[IETF-IDRM] Fwd: [IDRM] More on InterTrust sues Microsoft

[Thomas Hardjono]

>Date: Mon, 14 May 2001 16:19:01 -0400
>From: Thomas Hardjono <thardjono@mediaone.net>
>Subject: [IDRM] More on InterTrust sues Microsoft
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>http://www.zdnet.com/intweek/stories/news/0,4164,2716226,00.html
>
>Digital Patents Go to Court
>By Sara Robinson, Interactive Week
>May 8, 2001 12:58 PM PT
>URL:
>
>A high-stakes battle over a keyechnology for managing the distribution of=
=20
>digital content has been
>launched, and the first volley is InterTrust Technologies' lawsuit against=
=20
>Microsoft for patent
>infringement.
>
>InterTrust, founded in 1990, holds extensive patents in digital rights=20
>management, a technology that
>enables companies to encrypt documents or media files and attach rules for=
=20
>their use. DRM is just
>beginning to fulfill its promise as an essential building block for=20
>commerce of digital goods.
>
>Companies developing DRM worry that if InterTrust's patents hold up, they=
=20
>will be forced to pay
>costly licensing fees or awkwardly engineer their products to work around=
=20
>the patents. The outcome
>is unclear for corporate customers that are just beginning to use DRM to=20
>manage such assets as
>photos, logos, legal documents and corporate training videos. For example,=
=20
>using DRM, a training
>video could be encrypted so that a company could track how many times it=20
>is watched.
>
>Even if the patents are eventually struck down, the legal morass could=20
>prove costly for DRM
>providers and their customers. And InterTrust's lawsuit is likely to be=20
>one of many technology patent
>battles ahead.
>
>"Now that the dot-com boom is crashing, one of the things that's left to=20
>milk is the patents," said
>Greg Aharonian, publisher at the Internet Patent News Service, a=20
>newsletter covering technology
>patent issues. "You'll see a lot more of this."
>
>The lawsuit, which asks for damages and an injunction against the=20
>distribution and sale of Windows
>Media Player and other products, focuses only on Microsoft =97 for now. But=
=20
>in the April 26 lawsuit
>filed in San Jose, InterTrust reserves the right to add other companies.=20
>Some observers think the
>small, struggling firm is trying to make a business out of such legal=20
>fights =97 or position itself to be
>acquired.
>
>Suitor Sought?
>
>Aram Sinnreich, a senior analyst at Jupiter Research, believes in the=20
>latter theory. "DRM is finally
>going to become very important in the very near term, and it sounds like=20
>their patents are very
>far-reaching," Sinnreich said. "If I had to pick one reason to explain the=
=20
>lawsuit, I think InterTrust is
>trying to goad Microsoft or someone else into buying them."
>
>Other leading providers of DRM are ContentGuard and IBM; both declined to=
=20
>comment on the
>lawsuit.
>
>DRM technology was first marketed for business-to-consumer applications,=20
>such as sales of digital
>music and electronic books. But since the systems can be awkward to use=20
>and often require
>downloads of client software, they haven't been popular.
>
>Recently, however, DRM started steadily gaining traction in the enterprise=
=20
>market in the form of
>digital asset management. Systems to help corporations efficiently manage=
=20
>use of their digital
>property are offered by companies such as Artesia Technologies, eMotion=20
>and MediaBin.
>
>InterTrust's enormous patent portfolio has long frustrated rival companies=
=20
>developing DRM
>technology, which charge that the patents are overly broad.
>
>For example, the patent that is at the heart of the Microsoft suit was=20
>filed in 1998 as a continuation
>of patents going back to 1994. The patent was issued in February. It=20
>governs basic aspects of
>DRM such as content rights management procedures; "superdistribution,"=20
>which is the distribution of
>protected content from peer-to-peer; and subscription services for content=
=20
>governed by usage rules.
>
>"If they get an adequate settlement out of Microsoft, that certainly=20
>wouldn't hurt their position with
>the other companies doing digital rights management," Aharonian said. "If=
=20
>they get a jury verdict,
>that really strengthens their hand."
>
>A researcher at a large company that has developed DRM technology, who=20
>asked not to be
>named, complained that InterTrust has 5,000 to 10,000 pages of claims in=20
>its 18 existing patents,
>and more than 40 patents pending.
>
>"Until they are invalidated, people will have to worry about it, because=20
>you have these huge, huge
>patents with zillions of different claims," the researcher said. "If you=20
>go to a patent attorney and give
>them 10,000 pages to read and the meter clicks at $300 an hour, expenses=20
>start mounting up very
>quickly."
>
>Asked whether he believes the patents to be frivolous, the re searcher=20
>responded: "No one can
>really be sure because they are so voluminous. . . . Some people are=20
>willing to give them the benefit
>of the doubt because they have very smart people on their payroll and=20
>they've been around for quite
>a while, but most of our people are very skeptical of InterTrust patents."
>
>Ed Fish, president of the MetaTrust Utility division at InterTrust,=20
>acknowledged that the patent that
>provoked the lawsuit covers very fundamental aspects of DRM systems. "They=
=20
>are fundamental
>aspects of technical components that we think are necessary for efficient=
=20
>digital rights management,"
>Fish said. But, he added, "I don't want to make the point that this covers=
=20
>every functional means.
>The patent claims are technical and specific."
>
>Jim Cullinan, a Microsoft spokes man, said Microsoft has been developing=20
>DRM technology for
>many years, but declined to comment on the specifics of the lawsuit. "We=20
>have just received this
>complaint and we continue to evaluate it," Cullinan said, reading from a=20
>prepared statement.
>
>Fish said the complaint focused solely on Microsoft because the company=20
>spelled out the details of
>its system clearly enough in public documents that InterTrust felt sure=20
>Microsoft was infringing.
>
>"It's possible that there are other infringers, but there's less=20
>information available," Fish said. "We're
>continuing to investigate."
>
>Given the stakes involved, Aharonian said, the courts will probably act=20
>quickly on the injunction. If
>InterTrust can get an injunction, he added, Microsoft may well choose to=20
>settle rather than hold up
>the distribution of Windows XP, the latest version of its consumer=20
>operating system which is
>scheduled for release this fall. Microsoft's Media Player and DRM=20
>technology, the subject of the
>lawsuit, are built right into the new OS.
>
>A settlement in the current case would be a boon to InterTrust, which is=20
>struggling financially. The
>company reported a net loss of $21.6 million for the first quarter, and=20
>during its earnings call last
>week, it announced it would lay off 15 percent of its staff.
>
>InterTrust has been peddling its patents to its rivals for the last=20
>several years. So far, none of these
>companies license the InterTrust technology =97 primarily because the=20
>licensing fees InterTrust has
>asked seemed unreasonably high, several companies said privately.
>
>Still, this lawsuit is "not going to be a slam dunk" for either Microsoft=
=20
>or InterTrust, Aharonian said.
>"Inter Trust comes in with a good hand, but Microsoft has a ton of money =
=97=20
>and if it fights off the
>injunction, maybe it just bleeds InterTrust to death."
>
>
>Who Has the (Digital) Right?
>
>The InterTrust Technologies patent that is the subject of a lawsuit=20
>against Microsoft deals with many
>aspects of digital rights management:
>   Content rights management and provision of electronic licenses and=
 permits
>   Rules managing electronic subscriptions for content
>   Messaging and other communications according to secure policies and=
 rules
>   Trusted electronic negotiation, digital information escrow and=20
> automated, secure fulfillment
>   Tracking and secure control of electronic documents, records and other=
=20
> digital information among
>authenticated members of select user groups