CAFC: Operability of 102(g) prior invention

z4 Technologies v. Microsoft Corp. (Fed. Cir. 2007)

z4 was one of the first plaintiffs to test the revived notion that an injunction for patent infringement is a form of equitable relief.  After a jury verdict of infringement, the E.D. Texas court awarded over $100M in damages, but refused to enter a permanent injunction to stop infringement of z4’s anti software piracy patent.

Microsoft appealed (z4 did not appeal the denial of injunctive relief).

Prior Invention: Although rarely invoked, 35 USC 102(g) embodies the heart of the American first-to-invent system. 102(g) allows a small category of secret activities to serve as invalidating prior art when another party shows that it was the first to conceive of an invention and then ‘exercised reasonable diligence’ in reducing to practice. 

Microsoft argued on appeal that its “BP 98” software was invented first. According to the appellate panel, Microsoft’s claim fails because the BP 98 software did not actually work. (Or at least that such evidence was sufficient for the jury verdict).

Decision affirmed.

3 thoughts on “CAFC: Operability of 102(g) prior invention

  1. Dennis,

    An interesting and timely article. Some things I noticed:

    1. In the CSIRO case, the patentee is Australian, not Austrian,

    2. The article says that the different treatment of non-profits in the CSIRO case “is hard to justify.” Not really. For non-profit research patentees, their business is research, so they are unlikely to manufacture without a commercial partner. Also, the opinion in eBay case specifically recognizes such an exception to the “non-practicing entity” for this reason: “[S]ome patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so.”

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