniloc's patented method of identifying a device.

Six years ago, Uniloc sued Microsoft, claiming that it violated patents by using the same device recognition technology for Windows and Microsoft Office. Suing one of the largest companies on Earth may not at first glance seem like the most effective use of resources for a company with 40 employees. But Uniloc's survival depended on protecting its intellectual property, says Brad Davis, president and CEO.

"You wouldn't step out tomorrow and sue the largest software company in the world, but we're an IP-based company. We have 50-plus patents," Davis says. "You have to defend your IP. You can't always pick your dance partner."

According to Davis, Microsoft approached Uniloc in the 1990s, looking to either purchase the company or get an exclusive license to its technology. Several years later, Uniloc noticed Microsoft using "something awfully similar" in its product activation systems for Windows and Office.

Last month, in a federal court in Rhode Island, a jury ordered Microsoft to pay $388 million to Uniloc after deciding Microsoft was guilty of patent infringement. Microsoft said it was disappointed in the verdict and plans to appeal. 

The grandiose sum would be more than the annual revenues of Uniloc, company officials said. But Uniloc, which was founded in Australia in 1992 and established U.S. operations in 2003, is not just sitting back and waiting for the money to pour in. Uniloc today is announcing that it will take its device recognition technology and use it to protect critical infrastructure such as water, power, oil and gas, and chemicals and transportation.

Uniloc's software crawls through a PC or other device to find serial codes on hard drives, mother boards and network cards, and variations in chipsets and components including video and sound cards and RAM. Because all PCs contain physical imperfections, and many components with unique serial numbers, Uniloc is able to create a fingerprint that can distinguish any PC from any other.

Uniloc sells the technology to software and gaming companies under the name SoftAnchor, which helps prevent their products from being used on unauthorized devices. Sega and Maximum Software are among SoftAnchor's users.

Today, Uniloc is announcing the availability of NetAnchor, which uses the same device recognition technology to assign trusted user status to devices that need access to critical infrastructure in oil and gas and other industries. Any device that hasn't been confirmed as trusted is denied access.

One large oil company is already using NetAnchor, Davis says, noting that an oil company might face thousands of attacks every day from hackers attempting to take control of critical assets. With NetAnchor, a hacker could steal loads of usernames and passwords but still be denied access if he's not using a trusted device.

This still leaves the danger that a PC could be lost and fall into the wrong hands. But once the loss of a PC is discovered, it just takes one keystroke to rescind that device's access, Davis says.

Uniloc is charging $35,000 per server, with each server having the ability to control up to 500 devices.