On the other hand, if Microsoft uses too broad an interpretation, the company risks having its claim invalidated by prior artthe argument that such functionality was used in previous inventions. "I can think of simple devices that have had that kind of functionality for a long time, like digital watches," Watts said."If you embark on a strategy to get licensing revenues, all you need is an arguable patent," Watts said. "A lot of companies might prefer paying for a license thats in a gray area over the alternatives of trying to invalidate the patent or risking infringement proceedings, which are extremely expensive." Many in the tech industry argue that the U.S. Patent Offices lax standards for awarding patents has led to systematic abuse, with patents awarded for obvious technologies such as one-click shopping, paying with credit cards online, pop-up windows and even hyperlinks. Companies routinely stockpile patents in order to gain licensing fees from competitors and to protect themselves from other such stockpiles, a situation that critics say harms innovation. Organizations such as the Public Patent Foundation and the Electronic Frontier Foundation have begun working to have non-innovative patents revoked, through the Patent Offices re-examination process. Cisco Systems Inc., Intel Corp., eBay Inc., Symantec Corp., Chiron Corp., Genentech Inc. and Microsoft formed a working group in April, not yet named, to cooperate with regulators and legislators on patent reform. Microsoft has been hit by high-profile patent cases. Chicago-based Eolas Technologies Inc. last year won a $521 million jury verdict against Microsoft over the infringement of a Web browser patent, leading to a court appeal and an outcry from the Webs major standards body, the World Wide Web Consortium (W3C). The W3C helped persuade the patent office in November to order a re-examination of the patents validity. In an initial finding in February, a patent office examiner agreed that substantial "prior art" existed to reject the patents claimsthough Eolas recently refuted this finding. Such patent actions are becoming an increasingly common part of the high-tech business landscape, though they ordinarily end in cross-licensing agreements rather than lawsuits. Last month, the Patent Office published an application by Apple for a method of rendering translucent-appearing windows, technology that appears similar to features Microsoft has been previewing for its next major Windows release. Industry observers said the patent is likely to be used as leverage for cross-licensing rather than to attack Microsoft. Microsoft was not immediately available for comment. Check out eWEEK.coms Windows Center at http://windows.eweek.com for Microsoft and Windows news, views and analysis.
Companies do not always have to prove the validity of their claim in order to collect licensing revenues, however, particularly when their target is a small company.