News

Barnes & Noble Did Not Infringe Microsoft Patents, ITC Attorney Says

• By Kurt Mackie
• February 07, 2012

In an interview with Bloomberg on Monday, an attorney at the U.S. International Trade Commission (ITC) said Microsoft makes an unconvincing case in its patent infringement suit against Barnes & Noble.

Microsoft wants the bookseller to pay royalties for the use of the patents in B&N's Nook electronic reader devices, which use the open source Android mobile operating system. Microsoft recently narrowed the scope of the case to three patents after initially alleging five patent violations.

Bloomberg cited ITC staff attorney Jeff Hsu as saying that he is recommending that the administrative law judge in the case find no violation by Barnes & Noble with regard to three Microsoft patents.

In response to an article by veteran Microsoft observer Mary Jo Foley on the subject, Microsoft provided the following response regarding the staff attorney recommendation:

"This was a preliminary argument by the Office of Unfair Import Investigations ('OUII') staff attorney, which was filed before the presentation of the evidence at the hearing has occurred. The OUII staff may change its position after the hearing. Additionally, the administrative law judge will hear the evidence and arguments at the hearing and will come to his own conclusion.

"Microsoft is committed to protecting its intellectual property by licensing it to others. The Android based Nook devices infringe Microsoft patents. Barnes & Noble has refused to license Microsoft’s IP on commercially acceptable terms, a decision which has left us with no choice but to file this action in the ITC."

The OUII is part of the ITC hearing process, and it represents "the public interest in the trial phase of investigations conducted under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337)," according to the ITC's glossary. An attorney from the OUII is assigned as an "independent litigant" on behalf of the public interest in a case. Moreover, the attorney is "a full party to the investigation," according to the ITC's FAQ description (PDF).

According to the Bloomberg account, "the [OUII] staff acts as a third party in the case, and there's no requirement that the judge follow the recommendation." However, there's also no requirement that the Commission will abide by the determination of the administrative law judge in the case. The matter is ultimately decided by six members of the Commission.

According to the process, the six Commission members will assess the initial determination (or "ID") of the administrative law judge in the case. That assessment can take multiple forms.

"The Commission may review and adopt, modify, or reverse the ID or it may decide not to review the ID. If the Commission declines to review an ID, the ID becomes the final determination of the Commission," according to the ITC's FAQ (p. 3).

So far, on the single matter of Microsoft committing "patent misuse," as claimed by Barnes & Noble's attorney's, Administrative Law Judge Theodore R. Essex has already issued an initial determination -- namely, that Microsoft did not misuse the law.

At stake at the U.S. ITC courts is Barnes & Noble's ability to import and sell Nook devices in the United States that were built outside the country. Barnes & Noble's Taiwan-based hardware partners -- Hon Hai Precision Industry Co. Ltd., Foxconn and Inventec Corp. -- are named as part of the investigation (337-TA-769). The countries of origin for the Nook products in the lawsuit are named as Taiwan, China and Hong Kong, according to the OUII investigative history.

The final initial determination date for this case is listed as April 27, 2012, with a target for completion on Aug. 27, 2012. However, it's possible for the parties to appeal the decisions along the way.