Patent Trials and Triumphs: IPA v. Microsoft

Patent Trials and Triumphs is our blog series where we showcase U.S. patents that have triumphed in recent jury trials. Looking at patent portfolios that have survived the gauntlet of modern litigation provides unique insight on how to create robust patent portfolios that produce real value for tech companies.

We’ve previously discussed Kove v. Amazon, in which Kove won a hefty $525 million against tech juggernaut Amazon, showing how a smaller company can use its patent portfolio to protect valuable cloud-based software technology.

For this next post in the series, we’ll be looking at IPA v. Microsoft — another case where a smaller company won a nine-figure damages award (in this case, $242 million) against an infringing tech titan.

Notably, IPA was able to overcome several strategic mistakes in the original patent filings in order to secure the massive verdict. Here’s how they did it.

A $242 million verdict: IPA Technologies, Inc. v. Microsoft Corp.

IPA v. Microsoft stood out not only because of the size of the jury verdict, but also because the patent family asserted by IPA had a whopping 530 claims — and they won on the basis of just 3 of those claims.

And the 3 claims that were infringed? They were among the final claims in the last U.S. patent to be granted in the patent family. Yet another case that demonstrates how it truly takes an arsenal of patent claims to survive litigation.

IPA v. Microsoft: The basics

• Patent owner (plaintiff): IPA Technologies
• Alleged infringer (defendant): Microsoft Corp.
• Venue: District of Delaware
• Patent in suit:
  • U.S. Patent No. 7,069,560
• Jury verdict:
  • Rendered on May 10, 2024 for the patent owner (IPA), with US $242 million in damages
• Post-verdict update:
  • Initially, Microsoft indicated that they would appeal the verdict.
  • As of June 18, 2024, both parties have reached a settlement. The terms of the deal were not made public.

The ‘560 patent: Brief history

The patent-in-suit was U.S. Patent 7,069,560, referred to as the ’560 patent. The ’560 patent is part of a larger family of patents that all claim priority back to earlier patent applications filed as early as January 1999.

The ‘560 patent was originally filed by SRI International, a non-profit research institute in Silicon Valley that was formerly affiliated with Stanford University.

The technology described in the ’560 patent family was used to develop Siri, which SRI has described as “the first virtual personal assistant.” After SRI spun off Siri, Inc., Apple acquired Siri in 2010 through a non-exclusive license, which allowed the patent owner (then SRI) to continue asserting the patents against other companies.

In 2016, SRI sold off its patents — including the ‘560 patent family — to IPA Technologies, who asserted them against Microsoft, Amazon and Google in 2018.

Over the course of six-plus years of district court and PTAB litigation, many of the original patent claims fell to invalidity challenges filed by the tech titan defendants. But 3 claims survived to support the $242 million damages award in May 2024.

Neither Apple nor SRI were parties in IPA’s patent enforcement campaigns.

The ‘560 patent: What technology does it describe?

The ‘560 patent is titled “Highly scalable software-based architecture for communication and cooperation among distributed electronic agents.”

Basically, the ‘560 patent describes software architecture for converting a user’s request into a set of actionable sub-goals that can be executed by autonomous agents in a distributed computing environment. The software architecture uses an “Interagent Communication Language (ICL)” to interpret the user request, which allows the system to handle user requests of arbitrary complexity. These algorithms form the basis of Siri’s voice recognition technology.

Microsoft was found to have infringed claims 50, 53, and 54 of the ‘560 patent. As a representative claim, this is claim 50 of the ’560 patent:

50. A computer-implemented method for providing cooperative task completion within a distributed computing environment, the distributed computing environment including a plurality of autonomous electronic agents, the distributed computing environment supporting an Interagent Communication Language, the computer-implemented method comprising the acts of:

providing a plurality of synchronized agent registries each declaring capabilities of service-providing electronic agents currently active within the distributed computing environment, the plurality of synchronized agent registries each resident within a separate computer process;

interpreting a service request in order to determine a base goal, the service request adhering to the Interagent Communication Language (ICL), the ICL including a layer of conversational protocol defined by event types and parameter lists associated with one or more of the events, wherein the parameter lists further refine the one or more events, the act of interpreting including the sub-acts of:

determining a goal satisfaction plan that is associated with the base goal;

wherein the goal satisfaction plan involves: using reasoning to determine sub-goal requests based on non-syntactic decomposition of the base goal and using said reasoning to co-ordinate and schedule efforts by the service-providing electronic agents for fulfilling the sub-goal requests in a cooperative completion of the base goal; and

implementing the base goal satisfaction plan.

Microsoft’s technology: Where was the infringement?

In 2014, Microsoft released an AI assistant called Cortana. Cortana wasn’t popular with Microsoft’s customers, and Microsoft eventually abandoned the product, ending customer support for any remaining users in late 2023.

In their suit, IPA claimed that the Cortana software utilized similar methods to the ‘560 patent, which involved “autonomous electronic agents” for “cooperative task completion.”

Specifically, Cortana was found to infringe claim 50 of the ‘560 patent because it:

1. Received service requests that were recited in an Interagent Communication Language; and
2. Used software agents that were autonomous.

Both of these requirements were described in claim 50.

Also, IPA’s legal campaign against Microsoft concerned only damages for past infringement, since the ‘560 patent expired in 2019.

Key takeaways from IPA v. Microsoft: Why it pays to have lots of patent claims

The success of the ‘560 patent in IPA’s enforcement campaign, culminating in a successful jury trial against Microsoft, offers us several insights into smart strategies for software patents — namely concerning patent eligibility, overcoming seemingly fatal mistakes during patent prosecution, and the value of having numerous claims in your patent family.

AI software inventions are patent-eligible post-Alice

In recent years, patent-eligibility for AI and software-implemented inventions has become one of the most confusing and unpredictable areas of U.S. patent law. In particular, it’s difficult to predict whether a patent will be dismissed as a patent-ineligible “abstract idea” under Alice.

The IPA v. Microsoft litigation shows how AI patents can withstand patent eligibility challenges in district court litigation. Earlier in litigation, the district court invalidated three of the patents in the ‘560 family as “abstract ideas.”

However, the ‘560 patent and two others in the family were not invalidated, with the judge ruling that the patents described specific software structures that improved existing technology. As such, the ‘560 patent stands out as a good example of a software-implemented AI patent that withstood closer scrutiny under Alice.

(We’ve previously discussed what Alice is and how it’s impacted software patent filing; you can read more at Patenting Software and Beyond: A Guide to Understanding Alice and Its Impact.)

Overcoming errors in patent prosecution

The original patent applicant (SRI international) apparently made a couple of mistakes in the prosecution of the ‘560 patent, which they were eventually able to overcome.

The first was a strategic error in the timing of their patent filings: they had published their work before filing patent applications, which ultimately compromised their ability to seek patent protection in certain foreign jurisdictions.

Why did this happen? The inventors were able utilize the 1-year grace period in the U.S., but most other countries don’t have a grace period.

Under U.S. law, an inventor’s own public disclosures made one year or less before the effective filing date of their patent application doesn’t count against the inventor as prior art. In the case of the ‘560 patent, the inventors filed their U.S. patent applications within a year after their public disclosure and were therefore still able to secure U.S. patent rights.

However, most foreign countries don’t recognize the one-year “grace period.” This system, called “absolute novelty,” requires the invention to be new relative to all publicly available information prior to the filing date. In the case of the ‘560 patent, patent protection in Europe, Japan and many other foreign countries wasn’t an option due to the inventors’ own prior public disclosure.

The second was a procedural error before the patent was formally issued: the applicant received a notice of allowance that included a requirement to file formal drawings, but they failed to file formal drawings when they responded to the notice. As a result, the patent application went abandoned. Fortunately, the applicant was able to revive the application via petition.

To avoid making this kind of procedural error, we recommend always trying to file formal drawings with the application, as this can save time and money in the long run. In addition, this shows how important it is to read the notice of allowance and make sure you respond to each item.

Filing lots of claims

What SRI International did right — and what ultimately led their patent to hold up in litigation — was in filing several patent applications with many independent claims.

In a previous blog post, How Many Claims Should My Patent Have, we’ve discussed the importance of getting lots of claims. Basically, you want to create a constellation of claims ensuring that, even if many are knocked out, some will survive.

In total, SRI International filed 10 related U.S. applications and got 9 U.S. patents, for a total of 530 claims:

• 6851115: 89 claims
• 6742021: 132 claims
• 6513063: 102 claims
• 6691151: 38 claims
• 7036128: 45 claims
• 7069560: 55 claims
• 6859931: 24 claims
• 6523061: 18 claims
• 6757718: 27 claims

(The above list includes five patents based on continuation-in-part filings in 2000; based on those, SRI International then filed PCT applications.)

In other words, possibly to make up for losing some foreign patent rights, SRI International filed a lot of U.S. patents and claims —exploiting the one-year “grace period” to get as many claims as possible.

Compare the numbers above to the final verdict for IPA v. Microsoft, which hinged on just three claims from a single patent. During prosecution, SRI International couldn’t have known which claims would ultimately survive the scrutiny of a jury trial. Filing as many patents and claims as they did helped increase IPA’s chances of prevailing in litigation many years later.

Calculating $242 million in damages: Why Microsoft’s foreign sales were a factor

Another interesting element of the case relates to how IPA was able to use their U.S. patents to get damages based on Microsoft’s foreign activity. Although the inventors had compromised their ability to seek foreign patent protection for their invention (as discussed above), they were still able to claim damages from “foreign conduct that is not independently infringing,” which is why the damages award hit nine figures in this case.

Why did this happen? IPA was able to show that foreign sales of Microsoft products (namely, Windows 10 operating system) increased the value of the U.S.-based infringement. In particular, the court found that the “relationship between Windows 10 and the servers running the infringing code presents the type of situation” where the foreign sales of Windows 10 increase the value of the domestic infringement.

In this case, Cortana (the infringing product) can only be accessed and run through Microsoft’s Windows 10 operating system (the non-infringing product). Therefore, although Windows 10 sold outside the U.S. did not independently infringe the claims of the ‘560 patent, the foreign sale of Windows 10 client devices did enable infringing activity in the US, and so IPA could be awarded damages relating to the non-infringing product.

Finding the right patent counsel to protect your innovations

The outcome of IPA v. Microsoft shows how important it is to hire effective patent counsel: you want a business partner who understands U.S. and foreign patent prosecution, and who will collaborate with you to craft a patent strategy that supports your long-term goals.

At Henry Patent Law Firm, we’ve helped businesses of all sizes find the right strategy for protecting their technology. To find out more, please get in touch with us — we’d love to hear from you!