That'll be another $25 million, Microsoft

Judge penalizes Microsoft for 'litigation misconduct' in IP case

A judge in a U.S. District Court in Eastern Texas Friday slapped an additional $25 million in "enhanced damages" on Microsoft for "litigation misconduct" in a patent case z4 Technologies Inc. brought against the software vendor and Autodesk Inc. in September 2004.

In his ruling, U.S. District Judge Leonard Davis said that Microsoft tried to have z4's patents declared unenforceable even as it continued to willfully infringe on those patents and withheld evidence of its actions. He ruled that this misconduct merits adding to the amount of damages Microsoft must pay z4 in the case.

Davis also denied motions by both Microsoft and Autodesk to schedule a new trial after a ruling in April that they must pay z4 millions of dollars for infringing on two of the company's patents.

The Texas court awarded z4, a private company founded by David Colvin and based in Commerce Township, Michigan, $115 million from Microsoft and $18 million from Autodesk to settle a patent-infringement suit.

In addition to the added $25 million fine levied against Microsoft, the company also must pay z4 $1.98 million in lawyer's fees, according to court documents. A judge also ordered Autodesk to pay $322,000 in attorney's fees to z4 and also upheld the company's original fine.

The verdict in the case in April found that both Microsoft and Autodesk infringed on U.S. Patent No. 6,044,471 and U.S. Patent No. 6,785,825, both held by z4. The patents are for product-activation technology aimed at preventing unauthorized use or piracy of software.

Z4 develops digital rights management technology. The company could not be reached immediately for comment Thursday.

Both Autodesk and Microsoft continue to contend that neither company infringed on z4's patents. In an e-mailed statement on Thursday, Autodesk spokeswoman Caroline Kawashima said the company is "very disappointed" and plans to appeal the decision.

"We believe that the facts in this case clearly show that Autodesk and others developed their own product activation technologies well before z4 Technologies claims to have created this technology," she said.

In a statement from its public relations firm, Microsoft echoed Kawashima's statements and said it also plans to appeal the court's decision.

Copyright © 2006 IDG Communications, Inc.

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