Tucson: Microsoft Settles with Research Corporation Technologies

Microsoft settles with local company

By Enric Volante

Dispute involved infringement on digital-imaging technology

ARIZONA DAILY STAR 9/3/09

Microsoft Corp. reached a settlement with a Tucson firm that accused the software giant of in­fringing on patented digital-imaging technology, heading off a jury trial.

Terms of the deal weren’t disclosed.

But Tucson-based Research Corporation Tech­nologies Inc. had sought damages of potentially hundreds of millions of dollars from Microsoft for landmark technology that has been licensed to some of the world’s biggest computer brands.

Research Corporation Technologies, also known as RCT, sued Microsoft in 2001 in U.S. District Court, saying Microsoft was wrongly using the technology in its Office and Windows software.

The Tucson company claimed in court papers it was entitled to 67 cents for each of more than 427 million units of Microsoft software sold, or about $286 million. Microsoft maintained it didn’t in­fringe any of the patents and contended that all three were invalid.

“The only thing I can say is that it is settled. Terms are confidential,” RCT Chairman Gary M. Munsinger said Wednesday in Tucson.

Kevin Kutz, a Microsoft spokesman in Washing­ton, D.C., and Jeffrey Willis, a Tucson attorney on the Microsoft legal team, also declined to discuss the disputed technology.

“We’re going to let the settlement and the reso­lution of the case speak for itself,” Kutz said.

RCT, a technology licensing and management firm, acquired its patented technology after re­searchers at the University of Rochester developed it.

Known as the “Blue Noise Mask,” RCT said it combines high image quality with high­speed rendering of halftones, or screened images.

Microsoft initially won at the District Court level in 2006 when U.S. District Court Judge Manuel Real granted the com­pany summary judgment, find­ing the RCT patents invalid and unenforceable.

But in August 2008, a federal appellate court reversed the judge’s ruling, removed him from the case and remanded the case to a new judge. The appel­late court found that Real did not go far enough in his analysis. Dale Regelman, a Tucson patent attorney who followed the case but was not involved with either side, called the pro­cedural history “very unusual,” especially the replacement of the District Court judge with another from out of state.

“That part caught me by sur­prise,” he said. “Talk about pro­tracted litigation.”

Matt Rosoff, an analyst with the Kirkland, Wash.-based firm Directions on Microsoft, said the computer giant normally is bat­tling dozens of patent infringe­ment lawsuits, some for no other reason than that its deep pockets make it a good target.

Microsoft, which has about 93,000 employees worldwide, reported a net income of $14.57 billion for the fiscal year that ended June 30.

Occasionally, Rosoff said, Microsoft has been found in willful violation of patent law. But more often than not such cases tend to be settled like the RCT case — with both sides agreeing not to talk about it.

Regardless of the validity of the claim, Rosoff said, the latest settlement suggests “Microsoft must have thought there was at least a reasonable threat that RCT would win at trial.”

Over the past decade, RCT has moved aggressively to pro­tect its Blue Noise Mask patents, winning settlements and license deals with some of the world’s biggest printer makers.

In 1999, the firm licensed the technology to printing-indus­try leader Hewlett-Packard as part of a settlement of an in­fringement lawsuit against HP.

In 2000, RCT sued Japan­based Seiko Epson Corp. for al­leged patent infringement. That suit settled in January 2001.

RCT said it granted Lexmark International a license to use Blue Noise Mask patents in 2001.

After the Court of Appeals reversed Microsoft’s earlier vic­tory in the case, Microsoft is­sued a statement to the Arizona Daily Star: “We continue to maintain that these patents are invalid and are not infringed by tech­nology in Windows or Office. We look forward to going to trial for the first time and telling our story in court.”

Bloomberg News contributed to this report.

Contact reporter Enric Volante at 573­4129 or evolante@azstarnet.com.