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Originally published August 27, 2010 at 9:34 PM | Page modified August 27, 2010 at 9:34 PM

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Paul Allen goes after tech biggies in lawsuit on patents

Microsoft co-founder Paul Allen filed a lawsuit Friday against many of the biggest names in tech and on the Web, alleging they're infringing on patents obtained by a venture he headed in the 1990s.

Seattle Times senior technology reporter

The defendants

Companies sued by Paul Allen:

Apple Yahoo

Google Netflix

Facebook OfficeMax

eBay Office Depot

AOL Staples

Google's YouTube

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Microsoft co-founder Paul Allen filed a lawsuit Friday against many of the biggest names in tech and on the Web, alleging they're infringing on patents obtained by a venture he headed in the 1990s.

Named as defendants are Apple, Google, Facebook, eBay, AOL, Netflix, Yahoo, Google's YouTube, OfficeMax, Office Depot and Staples.

If Allen is successful, he could go after additional companies, seeking royalties for patents that touch on much of the current Web experience.

Allen and Xerox veteran David Liddle started Interval Research in 1992. The group operated in Palo Alto, Calif., growing to more than 100 researchers, until it was shuttered in 2000. Interval's research generated about 300 patents, four of which are the basis of the suit.

The patents in question were filed between 1996 and 2000, and the last one was granted in 2004.

Most of the targeted companies declined to comment, but Facebook said the suit — filed in federal court in Seattle — is without merit, and a Google spokesman said it's part of an "unfortunate trend of people trying to compete in the courtroom instead of the marketplace."

One of the patents in the suit involves the concept of automatically showing related information on a website, so people viewing, say, a news story could be presented with related stories.

Allen has already tried to make money with that concept, starting a company called Evri, which developed a widget that media websites could use to generate clusters of related stories.

It's unclear how Allen sought to license the technology. Asked whether the lawsuit follows attempts to negotiate licensing deals with the named companies, Allen's spokesman David Postman said, "The defendants were informed that we had patents of interest."

'An ongoing process'

The belated pursuit to be compensated for research conducted more than a decade ago puts Allen at risk of being labeled a "patent troll," a disparaging term for people using older patents simply to extract license fees rather than to protect innovation.

But Postman characterized the move as "part of an ongoing process for years to monetize that [patent] portfolio."

"Other patents were licensed to other people," he said. "Now we're to the point of reviewing that portfolio and seeing at the same time if technology in the marketplace has caught up to where Interval was. It's clear that these patents cover a variety of key processes in search and e-commerce. We're to the point where litigation is the next step on that."

Within Allen's circle of ultrarich Microsoft veterans is Nathan Myhrvold, who started a Bellevue company called Intellectual Ventures that collects patents and makes money charging licensing fees. Bill Gates is invested in the group and helping with its research.

Intellectual Ventures' rise has contributed to the debate over changing the U.S. patent system and raised questions about how much the system encourages innovation vs. enriching license holders.

But Postman said Allen's situation with Interval is different, partly because Interval was formed to be a research organization. Postman also denied that Allen is enforcing his patents at the suggestion of Myhrvold or others.

Facebook, at least, is going to fight back. "We believe this suit is completely without merit and we will fight it vigorously," the company said in a statement.

A spokeswoman for eBay provided a similar statement, saying Friday, "We are reviewing the complaint filed today. We intend to defend ourselves vigorously."

Patent suits common

Patent suits have become common in the tech industry after the dot-com collapse about a decade ago. Patents were the only assets left for many companies, leading investors and creditors to pursue infringement cases.

What's unusual in this case is that such a notable person is pursuing it directly, said Chris Cotropia, a law professor and member of the Intellectual Property Institute at the University of Richmond School of Law in Virginia.

"All these companies are used to people suing them, claiming they've invented very basic aspects of all parts of their business," he said.

Allen's patents appear broad on the surface, but the court will be analyzing detailed claims within the patents, Cotropia said. Although some of the inventions may seem obvious, they'll be evaluated in the context of the late 1990s, when they were developed.

Still, recent rulings have made it harder for a case like Allen's to get an injunction. Another issue will be the actual harm Allen has suffered and whether the defendants are competing with products he offers, Cotropia said.

Companies in patent cases have won awards of $500 million or more, said Mark Lemley, the William H. Neukom Professor of Law at Stanford and director of the university's law, science and technology program.

"If the patents were held valid and it went to a jury trial, the technologies here are worth a lot of money, so we could imagine this being a big verdict," he said. "I expect that's what Interval Research is looking at. There's a longshot prospect at potentially a very high payoff."

Microsoft not named

Microsoft is not named in the suit, and it has not obtained licenses to use the technology, Postman said. He declined to say why the suit went after particular companies, but said more companies could be pursued later.

The lawsuit mentions that Interval was an early supporter of Google's founders.

"For example, Interval Research served as an outside collaborator to and provided research funding for Sergey Brin and Lawrence Page's research that resulted in Google," it said. "Indeed, a Google screenshot dated September 27, 1998, entitled 'About Google!' identifies Interval Research in the 'Credits' section as one of two 'Outside Collaborators' and one of four sources of 'Research Funding' for Google."

Lemley said the case isn't unique, but the high profile of its participants could make it part of the larger patent debate.

"It has the potential to become a poster child in that debate," he said.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

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