In a case that could stand the Internet on its head, British Telecommunications plc (BT) claims that it owns the patent to hyperlinks and is suing to enforce the patent.
The U.S. patent at issue, number 4,873,662 entitled "Information handling system and terminal apparatus therefor" (the "'662 patent"), was issued on October 10, 1989, and, under the rules in effect at the time, will expire in October 2006.
During an audit of its extensive patent portfolio a few years ago, BT discovered the '662 patent, which it refers to as the "Hidden Page" patent. BT then contacted a number of U.S. Internet service providers (ISPs), requesting they purchase a license to use the patented invention. It appears that none have so far taken BT up on its offer.
BT then filed an infringement suit against an ISP and, if BT wins, it is expected to sue other U.S. ISPs for infringement.
Under the famous 1996 Supreme Court case Markman v. Westview Instruments, Inc., before a jury can decide whether infringement occurred, the court must interpret the meaning of the claims. The Markman hearing was conducted on February 11, 2002 and, on March 13, the court issued its claim interpretation, previewing the instructions it would give jurors in a trial scheduled to begin on September 9. The court has determined that BT's patented invention involves the use of a single computer serving information to multiple terminal devices (which are themselves subject to other patent claims). If the jury determines that the use of hyperlinks over the Internet is not covered by the patented invention, as some analysts anticipate, the ISP will be found not to have infringed the 662 patent.
Possible Prior Art:
The U.S. Patent Code requires that patented inventions be novel and non-obvious to a person with ordinary skill in the art at the time the invention was made. Publicity about the case has drawn attention to various items of prior art which some proponents claim prove that the concept of hyperlinks was known at the time the invention disclosed in the '662 patent, which claims priority back to 1975, was made. These items of prior art include an article by Vannevar Bush, late dean of MIT, published in a 1945 issue of Atlantic Monthly, and film of a 1968 demonstration given at a computer conference by Douglas Engelbart, then a researcher at Stanford Research Institute. Whether any of this prior art invalidates the '662 patent would be a matter of fact for the jury to decide.
BT has not specified the amount of damages it is seeking from the ISP. If BT wins the suit, the measure of damages will likely be the reasonable royalty which a licensor and a licensee would have agreed upon through arms-length negotiation at the time of the infringement.
Damages could be higher if BT can prove that, but for the ISP's infringement, BT itself would have provided the patented invention to the ISP's customers. In that case, BT would be entitled to the profits it had lost due to the infringement, if such profits are higher than the reasonable royalties measure of damages. To win this potentially higher award, BT would need to prove that it actually had the capability to provide the service to the ISP's customers.
Finally, if it is found that the ISP willfully infringed on BT's patent, BT could be entitled to double or triple damages. In any case, BT will only be entitled to damages reaching back to December 1994, or 6 years from the date it filed its infringement claim. BT would also be entitled to interest on the amount of damages, measured from the date of infringement through the date of judgment.
Lessons to be Learned:
- BT found this potentially valuable patent during an audit of its extensive patent portfolio. Companies with a number of patents may consider conducting a portfolio review on a regular basis. A patent which once appeared to be of only marginal value may be found to be broad enough to cover new technologies, generating significant licensing revenue for its owner.
- Keep an eye on the outcome of this lawsuit. While BT claims that administrative impracticality would prevent it from suing individual Internet users for infringement, any royalties which ISPs might have to pay to BT for use of the patent -- both as damages for past infringement and as license fees through the 2006 expiration of the patent -- could be passed on to users in the form of higher fees.