The lawsuit, filed Oct. 30 by Portland, Maine-based SurfCast, alleges that Microsoft infringes on its U.S. Patent No. 6,724,403 dating back to the 1990s for the "tiling" concepts used in the new Windows 8 operating system that is now being used in PCs, Surface tablets, laptops and smartphones.
"We developed the concept of Tiles in the 1990s, which was ahead of its time," Ovid Santoro, CEO of SurfCast, said in a statement on the company's Website. "Microsoft’s Live Tiles are the centerpiece of Microsoft’s new Operating Systems and are covered by our patent."
The 10-page lawsuit, which was filed in U.S. District Court in Maine, says that the patent, called “System and Method For Simultaneous Display of Multiple Information Sources,” was issued by the U.S. Patent and Trademark Office April 20, 2004, to Santoro and co-inventor, Klaus Lagermann. Both men assigned their rights to the patent to SurfCast, according to the lawsuit.
The four-count lawsuit argues that Microsoft directly and willfully infringed SurfCast's patent through its new Windows 8 products and that by selling the operating systems, it will induce its customers, partners and others to also infringe on SurfCast's patent. SurfCast alleges that Microsoft "had knowledge of the '403 patent at least as early as April 21, 2009."
SurfCast also alleges that Microsoft will continue such patent infringements through its Windows Store, where users can "search for or browse thousands of apps, all grouped in easy-to-find categories" that also used the tiles-based system. "Microsoft also instructs developers how to write applications that, when downloaded through the Windows Store and used on an Accused Product, directly infringe one or more claims of the '403 patent," the lawsuit alleges.
The lawsuit asks the court to rule that Microsoft has directly infringed the '403 patent and to order that Microsoft "account for and pay to SurfCast all damages caused to SurfCast" due to the alleged infringements.
One of SurfCast's attorneys, Benjamin Piper of Preti Flaherty Beliveau & Pachios, declined to comment on the lawsuit Oct. 31.
In an email, a Microsoft spokesman said the company is "confident we will prove to the court that these claims are without merit and that Microsoft has created a unique user experience."
So what is SurfCast and where did it come from?
The company's sparse Website includes no products or services that it markets to any users. What the Website does include, however, are several statements about its business and its founders and directors.
"SurfCast designs Operating System technology and has four issued patents with additional applications pending," according to the site's home page. "SurfCast designed a new concept referred to as 'Tiles.' Tiles can be thought of as dynamically updating icons. A Tile is different from an icon because it can be both selectable and live—containing refreshed content that provides a real-time or near-real-time view of the underlying information. Tiles can provide dynamic bookmarking—an at-a-glance view of the current status of the program, file, or content associated with it. Tiles enable people to have all their content, applications, and resources, regardless of whether on their mobile device, tablet, computer, or in their Cloud—visualized persistently—dynamically updating."
The company says its four patents were issued in 2004, 2006, 2008 and 2011.
The company's listed founders and directors and their former and current affiliations include Jim Cannavino of IBM and Perot Systems; Bob Carberry of IBM; David Charters of the British Foreign and Commonwealth Office, Partner Capital and D Group; and Michael Cohrs of Deutsche Bank and the Bank of England. Also listed are Tom Dechaene of Deutsche Bank Venture Capital, KBC Group NV, Agenus and Transics; patent co-founder Lagermann of IBM and Cisco; and patent co-founder Santoro of Deutsche Bank Venture Capital and Red Herring magazine.
Patent-infringement lawsuits, when filed by companies that don't sell their own products or services, typically are referred to as "patent troll" cases involving businesses set up to acquire patents that can later be pursued in legal cases against larger companies with deep pockets.
And one of the problems in such cases, said Rob Enderle, principle analyst with Enderle Group, is that companies like Microsoft often lose one of their main defensive strategies—the countersuit—because the opponent has no products or services that can be challenged.
"Given the number of former IBM people that are involved with [SurfCast], it still could be a patent troll company," said Enderle. "It could have been formed just to do this and get a couple million dollars out of Microsoft. I don't see any products that they are selling."
Another factor that makes Enderle suspicious is that SurfCast "waited so long to do something about" the alleged patent infringements, since Microsoft has been working on Windows 8 and publically revealing its makeup for a while.
If going after Microsoft's money is the primary aim of the lawsuit, then SurfCast could be up against quite a battle, he said. "Companies like Microsoft are very good at fighting these things and they could run them out of money to fight it," he said.
"It kind of smells to me like it’s a patent troll case, like a bunch of guys who got together and thought they'd get some money," said Enderle. "But it doesn't sound like it's going to end well for these guys. They are going after one of the top three companies that have this kind of patent-claim fighting experience on the planet. If this is the company that you cut your teeth on, holy crud."