What follows is some background on the patent and the lawsuit. It is very interesting for a variety of reasons. My guess on the reexamination is that the PTO will invalidate Billings' patent. Given my software/hardware prior art databases, I could kill Billings' patent on prior art grounds. Given the billions Novell has, and hundreds of millions at stake, I assume Novell has spent plenty tracking down similar amounts of prior art, which they have submitted to the PTO. Done right, what they have collected so do the job.
Greg Aharonian
Internet Patent News Service
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(for prior art search services info, send 'prior' to patents@world.std.com)
Some history. During the 1970's, Billings was a student at Brigham Young University, where he and other students were studying networking. Four of these students, along with Billings, between the types of information exchange between students in an academic environment, also had classes together. In particular, they all were taught by one computer science professor, Robert Linebarger, who worked with all five students and taught them about networking technologies he had been involved with while working for the government.
In the early 1980's, Billings went off and formed his own company, and in 1982 applied for a patent on his networking technology, which after two rejections, was finally granted in 1987. At the same time, the four other BYU students were hired by Novell, and went on to be the core of the team that developed the networking technology that has made Novell the billion dollar, 4000+ employee company that it is today. It is Billing's contention that this group of four incorporated his technology into the final version of the technology that NetWare is based on.
Later in 1987, after the patent was issued, Billings approached Novell in an effort to get them to license his patent. After repeated unsuccessful attempts to deal with Novell, Billings proceded to raise money to sue Novell, and in December 1991 formally filed suit. Unless something happens in the next few months, this fall the lawsuit will actually be argued out in front of a jury in San Francisco. [NOTE: now on hold while the reexamination occurs]
This case is interesting for a variety of reasons, three of which I will discuss: investing in patent lawsuits, software prior art, and Novell's tactical mistakes in pre-trial motions.
Until quite recently, large patent infringement awards were not that common, as for decades the courts were biased against patent holders, much to the delight of patent infringers. Part of this was due to judges and courts dealing with technology and intellectual property issues that they were unfamiliar with. With the creation of a special Federal court system for intellectual property, the bias shifted towards to the patent holder. In the past few years, many penalties in the hundreds of millions of dollars have been awarded. Additionally, some companies like TI and IBM earn over a half billion dollars a year in patent royalties.
Thus the stakes can be quite big, and big companies being sued will do their best (and spend their best) to fight such lawsuits. For small companies, this can be a financial burden, and in some cases they back off. A growing number of patent holders are doing what Billings did, seeking investors to back their lawsuit in return for a percentage of the awarded penalty. Others use the services of a small, but growing number of patent law firms, who are willing to work on contigency, again getting a percentage of the awarded penalty. And of course, wherever there is a liability and risk, eventually someone offers insurance, which you can now obtain for patent infringement. Thus Billings' lawsuit is interesting as being a very visible precursor for these economic game aspects of patenting.
With regards to prior art, many have been surprised that Novell has been unable to convince the courts that Billings' patent is invalid because of prior art. There is a raging controversy in the software world over the issue of prior art. There currently are over 12,000 software patents, a large number to many considering the gradual evolutionary nature of software research and development (for which prior art chains are easy to construct). Given the large amount of research performed in the last thirty years on networking, it is easy to believe that Billings' patent is contestable. Indeed, Novell has claimed it has located over a dozen items of prior art that would invalidate Billings' patent, and this summer formally requested that the Patent and Trademark Office reexamine Billing's patent. Yet at the same time, Novell has been unable to convince the courts to issue a summary judgment against Billings, so he must have some grounds.
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