The case was initially disposed of by a US District Court of New York in March 1999. At that hearing, the court found that the patent registered by E-Data in 1985 was only relevant in limited circumstances, which excluded many instances of software downloading to PCs.
In the Appeals Court order dated 13th July, the following statement in background description of the “Freeny Patent” is noted:
"… the invention overcomes the problem of how to manufacture and distribute material objects embodying… information in an economical and efficient manner and in a manner which virtually assures that the owners of [the] information will be compensated in connection with the sale of such material objects."
If the review ordered by the court concludes that the previous interpretation of the patent was too narrow, then it may be taken to include a far broader spectrum of software downloads. In that event, E-Data may be entitled to pursue companies employing the technology for royalty payments and to demand payments for use of the patented invention.