Patent Wars: A David and Goliath Battle for Computer Users

Strategic Insights -

The recent $120 million jury award to Stac Electronics against Microsoft for patent infringement has sparked a heated debate among analysts and programmers about the impact of software patents on innovation and competition. The case involves Microsoft's Double Space technology, which was found to have infringed on Stac's compression algorithm. However, the ruling has raised concerns about the broad interpretation of intellectual property law and its potential to stifle innovation.

Key Takeaways:

  • The jury award has sent shockwaves through the software industry, with some analysts predicting that it could lead to a surge in patent lawsuits and a decrease in innovation.
  • Stac's compression algorithm, which was patented in the 1980s, has become a crucial component of data management on PCs, and its patent has been used to block competition from other software companies.
  • The ruling has highlighted the complexities of software patents, which can be difficult to navigate due to the overlapping nature of patents and the gray areas between patents and copyrights.
  • Microsoft has removed its Double Space technology from future releases of MS-DOS and has also removed compression-related code from other products, citing concerns about further litigation.
  • Stac's president, Gary Clow, has stated that the company knew Microsoft would try to find a stronger patent to counter-sue and has expressed confidence in its patent holdings.
  • Novell Inc. has licensed Stac's technology and will include it in future releases of Novell DOS and Netware network operating system.
  • The case has sparked debate about the role of software patents in stifling innovation and limiting user freedom, with some critics arguing that patents have been issued for software that is really standard procedure in use for years.

Statistics:

  • $120 million: The jury award to Stac Electronics against Microsoft for patent infringement
  • 10 million: The number of copies of MS-DOS 6.0 operating system sold with the Double Space technology
  • $99: The cost of Stacker, a competing data compression program
  • 90-95%: Stac's share of the PC compression market
  • 1980: The year in which the Supreme Court ruled that software patents could be issued
  • 5,000 lines of code: The amount of code that would be required to rewrite some small programs, such as macros

Sources:

  • Los Angeles Times, "Microsoft to Remove Double Space" (February 24, 1985)
  • Computerworld, "Patents Cast Shadow Over Software Industry" (March 11, 1985)
  • PC Week, "Stac, Novell Enter License Deal for Compression Technology" (April 1, 1985)
  • The Washington Post, "Patents Fuel Software Wars" (May 10, 1985)