Melville, New York-based CopyTele Inc. (CTI) said that subsidiary Secure Web Conference Corporation has filed a patent infringement lawsuit against Microsoft in the Federal District Court for the Eastern District of New York. The company claims that Skype, which was purchased by Microsoft in 2011 for $8.5 billion (and conveniently has around 250 million active monthly users), infringes on its encryption technology.
CTI's company profile reveals that it develops and acquires patented technologies for the purpose of patent monetization and patent assertion. The press release and accompanying comments by CTI President and CEO Robert Berman almost seems like an April Fools' joke a month too late, saying that the company will continue to "mine its patents" and launch "additional assertion programs with significant revenue opportunities."
"With coverage on web conferencing technology across an industry that generates over $4 billion in annual revenue, these encryption patents are a prime example of the enormous, untapped potential at CTI," Berman said. "The new management team was attracted to CTI because of the tremendous value of its patents that were masked by its previous business model."
Microsoft is CTI's second patent assertion campaign. In January the company launched its first attack against AU Optronics Corp. and E Ink Holdings regarding patented electrophoretic display technologies that was developed in-house. The company currently has 6 patent portfolios spanning key-based encryption to e-paper to window frame construction technology.
The complaint against Microsoft can be accessed here, and covers two U.S. patents that were granted in 2005: "Method and apparatus for securing e-mail attachments" and "Portable telecommunication security device". The first one covers an exchange of information using public-key and private-key encryption, and the user's email address. The second one covers a security device that's defined as a keyboard and microprocessor with multiple inputs and outputs.
"New management joined CopyTele in September, and we saw a lot of potential diamonds in the rough, and this is one of them," Berman told CNET. He went on to tell Forbes that the patents Skype infringes on were actually invented decades ago, that CTI has been in the tech development business for thirty years. It was only until recently that the company moved into "patent monetization" as a business model.
That said, he recognizes the "patent troll" label but defends the move, saying that it's difficult for small inventors to succeed when big name companies use their patents for free. "We provide a service to these inventors," he said. "They don’t have sophistication and expertise to monetize their inventions and we will help them do that."
Microsoft is typically on the other end of the patent stick, forcing companies to pay for using Android thanks to its own patent portfolio. It's big money, as the company could earn up to $8.8 billion from Android licenses by 2017 based on an average of $1 per device in royalties.
One of the latest victims in Microsoft's Android campaign is Samsung who was found guilty in Germany of infringing on a patent that disassembles an SMS message from the sender and reassembles it on the receiving end.