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Microsoft, Autodesk Lose Patent Appeal

Microsoft Corp. must pay more than $140 million for infringing on software patents owned by a Michigan-based technology company, a federal appeals court has ruled.

Z4 Technologies Inc. sued Microsoft and Autodesk Inc., maker of drafting software, in 2004, claiming the technology they used to activate newly installed software and deter piracy infringed on patents created and owned by David Colvin, the owner of privately held z4.

Commerce Township, Mich.-based z4 argued that Microsoft's Windows XP and Office 2003 suite of productivity software used its patented method of asking computer users to supply two passwords, or authorization codes, before they could fully use new software.

The technology in question also can be used to deactivate software.

In April 2006, a federal jury in East Texas ordered Microsoft to pay $115 million to z4, plus attorney fees and $25 million for willful patent infringement. Microsoft, which had argued that the patents were invalid, appealed the decision.

The jury also ordered Autodesk to pay $18 million to z4.

On Nov. 16, the U.S. Court of Appeals for the Federal Circuit, which considers all patent appeals, upheld the lower court's decision in its entirety.

Microsoft spokesman David Bowermaster said Windows Vista and Office 2007 are not affected by the appeals court decision. Bowermaster also said the company does not have to make any technical changes to Windows XP or Office 2003.

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