Microsoft tries to offset $512 million patent judgment with IMS counterclaim

It's way too early to declare the battle between Microsoft and arch-rival Alcatel-Lucent over. Last week, a judge upheld a big jury decision against Microsoft and tacked on some interest. That just made the defendant a little angrier.

The state of affairs between Microsoft and French telecommunications firm Alcatel-Lucent, the current holder of patents developed by the old Bell Laboratories, remains contentious. Last Thursday, a US district judge in Southern California upheld an April jury verdict against Microsoft for violating a series of patents Alcatel holds for how a user selects a calendar entry from a menu ($357.7 million) and the use of styluses on touch-screen devices ($10.4 million). Judge Marilyn Huff opted to charge interest on both rulings in the interim, raising the award to $512 million.

But as it turns out, Alcatel only won two out of three. Judge Huff also upheld the portion of the jury's decision that threw out Alcatel's case against Microsoft for allegedly violating its video encoding standards in the production of the Xbox 360 game console. Alcatel was seeking $419 million on that count.

As court documents made public today indicate, Microsoft may be hoping it can pay off this latest judgment with a counter-claim it hopes will make everything a wash: a claim on a patent for a protocol used to send multimedia content over the Internet to mobile clients. For years, companies have been endeavoring to implement a standard engineered through the auspices of the IETF, for an IP Multimedia Subsystem (IMS) that uses Session Initiation Protocol (SIP) -- which is also one of the key communications protocols used in VoIP. This way, services can meter for multimedia transfers and charge customers for quality of service deployed, rather than bytes downloaded.

Although Microsoft's patented invention is not specific to IMS, what it claims is a method for implementing a supplemental protocol that goes above and beyond TCP, where multiple media servers provide portions of content simultaneously to a single server, and it's that server that maintains the connection with the client at the end. "The present invention overcomes the limitations of the prior art by adding an additional layer on top of a transfer protocol layer to facilitate communications between a client on a first computer and a media server on a second computer," reads the invention summary for Microsoft's 2002 patent, "Wire protocol for a media server system."

As a September 2006 document from IBM indicates, IMS enables a variety of possible and potentially new protocols to serve in its transport layer; so IMS would not qualify as an open technology which Microsoft is trying to claim as its own. "IMS devices connect to the IP network in the transport layer via a variety of transmission media, including Wi-Fi (a wireless local area networks technology), DSL, Cable, SIP, GPRS (General Packet Radio Service is a mobile data service), and WCDMA (Wideband Code Division Multiple Access, a type of 3G cellular network)," IBM's explanation reads. "In addition, the transport layer allows IMS devices to make and receive calls to and from the PSTN network [public switched telephone network] or other circuit-switched networks via the PSTN gateway."

It's this process of "funneling" multichannel information to a single server that handles the connection, that Microsoft claims Lucent is violating with its 8788 Media Platform, which the telecom firm currently sells to network carrier customers. Alcatel describes its product as "a network-based platform combining interactive voice response (IVR), a voice browser and a media server, optimized for service providers delivering enterprise services."

Apparently a point of contention in prior arguments concerned whether the 8788 system used Internet-related protocols as a transfer medium. If it does, Microsoft contends, then Alcatel is infringing.

In documents filed with Judge Huff's court on Friday, the day after she upheld the jury's decision giving Alcatel two out of three, Microsoft makes a curious argument it says proves its point: After Alcatel claimed that an expert witness for Microsoft didn't actually review the 8788 software before providing information on how it's supposed to work, Microsoft argued that Alcatel's own expert didn't review the software either -- just the documentation. And not reviewing the software indicates that the software must use TCP in its transport layer, otherwise the expert would have known this.

"Nowhere does Dr. Kaliski [Alcatel's expert] testify that he himself reviewed the actual software in question. This omission on the part of Alcatel-Lucent is telling. Assuming Alcatel-Lucent's position is correct, that the 8788 Media Resource Platform does not use TCP as a transport protocol, surely Dr. Kaliski would have relied on the software for the 8788 Media Resource Platform, or at least examined it. Instead, the only evidence that Dr. Kaliski relied upon were the statements of Mr. Gouverneur [of Alcatel-Lucent]. With respect to this exact issue, Dr. Kaliski testified, 'I understand from reviewing product documentation for the 8788 MRP and from speaking with M. Gouverneur, product manager for the 8788 MRP, that the 8788 MRP uses the User Datagram Protocol ('UDP') as the transport protocol for both the 'control connection' and the 'data connection' Dr. Modestino identified.'...In light of the clear statements from Alcatel-Lucent's own documentation - created prior to the onset of litigation - that the 8788 Media Resource Platform uses both UDP and TCP, Alcatel-Lucent cannot prevail."

Microsoft's document also contends that Alcatel was trying to avoid liability by saying that 8788 isn't really a product with a fixed price, and therefore not something to which infringement can be measured with a dollar amount. "Given Alcatel-Lucent's numerous attempts to commercialize the 8788 Media Resource Platform, Alcatel-Lucent cannot be allowed to avoid liability," Microsoft's attorneys contend. "To find otherwise would be to eviscerate the plain statutory language."

Given the fact that so much concerning Microsoft's counterclaims against Alcatel-Lucent remain undetermined, the possibility remains that the company may find itself paying somewhat less than that $512 million after all. But there's no question the company has lost a major round in its effort to even the stakes with Alcatel, and maybe -- with the dismissal or eradication of another major patent infringement judgment against it -- force history to repeat itself.