Barnes & Noble Fights Back
In March 2011, Microsoft filed a complaint with the United States International Trade Commission (ITC) against Barnes & Noble for patent infringement alleging that Barnes & Noble’s Android-based Nook portable devices violated three Microsoft patents. This complaint is just one of many complaints issued by Microsoft against Android software users. Many Android software vendors, including Samsung, HTC, LG, and Acer, have signed licensing agreements with Microsoft for use of the software. The most recent signee to a Microsoft licensing agreement is Amazon for its use of Android software in the company’s Kindle Fire devices. Barnes & Noble is one of the last two remaining companies who refuse to enter into a licensing agreement with Microsoft. Instead, Barnes & Noble has chosen to challenge the validity of Microsoft’s patents and assert that the Nook does not violate those patents.
The three patents Microsoft alleges Barnes & Noble has violated are processes and methods that enable the user to add annotations to “read-only” text, to highlight and select text from electronic documents, and to download documents from browsers at a faster speed. Barnes & Noble denies the validity of each of the three patents and has argued that none of the features patented serve as the basis for customer demand for the product. Additionally, Barnes & Noble has stated distinct reasons for why each patent is invalid. For the first of the three patents, that which enables the user to annotate “read-only” text, Barnes & Noble argues that Microsoft did not disclose the use of prior art from a European patent. Barnes & Noble further argues that there was nothing novel in the process, and that Microsoft merely used well known techniques to resolve the problem with “read-only” materials.
In defense of the alleged infringement on the second patent, Barnes & Noble argues that the highlighting technique covered by the patent was neither novel nor non-obvious at the time the patent was issued and so the patent should be invalid. Barnes & Noble points out that the highlighting technique used simply implemented the preexisting use of “graphic selection handles.” The graphic selection handles come in the form of two vertical bars positioned at the beginning and end of the selection area and enable the reader to select text and increase and decrease the text size. As this technique was already in use at the time the patent was issued, Barnes & Noble argues that the patent itself did not meet the requirement of novelty and non-obviousness.
Finally, in regards to the third patent, Barnes & Noble notes that the removal of the “double-display” technology from devices today would not harm the user experience as modern speed of downloading makes the process protected by the patent practically useless in this age of internet technology. While the patent covers a process that undoubtedly had purpose in 1996 when the patent was issued, such a process is no longer necessary as the current speed of downloading makes the process obsolete. This argument claims that the process described by the patent is no longer useful and attempts to show that the utility requirement of the patent no longer exists.
The difficulty with Barnes & Noble’s defense is that patents carry with them a presumption of validity and are very difficult to overturn. However, there have been reports from ITC staff attorneys who have recommended a ruling in Barnes & Noble’s favor. While recommendations from the ITC staff are not binding, they do provide strong indications for the outcome. If the patents are overturned and if Barnes & Noble succeeds in defending against Microsoft patent infringement claims, Microsoft will encounter significant resistance in the future as companies will be less willing to enter into licensing agreements with Microsoft and will be more willing to challenge infringement claims.
Barnes & Noble’s challenge to the Microsoft complaint may have a critical effect on the market for smartphones and other hand held devices. In addition to challenging the validity of Microsoft’s patents, Barnes & Noble has also alleged that Microsoft’s patent licensing agreements with vendors of Android-based devices are anti-competitive, and that Microsoft is attempting to capture the majority of the market by binding these vendors to licensing agreements. This “anti-competitive” practice has become a highly discussed and disputed issue in the IP community. At the Fordham Intellectual Property, Media & Entertainment Law Journal’s (IPLJ) annual symposium last November, prominent individuals from the legal community discussed the difference between fair and effective enforcement of intellectual property rights and what has come to be known as “IP Bullying”. On one hand, patent holders are seeking to enforce their rights to exclusive use of their inventions, and on the other hand, patent holders are seeking to misuse their patents to exclude other competitors from the market. This is clearly the issue in the case of Microsoft. Is Microsoft case effectively policing and enforcing its patent rights or is the company attempting to gain control of the market by excluding others from using its patented technology in their devices? The case will continue throughout the next couple of months, and it will be very interesting to see the court’s reasoning and final decision on the case.