Carlos Armando Amado won a case in 2006 against the software
giant. The court accepted that Microsoft had infringed a patent he
held for software that connects Microsoft's Excel software with a
database.
Amado had been awarded four cents for every copy of the software
sold, but on appeal that was increased to 12 cents per copy. Amado
asked for $2 per copy.
The US Court of Appeals for the Federal Circuit has now said the
12 cents damages awarded by the District Court in the first appeal
must be reconsidered. The Court expressed no view as to what the
damages should be, but said that the 12 cents figure had not been
justified by the lower Court.
Both Microsoft and Amado had appealed, Microsoft demanding a
return to the 4 cents royalty rate, Amado seeking $2 per copy of
the software sold.
The four cents rate had been applied to Microsoft's activity
before the original court judgment against it. The dispute is now
over what royalty should be paid for copies sold after the verdict,
when Microsoft knew that it was deemed to be infringing Amado's
patent.
Microsoft was given the Court's permission to continue to sell
its software on condition of paying a Court-set royalty.
"The jury’s award of $0.04 per unit was based on Microsoft’s
infringing conduct that took place prior to the verdict," said
Circiut Judge Linn in the ruling. "There is a fundamental
difference, however, between a reasonable royalty for pre-verdict
infringement and damages for post-verdict infringement."
"Prior to judgment, liability for infringement, as well as the
validity of the patent, is uncertain, and damages are determined in
the context of that uncertainty. Once a judgment of validity and
infringement has been entered, however, the calculus is markedly
different because different economic factors are involved," said
the ruling.
The Court of Appeals said that it could not judge whether or not
the District Court had properly exercised its discretion because it
had not explained why it awarded royalties of 12 cents.
It asked the District Court to reconsider what the correct
royalty should be.
Inventor Amado said in earlier court hearings that he had
developed the application in 1990 and approached Microsoft in 1992,
when the company declined to buy his program. Amado went on to
patent the software.
He claimed that a year later Microsoft came out with a very
similar application in its 1995 Office software programs. Amado
sued in 2003, claiming around $500 million in damages for 10
claims. Only one was upheld, though, and he was awarded $8.96m in
damages for software sold up to the resolution of the court
case.
The current argument surrounds royalties for software sold since
then.
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