ADC Technology Inc. v. Microsoft Corporation et al
United States District Court for the Western District of Washington
Case No. 2:08-cv-01579-RSM, Filed October 27, 2008
Decided: May 2, 2016 against Nintendo; November 8, 2016 against Microsoft and Sony

Nowadays, being able to download a game to a current generation console is a standard feature, but that was not always the case. Digital downloads for video games only became a viable option for most consumers during the Xbox 360, Wii, and PlayStation 3 generation.  Back in 2008, ADC Technology filed a patent infringement lawsuit against Microsoft, Nintendo, and Sony, alleging their systems for digital downloads infringed ADC owned patents relating to pay-for-download software over a computer network.

ADC asserted five patents: U.S. Patent Nos. 5,775,995 (the ‘995 Patent), 6,193,520 (the ‘520 Patent), 6,488,508 (the ‘508 Patent), 6,702,585 (the ‘585 Patent), and 6,875,021 (the ‘021 Patent). The asserted patents related to the remote distribution of software to terminal devices. Claim 1 of the ‘021 patent reads:

1. A software distributing system for
transmitting at least one of the program, the data, and a combination of the program and data stored in a database provided in a distribution center to a requested communication terminal device via communication lines;

storing the transmitted program, the data, and the combination of the program and data in a memory provided in the communication terminal device; and

enabling execution of the program or data processing according to the program, the data, and the combination of the program and data in the memory,

said distribution center comprising:

a transmitter device for transmitting the program, the data, or the combination of the program and data at the request of said communication terminal devices to said communication terminal device; and

a charging device for charging a fee for at least one use of the transmitted program, the data, or the combination of the program and data in said communication terminal device. (‘021 patent, col. 14, line 14-35).

In July 2009, the district court granted ADC’s motion for stay of proceedings pending the outcome of reexamination proceedings initiated for each of the patents-in-suit. This case before the Patent Trial and Appeal Board was filed in 2012 under the recently enacted America Invents Act. After initial examination by a USPTO Examiner, the PTAB eventually looked at the patents when it affirmed the Examiner’s decision in 2015. Both the PTAB and the Examiner found the ‘520, ‘508, ‘585, and ‘021 Patents to be unpatentable because of prior art. As a result, the PTAB affirmed the cancellation of those four patents. The only patent the PTAB did not cancel was the ‘995 Patent.

ADC dropped most of the allegations in the lawsuit after the PTAB canceled four out of five patents. Microsoft and Nintendo reached a settlement for claims related to the ‘995 Patent. Sony was able to get a victory regarding the ‘995 patent, however, the ‘995 Patent was not canceled as a result.

The five patents asserted by ADC related to software downloads where the user pays for the download. The patents were not limited to game console use, but could potentially apply to any pay-for-software downloads, such as PC downloads. The broadness of the patent claims may be due to the fact the invention claimed a 1993 priority date, a time when digital distribution was not as prevalent as it is today. Having broad patent claims is beneficial because you capture a wider scope of infringers, but can be a detriment because it is easier for potential defendants to invalidate the patent by referencing a larger body of prior art. Early priority dates can make it challenging for those (alleged) infringers to find prior art due to the novelty of the invention at the time.  This case is a good illustration of all those points working together.

ADC Technology Inc. v. Microsoft Corp. illustrates the impact broad early patents can have on emerging technologies. Even though Microsoft, Sony, and Nintendo resolved their dispute with ADC regarding the asserted patents, there are other patents out there that could present problems in the future.

Additional Research By: Rachel Johns

Edited By: Andrew F. Thomas