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Court upholds Microsoft loss and orders more investigation into eBay false advertising claims

In December of 2009, A Federal Appeals court upheld a ruling against Microsoft in a long running patent battle between the software giant and a small Canadian firm called i4i. At the heart of the dispute was a feature in Microsoft's massively popular and profitable Office software.

Along with upholding the initial ruling against Microsoft and the $290 million judgment against the company, the appeals court also issued an injunction against the sale of Word and Office 2007 versions that were found to be infringing the i4i patent. Microsoft appealed the ruling to the U.S. Court of Appeals for the Federal Circuit asking for a rehearing by all 11 judges. The court denied Microsoft's request today reports

Microsoft isn’t done fighting the injunction yet though. Microsoft could take the case to the U.S. Supreme Court or make a new request to the Appeals Court for another hearing on the ruling. Since the ruling was issued, Microsoft has removed the feature at the heart of the case from current versions of Office and Word.

I4i Chairman Loudon Owen said, "This has been a long and arduous process, but this decision is a powerful reinforcement of the message that smaller enterprises and inventors who own intellectual property can and will be protected."

Microsoft issued its own statement saying, "We're disappointed with the decision. We continue to believe there are important matters of patent law that still need to be properly addressed, and we are considering our options for going forward."

EBay has found itself in court as well in a case that was originally filed by Tiffany & Co. The original suit alleged that eBay was ignoring the sale of counterfeit Tiffany jewelry on its website. EBay won the original case with the presiding judge stating, "It is the trademark owner's burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites."

Tiffany appealed the decision and the U.S. appeals court has again ruled in favor of eBay in the case. However, the court did order that more review of Tiffany's claims of false advertising be conducted. EBay maintains that it spends millions to track down, stop counterfeiters, and remove listings for goods that violate rules or law. Tiffany has stated that it will consider appealing the ruling to the U.S. Supreme court. The jewelry company stated that the ruling "leaves in place a prior ruling which allows eBay to profit from counterfeit sales."

The appeals court opinion on the ruling read, "It is true that eBay did not itself sell counterfeit Tiffany goods; only the fraudulent vendors did, and that is in part why we conclude that eBay did not infringe Tiffany's mark. But eBay did affirmatively advertise the goods sold through its site as Tiffany merchandise."

An accusation of false advertising was leveled against eBay by Tiffany because the eBay website advertised Tiffany goods, but many of them were counterfeit items. This decision by the appeals court was in contradiction to the original ruling of the district court that found eBay's ads were not likely to confuse customers.

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By Breathless on 4/2/2010 10:26:51 AM , Rating: 5
with the presiding judge stating, "It is the trademark owner's burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites."

The RIAA would poop themselves

By tastyratz on 4/2/2010 11:40:06 AM , Rating: 3
I find those with the high and mighty moral compass are the reason the legal system is allowed to rampantly oppress unjustly under the guise of generalized illegal activity.

Surely by you case we should all take direction from the way the Chinese government runs the internet?

By The Raven on 4/2/2010 1:55:42 PM , Rating: 2
You may be right, but it doesn't dismiss the fact that the way the system as it is set up now favors the big corporations who "spent a lot of money creating" and not the little guys who put in their "widow's mite" to create. This includes those who make a living off of software/music or even those who open source it.

This always makes me think of Gene Simmons saying that the pirates were a bunch of free loaders who stole from little acts who would never find success in the industry as a result. He said this as he promoted a big Kiss boxed set of material that had mostly been released 10 times prior.

So how is Gene going to justify stealing market share away from those small acts since he is asking for more of the consumer's money?

But basically my point is that it is a big convoluted mess at this point and you should not judge those who think it is not immoral to 'steal' music/software. Sure there are those who have no philosophical beef here and just want to get free stuff, but not everyone is like that.

As far as I'm concerned, it should be like the pot laws in California. Don't make it perfectly legal, but don't judge those who do it. (Note this does not reflect my views on pot ;-) )

By The Raven on 4/5/2010 2:31:16 PM , Rating: 2
I'm not sure what you mean, but in most part of CA it is very easy to get dope for medicinal purposes. Almost to the extent that the distinction is not necessary. And no, I don't smoke anything but brisket.

I'm not sure if you are agreeing with me on the second point. But to clarify, I am not necessarily anti-copyright I just think there needs to be a major reform of the system as it is now.

I don't think anyone is entitled to get to the top, but I think that local talent should be able to make a living off of their music and that we shouldn't pay all these people programmers/musicians to sit around doing what they love, and what we all could do in our free time as hobbyists.

By banthracis on 4/2/2010 11:46:01 AM , Rating: 1
Wow, I'd love to see someone bring up this decision and those exact words in a case against torrent websites.

Overall though, copyright law is just dumb. There's too much contradiction, inconsistent application of laws, etc.

By sprockkets on 4/2/2010 2:31:02 PM , Rating: 3
Really? Contradiction? Ebay

1. Forbids counterfeit sales of software such as Windows.
2. Forbids copies of CD music and anything else not original.
3. Will not even let you sell any quantity of OEM software such as Windows unless you have a good history of doing so. For instance, I cannot sell more than 5 copies of Windows XP a month until they see no one has complained that they were not counterfeit.

If ebay encouraged and solely offered illegal and pirated goods, they would be shut down. But they don't. Saying that torrent sites have anything but 98% pirated material would be laughable, and that is exactly why they cannot use that weak defense.

By fic2 on 4/3/2010 8:03:04 PM , Rating: 3
Really? Because I bought what turned out to be set of counterfeit DVDs on ebay 3-4 years ago. Reported it to ebay and paypal. AFAIK they are still "investigating" it. Even put a negative review saying that it was counterfeit. Ebay took it down. I closed my account after that. I will never buy anything else off of ebay.

By Samus on 4/8/2010 1:00:12 AM , Rating: 1
I used to collect ST Dupont Cigar Lighters and eBay was a great outlet to buy and sell them. There were a LOT of cheap knockoffs floating around awhile back and after looking, I couldn't find a single one. Looks like eBay is doing pretty fucking good at filtering the trash and shutting down auctions for fake goods if you ask me.

Which I'm perfectly fine with. If people want cheap knockoffs they can go to ibid or yahoo auctions!

By BruceLeet on 4/2/2010 12:32:26 PM , Rating: 4
Trademark = Copyright these days?

By RabidDog on 4/2/2010 10:54:46 AM , Rating: 2
On the Microsoft case, the fines seem excessive. I think the court was trying to send a message. The added feature was not really a show stopper as far as I could tell, it's not like its spell check or something.

On the EBay case, I think Tiffany is trying to recoup some if the money that they spend to police the Internet. To use round numbers here, a seller may make $1000 from a counterfeit piece, but it costs $1M a year to police the Internet. Going after the counterfeiter is may only yield a couple grand, where they are trying to get the big bucks from EBay. But I think EBay is practicing due-diligence on it's part to police these auctions.

RE: Meh...
By bhieb on 4/2/2010 10:58:32 AM , Rating: 2
I'd have to see the Office sales numbers. But let's say a fair license price to use i4i's tech is $.50 per copy, and MS has sold 500 million copies. If that was the case then the amount seems fair. A lot of assumptions obviously, but without the numbers neither of us can really judge the fairness.

RE: Meh...
By someguy123 on 4/2/2010 12:15:38 PM , Rating: 2
To be quite honest, I'm surprised microsoft didn't get the appeal through.

If the online patent is the same patent i4i is suing for.....i4i basically owns any and all methods of formatting via code. Most of i4i's patent is just a history lesson on the evolution of text.

RE: Meh...
By Solandri on 4/2/2010 3:24:39 PM , Rating: 2
On the downside, a stupid patent won.

On the upside, a big patent holder lost. So maybe companies with large patent portfolios will start to realize that simply having large patent portfolios for suing other patent holders into cross-licensing deals is not sufficient protection. What's needed is an overhaul of the PTO's policies so stupid patents aren't awarded in the first place.

RE: Meh...
By drycrust3 on 4/2/2010 4:08:01 PM , Rating: 2
On the downside, a stupid patent won.

As I understand it, the difference here is that Microsoft added a lot of "free stuff" that directly targeted the "niche" i4i had a market in, but not much in other areas, making it plain they only wanted to drive i4i out of business.
If Microsoft had just put it's normal range of "free stuff" into Word that were more or less useful to general applications and ignored i4i's market, then this case might never have gone to court.
As it is, this isn't just a patent issue, it is also an issue of does a company with huge financial resources have the right go into a market that a less endowed company operates in and take (steal?) ideas the small company developed and give them away.
We have seen this sort of thing happen so many times in the past, and Microsoft ended up with a huge market share and a company that started a good thing bankrupt or a faded star in the sky. But somehow this company is holding on. The sad thing is even though Microsoft has "lost", with all their appeals it is likely to be years before they have to pay up, and by then i4i may be history.
And if i4i do go out of business, then will those "free products" Microsoft gave away need a licence you have to pay for?

RE: Meh...
By cashkennedy on 4/5/2010 12:23:46 PM , Rating: 2
does a company with huge financial resources have the right go into a market that a less endowed company operates in and take (steal?) ideas the small company developed and give them away.

Sounds a lot like google's business model? (Not saying your argument is wrong or anything)

RE: Meh...
By woad on 4/10/2010 9:55:47 PM , Rating: 2
hence why MS is no stranger to being taken to court under the Sherman Act :-)

"I modded down, down, down, and the flames went higher." -- Sven Olsen

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